Daily Archives: July 12, 2016

Trump University Taught Students How to Exploit Disabled Homeowners

Trump University, the former for-profit business education venture that has landed Donald Trump in various courts to defend himself against claims of fraud, promised to teach students the secrets of Trump’s financial success. One particular course offered by Trump U presented a particularly blunt strategy for making money: target destitute, “completely disabled” homeowners headed into foreclosure and convince them to sell their homes at a discounted price. That is, exploit disabled people for profit.

That advice comes near the end of a nearly three-hour audio lesson—paired with a workbook—that was offered by Trump University in 2006, shortly before the housing market collapsed. It was a year after the opening of Trump University, which shut down in 2010 and has prompted lawsuits against Trump from former students who allege that the school was a scam that ripped them off.

The 2006 course, titled “Real Estate Goldmine: How to Get Rich Investing in Pre-Foreclosures,” begins with a monologue by Trump, who says, “We’re not peddling get-rich-quick schemes, no blue-sky promises or an easy road to riches.” But he pledges that his course will offer a “real estate gold mine.” Then Trump University’s Jon Ward interviews real estate investment adviser Gary Eldred about the best strategies for taking advantage of homeowners facing foreclosures. Throughout the course, Eldred provides a variety of tips on spotting homes that are in pre-foreclosure—for instance, look for an owner delinquent on payments because he could be foreclosed on imminently—and he offers strategies for persuading owners to sell their homes at a discount when they’re facing foreclosure. He repeatedly notes that a buyer should be kind when approaching pre-foreclosure owners about purchasing their properties, because these potential sellers are going through a stressful time.

Read on.

In Bill, Lawmakers Propose New Limits for Seizing Workers’ Pay Over Old Debts

For the first time in nearly 50 years, a new federal bill seeks to lower how much lenders and collectors can seize from debtors through the courts, revisiting caps set in 1968 by the landmark Consumer Credit Protection Act.

The Wage and Garnishment Equity (WAGE) Act of 2016, sponsored by Rep. Elijah Cummings, D-Md., and Sen. Jeff Merkley, D-Ore., would substantially reform protections for debtors by exempting many lower-income workers from garnishment and reducing what collectors can take from the paychecks and bank accounts of others.

As ProPublica has reported in a series of articles over the past three years, consumer debts such as medical or credit card bills result in millions of garnishments every year. But the scale of the seizures and their consequences for the poor have largely been ignored by lawmakers, in part because no one tracks how often they happen.

In their press release announcing the legislation, Cummings and Merkley cited ProPublica and NPR’s reporting that 4 million workers had wages taken for consumer debts in 2013. The garnishments hit low-income workers most frequently: Nearly 5 percent of those earning between $25,000 and $40,000 per year had a portion of their wages diverted to pay down consumer debts in 2013.

Read on.

Eric Holder’s Longtime Excuse for Not Prosecuting Banks Just Crashed and Burned

Great reporting, David!

Eric Holder has long insisted that he tried really hard when he was attorney general to make criminal cases against big banks in the wake of the 2007 financial crisis. His excuse, which he made again just last month, was that Justice Department prosecutors didn’t have enough evidence to bring charges.

Many critics have long suspected that was bullshit, and that Holder, for a combination of political, self-serving and craven reasons, held his department back.

A new, thoroughly-documented report from the House Financial Services Committee supports that theory. It recounts how career prosecutors in 2012 wanted to criminally charge the global bank HSBC for facilitating money laundering for Mexican drug lords and terrorist groups. But Holder said no.

When asked on June 8 why his Justice Department did not equally apply the criminal laws to financial institutions in the wake of the 2008 economic crisis, Holder told the platform drafting panel of the Democratic National Committee that it was laboring under a “misperception.”

He told the panel: “The question you need to ask yourself is, if we could have made those cases, do you think we would not have? Do you think that these very aggressive U.S. Attorneys I was proud to serve with would have not brought these cases if they had the ability?”

The report — the result of a three-year investigation — shows that aggressive attorneys did want to prosecute HSBC, but Holder overruled them.

In September 2012, the Justice Department’s Asset Forfeiture and Money Laundering Section (AFMLS) formally recommended that HSBC be prosecuted for its numerous financial crimes.

The history: From 2006 to 2010, HSBC failed to monitor billions of dollars of U.S. dollar purchases with drug trafficking proceeds in Mexico. It also conducted business going back to the mid-1990s on behalf of customers in Cuba, Iran, Libya, Sudan, and Burma, while they were under sanctions. Such transactions were banned by U.S. law.

