Anthony Weiner and the Revolving Door

By Sen. Elizabeth Warren

When former House Majority Leader Eric Cantor (R-Va.) took a job with the investment bank Moelis & Co. earlier this month shortly after resigning his Congressional seat, he became the latest example of the tight-knit relationship between Wall Street and Washington. In aninterview, I called this out for what it is: another sign that the revolving door still spins freely in Washington. Cantor had little experience in financial services, and the value of people like him to Wall Street firms is influence peddling, plain and simple.

Wall Street’s outsized influence in our nation’s capital is something I’ve talked about for a long time — long before I even thought about running for office. But where I see a problem — an infestation, really — a lot of others in Washington, both Democrats and Republicans, seem to see government working just fine.

So when former Congressman Anthony Weiner — a Democrat from New York —dismissed my concerns, it was business as usual. Identifying himself as a liberal, Weiner called my criticism of the revolving door culture “overblown” and “petty.”

Let’s start with some facts.

The Cantor move to Wall Street is not some isolated incident. Just look at the influence of one mega-bank — Citigroup — on our government. Starting with former Citigroup CEO Robert Rubin, three of the last four Treasury secretaries under Democratic presidents held high-paying jobs at Citigroup either before or after serving at Treasury — and the fourth was offered, but declined, Citigroup’s CEO position. Directors of the National Economic Council and Office of Management and Budget, the current Vice Chairman of the Federal Reserve and the U.S. trade representative, also pulled in millions from Citigroup.

That’s what the revolving door looks like at just one Too Big to Fail Bank. What about others? The influence of Goldman Sachs in Washington has been much documented,including here at Huffington Post. JPMorgan? Shortly before the Cantor episode, another former member of Congress — Democrat Melissa Bean — took the same senior job at JPMorgan Chase previously held by Democrat Bill Daley before his recent service as White House Chief of Staff. Yes — this is just a single position at JPMorgan Chase, evidently reserved for the latest politician ready to cash in on Wall Street.

I could go on — and I will. Soon after they crashed the economy and got tens of billions of dollars in taxpayer bailouts, the biggest Wall Street banks started lobbying Congress to head off any serious financial regulation. Public Citizen and the Center for Responsive Politics found that in 2009 alone, the financial services sector employed 1,447 former federal employees to carry out their lobbying efforts, swarming all over Congress. And who were their top lobbyists? Members of Congress — in fact, 73 former Members of Congress.

According to a report by the Institute for America’s Future, by the following year, the six biggest banks employed 243 lobbyists who once worked in the federal government, including 33 who had worked as chiefs of staff for members of Congress and 54 who had worked as staffers for the banking oversight committees in the Senate or the House.

The point here is simple: Eric Cantor isn’t the exception — he’s the rule. The ties between Washington and Wall Street run deep.

Read on.

U.S. House passes Fed audit bill; measure seen doomed in Senate

The U.S. House of Representatives overwhelmingly passed a bill on Wednesday that would open up Federal Reserve monetary policy decisions to a congressional audit, reviving a measure passed in 2012.

But the legislation approved by the Republican-dominated House is expected to meet a fate similar to its predecessor’s: death in the Democratic-controlled Senate.

The “Federal Reserve Transparency Act” passed 333-92 in a bipartisan vote. It is largely similar to the 2012 “Audit the Fed” bill championed by former libertarian Representative Ron Paul.

The new measure would require the Government Accountability Office to conduct an audit of the Federal Reserve Board and the 12 Federal Reserve Banks within 12 months of enactment. A report to Congress would be due 90 days after the audits were completed by the nonpartisan congressional watchdog.

The bill would also repeal a limitation that had shielded the U.S. central bank’s monetary policy decisions. The measure would require the GAO to audit Fed reviews of homeowners who were in foreclosure in 2009 and 2010 that were required as part of enforcement actions taken by the central bank against financial institutions at the time.

Read on.

Citigroup and Bank of America loosen standards for struggling borrowers

Citigroup (C) and Bank of America (BAC) will start to offer mortgages at discounted interest rates as part of their efforts to help borrowers with low incomes or subprime-credit histories. Per The Wall Street Journal:

Citigroup, the seventh-largest mortgage lender by volume in the U.S., has agreed to fund 15-year fixed-rate mortgages with below-market interest rates for these borrowers. The move comes after Bank of America, the third-largest mortgage lender, signed on earlier this month.

