Daily Archives: December 12, 2014

Regulators fined 10 investment firms $43.5 million for positive write-ups on Toys “R” Us in exchange for lucrative investment banking business

OMG… Hat tip to NY Post…

The talks on Wall Street to take Toys “R” Us public in 2010 were definitely not suitable for children.

Eager to pitch the giant toy retailer’s private-equity owners as they weighed an initial public offering of the chain, one analyst at Needham & Co. went into graphic detail about his hankering.

“I would crawl on broken glass dragging my exposed junk to get this deal,” the analyst wrote in a May 2010 email to a colleague.

The dirty message was among dozens released Thursday following a four-year probe by the Financial Industry Regulatory Authority that was initially sparked by The Post, said Finra spokeswoman Nancy Condon.

In June 2010, The Post exclusively reported that Wall Street analysts felt that KKR, the lead owner of Toys “R” Us, “attempted to grill and cajole” them into giving upbeat valuations of the retailer as investment bankers at their firms lobbied for a piece of the deal.

“Can’t slip anything by a crackerjack analyst, can you?” one analyst said sarcastically of The Post’s report in an email unearthed by Finra, suggesting that the pressure was obvious and blatant.

Indeed, Finra’s exhaustive investigation showed that the conflicts of interest were routine rather than unusual, as 10 of Wall Street’s biggest banks were slapped with $43.5 million in fines on Thursday.

Goldman Sachs, JPMorgan, Credit Suisse, Barclays and Citi were fined $5 million apiece, while Deutsche Bank, Merrill Lynch, Wells Fargo and Morgan Stanley each paid $4 million. Needham & Co. was fined $2.5 million.

Read on.

BofA asked the court to overturn homeowners’ $1 million dollar collection calls lawsuit win, judge said no

A Florida couple who got more than 700 collection calls from Bank of America over four years will now do a little collecting of their own — to the tune of more than $1 million.

“Unrelenting,” said Joyce Coniglio of Tampa.

“They treated us very badly,” said her husband, Nelson. “No two ways about it.”

The Coniglios said the bank badgered them after they had fallen behind on their house payments, local station WTSP reported.

The calls didn’t stop even after the Coniglios told the bank that they had hired an attorney.

The Coniglios sued under the Telephone Consumer Protection Act. A federal judge in Tampa awarded them just over $1 million, the report said. The bank’s expense was $500 per call, but the damages were tripled.

“The borrowers, the people who own those phones, you do have a right to privacy. And when they say to stop, you have to stop,” said the Coniglios’ attorney, David Mitchell.

Bank of America has asked the court to reconsider, but this past week, the judge rejected all of it.

Read on.

TN Congressman GAFFE OF THE YEAR: Sexual Assault Begins at Home

TMZ:

Prepare to apply palm to forehead.

Tennessee Congressman Steve Cohen made one of the all-time blunders yesterday when asked about a sexual assault case involving a Tennessee Titans football player.

The 65-year-old politician explained that he’s not really a big football guy … but keeps up with Peyton and Eli Manning … and knows the following thing to be 100% true:

“Eli and Peyton DON’T DO sexual assault against people … other than their wives.”

(apply palm to forehead now)

Even more shocking, the congressman didn’t seem to realize his gaffe … and moved on to the next topic without correcting himself.

And here is the video: http://www.tmz.com/videos/0_v7k9v1ib

Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For

That’s right. A trillion with a T! U.S. government has become a wholly-owned subsidiary of Wall Street and other wealthy special interests and no longer a government of, by, and for the people.

Zerohedge:

Recall:

Five years after the Wall Street coup of 2008, it appears the U.S. House of Representatives is as bought and paid for as ever. We heard about the Citigroup crafted legislation currently being pushed through Congress back in May when Mother Jones reported on it. Fortunately, they included the following image in their article:

Screen Shot 2014-12-05 at 3.32.12 PM

Unsurprisingly, the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services.

……….

Exhibit A: US banks are the proud owners of $303 trillion in derivatives (and spare us the whole “but.. but… net exposure” cluelessness – read here why that is absolutely irrelevant when even one counterpaty fails):

Exhibit B: Here are the four banks that are in complete control of the US “republic.”

$2.7 billion Fannie, Freddie MSR portfolio for sale

MountainView Servicing Group is the advisor for the sale of a Fannie Mae and Freddie Mac mortgage servicing rights portfolio with $2,738,563,642 of total unpaid principal balance.

The portfolio features 100% fixed-rate and first lien product, along with 100% retail production.

It also includes 80% purchase originations, a weighted average original FICO score of 746, a weighted average original loan-to-value ratio of 79% and a weighted average interest rate of 4.51%.

In addition, top states in the portfolio’s nationwide geography are California (17.6%), Arizona (16.4%), Utah (16.4%), and Colorado (9.7%). The portfolio’s average loan size is $207,263.

Read on.

Young couple charged with fraud in filing deed for $1.1 million house

A young couple in Florida has been charged with fraud for filing a forged quit deed for a $1.1 million home, where they were squatting.

The bank only discovered this after the bank lawfully sold the foreclosed property to another couple.

And, of course, before getting caught the couple bragged about it on Facebook.

From the Florida Times-Union:

Jenna Dean’s friends were shocked when the 23-year-old wife and mother posted photos of herself and her family at their new $1,395,000, 7,000-square-feet home with the two-story Corinthian columns on 240 acres in Keystone Heights.

“It’s amazing … way better than you made it sound!” one said. “I’m totally jealous!”

Most people would be with six bedrooms, double two-car garages, spiral staircases and a swimming pool.

“How do you guys find such amazing places?” another friend asked.

“Takes years of looking and harassing banks about their foreclosures,” Dean responded. “I should start my own business.”

