Daily Archives: February 11, 2016

Elizabeth Warren Catches Investment Advisors Fibbing

Companies that provide investment advice have been vigorously fighting a proposed Department of Labor rule that would formally require investment advisors for retirement plans to operate in the best interest of their clients — instead of ripping them off with products that earn them bigger profits.

Investment advisors have claimed this would be disastrous for their businesses and would leave retail investors with no assistance in navigating the financial markets.

But behind the scenes, in earnings calls with their own shareholders, these same companies are downplaying the impact of the rule, reassuring that they could easily handle the changes.

This contradiction was revealed in a letter from Senator Elizabeth Warren and Congressman Elijah Cummings made public Thursday. The letter highlights four companies with investment advisory units, contrasting their public and private statements, and implicitly raising the question: Are they lying to the Department of Labor, or to their shareholders?

For example, in a letter to the Labor Department last July, Jackson National Life Insurance Company president James Sopha called the proposal “bad for investors and for America,” and said that “it will be very difficult, if not impossible for financial professionals and firms to comply with the requirements.”

Read on.

Hillary Clinton’s Congressional Black Caucus PAC Endorsement Approved By Board Awash in Lobbyists

The Congressional Black Caucus PAC announced its endorsement of Hillary Clinton’s presidential campaign on Thursday, a move that is being widely interpreted as a sign of her deep support from the African American community. As they made their announcement, CBC PAC officials downplayed Bernie Sanders’s proposals for poverty reduction and tuition-free college as unrealistic, while touting Clinton as a bold leader.

Some of the members who spoke at the event, held at the Democratic National Committee headquarters, anticipated the same kind of criticism that the Sanders campaign has made of some other Washington-based leadership groups that have endorsed Clinton. “We are not from the establishment, we are from the streets,” said Rep. Gregory Meeks, D-N.Y.

But the Congressional Black Caucus PAC is not the same thing as the Congressional Black Caucus, which is made up of 46 members of Congress. Indeed, Rep. Keith Ellison, D-Minn., a Sanders supporter, made that point on Twitter:



Ellison then said in another tweet that “endorsements should be the product of a fair open process. Didn’t happen.”

Ben Branch, the executive director of the Congressional Black Caucus PAC told The Intercept that his group made the decision after a vote from its 20-member board. The board includes 11 lobbyists, seven elected officials, and two officials who work for the PAC. Branch confirmed that the lobbyists were involved in the endorsement, but would not go into detail about the process.

Read on.

Hollywood Glorifies Bankers, Ignores Unsung Whistleblowers

Bill Black reviews the highlights and holes of the film The Big Short in 2 parts on The Real News. You can view part 1 here and part 2 is here. Both have transcripts.

“Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don’t have it and can’t provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.” [S&P 2001] [emphasis in original]

Source: New Economic Perspectives

Time to Jail the Bankers and Take Back Control over Money

Randy Wray and Bill Black appear on “Clearing the Fog.” You can listen to the podcast here. Bill, of the newly formed Bank Whistleblowers United, speaks about the plan they have outlined to instill the rule of law on Wall Street and end fraud with the hope of mitigating the effects of the next financial crisis. Randy, an expert in financial instability and macroeconomics, speaks about alternatives to the current financial system that would bring greater stability.

Source: New Economic Perspectives

The Whistleblowers’ Plan Offers Hillary the Perfect Opportunity

  • Prof; Econ & Law, UMKC. Financial regulator. White-collar criminologist. Founding member, Bank Whistleblowers United. Author: The Best Way to Rob a Bank is to Own One.

I am writing as one of the four founding members of Bank Whistleblowers United. We came together recently to create a detailed plan that could restore the rule of law to Wall Street and dramatically reduce the risk and damage of future financial crises. We crafted it so that it could be implemented without any new legislation or regulation. We offered our aid in the implementation process to any candidate who wins the election — and pointed out that President Obama could implement it immediately. Our plan and approach virtually defines the word “pragmatic.” It would also transform finance and begin to end its corrupt culture.

In response to Bernie’s big election win in New Hampshire, a political scientist rushed out a piece in the New York Times advising Hillary how to do a PR makeover. His advice was “peddling pragmatism,” by which he meant the opposite — an effort to rebrand Hillary through slogans. The political scientist does, however, understand Hillary’s key liability — the one that Krugman was foolish enough to think was an asset — “she often sounds as if she were acquiescing to a status quo that Democrats find objectionable.” Actually, she is acquiescing to a status quo that is objectively far beyond “objectionable.” It isn’t simply Democrats that find it unacceptable for a pervasively corrupt Wall Street to maintain its destructive power over our economy and our democracy, that view is shared by the vast majority of Republicans and independents.

Hillary does not “sound as if” she is “acquiescing” to Wall Street’s stranglehold. Hillary’s most prominent economics supporter, Krugman, urged us to vote for her because Hillary will not seek to break Wall Street’s corrupt power. Paul Krugman, in an article meant to attack Bernie Sanders, accidentally misfired and shot Hillary Clinton when he admitted that Dodd-Frank did not even try “breaking [Wall Street’s] power” over our economy and democracy — and praised that failure. Hillary’s fundamental problem is that, after an adult lifetime in which she and Bill formed a mutual support society with Wall Street, few find her claims to a Road to Damascus conversion credible. In the last debate, when trying to demonstrate how tough she was on Wall Street the best she could muster was to call the elite bankers’ frauds that caused the Great Recession “shenanigans” — childish pranks.

