Daily Archives: December 1, 2014

Wells Fargo Cuts Ties with Prisoner Banking Service

Wells Fargo WFC -0.94% & Co. is severing ties with a company that helps inmates set up bank accounts, establish credit and conduct a variety of services that are difficult to perform from behind bars, the company’s founder said.

Prisoner Assistant has encountered skeptical law enforcement officials and jittery banks since Michael Benanti launched the company about six years ago. A former federal prisoner who served 16 years behind bars for conspiring to rob a bank, Mr. Benanti and his company were the subjects of a January story in the The Wall Street Journal.

Mr. Benanti said Wells Fargo recently informed him that he has until Jan. 5 to close his client accounts, more than 600 total, without giving a reason. “They have administered my accounts for Prisoner Assistant for almost six years, with no incident,” he said of Wells Fargo. “We keep our accounts in good standing, and there is never a bounced check or overdrawn account.”

A spokeswoman for the San Francisco-based lender, Richele J. Messick, declined to comment. “When it comes to customer accounts, due to privacy and confidentiality, we do not share specific details,” she said in an email.

Prisoner Assistant requires its clients to grant power of attorney to the company. For $5 a month, the company will manage a prisoner’s bank account. For $24 a month, Prisoner Assistant will pay bills, pick up mail, make wire transfers and help an inmate get credit cards and lines of credit. The most expensive package costs $50 a month.

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Bankers can soon cash in on deferred recession era bonuses

When it comes to bonuses, the waiting on Wall Street is about to pay off.

A rash of bonuses that were deferred in the wake of the financial crisis will begin to vest in the coming weeks, resulting in vastly larger paydays than if bankers and traders had been paid in cash, according to a report by Crain’s New York Business.

After a challenging 2009, Goldman Sachs cut average employee pay by 13 percent, but to dull the pain, granted staffers $3.6 billion worth of shares that couldn’t be sold until January 2015, according to a regulatory filing.

The stock is currently valued at $5.1 billion, thanks to a 40 percent-plus run-up in Goldman stock to Friday’s close at $188.41.

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Widowers in Reverse- Mortgage Case Win Fees

(CN) – The widowed spouses of homeowners who tackled the U.S. government’s reverse-mortgage policy deserve $293,000 in attorneys’ fees, a federal judge ruled.
Reverse mortgages allow a homeowner to take out a loan against his property’s equity, but they are particularly risky for a lender. To ensure that banks keeps make them available to senior citizens, Congress therefore permits the Department of Housing and Urban Development to insure qualifying loans.
Charlie Plunkett and Robert Bennett were both widowed by holders of reverse mortgages, also known as home-equity conversion mortgages, and sued HUD when they faced foreclosure.
U.S. District Judge Ellen Huvelle in Washington had ruled this past August that HUD cannot insure a reverse mortgage that would permit a lending bank to foreclose on a home if the mortgager was survived by a spouse who was not named on the mortgage.
She awarded the widowers $236,000 in attorneys’ fees and costs on Monday. They had requested $293,000.
The judge found the department’s policy was “not a plausible reading of the statute,” and its position was therefore unreasonable.
HUD lost the case “because it failed to provide any persuasive criticism of plaintiffs’ straightforward interpretation of the statute,” Huvelle said.
In a separate ruling, Huvelle upheld HUD’s plans to adopt the loan itself if the loan reached 98 percent to avoid improper foreclosure.
“The court can find nothing in HUD’s past briefing in which it represented that the mortgages would be ‘not due and payable’ rather than ‘deferred,'” she wrote. “More to the point, plaintiffs have not explained why this semantic distinction results in any meaningful difference.”
HUD clearly told the banks of the plaintiffs that the loans did not become due upon the deaths of their spouses, unless some other triggering effect occurred to make the loans immediately due, according to the ruling.

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Leak at Federal Reserve Revealed Confidential Bond-Buying Details

Then-Chairman Ben Bernanke ordered an internal review of the previously undisclosed leak, which found its way into a newsletter for big investors.

The Federal Reserve sprung a previously unreported leak in October 2012, when potentially market-moving information about highly confidential monetary deliberations made its way into a financial analyst’s private newsletter.

The leak occurred the day before the scheduled public release of meeting minutes that shed new light on the Fed’s decision to embark on a third round of bond buying to boost the economy, ProPublica has learned.

The newsletter revealed what the minutes would say the next day as well as fresh details about the Fed’s internal plans and deliberations – information that could have provided traders with an edge.

Leaks from inside the Fed are considered a serious matter. In the past, they have prompted Congressional concern and triggered the involvement of federal law enforcement. In this instance, then Fed Chairman Ben Bernanke instructed the central bank’s general counsel to look into the matter.

The Federal Reserve has faced criticism in recent years for its information security practices, with some in Congress questioning whether it operates under sufficient oversight.

The October 2012 leak involved deliberations of the Federal Open Markets Committee, which holds eight regularly scheduled meetings per year to set policies that control inflation and keep the economy growing. Since the 2008 economic crisis, it has involved itself more deeply in financial markets.

Minutes of the committee’s meetings are released promptly at 2 p.m. three weeks after it meets. Fed watchers eagerly await the event and parse every word for clues on how financial markets will move.

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Short sale tax break expiration could slam 170K with massive tax bills

A slate of expired tax breaks and extensions that Congressional infighting has left unrenewed could hit homeowners who had short sales with massive tax bills.

Without Congressional action to renew the breaks, those whom banks allowed to sell their homes for less than the amount of their mortgage would have to pay taxes on the forgiven mortgage debt as if it were income.

Short selling became common after the housing crisis started, with homeowners who were unable to pay their monthly mortgage bills even as the value of their homes dropped.

RealtyTrac estimates that in the first three quarters of 2014, there have been more than 170,000 short sales representing a mortgage debt forgiveness of $8.1 billion total. The average short sale has a mortgage forgiveness of about $75,000, which if the tax break expires would be counted as income.

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HSBC says UK directors did not quit due to jail threat

Two directors of HSBC’s British business have expressed concerns about new rules that can result in jail sentences for senior bankers, but only one has resigned, and that was mainly due to extra demands on his time, the bank said.

HSBC Chairman Douglas Flint said in a letter publicly released on Monday that Alan Thomson had resigned from the board of HSBC Bank Plc on Sept. 4 and left at the end of October.

Thomson had “some incremental concerns surrounding the application of the new senior manager’s regime to NEDs (non-executive directors)”, Flint said in a letter to Andrew Tyrie, the politician who chairs the Treasury Committee.

Media reports in October said Thomson had resigned and that John Trueman, the deputy chairman, was close to resigning.

Sky News reported that it was a direct consequence of proposals by the Bank of England to strengthen accountability for senior bankers, known as the Senior Persons Regime, which includes powers to jail bankers for reckless misconduct.

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