Daily Archives: October 30, 2015

Capitol Gains: S.C. lawmakers profit from government connections

Current, former legislators benefit through side businesses

South Carolina’s legislators like to complain about how little money they earn from their part-time jobs running the state. But for some of them, the $10,400 salary is the ticket for a far more lucrative pursuit — profiting on business deals with state and local governments.

It’s almost impossible to say with certainty how much money flows from government coffers to lawmakers because the state’s reporting laws are littered with loopholes and inconsistency. It’s a murky system, created by lawmakers, that makes it difficult for the average voter to see just where the money is going and to whom.

Since 2009, 20 current and former lawmakers reported ties to about $16 million in contracts with state and local government, an analysis byThe Post and Courier and the Center for Public Integrity shows.

Separately, some reported that they, their businesses, their associates or their immediate family members earned more than $3 million in work for entities that lobby state government and nearly $17 million from work representing people, businesses or government bodies in government matters, such as worker’s compensation cases and adoptions.

Read on.

Eric Holder Defends Record of Not Prosecuting Financial Fraud

Oct. 16 2015, 11:05 a.m.

The Intercept:

And I noted that after he stepped down from his post in April, he went back to his job at Covington & Burling, the gigantic D.C. law firm whose clients have included many of the big banks that Holder chose not to prosecute. (The reception was actually held at Covington & Burling’s swanky new building downtown. While it was being built — while Holder was still attorney general! — the firm actually kept an 11th-story corner office reserved for his return. He was making over $3 million a year from the firm before his sojourn at the Justice Department; his current salary has not been disclosed.)

Holder bristled at my suggestion that there might be a connection between his current employer and his conduct at Justice, saying that many top prosecutors at Justice had pursued cases as best they could. “We were simply unable to do it under the existing statutes that we had, and given the ways the decision-making worked at those institutions,” he said.

However, Holder had all the statutory authority he needed to prosecute straightforward crimes such as robosigning fraud, perjury in front of Congress by Goldman Sachs executives, or for that matter, HSBC’s money laundering for Mexican drug cartels. He simply chose not to. (In response to another questioner, he denied that any of his decisions not to prosecute were based on the massive legal teams that were fielded against the government.) Moreover, he actively waved off offers of additional help such as the suggestion from Sen. Sherrod Brown, D-Ohio, that Congress give him more staff for his Residential Mortgage-Backed Securities Working Group, or extend the statute of limitations on some crimes.

At Wednesday’s event, Holder continued: “It’s an easy thing for people who are not a part of the process” to “ask questions,” he said. “It pisses me off, on the other hand,” for people “not conversant” in the process to “somehow say that I did something that was inconsistent with my oath or that I’m not a person of integrity.”

“I’m proud to be back at the firm,” he said. “It’s a great firm. And I’m proud of the work I did at the Justice Department.”

Holder’s comment was only the most recent in a series of pronouncements from formerly powerful government officials that they were in fact powerless — while talking tough once they no longer have the ability to do anything about it.

Clinton Takes Her Adviser’s Side, Attacking Big Banks but Not BlackRock

Hillary Clinton has received a mixture of plaudits and qualified skepticismfor her Wall Street reform plan. She insists that the plan is tougher than those of her Democratic presidential rivals, because it targets more participants in the financial industry beyond the big banks.

But Clinton’s plan was mute on a key sector of the industry: asset management firms, like BlackRock or Vanguard or Fidelity, which control a staggering $30 trillion in global wealth.

And a number of Clinton’s ideas mirror the preferences of leading asset managers, who would profit from crackdowns on their competition — the big banks — while they get a pass.

That’s probably not a coincidence. Cheryl Mills, arguably Clinton’s closest adviser, sits on the board of directors of BlackRock, the largest asset management firm in the world, with $4.5 trillion in investor assets.

Read on.

With Boehner Gone, Nothing Stands Between Wall Street and the Tea Party Disaster It Created

The havoc in the Republican House caucus has finally ended, with the election of the Ayn Rand-reading, Medicare-privatizing “moderate” Paul Ryan as the new Speaker of the House. But a closer look at the recent leadership shakeup reveals the degree to which Congress has become a ruling-class plaything.

The abrupt resignation of Speaker John Boehner was met with shock but not much sentiment. He was the face of the 2013 government shutdown, demanding aggressive spending cuts, and the congressional Republicans’ aggressive efforts to undo Obamacare. But while the possible breakup of the Republicans’ “Southern strategy” has been much discussed, less attention has gone to the crucial and shifting role in these developments of corporate America, to which the GOP owes its current majorities.

Read more…

CFPB Wins Default Judgment Against Corinthian Colleges for Engaging in a Predatory Lending Scheme

Court Rules that Corinthian Engaged in Deceptive Lending Practices and Illegal Debt Collection Practices

WASHINGTON, D.C. — Yesterday, at the request of the Consumer Financial Protection Bureau (CFPB), a federal court entered a final default judgment against Corinthian Colleges, Inc., resolving a lawsuit filed by the CFPB in September 2014. The Bureau’s lawsuit against Corinthian alleged that the company lured tens of thousands of students into taking out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school. The court ordered that Corinthian was liable for more than $530 million and prohibited the company from engaging in future misconduct.

Read on.

CFPB Takes Action Against Nationwide Student Financial Aid Scam

WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) announced it is taking action to halt a nationwide student financial aid scam that allegedly ripped off tens of thousands of students and families across the country by illegally charging millions of dollars in fees for sham financial services. The Bureau filed a complaint in federal court against the company, which operates under the names of Student Financial Resource Center and College Financial Advisory, and the individual who owns and operates the scheme. The CFPB is seeking to halt illegal practices and obtain relief for harmed consumers.

