Daily Archives: February 8, 2016

Super Bowl ‘rocket’ mortgage ad brings jeers — and loan may not be so quick

And I certainly was not paying attention to the Super Bowl commericals last night. I didn’t know that Quicken Loans had a mortgage ad. And the ad certainly sounds like a subprime loan pitch.

“You could get a mortgage on your phone,” according to the Super Bowl ad.

It was a promotion for Quicken Loans’ Rocket Mortgage, so named because it tries to connect applicants with mortgages in just eight minutes. That’s all the time that’s needed to get a mortgage – not just a pre-approval, Quicken claims.

And when consumers get mortgages, it’s a shot in the arm for the entire economy, the commercial tells us.
For many viewers, that hit a little too close to home to the business model that cratered the financial system in 2008.

Read on.

“Timmy” Geithner Gets Loan From Jamie Dimon For PE Investment

“You are in a position to make 20 percent to 30 percent on your position in the fund. Why wouldn’t you buy in at Libor-plus to leverage that up?”

Good question.

That quote is from Tom Bernhardt, a senior vice president at TorreyCove Capital Partners, a San Diego-based private-equity consultant.

Tom is referring to Tim Geithner who just secured a line of credit with JP Morgan to invest in a $12 billion private equity fund launched by Warburg Pincus, the former Treasury Secretary’s current employer.

As Bloomberg reminds us, “when raising a new fund, private-equity principals and their firms often commit their own money, in part to encourage outside investors to sign up.” In other words, “you can trust that this is a good idea because look, I threw my own money at it.”

Bloomberg goes on to note that contributions from PE principals amount to around four-and-a-half percent of the capital the funds raised in 2014. That’s nearly double the figure from 2011.

For this particular fund, Warburg Pincus put up 6.7% of the $12 billion in commitments. Geithner is president at the firm, which puts him just under Joseph Landy and Charles Kaye who are co-CEOs. Warburg manages some $40 billion invested in VC assets and plain vanilla buyouts. Here’s a bit more from The New York Times:

Timothy F. Geithner has joined fellow Warburg Pincus partners in securing financing to make personal investments in the private equity firm’s funds.

 

Mr. Geithner, the former Treasury secretary who joined Warburg two years ago as its president, has a line of credit with JPMorgan Chase, according to a December filing with New York State.

 

Warburg’s co-chief executive, Joseph P. Landy, and four managing directors — Christopher C. Gunther, Peter R. Kagan, James W. Wilson and Daniel Zilberman, — also arranged lines of credit with JPMorgan in the last year backed by collateral that includes stakes Warburg funds, according to the filings.

 

The $12 billion Warburg Pincus Private Equity XII fund would be the first main fund the firm has closed since Mr. Geithner joined it.

Read on.

Barclays To Pay $2.5M Over Violations Of Zimbabwe Sanctions

Law360, New York (February 8, 2016, 2:40 PM ET) — Barclays PLC on Monday agreed to pay $2.5 million to settle U.S. claims that the bank processed transactions for government-backed entities in Zimbabwe that were subject to U.S. sanctions.

The U.S. Department of the Treasury’s Office of Foreign Assets Control said in an enforcement release that Barclays, through its units in New York, the U.K. and Zimbabwe, helped the Industrial Development Corp. of Zimbabwe, a state-sponsored development institution, and individuals linked to IDCZ, process 159 funds transfers valued at around $3.4 million between July 2008 and…

Source: Law360

Wells Fargo settles mortgage kickback class action lawsuit for $16.2 million

Wells Fargo will pay more than $16 million to settle a class action lawsuit brought against the megabank by customers of Genuine Title, who accused the bank of accepting kickbacks from Genuine Title in in exchange for business referrals.

This settlement marks the second punitive action against Wells Fargo for its dealings with Maryland-based Genuine Title, a now-defunct title company.

Just over a year ago, the Consumer Financial Protection Bureau and the Maryland Attorney General fined Wells Fargo and JPMorgan Chase nearly $36 million for the alleged kickback scheme that involved Genuine Title giving the banks’ loan officers cash, marketing materials and consumer information.

The CFPB settlement required Wells Fargo to pay $24 million in civil penalties and $10.8 million in redress, but more than 9,000 of the affected customers filed a class action lawsuit against Wells Fargo, which the bank agreed to settle for $16.2 million.

Read on.

Ron Paul: Ted Cruz is owned by Goldman Sachs and he’s no “free market” libertarian

 

Now that Rand Paul is out of the race for the White House his father Ron Paul, who ran in 2008 and 2012, isn’t impressed by Ted Cruz’s attempts to pick up the “free market” libertarian banner.

“You take a guy like Cruz, people are liking the Cruz — they think he’s for the free market, and [in reality] he’s owned by Goldman Sachs. I mean, he and Hillary have more in common than we would have with either Cruz or Trump or any of them so I just don’t think there is much picking,” Paul said of the Texas senator on Fox Business’ “Varney & Company” on Friday.

Surprisingly, the elder Paul seemed more attracted to the views of Vermont Sen. Bernie Sanders, who is giving Hillary Clinton a run for her money in the Democratic primary.

“On occasion, Bernie comes up with libertarian views when he talks about taking away the cronyism on Wall Street, so in essence he’s right, and occasionally he voted against war,” the former Texas congressman said when asked if there was a candidate who was truly for the free market.

“It’s hard to find anybody — since Rand is out of it — anybody that would take a libertarian position, hardcore libertarian position on privacy, on the war issue and on economic policy,” Paul added.

Read more: http://www.politico.com/story/2016/02/ron-paul-ted-cruz-libertarian-218822#ixzz3zWvfkW8D