Daily Archives: July 15, 2016

Puerto Rico’s Payday Loans: The Shocking Story Behind Wall Street’s Role in Debt Crisis

On June 30, President Obama signed into law thePROMESA bill, which will establish a federally appointed control board with sweeping powers to run Puerto Rico’s economy. While the legislation’s supporters say the bill will help the island cope with its debt crisis by allowing an orderly restructuring of its $72 billion in bond debt, critics say it is a reversion to old-style colonialism that removes democratic control from the people of Puerto Rico. But does Puerto Rico really owe $72 billion in bond debt—and to whom? A stunning new report by ReFund America Project reveals nearly half the debt owed by Puerto Rico is not actually money that the island borrowed, but instead interest owed to investors on bonds underwritten by Wall Street firms including Goldman Sachs, Citigroup, Merrill Lynch and Morgan Stanley. While the Puerto Rican people are facing massive austerity cuts, bondholders are set to make mind-boggling profits in what has been compared to a payday lending scheme. For more, we speak in San Juan, Puerto Rico, with Carlos Gallisá, an attorney, politician and independence movement leader. And in New York, we speak with Saqib Bhatti, director of the ReFund America Project and a fellow at the Roosevelt Institute. He is co-author of the new report, “Puerto Rico’s Payday Loans.”

Read on.

Can Wall Street be fixed? Ex-banker’s memoir examines a broken system

In his memoir For the Love Of Money, due out next week, Sam Polk suggests Wall Street would not be so bad if its workers were contributing to society

Can Wall Street be fixed? Sam Polk, a former investment banker who walked away from millions as a hedge fund investment manager, isn’t entirely sure.

“High-achieving, successful kids get jobs on Wall Street and quickly become part of the system,” he says. “There’s this incredibly strong pressure that distorts their perception of reality, and makes them feel poor when they’re earning hundreds of thousands of dollars.”

In a far-ranging discussion, as in his memoir For the Love Of Money, due out next week, Polk suggested it would not be so bad if such kids were contributing to society as well as to their personal bottom lines. Or even, perhaps, if they were using financial tools to help solve economic problems, which is after all Wall Street’s raison d’être.

Instead, the relationship between Main Street and Wall Street – or between businesses and the financial sector, if you prefer – is broken.

It’s a phenomenon often referred to as “financialization”: the growth in size, rate of growth and overall profitability of Wall Street (and finance in general) as a proportion of our economy. Between 1980 and 2006, GDP increased fivefold. Profits at financial firms increased 16 times, while those at their non-financial counterparts rose sevenfold. Prior to 1980, the rate of growth in the two groups had been roughly equal.

People like Polk were there to witness it all, as Wall Street morphed into a self-dealing monster.

Read on.

The Best Reporting on Mike Pence Through the Years: Propublica

Indiana Gov. Mike Pence served five terms in Congress and worked his way up to a leadership role in the House. Since he has sealed his Congressional records until December 2022, we’ve done what we can to dig up the best reporting on Donald Trump’s would-be vice president.

Pence describes himself as “a Christian, a conservative and a Republican, in that order.” He may be best known outside his state for his defense of Indiana’s religious freedom restoration law, which allowed businesses to deny service to gays and lesbians.

He started his political career as a Democrat who keptclippings of John F. Kennedy in his Indiana home as a boy. But in law school, his views shifted to the right. By 1988, at the age of 29, he ran as a Republican to try to unseat the Democratic incumbent in Indiana’s 2nd district and lost. He lost to the same candidate in 1990 after an ugly race that featured an ad with an actor dressed to look Arab thanking his opponent for foreign oil support. Pence’s campaign paid for his car payment and golf fees. (A year later, he wrote an essay called “Confessions of a Negative Campaigner” and repudiated his own style.)

Pence found his niche in talk radio in 1992 with “The Mike Pence Show,” which was syndicated across the state two years later. From 1995 to 1999, he hosted an Indianapolis political talk show on television. In 2000, he re-entered the political arena and finally won his seat to Congress (later redrawn as Indiana’s 6th district). An envelope with traces ofanthrax welcomed Pence to the Capitol during the 2001 scare.

