Daily Archives: January 12, 2016

Hillary Clinton Whiffs on Reforming Wall Street’s Ratings Agencies

Jan. 12 2016, 7:21 a.m.

Hillary Clinton’s response to Bernie Sanders’ plan to aggressively break up the big banks responsible for the financial crisis is to suggest that he is naive.

“My plan also goes beyond the biggest banks to include the whole financial sector,” Clinton wrote in a New York Times op-ed in December. “My plan is more comprehensive,” she said at the first Democratic debate in October — and for that reason, “frankly, it’s tougher.”

But Clinton’s vision of financial reform neglects one part of the industry everyone agrees was an essential factor in the 2008 crisis: the credit ratings agencies, which assess the worthiness of Wall Street securities for investors.

Sanders’ plan, released last week, would no longer allow the companies that issue securities to pick which ratings agency they use — a simple but outrageous practice that creates an enormous conflict of interest and helps facilitate fraud.

The heart of Clinton’s pitch on Wall Street is that she recognizes all potential hazards. But there is not one word in her big reform plan about the ratings agencies.

The ludicrousness of the current system was brilliantly depicted in The Big Short, the Oscar-contending comedy about the financial collapse. In a pivotal scene, Melissa Leo (sporting comically large eyeglasses, above) plays an employee of Standard & Poor’s, one of the three biggest ratings agencies.

She explains to Steve Carell (as hedge fund manager Mark Baum) why S&P continues to give AAA ratings (connoting no risk of default) to mortgage-backed securities composed of junk loans: If they didn’t, the issuers would just go to their competitors, Moody’s and Fitch.

Investors use those ratings to make decisions about what bonds to buy. But because the banks that issue securities pay for the ratings, the ratings agencies have a significant financial incentive to grant high ratings in order to attract more business.

Read on.

Government tax adviser ‘sorry’ for banking role during Libor crisis

The former head of the British Bankers’ Association has repeatedly told MPs she was sorry that she ended up at the lobby group at the time of banking crisis and the Libor rigging scandal. Angela Knight, the former Conservative MP who ran the BBA between 2007 and 2012, faced questions on Tuesday from the Treasury select committee about whether her tenure at the association was a credibility issue for her. She disagreed.

MPs on the committee were taking evidence about her appointment as chair of the Office of Tax Simplification after a two-year stint at Energy UK. “I found myself in charge [at the BBA] at the time of the biggest banking crisis in history. I did what I could in the face of a hurricane,” she said. “If someone who does a difficult job and finds themselves in a very tricky position does what they can, is thereafter told, ‘You can’t do anything else,’ you’ll never get anybody to do a difficult job again. I tried my best.

“I am so sorry I ended up at the BBA during the banking crisis. I’m so sorry it chose me to be its target. I’m so sorry it took a trade association into a different era. I’m so sorry I never persuaded the authorities to take over [setting] Libor [rates] earlier and I’m so sorry the banks brought about [the] financial disaster they did.”

Read on.

WELLS FARGO V. STAFFORDS BOMBSHELL: BANK NOT COMPLAINANT, COUNTY CHARGED COUPLE ANYWAY

Wells Fargo: “no role in initiating the complaint”

Preliminary exams held in violation of Michigan Court Rule

Investigator Jones lied in request for warrant

Sentencing set for Jan. 13 at 9 a.m. in front of Judge Michael Hathaway

By Diane Bukowski

DETROIT – Wells Fargo Bank had no role in initiating a criminal prosecution against community anti-foreclosure advocates Clifford and Mary Stafford, according to an official statement provided to VOD.

But Wayne County Deed Fraud Task Force Investigator Mary Williams-Jones and Assistant Prosecutor Jennifer Douglas listed them as the  COMPLAINANT in a case involving a 2007 predatory mortgage loan from Wells Fargo Bank for a Belleville, Michigan property at 13236 Nautica.

The couple faces sentencing Wed. Jan. 13 at 9 a.m. in front of Wayne County Circuit Court Judge Michael Hathaway, with Mrs. Stafford subject to 15 years in prison. A jury convicted her of “False Pretenses over $20,000” a felony, and “Obstruction of Justice,” a misdemeanor, while her husband was convicted only of the second charge.

