Daily Archives: August 10, 2015

Bamboozled: Bank of America holds funds hostage after customer’s death, family says

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Robert Petersen knew he was going to die soon.

He made plans to enter hospice care on May 14.

He also planned for his brother, Frederick Petersen, to manage his affairs: before his death with a power of attorney, and after his death as his executor. His sister-in-law Joan Petersen would help.

Robert Petersen had no real assets except for his home, Joan Petersen said. He took a reverse mortgage on the home with Champion Mortgage in 2007 so he could access his home’s equity for living expenses.

“He requested that my husband, as his power of attorney, draw $20,000 from this line of credit with Champion Mortgage to help cover his funeral expenses,” Joan Petersen said.

Documents show Champion received the request on May 12, and the funds were to be  deposited into Robert Petersen’s Bank of America account.

But the next day — one day before he was to move into hospice care — Robert Petersen died.

Since that time, the surviving Petersens have been deluged with red tape, fighting with Champion and Bank of America over the money.

You see, the money did get to the Bank of America account, but despite receiving all the requested paperwork multiple times, the bank refused to release the money. It’s been locked up for months now, causing Frederick and Joan Petersen to lay out more than $10,000 to cover Robert’s final expenses and other bills, and to waste lots of hours lost in bureaucracy.

At first, the delay didn’t seem like a big deal. The funds posted to the Bank of America account on May 18, the couple said, and they went to their local Bank of America branch on May 22.

Joan Petersen said their rep explained what paperwork was needed to close Robert’s two accounts.

“She advised that before we could establish the accounts for the estate we needed an O-1 certificate from the state of New Jersey, but the bank would release 50 percent of the funds without it,” Joan Petersen said.

To receive the 50 percent, they’d need to present a tax ID for the estate, an original death certificate, the testamentary letter from surrogate court and a letter of instruction advising Bank of America that they’d like access to 50 percent of the funds.

Read on.

Judge slaps down NY Mayor de Blasio’s effort to regulate banks

Wall Street fought the law — and the law lost.

A federal judge Monday ruled that an attempt by New York City Mayor Bill de Blasio to regulate banks through the Responsible Banking Act was unconstitutional.

De Blasio wanted to push lenders to release confidential loan and foreclosure data, especially in low-income areas, in order to crack down on alleged practices like red-lining.

But the RBA, which created a City Hall-controlled, eight-person panel with the power to yank public monies from any bank that didn’t live up to new standards, essentially gave the Big Apple powers that are reserved for federal and state regulators like the Securities and Exchange Commission and the New York Department of Financial Services, lawyers for the New York Bankers Association, which fought the law, told the judge.

Read on.

Hedge Fund That Hired “Master Manipulator” From Deutsche Bank Implicated In LIBOR Suit


In many ways, Christian Bittar has come to personify the global effort to manipulate the world’s most important benchmark rates. Regular readers will remember Christian as the Deutsche Bank prop trader we first introduced in 2012 and who we later noted was dismissed from the German lender only to be hired at BlueCrest Capital Management. Here’s our six-point summary from 2013:

  1. Deutsche tells an internal prop trader to “do everything legally and by the book or else.”
  2. Bittar colludes with virtually everyone else under the sun to generate billions in profits;
  3. Bittar makes tens if not hundreds of millions of bonuses for himself;
  4. Finally, DB no longer can hide the deception and claws back a portion of Bittar’s bonuses, while washing its hands of the full affair;
  5. He went to work for BlueCrest Capital Management LLP, Europe’s third- biggest hedge fund with $30 billion under management.

But that wouldn’t be the end of it.

Earlier this year, after Deutsche Bank agreed to pay $2.5 billion to settle rate rigging charges, we got a look at exactly what Bittar said on the way to fixing the fixes (so to speak). You can view some of the highlights here.

Finally, when WSJ released the full text of a letter sent to Deutsche Bank by German financial watchdog BaFin, we got an in depth look at the relationship between Bittar and former CEO Anshu Jain. Unsurprisingly, Bittar’s lucrative trading activities at the bank made him a star in the eyes of upper management.

Now, none other than Bittar’s post-Deutsche Bank employer BlueCrest is being sued along with the usual suspect banks for conspiring to rig the Swiss franc LIBOR rate. The allegations appear to stem from the documents which were made available when Deutsche Bank settled with US regulators earlier this year. BlueCrest is the only hedge fund named.

From the complaint:

On April 23, 2015, the NYSDFS revealed that BlueCrest conspired with Defendant Deutsche Bank to manipulate Swiss franc LIBOR for its financial benefit, requesting that Deutsche Bank make a false 1 month Swiss franc LIBOR submission on February 10, 2005. Upon information and belief, that request was sent via electronic communication to a Deutsche Bank Swiss franc LIBOR-based derivatives trader and/or Swiss franc LIBOR submitter located in New York.


Defendant BlueCrest has deep connections to the Contributor Bank Defendants, including several individual traders directly involved in the manipulation of LIBOR. In addition to being funded in part by Defendant JPMorgan, BlueCrest hired Deutsche Bank master manipulator Christian Bittar after he was publicly fired by Deutsche Bank for his involvement in various rate-rigging schemes.


More Regional Banks to Face Probes of Shoddy FHA Loans

Banks are still haunted by bad underwriting of mortgage loans from the last housing boom, and the nightmare could endure for months to come.

M&T Bank’s disclosure Thursday that it is in settlement talks with the Justice Department for not complying with underwriting guidelines on Federal Housing Administration loans has renewed fears that more lenders will be the targets of probes and possible litigation.

The $97 billion-asset bank M&T, in Buffalo, N.Y., joins a growing list of large and regional banks currently in litigation or settlement discussions with the government for allegations of shoddy underwriting.

Wells Fargo, Quicken Loans, PNC Financial Services Group, Regions Financial and BB&T all have outstanding investigations of FHA loans, according to company filings.

Read on.

The Libor conviction is welcome. Now directors must be held accountable too

The new regulatory regime for banks and brokers will force senior managers prove they are taking steps to prevent fraud. At least, that’s the theory

The Guardian:

But the troubling aspect of the case is not the length of the sentence. It’s this: Hayes could only have rigged Libor for so long if his bosses either failed to supervise him properly or preferred to ignore his tactics. Why weren’t they also in the dock?

The judge argued, fairly, that inadequate supervision should not deflect from the seriousness of Hayes’s actions: “The fact that others were doing the same as you is no excuse, nor is the fact that your immediate managers saw the benefit of what you were doing and condoned it and embraced it, if not encouraged it.” Yet a cultural cleanup of the banking and financial system will look like a depressing hunt for scapegoats if accountability extends only to the (admittedly well-paid) troops on the trading floor.

This problem will not be eradicated easily, since the supervisors’ plea of “I didn’t know” is hard to counter. The regulatory answer is meant to be the new Senior Managers Regime, designed to ensure individual accountability by requiring that specific tasks and responsibilities are attached to named individuals. The regime, covering banks, brokers, investment firms and insurers, is intended to mean ignorance can no longer be an excuse. Senior individuals must show they were awake and took reasonable steps to prevent misbehaviour.