Daily Archives: February 24, 2015

J.P. Morgan in Talks With Justice Department Over Auto Loan Pricing

J.P. Morgan Chase & Co. said it is in discussions with the Justice Department as part of a federal probe into whether auto lenders are doing enough to prevent dealers from charging higher interest rates to minorities.

The largest U.S. bank by assets said in a securities filing disclosed Tuesday afternoon it is in talks with the Justice Department about potential statistical disparities in interest rates for auto loans originated by car dealers, according to the filing.

The bank has been in discussions with the Justice Department for weeks, people familiar with the matter said. It is unclear when or if a resolution, settlement or civil lawsuit filed by the government will occur.

Read on.

Exclusive: BNY Mellon in forex settlement talks with U.S., N.Y. – sources

Bank of New York Mellon Corp is in settlement talks with the U.S. Justice Department and New York attorney general over claims the bank defrauded clients in foreign exchange transactions, according to sources familiar with the matter.

BNY Mellon last week revealed that it would take a $598 million charge as it sought to resolve matters including “substantially all” foreign exchange litigation it faced, though it did not specify which cases.

The bank faces several lawsuits, including class actions, stemming from allegations that it misled clients about how it determined currency exchange rates for certain transactions.

The Justice Department, which has a lawsuit against BNY Mellon pending in Manhattan federal court, is engaging in settlement talks, a person familiar with the matter said.

Read on.

JPMorgan to close 5% of its bank branches

JPMorgan Chase plans to close 300 bank branches over the next two years, about 5 percent of the total, as more customers move online and the bank seeks to cut costs.

The closures are part of a $1.4 billion cost-cutting plan the bank announced for this year. The latest developments were revealed during the bank’s annual investor day conference Tuesday.

Online and mobile banking have become increasingly popular and that trend is expected to continue. The shift online has begun to make brick-and-mortar branches less necessary and, frankly, expensive.

Read on.

Wall Street to companies: Spend that cash!

Wall Street has a clear message for CEOs: start spending all that cash.

Nearly three-quarters of financial industry professionals think companies have “too much cash” or “way too much cash” rotting in the bank, according to the Convergex Corporate Cash Survey obtained Tuesday by CNBC.com.

The technology sector was singled out as the most in need of additional spending. Some 73 percent of investment professionals said tech companies are holding too much dough, followed by the financial sector (43 percent), industrials (26 percent) and consumer staples (18 percent), according to Convergex.

“Our survey shows that investors want corporate leaders to open up the checkbook,” Nicholas Colas, Convergex chief market strategist, said in a statement.

Read on.

JPMorgan nixes calls for breakup in battle of bank giants

Jamie Dimon to Lloyd Blankfein: Come at me, bro.

JPMorgan Chase pushed back Tuesday against calls from rival Goldman Sachs to break up the nation’s biggest bank, arguing that its size is a selling point for clients.

“Scale has always defined the winner in banking,” Chief Financial Officer Marianne Lake said during the bank’s annual investor day held at its Park Avenue headquarters. “We have been able to consistently demonstrate out ability to leverage that scale and successfully adapt.”

“We have a unique asset, an irreplicable asset, in the shape of our company and the mix of our businesses,” she added.

Read on.

Failed Nominee Weiss Morphs Into Key Debt Official at Treasury

(Bloomberg) — Eight days after joining the Treasury Department as an adviser, Antonio Weiss was the lead U.S. official listed at a meeting with Wall Street executives. It’s a role typically played by the undersecretary for domestic finance — the same post Weiss lost after Democratic senators stymied his nomination.

Weiss’s presence at that Feb. 3 meeting on quarterly debt sales shows him diving into many of the same tasks that would have come with the undersecretary’s job. The former Lazard Ltd. global head of investment banking is now working on issues ranging from debt management to housing finance and global market developments. One big difference: his job as counselor to Secretary Jacob J. Lew doesn’t require Senate confirmation.

Read on.