The article explained that the loans are being originated and distributed by the Neighborhood Assistance Corp. of America, a national nonprofit based in Boston that works primarily with low- to moderate-income borrowers, including those who have subprime credit.

NACA and its chief executive, Bruce Marks, have a reputation for pushing banks to provide unusual deals for borrowers. Banks agree to the terms, in part, to show regulators they are providing loans to borrowers of all stripes and to attempt to receive credits under the Community Reinvestment Act of 1977, which requires banks to lend in neighborhoods where they receive deposits.

Source: WSJ

Credit Suisse loans draw U.S. scrutiny

Credit Suisse Group AG CSGN, +0.48% CS, +0.89%  is under fire from U.S. regulators over concerns the bank isn’t heeding warnings to stop making loans regulators see as risky, according to a person familiar with the matter.

The Swiss bank in recent weeks received a letter from the Federal Reserve demanding the bank immediately address problems with its underwriting and sale of leveraged loans, or high-interest-rate loans used by private-equity firms and others to finance purchases of companies, among other uses.

The letter to Credit Suisse, known as a Matters Requiring Immediate Attention, found problems with the bank’s adherence to guidance issued last year, warning banks to avoid deals that included too much debt or too few protections for the lenders in case of a default, according to the person familiar with the matter.

The Fed’s letter to Credit Suisse comes as regulators, some of whom have been taken aback by the lack of response to their guidance, are preparing to take tougher action against firms that don’t follow Washington’s marching orders, according to people familiar with the matter.

It is unclear if other banks beyond Credit Suisse have received such a letter.
Read on.

Here the most ridiculous bills that passed in Congress this week

And you wonder why Congress has the lowest approval ratings??

House Passes Bill Highlighting IRS Controversy

The House passed three bills Tuesday designed to highlight complaints that the IRS mistreated conservative political groups when they applied for tax-exempt status.

One bill makes it illegal for IRS workers to use personal email accounts to conduct official business. Another bill guarantees groups that are denied tax-exempt status the right to appeal the decision to a separate IRS office.

The third bill addresses complaints from groups that have had their confidential taxpayer information improperly disclosed by IRS employees. The bill allows the IRS to tell victims about the status of investigations into the disclosures. Current law forbids the IRS from releasing such information.

And my favorite:

House Passes ‘No Welfare For Weed’ Bill

The House passed a bill Tuesday that could make it a little harder for people to use government welfare payments to buy marijuana in states where the drug is legal.

Supporters call it the “no welfare for weed” bill.

The bill would prevent people from using government-issued welfare debit cards to make purchases at stores that sell marijuana. It would also prohibit people from using the cards to withdraw cash from ATMs in those stores.

A 2012 federal law already prevents people from using welfare debit cards at liquor stores, casinos and strip clubs.

I’m ready for the next Congress bill called no welfare for crack. Congress is completely useless. Obviously the Congress’ return from a 5 weeks recess hasn’t help. Memo to Congress: Weed is not food LOL. Besides selling marijuana is still illegal in majority of the states, only two states can sell weed for recreational use. 

CFPB Accuses Corinthian Colleges Of Cheating Students

For-profit education company Corinthian Colleges Inc. misled students into taking out unaffordable loans by falsely advertising job prospects, then used illegal debt collection tactics to force distressed students to pay up, according to a lawsuit filed Tuesday by the U.S. Consumer Financial Protection Bureau.

Corinthian owns Everest Institute, Everest College, WyoTech and Heald colleges, which collectively have more than 70,000 students and annually receive $1.4 billion in federal financial aid. The company is winding down all its operations in an agreement with the U.S. Department of Education.

The CFPB alleges that Corinthian inflated its job placement rates by creating fake companies, defining a “career” as a job that lasted one day with the promise of a second, and by paying employers to temporarily hire its graduates.

After students were deceived into taking out private loans from the company, Corinthian forced them to make good on their debts by pulling them from class, blocking access to academic resources such as school computers, and withholding diplomas, the consumer bureau alleges. One financial aid officer at a Georgia campus was nicknamed the “Grim Reaper” after pulling so many students from classes for past-due debts.

Read on.

NYU Law Professor Jennifer Arlen and Off the Record Corporate Crime

What happens if there’s a conference on corporate crime and nobody hears about it?

Did it happen?

It did.

It happened on April 4 and 5, 2014 at New York University School of Law.

The conference — Deterring Corporate Crime: Effective Principles for Corporate Enforcement – was the brainchild of Jennifer Arlen, co-chair of the NYU Law Program on Corporate Compliance and Enforcement. The conference was co-sponsored by the American Law Institute.

