Daily Archives: November 2, 2015

JPMorgan Chase settles unlawful debt-collection allegations

•  Chase will pay $50 million in restitution plus $50 million in penalties to consumers nationwide

•  “This settlement provides real relief to tens of thousands of Californians”

Monday, November 2, 2015
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

LOS ANGELES – Attorney General Kamala D. Harris today announced a stipulated judgment resolving allegations that JPMorgan Chase (Chase) committed credit card debt-collection abuses against tens of thousands of Californians. The settlement specifically addresses debt collection wrongdoing that includes collecting incorrect amounts, selling bad credit card debt, and running a debt collection mill that involved illegally “robo-signing” thousands of court documents and improperly obtaining default judgments against military servicemembers.

As part of the settlement, Chase will pay $50 million in restitution to consumers nationwide, including an estimated $10 million to California consumers, and significant restitution to servicemembers in California, some of whom were on active duty when Chase obtained illegal default judgments against them.  Chase will also pay $50 million in penalties and other payments to California, through the Office of the Attorney General.  The judgment includes injunctive terms that fundamentally change Chase’s credit card debt-collection practices to prevent similar misconduct in the future, and is subject to court approval.

“Abusive and illegal debt collection practices will not be tolerated in California,” Attorney General Harris said.  “This settlement provides real relief to tens of thousands of Californians, including servicemembers, and prevents JPMorgan Chase from continuing  these deceptive and illegal debt collection practices.”

Between 2009 and 2013, Chase filed more than 125,000 credit card collection lawsuits against California consumers relying on illegally robo-signed sworn documents and provided an additional 30,000 robo-signed sworn statements in support of lawsuits filed against California consumers by third-party debt-collectors.  Chase also made systematic calculation errors regarding the amounts owed, and sold “zombie debts” to third-party debt-collectors that included accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectable.

Read on.

Meet The New York Fed’s Latest Director: The Ex-CEO Of Another Bailed Out Bank

The Federal Reserve was supposed to serve the nation, however as even Bloomberg observes today, ended up “steamrolling” Main Street. One reason why: directors such as this one.

Presenting former Morgan Stanley CEO, James Gorman, whose former employer got a $107 billion loan from the Federal Reserve to avoid implosion:

The Federal Reserve Bank of New York announced that James P. Gorman, chairman and chief executive officer of Morgan Stanley, has been elected a Class A director representing Group 1, which consists of member banks with capital and surplus of more than $1 billion. Mr. Gorman will serve a three-year term beginning January 1, 2016.

Mr. Gorman has been chief executive officer of Morgan Stanley since January 2010, and chairman since January 2012. Previously, he was co-president of the firm, which he joined in February 2006.

Before joining Morgan Stanley, Mr. Gorman held a succession of executive positions at Merrill Lynch. Prior to this he was a senior partner of McKinsey & Co. and began his career as an attorney in Melbourne, Australia.

Mr. Gorman serves as a member of the Federal Advisory Council to the Federal Reserve Board of Governors and as co-chairman of the Partnership for New York City. He is also a member of the Board of Overseers of the Columbia Business School, the Board of the Institute of International Finance, the Monetary Authority of Singapore International Advisory Panel, the Council on Foreign Relations, and the Economic Club of New York. He formerly co-chaired the Business Committee of the Metropolitan Museum of Art and was on the Board of the Securities Industry and Financial Markets Association in Washington, D.C., serving as Chairman in 2006.

Mr. Gorman holds a bachelor’s degree and law degree from the University of Melbourne, and an MBA from Columbia University

Read on.

House vote on GSE CEO pay limits delayed two weeks

The chief executive officers of Fannie Mae and Freddie Mac will have to wait two more weeks to see if Congress will vote to install limits on their compensation, after a busy Congressional calendar delayed a scheduled vote on the compensation packages of Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton.

The House of Representatives was due to vote last week on limiting the pay of the Fannie and Freddie CEOs, but that vote was delayed by a combined house budget vote, a vote on reopening the federal Export-Import Bank, and a vote on electing Rep. Paul Ryan, R-Wis., as the newSpeaker of the House.

Now, the vote on limiting the pay of the GSE CEOs is tentatively scheduled for the week of Nov. 16, according to the office of Rep. Ed Royce, R- Calif., who authored the House’s Equity in Government Compensation Act of 2015.

Royce’s bill, and a companion bill in the Senate, would cap the GSE CEOs’ pay at its current level, which is $600,000, instead of the $3 million raises that were awarded to Mayopoulos and Layton earlier this year by the Federal Housing Finance Agency.

Read on.

Monday Morning Cup of Coffee: BofA mortgage settlements begin to add up


In other top news, the Pennsylvania Public School Employees’ Retirement System won its day in court against Bank of America. Just as Worstall mentions, pension funds both here and abroad took a beating during the subprime crises; And they still fight back.

In a 10-Q filing, all the way at the bottom, there is this:

The parties in Pennsylvania Public School Employees’ Retirement System v. Bank of America, et al. agreed to settle the claims for $335 million, an amount that was fully accrued as of June 30, 2015. The agreement is subject to final documentation and court approval.

Reuters published an article on the situation late Friday, BofA settles claims of “misleading shareholders about its exposure to risky mortgage securities and its dependence on an electronic mortgage registry known as MERS.”

So, yes, it’s just another settlement for BofA, which is probably really used to this kind of development.

“The bank has spent more than $70 billion since the financial crisis to resolve legal and regulatory matters, including those tied to its purchases of Countrywide in July 2008 and Merrill Lynch & Co six months later,” the article states.

New York attorney general calls on banks to step up efforts to provide the poor access

New York’s attorney general called on more than 90 banks, including units of Toronto-Dominion Bank and HSBC Holdings Plc, to revamp customer screening procedures in order to give poor people better access to financial services.

Following agreements with several major banks to change how they use screening tools, Attorney General Eric Schneiderman sent letters Monday urging other financial institutions to adopt new standards.

The measure is aimed at helping more than 2 million households in the state that lack access to mainstream bank accounts including “unbanked” or “underbanked” populations, which are disproportionately represented by African-American and Hispanic consumers.

“It is critical that low-income Americans—and New Yorkers in particular—have access to mainstream banking services,” Schneiderman said in a statement. In his letters, Schneiderman said he asked banks to “look closely at the benefits that would accrue to the people of the state, as well as to their institutions, if they were to adopt similar changes to their account screening procedures.”

Credit reporting services used to examine prospective customers’ account histories, such as ChexSystems Inc. and Early Warning Services LLC, caused banks to reject thousands of applicants for minor problems such as isolated bounced checks, according to Schneiderman.

Read on.