The Deans twice changed the locks and photos of the family in the home’s swimming pool were posted to Jenna Dean’s Facebook page.

However, according to the Clay County Sheriff’s Office, what it took was forgery and deceit.

Dean and her husband, Justin Kyle Dean, turned themselves in to Clay County deputies Dec. 8 on charges of unlawful filing, uttering a forged instrument and grand theft.

Recorded Documents: Who Loses When A Document Is Not Properly Indexed?

Bankruptcy-RealEstate-Insights

Agin v. Dookhan (In re Hultin), 516 B.R. 190 (Bankr. D. Mass. 2014) –

A chapter 7 trustee sought to avoid a transfer of the debtor’s real property using his “strong arm” powers based on an argument that the deed conveying the property did not provide constructive notice since it was not properly indexed in the real estate records.

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The Wall Street Takeover of Charity

Donor-advised funds run by huge money management firms are exploding.

Fidelity Charitable runs the second-ranked charity in the United States, according to the Chronicle of Philanthropy, behind United Way Worldwide. Charles Schwab’s is fourth and Vanguard’s is 10th.

People aren’t literally giving to these companies. They are setting up accounts at these firms and then disbursing the money, advising on which charities get how much.

The idea of the funds was to make it easier for individuals to give to charity. People could drop money into the account during flush times, and donate as they see fit, not in a panicked rush to meet the Dec. 31 deadline for contributions.

So far, this has turned out to be a bad deal for society.

For about 40 years, charitable giving held steady at about 2 percent of gross domestic product, while donations from individuals have stayed at around 2 percent of disposable personal income, according to Ray D. Madoff, a Boston College law professor and frequent critic of donor-advised funds.

Over the last few years, the donor-advised funds have grabbed significant market share. The total amount of assets under management at donor-advised funds rose to $54 billion in 2013, up 20 percent from $45 billion a year earlier. Fidelity’s alone have skyrocketed to $13.2 billion.

Contributions to donor-advised funds rose 24 percent in 2013, compared with the previous year, to $17 billion. They only gave out less than $10 billion, so money is building up in them. And the amount paid out each year declined in each of the last three years through 2013, according to Alan Cantor, who runs a philanthropy consultancy and is a frequent critic of donor-advised funds.

This has given rise to several concerns. The money in donor-advised accounts doesn’t have to go out right away. Private foundations have to disburse an average of 5 percent each year. But donor-advised funds have no legal obligation to spend down their money — ever. True, donors cannot get their money back. But they could designate their children as the advisers to the money. And their children could pass that responsibility on to their children.

So people can get their taxable deduction all in one year, but society doesn’t get the benefit of the money right away.

And there’s a tax game. Investors who had a particularly good year can make a big donation to a donor-advised fund and lower their taxes. But charities might have to wait while the money sits in the account for years.

Another significant issue is that the interests of the donor-advised funds and donors may diverge. Fidelity, Schwab and Vanguard all charge fees on the money put into their charitable funds. The charities are notionally independent, but they actually plow money into mutual funds run by the same companies.

There are layers of fees charged on that money. Of the $13.2 billion in Fidelity Charitable, $8.5 billion of it goes into Fidelity mutual funds. Those Fidelity funds also charge fees. And investment advisers can charge fees on some portion of the rest of the money.

Cantor estimates Fidelity makes 0.75 percent in total on its funds, but that’s really just a shot in the dark because Fidelity doesn’t clearly disclose the fees.

Read on.

Why Citi May Soon Regret Its Big Victory on Capitol Hill

WASHINGTON – On its face, the House vote late Thursday to approve a spending bill that included an unrelated provision written by Citigroup was a big legislative victory for the bank and its fellow Wall Street behemoths.

Yet it’s also a victory that may soon come to haunt the largest institutions.

What they won was the repeal of a Dodd-Frank Act provision that requires them to push out a portion of their derivatives business into subsidiaries. Big banks fought against its inclusion in the 2010 financial reform law and have been steadily fighting to repeal it ever since. The spending bill is expected to pass the Senate in the coming days.

But in finally getting what they wanted, big banks also thrust themselves back into the limelight in the worst possible way, simultaneously reminding the public of their role in causing the financial crisis and in their continuing influence over the various levers of the U.S government. In one fell swoop, they undid whatever recovery to their battered reputation they’d made in the past four years and once again cast themselves as the prototypical supervillain in a comic book movie.

Observers said the fight was a public relations nightmare for Citigroup and the big banks.

Read on.

St. Louis area mortgage company executive admits fraud

While major banksters are still out operating and getting board of director positions, one small mortgage company executive faces 30 years for floating checks to keep his business afloat.

St. Louis Today has the story.

Mark Avalos, who had been controller for The Mortgage Store Inc., has pleaded guilty in federal court here of bank fraud in a case related to illicit practices to try to keep the failing enterprise in business, prosecutors said Thursday.

Sentencing for Avalos, 49, St. Peters, is set for March 16 before U.S. District Judge Henry E. Autrey. Officials said Avalos could face up to 30 years in prison and a fine up to $1 million, although he would be expected to receive much less, based on sentencing guidelines and on court documents that reflect his cooperation with investigators.

Officials said TMS, a mortgage broker with main offices in Maryland Heights and Wentzville, employed hundreds of people in four states. It began operating at a deficit in 2008, court documents say, so Avalos and others “floated” insufficient-funds checks between accounts for TMS and another company to conceal the true balances at Enterprise Bank in Clayton and at the First Bank of the Lake, in Osage Beach, Mo.

TMS had a negative balance of about $850,000 in mid-2008, when the banks stopped accepting the checks, officials said. TMS then went out of business.