Food for the event was provided by Jules Kroll and his firm K2 Intelligence.

Reporters were not invited or allowed in.

As a result, there was no reporting on the conference.

And not that reporters wouldn’t have loved to have been there.

You had some of biggest names in the field.

You had your prosecutors — including Preet Bharara, Benjamin Lawsky, Andrew Ceresney, Denis McInerney, Jeffrey Knox.

You had your defense attorneys — including Lanny Breuer (Covington & Burling), John Buretta (Cravath), George Canellos (Milbank Tweed) Robert Khuzami (Kirkland & Ellis), Scott Muller (Davis Polk), Mythili Raman (Covington & Burling), Bruce Yannett (Debevoise) and John Savarese (Wachtell).

You had your in house counsel — including Bradford Berenson (General Electric), Mark Califano (American Express), Sheila Cheston (Northrop Grumman), Stephen Cutler (JP Morgan Chase), Eric Grossman (Morgan Stanley).

Your had your judges — including Jed Rakoff, Valeria Caproni, John Gleeson, Raymond Lohier, Gerard Lynch.

And you had your academics — including Jennifer Arlen, Brandon Garrett, Miriam Baer, Samuel Buell, Stephen Choi, Kevin Davis, David Engstrom, Brandon Garrett, Michael Klausner, Reinier Kraakman, Julie O’Sullivan, Daniel Richman, Andrew Weissmann, Sara Beale and David Uhlmann.

It was perhaps the first ever off the record corporate crime conference.

But no press allowed.

Read on.

Wells Fargo Stumbles in Ponzi Scheme Litigation

WEST PALM BEACH, Fla. (CN) – Accused of aiding and abetting a $60 million Ponzi scheme in South Florida’s Haitian community, Wells Fargo failed to charm a federal judge with its affirmative defenses.
“Although defendant may not have had a duty to investigate, disclose or prevent misconduct, defendant did have a duty not to aid and abet it,” U.S. District Judge Daniel Hurley wrote Wednesday.
In a Ponzi scheme that reportedly began around November 2007, George Theodule promised investors 100 percent return within 90 days at no risk, spending a portion of the trading profits on projects to benefit the Haitian community.
Contrary to his promises, Theodule lost money in his trade accounts and never generated any net profit for his Creative Capital Consortium entities because the funds were used to pay earlier investors or for Theodule’s personal benefit.

Read on.

N.Y. AG says Barclays move to toss fraud case should be denied

New York Attorney General Eric Schneiderman again blasted Barclays for allegedly not protecting customers from “high-frequency” traders in its trading venue, despite repeated assurances to clients by the bank that it was doing so.

Schneiderman moved to knock down a key argument in Barclays’ motion, that the lawsuit falls outside of the scope and authority of the New York’s securities laws, a powerful statue known as the Martin Act.

Schneiderman said the 1921 statue has long co-existed with federal securities regulation and enforcement, and he said that the suggestion in Barclays’ motion that federal law should take precedence in matters of securities fraud is misguided.

A spokesman for Barclays said the bank will continue to cooperate with the attorney general, but the complaint is based on clear and substantial factual errors.

Read on.

With Debt Collection, Your Bank Account Could Be At Risk

Kari Fiotti moved back to Omaha, Neb., in 2009 after a decade living in Italy. She had divorced her husband and returned to the U.S. to start a new life.

Then, Fiotti, 44, took a pricey fall.

“When I came back, I fell and I broke my wrist without insurance,” she says.

Her doctor, she says, rejected her offer to make partial payments. So, like millions of Americans, her debt — which had grown to $1,640 with interest and fees — was turned over to collectors.

Fiotti soon learned how hard they would try to collect her unpaid bills.

Court records show that the collectors sued Fiotti, but that she didn’t show up in court for the hearing about her case.

In May of last year, Fiotti suddenly realized, “My bank account’s at zero and I’m like, whoa, what’s going on?”

Debt collectors had seized her bank account because she didn’t have enough to cover the debt. Fiotti says she was stunned. “You’re taking everything that I have,” she says. “You’re not just taking a portion of it, you’re taking my livelihood.”

Fiotti says she was doing clerical work making about $10 an hour. She had a kid in college and no savings. She says she had to overdraw her checking account just to take out $50 to buy groceries. In the end, a friend put Fiotti in touch with a lawyer, and she now has the debt behind her.

Read on