Bank of America cuts 116 North Texas employees

More layoffs at BofA!

This time Bank of America’s (BAC) job cuts are once again located in North Texas, with 116 layoffs in Addison and Plano, according the bank’s Worker Adjustment and Retraining Notification.

Employees are being laid off in Plano at a Bank of America Home Loans Corporate office on Legacy Drive and a mortgage-banking unit on Corporate Drive. A total of 177 associates have been affected over a 90-day period at the two locations, an article in the Dallas Business Journal said.  

The layoffs will take effect on April 13 and April 15.

Over the past six months, the mega bank has announced a slew of layoffs, mostly recently cutting 250 mortgage and technology workers in Charlotte, North Carolina.

At the beginning of this month, the bank announced it was laying off 202 employees from its Norfolk, Virginia legacy asset servicing unit as it scales back its staff to “normal levels.”

In October, HousingWire reported that BofA laid off 187 employees from its Plano, Texas, offices.

When contacted about those layoffs, BofA spokesperson Jumana Bauwens told HousingWire that the bank has made “significant progress” in helping delinquent homeowners.

“The number of delinquent mortgage loans we service has decreased to one-fifth of their peak levels,” Bauwens told HousingWire in October. “Due to the lower demand for these specialized services, we are reducing the size of the operations. This division was created in 2011 and staffing grew dramatically to support the short-term needs of mortgage customers at risk of foreclosure. Now, we are in the process of returning to normal staffing levels.”

Source: DBJ

Swimming With the Sharks: Goldman Sachs, School Districts and Capital Appreciation Bonds

The fliers touted new ballfields, science labs and modern classrooms. They didn’t mention the crushing debt or the investment bank that stood to make millions.
Melody Peterson, Orange County Register, February 15, 2013

Remember when Goldman Sachs – dubbed by Matt Taibbi the Vampire Squidsold derivatives to Greece so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the undisputed king of the municipal bond business epitomize the culture of greed that has ensnared students and future generations in unrepayable debt.

In 2008, after collecting millions of dollars in fees to help California sell its bonds, Goldman urged its bigger clients to place investment bets against those bonds, in order to profit from a financial crisis that was sparked in the first place by irresponsible Wall Street speculation. Alarmed California officials warned that these short sales would jeopardize the state’s bond rating and drive up interest rates. But that result also served Goldman, which had sold credit default swaps on the bonds, since the price of the swaps rose along with the risk of default.

In 2009, the lenders’ lobbying group than proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed, bankers traveled all over the state pushing something called “capital appreciation bonds” (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by more than 400 California districts, some with repayment obligations of up to 20 times the principal advanced (or 2000%).

The controversial bonds came under increased scrutiny in August 2012, following a report that San Diego County’s Poway Unified would have to pay $982 million for a $105 million CAB it issued. Goldman Sachs made $1.6 million on a single capital appreciation deal with the San Diego Unified School District.

Green Light to Exploit

In a September 2013 op-ed in SFGate.com called “School Bonds Are a Wall Street Scam,” attorney Nanci Nishimura wrote:

. . . AB1388, signed by then-Gov. Arnold Schwarzenegger in 2009, [gave] banks the green light to lure California school boards into issuing bonds to raise quick money to build schools.

Unlike conventional bonds that have to be paid off on a regular basis, the bonds approved in AB1388 relaxed regulatory safeguards and allowed them to be paid back 25 to 40 years in the future. The problem is that from the time the bonds are issued until payment is due, interest accrues and compounds at exorbitant rates, requiring a balloon payment in the millions of dollars. . . .

Wall Street exploited the school boards’ lack of business acumen and proposed the bonds as blank checks written against taxpayers’ pocketbooks. One school administrator described a Wall Street meeting to discuss the system as like “swimming with the big sharks.”

Read on.