Newly public internal Treasury Department records show that AFMLS Chief Jennifer Shasky wanted to seek a guilty plea for violations of the Bank Secrecy Act. “DoJ is mulling over the ramifications that could flow from such an approach and plans to finalize its decision this week,” reads an email from September 4, 2012 to senior Treasury officials. On September 7, Treasury official Dennis Wood describes the AFMLS decision as an “internal recommendation to ask the bank [to] plead guilty.” It was a “bombshell,” Wood wrote, because of “the implications of a criminal plea” and “the sheer amount of the proposed fines and forfeitures.”

Read on.

And where is  AFMLS Chief Jennifer Shasky? She resigned as the head of the Financial Crimes Enforcement Network to become a senior compliance officer with HSBC.(revolving door).

And who can forget former DOJ head of Criminal Division Lanny Breuer (who now returned to along with Eric Holder to work for Covington & Burling) interview on PBS Frontline.  In the short clip, PBS Frontline reporters explained why US regulators failed to prosecute any bankers for fraud relating to the Global Financial Crisis.


Citigroup Admits Giving SEC Faulty Blue Sheets For 15 Years

Citigroup Inc. has agreed to pay $7 million and admitted to wrongdoing to settle Securities and Exchange Commission charges the financial services firm gave the agency incomplete “blue sheet” information.

A computer coding error was in software Citigroup used from May 1999 to April 2014 to process the agency’s requests for blue sheet data. Blue sheets include the time, type, volume, and prices of trades, among other information. In using the software with the error, the SEC said, Citigroup omitted 26,810 transactions in more than 2,300 blue sheet requests.

“We are pleased to have resolved this matter,” a Citigroup spokeswoman said when asked about the situation.

“Broker-dealers have a core responsibility to promptly provide the SEC with accurate and complete trading data for us to analyze during enforcement investigations,” said Robert A. Cohen, co-chief of the SEC enforcement division’s market abuse unit. “Citigroup did not live up to that responsibility for an inexcusably long period of time, and it must pay the largest penalty to date for blue sheet violations.”

Read on.

J.P. Morgan To Give Its Lowest Paid Workers A Raise

Amazing from the overpaid job holder and $27 million dollar CEO….Sorry, Jamie, you are no George Bailey!

“Wages for many Americans have gone nowhere for too long,” CEO Jamie Dimon says.

J.P. Morgan Chase will give its lowest paid employees a raise over the next two years, its chairman and chief executive Jamie Dimon wrote in an opinion piece for The New York Times on Tuesday.

The bank currently has a minimum wage of $10.15 an hour plus benefits. Over the next two years, it will raise base pay to between $12 and $16.50 an hour “depending on geographic and market factors,” Dimon writes. The current federal minimum wage is $7.25 an hour, a rate that has not risen since 2009. Twenty-nine states and the District of Columbia have minimum wages above the federal rate.

J.P. Morgan Chase’s move is the right thing for the company to do in an era when pay has not risen for most people, Dimon said.

“Wages for many Americans have gone nowhere for too long,” he wrote.

Dimon’s pay package was $27 million for 2015, a 35 percent rise from 2014.His column draws attention to the lower-paid Americans who work in the financial sector. A third of the 1.7 million workers in retail banking make less than $15 an hour, according to a 2015 study flagged in the Financial Times. And a third of bank tellers make so little that they receive some form of public aid, a 2013 study found

Read on.

Wall Street Journal editorial lauds Republican plan to abolish Dodd-Frank

Hat tip to Housingwire:

Count the Wall Street Journal editorial board among the supporters of the Republican-crafted plan to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Republican plan, championed by House Financial Services Committee Chairman Rep. Jeb Hensarling, R-TX, would see Dodd-Frank replaced by the Financial CHOICE Act, which will “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”

In an editorial published on Sunday, the Wall Street Journal editorial board calls Hensarling’s plan a “promising idea” that would “promote economic growth and protect taxpayers.”

From the Wall Street Journal:

Don’t believe the shrieks that this is about “rolling back” financial reform to let the banks run wild. The financial system was heavily regulated before the 2008 panic; regulators failed to do their job (see Citigroup) and missed signals from the housing market, among other mistakes. The Dodd-Frank Act of 2010 doubled down on the same approach: Give even more power to regulators with the promise they’ll be smarter the next time.

