Daily Archives: July 15, 2015

Bank of America forced to pay state in foreclosure settlement

And this is another example on why the big banks are too big to fail and need to be broken up.

Vermont will be paid $1.25 million by the Bank of Canada after the big bank failed to comply with state foreclosure laws.

“There were mediation attempts and agreements reached and for some reason, one way or another, one part of Bank of America didn’t know what other parts of Bank of America were doing,” Attorney General Bill Sorrell said of the bank’s activity following the federal case. “So people were being billed for higher amounts than what was provided in the settlement.

“These sorts of issues were specifically part of the complaints that the states had and the federal government had with Bank of America and others,” he continued. “We had this national settlement that they were to reform their procedures, and at the end of the day, they didn’t do what they were supposed to do.”

Read on.

Bank of America says it’s No. 2 for mortgage customer satisfaction. So does Chase.


Yeah, right!

In the competitive U.S. mortgage market, bank giants are battling to be runner-up in customer satisfaction for home loans.

On Wednesday, Bank of America BAC, -0.11% boasted of earning the No. 2 spot in J.D. Power’s customer-satisfaction study for mortgage originations. On Tuesday J.P.Morgan Chase JPM, -0.26% proclaimed it was No. 2 in J.D. Power’s customer-satisfaction study for mortgage servicing.

Both claims are true, with a caveat: USAA out-scored Bank of America in the origination study, but it wasn’t included in the ranking because its mortgages are only available to those who have been or are in the military, plus their families.
So, who is No. 1 for mortgage-customer satisfaction? That’s Quicken Loans, an online lender based in Detroit. Quicken nabbed top spots last year in customer satisfaction for both originations and servicing.

Read on.

Scott Walker Sues Feds Over Food Stamp Drug Testing

I have not paid attention on how many Republicans are running for President in 2016. But, I have to agree with the USDA head: Scott Walker hasn’t read the federal law. As Calvin Coolidge said that the world is full of educated derelicts. Walker is certainly an uneducated derelict. TANF program is not the SNAP program. Anyone with a brain knows that this is all political.

Wisconsin Gov. Scott Walker, one of many Republicans seeking their party’s presidential nomination, is suing the federal government over his plan to make some food stamp recipients pee in cups to prove they’re not on drugs.

Federal law doesn’t give states much room to impose new conditions on Supplemental Nutrition Assistance Program benefits. The program is known informally by its former name, food stamps, and in Wisconsin it’s called FoodShare.

“This lawsuit seeks to provide clarity that the State of Wisconsin has the authority to require drug testing for FoodShare recipients,” Wisconsin Attorney General Brad Schimel said in a press release on Tuesday.

While federal law doesn’t allow states to impose drug tests on SNAP recipients, it does allow states to drug test and in general make up their own rules for the much smaller Temporary Assistance for Needy Families program, which serves about 4 million Americans. Roughly 46 million Americans receive SNAP benefits.

“Gov. Walker hasn’t read the law,” U.S. Agriculture Secretary Tom Vilsack told The Huffington Post in an interview Wednesday. “It’s always a good idea before you start litigation to understand what the law is.”

The Wisconsin lawsuit appears to hinge on whether the state can treat SNAP recipients like TANF recipients. The state evidently thinks it can: The new law that calls for drug tests also claims that an “individual who is a recipient under the food stamp program is considered to be a welfare recipient.”

Temporary Assistance for Needy Families is the program most commonly called “welfare,” though Republicans have used the term to describe most means-tested safety net programs.

Read on.

Only if more counties in other states vote to cease doing business with 5 TBTF mega banks

board of supervisors letter banks

It is worth repeating…

AllGov reportsthat:

The board, acting on a request (pdf) from Supervisor Ryan Coonerty, voted to “not do new business for a period of five years with Citigroup, JP Morgan Chase, Barclays, Royal Bank of Scotland and UBS as specified, and further direct that the County unwind existing relationships with these five banks to the greatest extent feasible.”

That means the county won’t buy the banks’ commercial paper or investment services, and will withdraw whatever funds it can from them.

The banks made untold billions using a private electronic chatroom to manipulate the spot market’s exchange rate between euros and dollars. The fifth bank, USB, manipulated the London Interbank Offered Rate (LIBOR), the benchmark interest rate that banks charge to borrow from each other. One Barclays employee said in a chatroom, “If you ain’t cheating, you ain’t trying.”