“We foreclosed on the property and conveyed it to Fannie Mae in 2011, which ended our involvement in the matter,” Wells Fargo Bank representative James Hines told VOD in an official statement emailed Jan. 5. “While we complied with a subpoena related to the recent criminal prosecution, we have no additional information about that case and had no role in initiating the complaint.” – See more at: http://voiceofdetroit.net/2016/01/12/wells-fargo-v-staffords-bombshell-bank-not-complainant-county-charged-couple-anyway/#sthash.qIClQ0KG.dpuf

JP Morgan looks to pull the plug on Bloomberg terminals

Jamie Dimon may be pulling the plug on Bloomberg terminals, unless he can get a deal.

The JPMorgan Chase CEO is preparing to rip out thousands of its $21,000-a-year Bloomberg terminals over the coming two or three years, which may crimp the private financial data company that’s made Mike Bloomberg one of the world’s richest men, The Post has learned exclusively.

The New York-based bank is in the midst of negotiating contracts with Thomson Reuters — Bloomberg’s main competitor — to replace at least 1,000 to 2,000 terminals worldwide during the next two years, according to a person directly familiar with the company’s plans.

“Unseating the incumbent is never an easy thing,” Kevin McPartland, a Greenwich Associates analyst who covers both Bloomberg and Reuters, told The Post.

But, McPartland added, “[Reuters] put a ton of time and money into the platform.”

The potential switch-over to Reuters’ own version of the terminal, called Eikon, comes as Wall Street’s biggest banks are getting deeper into cost-cutting.

Read on.

Lehman Brothers Dodges Suit Over Firing, Unpaid Bonus In 2nd Circ.

Law360, New York (January 12, 2016, 12:52 PM ET) — The Second Circuit on Tuesday refused to reinstate a suit claiming that Lehman Brothers fired an employee and wrongly failed to pay her a $350,000 bonus after learning that she had accused two previous employers of gender discrimination.

A three-judge panel rejected an appeal by Mary Ortegon, a former business chief administrative officer in Lehman Brothers Inc.’s fixed income unit who argued that the investment bank reneged on its promise to pay her a guaranteed minimum bonus.

Ortegon claimed that Lehman fired her three days after…

Source: Law360

HUD accuses California foreclosure rescue companies of scamming Hispanics

A trio of California foreclosure rescue companies targeted Hispanics with fake loan modifications, offering the false promise of mortgage relief in exchange for thousands of dollars, the Department of Housing and Urban Development alleged Tuesday.

HUD announced Tuesday that it is charging three California-based foreclosure rescue companies, The Home Loan Auditors, Century Law Center and SOE Assistance Center, with violating the Fair Housing Act by targeting Hispanic homeowners for “illegal or unfair loan audit and loan modification assistance because of their national origin.”

According to HUD, from 2008 to 2010 these three companies and nine of their agents lured struggling Hispanic homeowners into paying thousands of dollars for home loan audits that the homeowners never received and promised loan modification services that actually had little, if any, value.

HUD also said that the companies allegedly exploited the homeowners’ limited English proficiency and used deceptive marketing in Spanish, including making false representations, in order to mislead them into paying for loan modification services.

Read on.

Debt Collection Foul Play: CFPB Sanctions Practice Reminiscent of Robo-Signing

Credit card and student loan debt-collector Frederick J. Hanna & Associates settled charges last month with the Consumer Financial Protection Bureau (CFPB) over allegations that it used illegal debt collection practices on a variety of consumer loans. Hanna agreed to pay $3.1 million stemming from a CFPB investigation that led to a lawsuit filed last July in U.S. District Court in Atlanta.

The CFPB charged that Hanna used its capacity as a law firm to disguise its activity as a bulk debt collector, where legal papers were rubber-stamped by the firm without verification of their contents, reminiscent of the practice known as robo-signing that surfaced in home mortgages during the financial crisis. The CFPB suit charges that Hanna filed hundreds of thousands of lawsuits without bothering to make sure that the people they were taking to court actually owed any money. The CFPB charges that one Hanna attorney signed off on 138,000 lawsuits in two years.

“The Hanna firm relied on deception and faulty evidence to coerce consumers into paying debts that often could not be verified or may not be owed,” said CFPB Director Richard Cordray. “Debt collectors that use the court system for purposes of intimidation should reconsider how their practices are harming consumers.” The CFPB suit demanded that the court “order disgorgement of ill-gotten revenues” and impose civil money penalties. It also asked that Hanna pay the CFPB’s costs in bringing the case to trial.

But the suit did not stop at Hanna’s doorstep, where the firm has offices in a Marietta, Ga. shopping mall. J.P. Morgan Chase and the two largest debt buyers in the United States, Encore Capital Group and Portfolio Recovery Associates, all Hanna clients, have been tarred with the same brush.

Read on.