History tells us that is a fantasy. Regulators will focus on solving the previous problem, while they miss where the excesses are really building. As Charles Kindleberger taught, the essence of a credit mania is that everyone follows everyone else and thinks it will never end. Regulators are no better than bankers.

The WSJ editorial states that Hensarling has a “better idea,” which involves opt out of some regulations in exchange for holding larger capital reserve.

Again, from the WSJ:

The Texas Congressman wants a simpler system in which private investors with money at risk decide which assets are safe. Under the Hensarling plan, banks can opt out of today’s complicated rules if they have capital equal to 10% of their assets. Their tally of assets has to include off-balance-sheet exposures. No more hiding toxic paper in conduits or structured-investment vehicles as Mr. Geithner allowed Citi to do before the financial crisis. And no more pretending that a financial instrument has no risk because a regulator says so.

Click here (or below) to read the full editorial from the WSJ, and for more on Hensarling’s plan, click here.


The Bad CHOICE Act – Dodd-Frank Alternative

Deadly Clear

The Bad CHOICE Act

posted by Adam Levitin

ADAM LEVITINI’m testifying before House Financial Services tomorrow regarding the “CHOICE Act,” the Republican Dodd-Frank alternative.  My testimony is here.  It’s lengthy, but it doesn’t even cover everything in the CHOICE Act–there are just too many bad provisions, starting with the idea of letting megabanks out of Dodd-Frank’s heightened prudential standards in exchange for more capital, then moving on to a total gutting of consumer financial protection, and ending with a very poorly conceived good bank/bad bank resolution system executed through a new bankruptcy subchapter.  The only good thing about the Bad CHOICE Act is that it has little chance of becoming law any time soon. 

Reblogged from Credit Slips – Read More HERE.

Excerpt: “The CHOICE Act also has numerous provisions that make it difficult for the SEC to pursue enforcement actions and achieve meaningful relief. These provisions reduce the…

View original post 132 more words

Chinese will need another bailout

  • About 10 SOEs said to be considered for government plan
  • SinoSteel said to be among SOEs that may receive help

China is considering providing about 10 of its state-owned enterprises with an aid package, people familiar with the matter said. Sinosteel Corp. is among those that may receive help, one of the people said.

The government is considering options such as asset or equity transfers, takeovers and preferential policies, the people said, asking not to be identified because the discussions haven’t been made public. The proposal is still being discussed, the people said.

Should the plan be approved, it would mark the government’s latest effort to provide relief to its state firms, many of which are struggling with overcapacity and slumping demand as the economy grows at its slowest pace in a quarter century. SOEs have seen their profits drop by about 10 percent during the first five months of the year, extending last year’s slump.

Among the measures being considered, state-asset management firms such as China Chengtong Holdings Group Ltd. and China Reform Holdings Corp. could take over struggling SOEs, according to the people. In another option, weaker SOEs would receive assets or equity from healthier SOEs, the people said.

Read on.

Why does the Chinese need a bailout? According to the government auditor,Sinopec subsidiaries inflated 2014 revenue, costs by $3.04 billion:

Subsidiaries of China’s second-largest energy company Sinopec inflated their 2014 revenue and costs by 20.2 billion yuan ($3.04 billion), according to a report published by China’s auditing department.

Twelve subsidiaries of Sinopec Group, the parent of Sinopec Corp (0386.HK), have manipulated their financial reports by creating fake invoices of fuel sales, among other discrepancies, the report from the China National Audit Office published on Wednesday said.

The audit also showed Sinopec lost 1.29 billion yuan after it acquired a 49-percent stake in an overseas project, due to “insufficient assessment of risk factors,” said the report, without identifying the project.

Crude output from 29 overseas production projects fell short of targets stated in feasibility studies by about 90 million tonnes, the audit showed.