No one went to jail.

Very impressive.. indeed…

The Shocking 2008 AIG Report On The Motives Behind Europe’s “Perpetual Crisis” And The Death Of Greece


Yesterday, Nomura’s Richard Koo presented one of the better assessments of the situation in Greece, when he said that the “IMF is slowly beginning to understand the Greek economy“, which explains its strategic U-turn, one which now demands far greater debt cuts than what Europe, and Germany in particular, is willing to concede.

Koo further notes that “the reason is that Greece’s GDP has plunged because fiscal consolidation was carried out during a balance sheet recession, resulting in a destructive deflationary spiral that has devastated the lives of ordinary Greeks. While the nation may appear to be making progress when we view the data as a percentage of GDP, the raw data show an economy in collapse. This difference in perspectives widened the gap separatingEuropean creditors who thought everything is going well, and the Greek public who has been suffering serious declines in their standard of living. And this rift in perceptions was perhaps nowhere as evident as in the results of the national referendum on 5 July.”

The observation of the Greek economic devastation is absolutely accurate, and is no surprise to our readers: it has been our base case that not only Greece, but the rest of Europe’s peripheral countries would suffer an ongoing deterioration in living standards due to lack of an external rebalancing (thanks to the common currency) leaving internal devaluation (plunging wages, deflation, economic devastation) as the possibility to remain competitive in the Euro Area; however where our opinion differs from that of Koo is the “motives” behind the creditors’ unwillingness to honestly interpret the situation on the ground in Greece.

Yes, it is true that it is the same creditors who were the next beneficiaries of some 90% of incremental debt-funded proceeds entering Greece (only 11% of the €220+ billion in Greek bailouts ever reached the general population), and as a result they may have had the impression that ordinary Greeks are also enjoying the spoils of their bailout.

They were not, as the events of July 5 showed.

But while the former Fed economist will surely attribute this “oversight” to mere carelessness or at best, stupidity, even if an entire nation of 11 million people is suffering more than ever in history as a result of what is, at best, a failed experiment, there may be a more ulterior truth to events in Greece in the past 5 years especially considering Germany’s stern insistence on not writing off Greek debts despite what is now an accepted fact that without a major debt haircut Greece simply is unviable.

Meet Bernard Connolly.

Barnard is a British economist whose rise to prominence started when he worked for many years at the European Commission in Brussels, where he was head of the unit responsible for the European Monetary System and monetary policies. In other words, if any one was familiar with what the ascent of the Euro would lead to, it would be him.

We say “eventual” because he was terminated by the Commission in 1995. The catalyst may well have been his book “The Rotten Heart of Europe: The Dirty War for Europe’s Money, a negative treatment of the European Exchange Rate Mechanism” which Eurocrats did not take too very lightly.

However, Bernard is more notable not his books, or his employment in Brussels, but where he went next and what he did there.

After ending his relationship with Europe, Bernaned worked at Banque AIG, the Paris-based financial arm of the infamous AIG whose collapse together with that of Lehman, was the primary catalyst for the great financial crisis. Bernard however was not in the front office and did not trade CDS, but was the global strategist. Here is euro skepticism flourished and culminated in a report on May 30, 2008, months before the GSEs and Lehman failed, and AIG was bailed out.

The report was titled “Europe – Drive or Driven“, and it should have been a must read for all Greek (and Europeans) some 7 years ago as it not only lays out precisely why Greece is now on the verge of not only sovereign capitulation but total collapse, but presents what may be the true motives behind Europe’s perpetual crisis and why it almost appears as if the core European countries demand that the sick men of Europe, because Greece is just the first of many, remain and keep Europe in a state of perpetual turmoil.

And since this report is as relevant now as it was 7 years ago, we lay out some of its key highlights again.

