Daily Archives: October 7, 2015

For-profit colleges transform into nonprofits to evade rules, report suggests

For-profit colleges may have found a loophole to evade the Obama administration’s crackdown on the industry: Transform into nonprofit institutions.

Four college chains, which account for a total of about 50 campuses nationwide, converted to nonprofit entities over the last several years, but still act in many ways like profit-seeking enterprises, a new report suggests.

The schools engage in behaviors that aren’t typical of nonprofits, such as paying lease payments on property to the former owners of the for-profit company and allowing the former owners to have a larger say in the governing of the new nonprofit instead of leaving it up to a group of independent trustees not out for financial gain, according to a review of government documents by Robert Shireman, a senior fellow at the Century Foundation, a progressive think tank based in New York that focuses on education and economic issues.
“I didn’t expect to see such a consistent pattern,” said Shireman, who has also served as an undersecretary in the Department of Education.

Read on.

Ben Bernanke Blames Congress For Poor Economic Recovery

Doesn’t take personal responsibility…Bernanke needs to crawl back under the rock with Greenspan…

Here’s FT with Bernanke’s take:

The former chairman of the Federal Reserve has hit out at Congress for failing to do its part to bolster America’s rebound from the financial crisis, saying the US central bank had been unfairly criticised when the recovery “failed to lift all boats”.

In his newly published memoir, Ben Bernanke admitted the Fed had failed to spot some of the dangers building before the financial crash, and said that the controversial rescues of Bear Stearns and the insurance company AIG had damaged its political standing and “created new risks to its independence”.

As suggested by the title of his book, The Courage to Act, Mr Bernanke argues that the Fed’s policies under his leadership were justified and helped usher in a stronger recovery than in many other countries. He draws a sharp contrast with the euro area, where monetary and fiscal policies had been “much tighter than demanded by economic conditions,” helping explain the miserable recovery in that economic bloc.

Mr Bernanke levels frequent criticism at Congress in the book, calling for less confrontation and implicitly contrasting the bitter partisanship on Capitol Hill with a collegiate, consensus-building approach within the Fed.

The publication come as Congress struggles to reach agreement on budget plans that would ensure highway building is funded and avoid a punishing fiscal clampdown after temporary spending measures lapse in December.

Mr Bernanke writes: “The Fed can support overall job growth during an economic recovery, but it has no power to address the quality of education, the pace of technological innovation, and other factors that determine if the jobs being created are good jobs with high wages.

“That’s why I often said that monetary policy was not a panacea — we needed Congress to do its part. After the crisis calmed, that help was not forthcoming. When the recovery predictably failed to lift all boats, the Fed often, I believe unfairly, took the criticism.”

4,000 posts on Justice League Tumblr!

4,000 posts!

Hillary Clinton to Announce Plan to Rein in Wall Street ‘Abuses’

U.S. Democratic presidential candidate Hillary Clinton said Tuesday that she will lay out her plan to rein in Wall Street “abuses” within the next week.

“I’m going to be proposing in the next week what I think will be the best way to go after Wall Street abuses and rein in the too-big-to-fail banks and other institutions,” Clinton said at an Iowa campaign stop.

Clinton said her plan would focus on more than banks, taking into account any kind of financial institution that causes disruption in the marketplace.

“What I’m proposing is that we go after the risk,” Clinton said. “If they are so big that they are causing disruptions in the marketplace, that’s a risk. So I have what I consider to be a more comprehensive approach toward what we need to do to rein in the big institutions, including the banks.”

Clinton also indicated that she would address calls from within the Democratic Party’s progressive wing to say how she would hold individuals accountable for financial crimes and if she would pursue reinstating a Great Depression-era law that separated commercial banks from riskier investment arms. That law was repealed during the administration of her husband, former President Bill Clinton.

Read on.

Meanwhile: Bernie Sanders wants Wall Street execs jailed for 2008 financial crisis

Memo to Sanders: Statute of limitations ran out to jail the banksters. Time to have the IRS audit the banksters to whether banks properly transferred the mortgage backed securities into the trust that they sold to Wall Street and whether they violated their tax-free IRS status for REMICs. And we shall see what Ms. Clinton’s plan to “rein” Wall Street.

Florida’s Hardest Hit Fund program blistered in report

In a blistering report released today, federal investigators say Florida has consistently “under-performed” other states in using federal mortgage assistance money to help desperate homeowners facing foreclosure.

Of the 18 states participating in the Treasury Department’s Hardest Hit Fund, Florida has the lowest rate of approving homeowners for assistance, one of the highest rates of denying assistance and an overall “slowness” in processing thousands of applications.

Five years into the program, only 22,400 Floridians had been helped as of March — just 20 percent of all who applied and the lowest percentage of any state. Estimates of the total number to receive assistance by the program’s end in December 2017 have plunged from the original 106,000 to just 39,000.

“After five years, Hardest Hit Fund Florida still has half of their HHF funds despite Florida homeowners experiencing critical need,” according to the Special Inspector General for the Troubled Asset Relief Program, or TARP.

Read on.

Fifth Third to pay $85 million for faulty FHA mortgages

Fifth Third Bancorp (FITB) will pay $85 million as a part of settlement with the federal government over allegations that the bank failed to self-report mortgages it knew to be defective, causing millions of dollars in losses to theDepartment of Housing and Urban Development.

The settlement stems from a whistleblower complaint under the False Claims Act that accused Fifth Third of certifying that a number of mortgages were eligible forFederal Housing Administration insurance, then later determining that those mortgages were “materially defective,” making them ineligible for FHA insurance, but not reporting those defects to the FHA.

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JPMorgan buys more mortgages from other lenders as market shrinks

JPMorgan Chase & Co, looking to stem falling revenue in its mortgage business as fewer Americans refinance, is increasingly buying loans from smaller lenders, a practice that competitors including Bank of America view as risky. In the first half of 2015, the bank bought 62 percent of the $58 billion in home loans it added to its books, compared with 56 percent in 2014 and 37 percent in 2011. While other big banks buy mortgages from other lenders, known as correspondents, JPMorgan has racked up the biggest increase among its peers in the proportion of loans it buys from others, according to data from trade publication Inside Mortgage Finance. JPMorgan is fighting for business in what has been a shrinking market. According to the Mortgage Bankers Association, applications for U.S. home loans have fallen by about 25 percent since mid-January, when a temporary drop in rates spurred a small wave of refinancing. Since May 2013, when mortgage rates first started jumping amid fears the Federal Reserve would hike rates, application volume has fallen by more than 50 percent. Fewer applications overall make it harder for JPMorgan to make as many loans directly to consumers in its bank branches. Still, JPMorgan’s willingness to buy loans from correspondent banks is a sign that banks are comfortable taking more risk in the mortgage market, nearly a decade after the housing bubble popped. “As they gain more confidence about the environment, they go right back to the correspondent channel for more volume,” said banking analyst Charles Peabody of Portales Partners. To be sure, Bank of America Corp avoids the loans, because it doesn’t want to be exposed to bad decisions made by smaller banks that do the actual lending. “There’s more risk in being that far away from the customer,” said D. Steve Boland, the Bank of America executive in charge of mortgage and auto lending. For example, a smaller lender could fail to verify a borrower’s income properly, and just sell the loan on to a bigger bank.

Read on.