JULY 11, 2016

Executive Summary

In March 2013, the Committee on Financial Services (Committee) initiated a
review of the U.S. Department of Justice’s (DOJ’s) decision not to prosecute HSBC
Holdings Plc. and HSBC Bank USA N.A. (together with its affiliates, HSBC) or any
of its executives or employees for serious violations of U.S. anti-money laundering
(AML) and sanctions laws and related offenses. The Committee’s efforts to obtain
relevant documents from DOJ and the U.S. Department of the Treasury (Treasury)
were met with non-compliance, necessitating the issuance of subpoenas to both
agencies. Approximately three years after its initial inquiries, the Committee
finally obtained copies of internal Treasury records showing that DOJ has not been
forthright with Congress or the American people concerning its decision to decline
to prosecute HSBC. Specifically, these documents show that:

  • Senior DOJ leadership, including Attorney General Holder, overruled an
    internal recommendation by DOJ’s Asset Forfeiture and Money Laundering
    Section to prosecute HSBC because of DOJ leadership’s concern that
    prosecuting the bank would have serious adverse consequences on the
    financial system.
  • Notwithstanding Attorney General Holder’s personal demand that HSBC
    agree to DOJ’s “take-it-or-leave-it” deferred prosecution agreement deal by
    November 14, 2012, HSBC appears to have successfully negotiated with DOJ
    for significant alterations to the DPA’s terms in the weeks following the
    Attorney General’s deadline.
  • DOJ and federal financial regulators were rushing at what one Treasury
    official described as “alarming speed” to complete their investigations and
    enforcement actions involving HSBC in order to beat the New York
    Department of Financial Services.
  • In its haste to complete its enforcement action against HSBC, DOJ
    transmitted settlement numbers to HSBC before consulting with Treasury’s
    Office of Foreign Asset Control (OFAC) to ensure that the settlement amount
    accurately reflected the full degree of HSBC’s sanctions violations.
  • The involvement of the United Kingdom’s Financial Services Authority in the
    U.S. government’s investigations and enforcement actions relating to HSBC,
    a British-domiciled institution, appears to have hampered the U.S.
    government’s investigations and influenced DOJ’s decision not to prosecute
  • Attorney General Holder misled Congress concerning DOJ’s reasons for not
    bringing a criminal prosecution against HSBC.
    ? DOJ to date has failed to produce any records pertaining to its prosecutorial
    decision making with respect to HSBC or any large financial institution,
    notwithstanding the Committee’s multiple requests for this information and
    a congressional subpoena requiring Attorney General Lynch to timely
    produce these records to the Committee.
  • Attorney General Lynch and Secretary Lew remain in default on their legal
    obligation to produce the subpoenaed records to the Committee.
  • DOJ’s and Treasury’s longstanding efforts to impede the Committee’s
    investigation may constitute contempt and obstruction of Congress.
    The Committee is releasing this report to shed light on whether DOJ is
    making prosecutorial decisions based on the size of financial institutions and DOJ’s
    belief that such prosecutions could negatively impact the economy.

Here is the report. Click here.

Who is eligible for principal reduction? New report sheds light on groundbreaking program Just how many borrowers are eligible? Where are they located?


When the Federal Housing Finance Agency announced earlier this year that it was going forward with a groundbreaking plan to offer principal reduction to a select number of borrowers, the details on who exactly would be eligible were somewhat scarce, outside of the stipulations for the program provided by the FHFA.

At the time, the FHFA said that the only borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac are eligible to have their principal reduced.

Additionally, the FHFA said that principal reductions are only being made available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016, and that the program will only apply to borrowers whose mortgages have an outstanding unpaid principal balance of $250,000 or less, and whose mark-to-market loan-to-value ratios are more than 115%.

Under those rules, the FHFA said that approximately 33,000 borrowers were going to be eligible for the “final crisis-era modification program.”

As it turns out, the number is eligible borrowers is actually less than that.

A new report, published Monday by the FHFA, states that the FHFA now estimates that more than 30,000 borrowers will be eligible nationwide – 30,761 to be exact.

According to the FHFA report, the reduction can be attributed to “the fact that the housing market is continuously evolving and may have improved in some areas.”

But where exactly are those eligible borrowers located? According to the FHFA report, eligible borrowers “tend to be concentrated in communities across the country that have not yet fully recovered from the foreclosure crisis, especially in states with long foreclosure timelines.”

The new FHFA report actually sheds more light on that, showing the top ten states where the most eligible borrowers are.

According to the FHFA report, the top ten states with the most potentially eligible borrowers can be found in:

Florida – 6,260 potentially eligible borrowers

New Jersey – 6,257 potentially eligible borrowers

New York – 2,823 potentially eligible borrowers

Illinois – 2,434 potentially eligible borrowers

Ohio – 1,214 potentially eligible borrowers

Pennsylvania – 1,109 potentially eligible borrowers

Nevada – 1,032 potentially eligible borrowers

Maryland – 726 potentially eligible borrowers

Connecticut – 703 potentially eligible borrowers

Massachusetts – 682 potentially eligible borrowers