From May 30, 2008

The Global Economic Crisis and the EMU Crisis

  • The global crisis is the result of intertemporal misallocation (Greenspan; EMU).
  • In effect, there has been a global Ponzi game.
  • In Europe, this was intensified by the myth that “current accounts don’t matter in a monetary union”: EMU is the biggest credit bubble of them all.
  • The treaty says that government should have the same credit status as private sector borrowers.
  • Monetary union means greater economic instability.
  • These two factors should mean a worsened credit standing in EMU, yet government bond spreads actually diminished in EMU and ratings agencies actually upgraded governments

When the bubble bursts…

  • A collapsing credit bubble in the world means collapsing domestic demand in deficit countries (e.g. US, Britain, Balkans, Baltics – and several euro-area countries)
  • In the US, and to some extent Britain, domestic demand is being supported by rate cuts and, in the US, by a fiscal stimulus
  • In the affected euro-area countries, it isn’t
  • In the absence of support for domestic demand, affected countries will be forced into an improvement in net exports via improved competitiveness
  • In the US and Britain, this is happening through currency depreciation; in the euro area it isn’t.

Ex-Libor trader says made mistakes in interviews with investigators

Tom Hayes, a former trader on trial on Libor manipulation charges, told a London court on Wednesday he had made mistakes and “educated guesses” during interviews with investigators while he was cooperating with Britain’s Serious Fraud Office (SFO) in 2013.

The 35-year-old former yen derivatives trader told the court it was wrong to assume he had been qualified to answer some of the questions he had responded to after his arrest in England in December 2012.

“What I said in 2013 relating to events in 2006 — there were so many mistakes,” he told the prosecution, led by senior counsel Mukul Chawla. He also said that his memory of events such a long time ago was often hazy. “You’re treating me as if I know everything about everything and I don’t,” he told the court.

Read on.

Florida still ranks high in mortgage complaints

The state of Florida ranks as one of the states with the most mortgage complaints, according to a new national analysis of mortgage industry complaints released Tuesday by the U.S. Public Interest Research Group. PerTampa Bay Times:

The article explained that Florida ranks fourth among all states and the District of Columbia in the concentration of mortgage complaints filed between late 2011 and March 16 of this year with the federal Consumer Financial Protection Bureau.

Florida stands out because the other high-complaint states and D.C. are all small in population compared with the Sunshine State. Florida’s high rate of 82.6 mortgage complaints per 100,000 residents is a key sign that Florida’s mortgage industry woes continue to run wide and deep in the nation’s third-largest state.

Scotiabank acquires Citigroup retail and commercial operations in Latin America

Bank of Nova Scotia is expanding its significant footprint in Latin America with a deal to buy Citigroup’s retail and commercial banking operations in Panama and Costa Rica, suggesting that Scotiabank is responding to a relatively weak outlook for developing economies by doubling down.

The terms of the agreement with Citigroup were not disclosed. However, Scotiabank said that the deal will triple the customer size of its existing operations in the two countries, to a total of 387,000 customers.

Read on.

Was ‘he’ fired for becoming a ‘she?’ Wells Fargo sued

Wells Fargo was sued Tuesday by a former employee who alleges she was wrongfully fired because of her decision to transition from a man to a woman.

In her Los Angeles Superior Court complaint, Marco “Marlo Kaitlin” Gallegos alleges discrimination, hostile work environment harassment, retaliation, wrongful termination and both intentional and negligent infliction of emotional distress. She seeks unspecified damages.

A Wells Fargo representative said he may have a comment on behalf of the bank later today.

According to the lawsuit, Gallegos was hired at the bank’s consumer call center in El Monte in August 2010.

“Plaintiff held herself out to the public as a man at her hire,” the suit states.

Read on.

Bank Of America, Wells Fargo Top List Of Most Complained About Mortgage Issuers

occupy homes sign

For the past four years, the Consumer Financial Protection Bureau’s Consumer Complaint Database has seen its fair share of consumer issues related to mortgages. In fact, complaints regarding loan modification, collection, foreclosure, loan servicing, payments and escrow accounts continue to be one of the biggest financial thorns in consumers’ sides. And the worst offender? Bank of America.

That’s according to a new report [PDF] from the U.S. PIRG Education Fund, which examined more than 138,000 mortgage-related complaints in the CFPB’s public complaint database.

The report – the sixth in a series reviewing complaints made to the CFPB – looked at mortgage issues that occur when consumers are unable to pay, encounter difficulty making payments, applying for the loan, signing the agreement, receiving a credit offer and others.

Read on.