Cross-posted from The Law Offices of Evan M. Rosen:

Plaintiff starts off wanting leave to amend to add lost note count at the beginning of trial. Despite pleading owner and holder in a “verified” complaint, they now know the note was lost all along. First, opposing counsel attempts to place blame on the court clerk of court but the clerk who he calls to testify, proffers during their motion that the original was never filed. What they show was that a Notice of Filing of original note was filed in a prior 2009 case but when the bank was ordered to transfer the original note via an order from the Judge in the current 2013 case, they found that only a copy of the note was attached to Plaintiff’s notice of filing the “original note.” This is not the first time we’ve seen or heard this…

Without me saying a word, the Judge denies their motion. We wait around to be called up for trial. During which time, Iwatch the Judge, with a little unsolicited input from the “peanut gallery” (me), refuse to apply a recent Calloway case – a case which turns the evidence code on its ear. I informed the Defendant’s counsel during his argument that motions for rehearing and for certification were filed, so the Calloway case is not final law. I hated to do it but the Judge was very seriously considering Calloway and I wanted to do all I could to prevent the well from being tainted! So I was talking out loud a few times but ultimately whispered to Defendant’s counsel a few times and passed him some notes. The Judge asked Defendant’s counsel how he knew and he said a “little birdie told me.” The Judge looked right at me so I offered to show her the motions on my ipad but she said it’s was okay. Then she said, even if it the law was final, “the 4th is now legislating from the bench” and are trying to change the evidence code! Calloway conflicts with the third. She asks what the case from the third on this. I yell out Holt v Grimes. She says, right.  So, there is a conflict with the third and I’m bound to follow the third. She excludes the payment history. Plaintiff’s lawyer asks for continuance. Judge denies and then the bank takes a voluntary dismissal. Beautiful.

We go to lunch…

After lunch, opposing counsel shows me his exhibits. We get called up. Despite being shot down the first time around, opposing counsel renews his motion for continuance. It’s now later in the day and the Judge sees a way out, to go home. She asks me to state my position. I go through the six times the Plaintiff could and should have known this the lost note was a problem and could and should have addressed it sooner. Starting with their “verified” complaint which alleges they own and hold yet they attach a copy of a note made payable to someone other than the Plaintiff… Let us not forget that verification is a special act required by the Supreme Court of Florida, only for plaintiff’s in residential foreclosurecases because of so many issues (she’s nodding her head up and down in agreement). Times five and six that the Plaintiff should have known of their lost note issues were when the last two trial orders got entered which specifically say basically, go get your note or else… and no motions for continuance will be granted.

Opposing counsel still argues clerk lost the note. Then, when Judge gets defensive and starts to defend the clerk, opposing counsel switches gears and says his law firm lost the note and an associate is there to testify! Judge says, this only proves you were wrong all this time. She asks the associate to come up who proffers he has records to show they had the note prior to filing.   However, the associate admits he doesn’t know if it was lost before suit was filed or not. The Judge says sternly, “this only shows you don’t know if you had the note in your hands at the time suit was filed and you pled you did! Motion for Continuance denied. Start your case!”

Ex-Plunge Protection Team Whistleblower: “Governments Control Markets; There Is No Price Discovery Anymore”


One year after the great stock market crash in 1987, US President Ronald Reagan launched the “Working Group on Financial Markets.” Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the “Plunge Protection Team.”

One glimpse at a few days suring 2007/8 and it is clear that ‘someone’ with infinitely deep pockets was able to support markets on several critical days – though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. However, as Dr. Pippa Malmgren – a former member of the U.S. President’s Working Group on Financial Markets – it is not conspiracy theory, it is conspiracy fact: “there’s no price discovery anymore by the market… governments impose prices on the market.”

*  *  *

In this 38 minute interview Lars Schall, for Matterhorn Asset Management, speaks with Dr Pippa Malmgren, a US financial advisor and policy expert based in London. Dr Malmgren has been a member of the U.S. President’s Working Group on Financial Markets (a.k.a. the “Plunge Protection Team”). They address, inter alia:

Full interview: