Daily Archives: February 3, 2016

Chicago Teachers Union targets Bank of America as contract battle continues


CHICAGO — The Chicago Teachers Union closes accounts at the main Bank of America in the Loop on Wednesday. The union claims it’s an institution that’s adding to the budget crisis.

This is the latest move as the union and CPS battle over a new contract.

The union had more than $700,000 in the Bank of America at 135 S. LaSalle. It’s protesting against the bank’s so-called toxic interest rate swap deals with CPS.

Bank of America, Wells Fargo Press Bids to Dismiss Bias Claims

Feb. 1 — State political subdivisions such as counties have no right to sue under the Fair Housing Act (FHA), Bank of America told a federal judge in a bid to squelch lending bias claims by three Georgia counties (Cobb County v. Bank of Am. Corp., N.D. Ga., No. 15-cv-04081, motion to dismiss, 1/29/16).

The three counties in Georgia — Fulton and DeKalb, which include the city of Atlanta, and Cobb County, which lies to Atlanta’s northwest —sued Bank of America in November in the U.S. District Court for the Northern District of Georgia.

The suit, one of several such actions now ongoing by local governments against major banks, alleged that Bank of America, and its Countrywide and Merrill Lynch units, violated the Fair Housing Act through “equity stripping schemes” — making loans with onerous terms based on the value of the borrower’s home, but with no regard for the borrower’s ability to repay.

Read on.

Day 2 Bill Cosby in Court: Attorney Says Former DA Promised Not to Prosecute

Bill Cosby press release

(Former Pennsylvania DA Bruce Castor’s February 17, 2005 press release of joint investigation into Bill Cosby’s case. Mr. Castor decided not to pursue criminal charges against Cosby) Here is the press release. Click here.

Beth Karas is LawNewz.com’s Editor-at-Large. She is currently in a Pennsylvania courtroom at Bill Cosby’s hearing. She sent in the details for this report:

This morning a second witness was called to the stand in the Bill Cosby hearing. A judge is set to determine whether a non-prosecution agreement is enforceable and if the whole case should be thrown out because of it. Cosby’s attorneys allege that the former Montgomery County district attorney agreed not to prosecute Cosby after finding there was not enough evidence. Bill Castor testified Tuesday that he thought Cosby may have done it, but didn’t think he could convince 12 jurors. The alleged victim, Andrea Constand, sued Cosby in 2005 claiming he rapped and drugged her. Cosby’s civil deposition in the case is now the heart of the prosecutor’s newly filed case against him.

Here is what happened this morning (from Beth Karas):

A second witness was called by the defense: John P. Schmitt, a New York corporate attorney, who has represented Bill Cosby since the 1990s. Schmitt said in 2005 he became aware of a criminal investigation into Cosby, but he says the allegations were resolved in mid-February 2005, and the DA determined there was insufficient evidence to prosecute. He retained Walter Phillips as criminal defense counsel for Cosby during the investigation. Phillips has since died.

“I understood that the case could not be reopened. I spoke to Phillips who said that though Cosby wasn’t being charged, the DA wanted to make sure he had to testify in a civil case—that he couldn’t take the 5th,” Schmitt said in court. Schmitt said it was his understanding that Cosby could not be charged, and that was irrevocable. He also added that back in 2005 Cosby was interviewed in a conference call at his office by detectives.

“We participated in discovery (re: the civil case). Mr. Cosby sat for 4 days of deposition knowing that the criminal case could not be reopened. Did Mr. Cosby invoke the 5th? No,” Schmitt said.  Prosecutor Kevin Steele cross examined Schmitt.

Read on.

More on why Castor didn’t prosecute Cosby. From Law Newz:

 Update — Feb 2, 1:38 p.m. EST: (from Beth Karas at the hearing): Former District Attorney Bruce Castor was on the stand all morning giving details about his decision not to prosecute Bill Cosby for alleged sexual assault in 2004. Among the reasons he gave today were: that the accuser, Andrea Constand, did not report the incident for one year, there was no forensic evidence of drugs or Cosby’s DNA, there were inconsistencies in the statements she made over time to law enforcement, she continued to have contact with Cosby, sometimes in person, between the incident and reporting it to police, and she contacted a civil attorney before reporting the incident to the police.

Castor said that as Montgomery County District Attorney, it was his decision not to prosecute Cosby; that it was not an “agreement.” He did not believe the case could be proven. Cosby’s attorney, Walter Phillips, was aware that, with the decision not to prosecute, Cosby could no longer assert his 5th Amendment right not to self-incriminate. At one point, Castor said that “Cosby had to be nuts to say those things” if he thought he could be prosecuted.

Update Feb. 2, 12:24 EST: Editor-at-Large Beth Karas, who is at the hearing updated us. Bruce Castor, the former District Attorney is on the stand. Here is what Beth reports: “When asked about steps to formalize (the non-prosecution agreement) in writing, Castor said he and Phillips (Cosby’s attorney) didn’t think it was a hard  concept to understand. Once the possibility of a criminal prosecution is gone, the possibility of taking the 5th is too.” Former DA Castor also said on the stand that he directed his First Dep to contact Constand’s attorneys and tell them there would be no prosecution. There was no official document of this agreement, but Castor testified there was an understanding.


Wells Fargo officially reaches $1.2B settlement over its FHA lending

Wells Fargo announced a $1.2 billion agreement with the federal government to resolve claims related to its Federal Housing Administration lending program for the time period between 2001-2010, along with other potential civil claims relating to the bank’s FHA lending activities for other periods.

Wells Fargo said in a filing with the Securities and Exchange Commission that it reached an agreement in principle with the Department of Justice, the U.S. Attorney’s Office for the Southern District of New York, the U.S. Attorney’s Office for the Northern District of California and the U.S. Department of Housing and Urban Development.

The settlement hit a roadblock back in November 2014 when both sides’ talks of negotiating a settlement started to slow down, with both parties no longer as optimistic as they once were.

In the lawsuit, originally filed in October 2012, the DOJ sought damages and civil penalties under the False Claims Act.

Read on.

Super PACs allow Wall Street to dominate presidential giving in 2015

Open Secrets:

The securities and investment industry flexed serious financial muscle in the presidential money race last year. At $90 million contributed to all candidates, current and former, and the super PACs supporting them, it led all industries tracked by the Center for Responsive Politics, new data show.

Super PACs allowed the industry to gain an outsize share of the pie in 2015 as Wall Street gravitated to some candidates and utterly abandoned others. With billionaire investors giving right and left, total contributions from the industry to presidential super PACs rose to $81.2 million.

But while securities and investment interests hold the lead in terms of money to the types of groups that can receive unlimited contributions, they gave far less to the campaign committees under the direct control of the candidates — just $9.3 million.

Investors made up the top donor industry to six of the current candidates when their campaign committees and super PACs are combined; the exceptions were retired neurosurgeon Ben Carson, businesswoman Carly Fiorina, Sen. Bernie Sanders (I-Vt.) and Sen. Ted Cruz (R-Texas).

That $72 million split reveals, again, a difference in the funding sources for campaigns and for super PACs. Lawyers and law firms, along with individuals who reported they were retired, beat out securities and investment as the largest overall sources of direct campaign contributions, at $16 million and $33 million respectively.Real estate followed Wall Street closely at $8.8 million.

For some candidates, like former Secretary of State Hillary Clinton, the difference allows for a technically accurate but misleading characterization of the facts. In December, Clinton could say she receives more contributions from teachers than Wall Street types even as her super PACs scooped up $17.2 million from wealthy financiers. She can’t make that claim anymore, by the way: Her campaign has now received more money (barely) from individuals in the securities and investment industry than in education: $2.93 million to $2.88 million, respectively.

Despite huge contributions to former Florida Gov. Jeb Bush in the first six months of 2015, securities and investment firms appear to have picked their favorite candidate on the Republican side: Sen. Marco Rubio (R-Fla.).

Judge OKs class action against Wells Fargo in dispute with homeowners

SAN FRANCISCO — Wells Fargo must defend itself against a class-action lawsuit brought by homeowners who accuse the banking giant of failing to modify mortgages that the residents sought to change amid the foreclosure crisis unleashed by the Great Recession, attorneys said Tuesday.

The plaintiffs in the case believe that Wells Fargo did not keep the promises it had made to homeowners in terms of modifying the terms and conditions of their mortgages.

Read on.

Lenders’ Lies about Liar’s Loans and “Rigorous Underwriting”

William K. Black
February 2, 2016     Bloomington, MN

It is time to break out one of our two family rules again – it is impossible to compete with unintentional self-parody.  How fraudulent is finance even now?  The Wall Street Journal reports that “big money managers” want to bring back “liar’s loans.”  I am trying to write much shorter columns, so there will be many columns in this series because the WSJ article so beautifully exemplifies the lies that the industry and the media told about liar’s loans before and after 2008.

Spoiler alert:  liar’s loans, as the name admits, are pervasively fraudulent.  Only fraudulent lenders make liar’s loans as a regular business practice.  These home loans make the officers wealthy through the “sure thing” of the “fraud recipe” for “accounting control fraud.” The WSJ, of course, ignores these facts and presents instead falsehoods provided by fraudulent officers.

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