“Student Financial Resource Center and College Financial Advisory scammed thousands of students by masquerading as government agencies and other trusted organizations,” said CFPB Director Richard Cordray. “Students and families were looking for information on how to pay for college, instead they were illegally charged millions of dollars for sham financial services. We will continue to take strong action against those who deceive consumers.”

Global Financial Support, Inc. is a California corporation owned by Armond Aria that operates under the names of College Financial Advisory and Student Financial Resource Center. According to the Bureau complaint, the deceptive scheme run by Aria and his businesses operates under the guise of a government or university-affiliated operation. The defendants allegedly send millions of deceptive letters to students and their families claiming to match them with targeted financial aid assistance programs for a fee. In reality, many consumers receive nothing in exchange for their fee and the scheme reaps millions of dollars in illegal fees.

Read on.

Bank of America cutting 100 mortgage, tech jobs in Charlotte

BofA has been reducing mortgage staff as problem loans dwindle

CEO Brian Moynihan signaled last month that cost-cutting remained focus

The bank’s employee count has dropped more than 68,800 since 2010

Bank of America is eliminating about 100 jobs in Charlotte, as the bank continues to reduce staff that handles problem mortgage loans and makes cuts in its technology and operations unit, a bank spokesman said Wednesday.

Under CEO Brian Moynihan, Charlotte-based Bank of America has been focused on reducing expenses at a company that once grew rapidly through acquisitions.

The bank, one of Charlotte’s biggest employers, has long said it has about 15,000 employees in its hometown.

As the housing market recovers, the nation’s No. 2 bank by assets has said it will continue to reduce staff in its Legacy Asset Servicing unit, which serves customers who fall behind on home loan payments. The bank also continues to trim technology-related expenses, while adding staff that works with affluent customers and makes loans to businesses.

Bank employees told the Observer that they were informed of layoffs on Wednesday. Bank spokesman Dan Frahm said workers will be able to apply for other positions in the bank. Those who don’t stay on are eligible for severance and career counseling, he said.

Bank of America must face Ambac lawsuit over mortgage securities


A lawsuit against Bank of America Corp alleging the bank’s Countrywide mortgage unit fraudulently induced an insurer to cover more than $25 billion of mortgage-backed securities can proceed, a New York judge has ruled.

In a decision made public Tuesday, Manhattan Supreme Court Justice Eileen Bransten denied a summary judgment motion seeking to dismiss the case by Countrywide and Bank of America against plaintiff Ambac Assurance Corp.

To read the full story on WestlawNext Practitioner Insights, click here: bit.ly/1O9w27O

US Military Veterans Are Selling Their Pensions In Order To Pay The Bills

Here’s some of the Washington Post’s article on the subject from today:

Keith Moore, a 40-year-old military veteran recovering from post-traumatic stress disorder in Oklahoma, remembers the day last year when he sold off a chunk of his pension.

He had left the military after 21 years of service, because his disabilities — PTSD, arthritis and other injuries — made it difficult to work.  But the transition to civilian life came with a different struggle: the need to provide for his family and pay the same bills with only half the paycheck.

Moore soon found himself two months behind on rent and at least 10 days from payday. In bed that night, he saw a TV ad for Future Income Payments, a company based in Irvine, Calif., that buys pensions in exchange for a lump sum. The company said it had worked with military personnel and government workers. Ten minutes later, he got up and made the call.

The next day, a company representative called Moore back and explained that he would receive a $5,000 cash advance for selling part of his pension. In exchange, Moore would have to pay the company $510 a month for five years  — a total of $30,600.

If it were a typical loan, that would amount to $25,600 in interest — a rate of 512 percent.

Pension advances are complex products that offer retirees a lump-sum cash advance in exchange for all, or part, of their future pension payments. Consumer groups say they are pitched disproportionately to retired military members and federal retirees.

Future Income Payments is just one of the companies that offer such products. In a 2014 report, the Government Accountability Office identified 38 companies that had recently offered pension advances. At least 30 of the 38 companies were affiliated with one another in some way, sharing a parent company, a broker or another business relationship.

Future Income Payments did not return calls seeking comment.

Credit-Default Swap Settlement Against 12 Banks Approved

(CN) – A federal judge on Thursday approved a historic $1.86 billion settlement of claims that 12 banks colluded to obfuscate the credit-default-swap market.
U.S. Judge Denise Cote’s preliminary stamp of approval comes nearly a full month after class counsel announced the massive deal with Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Royal Bank of Scotland and UBS.
Quinn Emanuel Urquhart & Sullivan and Pearson, Simon & Warshaw represented 10 plaintiffs led by a Los Angeles retirement fund that accused the banks of conspiring to prevent exchange trading of credit default swaps “at secret meetings and through telephone and email communications.”
As further alleged, the banks agreed to work only with the single clearinghouse they controlled and imposed rules to restrict trading to their own benefit.
Investigations by the U.S. Justice Department and the European Commission ensued when The New York Times blew the lid on the secret meetings in 2010.
Cote rejected an attempt by the banks to dismiss the lawsuit last year.
Though the banks claimed that their behavior was “self-interested conduct in reaction to the global financial crisis,” Cote was skeptical.
“The financial crisis hardly explains the alleged secret meetings and coordinated actions,” she wrote.

Read on.