Read on.

California Getting Closer To Having Lawmakers Wear Donors’ Logos

Awesome idea!

A transparency group in California on Tuesday announced it had collected 40,000 signatures to place an initiative on the ballot that would require state representatives to wear the names of their top sponsors while on the floor of the Statehouse.

The initiative, called “California Is Not For Sale,” was created in part to curb the influence of money in politics, and has been compared to NASCAR drivers displaying company logos on their shirts. It is backed by California attorney and businessman John Cox, who committed $1 million to the effort. It will need 365,000 valid signatures in order to qualify for the ballot in November, and organizers are confident they can muster enough support.

“The idea was conceived during a protest that was being staged for a separate ballot initiative in which we had all of the cutouts of California politicians covered in logos,” Ryan Smith, a coordinator for the initiative, told The Huffington Post on Tuesday. “Everyone who saw it said, ‘You have to actually do this.'”

Read on.

Calif. Court Upholds $5.6M Wells Fargo Privacy Settlement

Law360, New York (February 11, 2016, 1:46 PM ET) — A California appellate court on Wednesday upheld a $5.6 million class action settlement between Wells Fargo Bank NA and mortgage borrowers who accused the bank of secretly recording customer service phone calls, rejecting objectors’ claims that nearly $2 million in attorneys’ fees included in the deal were too high.

The five objectors said that the approval process for the fees was too opaque and the fees were unreasonable, but the court of appeals in Los Angeles County said that simply was not the case, finding that…

Source: Law360

Morgan Stanley settles for $3.2 billion over ‘deceptive’ mortgage bond practices

Internal e-mail: We are running under the radar and do not want to document this


Morgan Stanley will hand out hundreds of millions of dollars in consumer relief and fork over hundreds of millions more to state governments as part of $3.2 billion settlement over its “deceptive” mortgage bond practices in the run-up to the financial crisis, the New York Attorney General’s Office said Thursday.

According to a release from New York Attorney General Eric Schniederman, Morgan Stanely will provide $400 million in consumer relief for New York residents and pay $150 million to the state of New York as part of the massive settlement.


According to Schniederman’s office, Morgan Stanley staff acknowledged this fact in several e-mails.

The statement of facts showed that in a May 31, 2006 email, the head of Morgan Stanley’s due diligence team that was tasked with reviewing the value of the properties supporting the mortgage loans asked a colleague, “please do not mention the ‘slightly higher risk tolerance’ in these communications. We are running under the radar and do not want to document these types of things.”

The statement of facts also showed that in another emails, from Nov. 21, 2006, another member of Morgan Stanley’s due diligence team forwarded a list of questionable loans for review and approval to purchase them, stating “I assume you will want to do your ‘magic’ on this one?”

Campaign Contributions and Politicians’ “Promises”

This post is not about conspiracy theory nor is it a political statement. Just an ironic commentary on the influence peddling that goes on between politicians and big companies, which unfortunately hurts the economy, the taxpayer and small business.
Recently my colleagues, Gary Aguirre, William Black, Michael Winston and I formed a probono group and policy initiative with a goal to restore the rule of law to Wall Street and accelerate our work to “greatly reduce the risk and cost of future financial crisis.” The group, Bank Whistleblowers United, issued a series of four documents we call our 60 Day Plan. We have drafted these in such a way that all of the candidates should be able to agree to implement at least some of our proposals.
I was forcefully reminded of the necessity of these proposals while reading the news recently and noting the actions of some of our presidential candidates. Our third document proposes a pledge that our political nominees sign to not to take material contributions from the banks (and their officers) that are responsible for the financial crisis, which essentially includes all of the largest banks in the US that have paid large settlements related to wrongdoing. It is a critical step, considering the many contributions going into political candidate’s pockets from the very same banks we have been railing against.
An example: the New York Times recently endorsed Hillary Clinton. No comment. However Citigroup, which has played no small part in her campaign and in funding both Clintons, ran a banner ad  in the paper that appeared to  salute the endorsement.

Manager of ‘predatory’ loan modification law firm sent to jail

A San Diego businessman will spend the next nine months in prison after being convicted for his role in a fraudulent mortgage loan modification business that presented itself as a “law firm” in order to con more than 1,000 struggling homeowners out of more than $3 million total.

According to a release from the U.S. Attorney’s Office for the Southern District of California, Michael Nazarinia worked as the manager of a “predatory loan modification law firm,” which promised loan modifications in exchange for money but did not deliver on its promises.

The U.S. Attorney’s Office said that Nazarinia worked as the manager of “Haffar & Associates,” which was owned by figurehead attorney Mohamed Haffar, and recruited new customers using telemarketers who lied to clients in order to induce more than 1,000 people to sign up to pay more than $3.5 million in total.

According to the release, Nazarinia supervised Haffar & Associates “case managers,” who submitted loan modification applications and negotiated with the banks on behalf of clients.

Read on.