The Hoosier quickly became known in Congress as a small-government, small-budget purist, fighting against many of then-president George W. Bush’s initiatives. He derided the No Child Left Behind education reform as “more red tape.” He opposed Bush’s push to extend Medicare Part D and subsidize senior citizens’ prescription drugs. As the Great Recession began, he vehemently opposed the 2008 bailouts.

Pence waded into the immigration battle in 2006 with a proposed compromise that would focus first on border security and, once that was accomplished, incentivize undocumented immigrants to “self-deport” and reapply to be guest workers. The proposal quickly brought the scorn of the right. Pence’s proposal failed, and he ultimately opposed the 2007 deal that never passed.

Unlike his counterpart at the top of the ticket, Pence has repeatedly backed protections for the press, introducing and reintroducing a federal shield law that would protect reporters’ confidential sources, with exceptions including national security. “Without the free flow of information from sources to reporters, the public is ill-equipped to make informed decisions,” he said in 2011.

Read on.

US Government Releases Redacted “28 Pages” Missing From 9/11 Report

The missing 28 pages from the 9/11 report begins as follows:

“While in the United States, some of the September 11 hijackers were in contact with, and received support from, individuals who may be connected to the Saudi Government…”

 

Class Slams Detroit on Tax-Foreclosure Crisis

DETROIT (CN) — Going to bat for thousands of distressed homeowners, most of them black, the American Civil Liberties Union claims in court that Wayne County’s foreclosure crisis is worst Michigan has seen since the Great Depression.
County treasurer Eric Sabree is going after homeowners for unpaid property taxes, but the ACLU says those tax rates are woefully out of date.
“The city of Detroit has failed to conduct properly the legally mandated property tax assessments for at least two decades,” the complaint states, filed Wednesday in Wayne County Circuit Court.
“Further, after the values of homes began to drop precipitously in 2008, the city of Detroit failed to reduce the assessed values of the homes to match the actual true cash values, a fact which city officials have acknowledged,” the complaint continues. “As a result homeowners, including plaintiffs, were taxed as if their homes were worth many times their actual true cash value.”
The ACLU brought the suit as a class action, with the Morningside Community Organization as lead plaintiff.
That nonprofit is joined by seven individual homeowners and three other community groups.

Read on.

Ex-Goldman VP loses suit against bank over $7M in legal fees

A Delaware court ruled on Wednesday that Sergey Aleynikov will have to pay his own $7 million-plus legal bill in his fight against Goldman Sachs, which has sued him for allegedly stealing the bank’s code.

Aleynikov, 46, claimed that his former employer is obligated to pay his legal fees because, as a VP, he was an officer.

But Delaware Chancery Court Judge Travis Laster ruled instead that VPs at Goldman don’t clear that bar.

Read on.

Ex-Aide’s Attorney Says Donald Trump May be Running Secret Shadow Operation

Law Newz:

Upon further investigation, Nunberg’s attorneys realized Trump 2012 PCA didn’t appear to be registered in New York.  In fact, attorneys for Nunberg told LawNewz.com they couldn’t find it existing anywhere. In addition, Nunberg’s mother, Rebecca Nunberg, confirms toLawNewz.com that her son received at least two paychecks fromTrump 2016 PCA, which also doesn’t appear to be registered with the Secretary of State’s Office. She confirmed that Nunberg never received any IRS 1099 forms, which are usually issued by companies who hire contract workers like Nunberg. LawNewz could also not find the company registered in New York or with the FEC.

“If you are an independent contractor and you are paid more than $600 you are required by the IRS, if you pay someone, that entity is obligated to issue a 1099 to the person they are paying,” Rebecca Nunberg told LawNewz.com. Nunberg is a corporate attorney herself.

Here is a copy of the confidentiality agreement. You can see Donald Trump signed off on it. 

Read on.

U.S. Century Bank settles foreclosure against ex-director

U.S. Century Bank has settled a foreclosure lawsuit that named one of its former directors and modified the associated mortgage.

That ends a dispute between the Doral-based bank and Rodney Barreto, who was previously a board member for nine years. His is currently chairman of the Miami Super Bowl Host Committee and the head of lobbying and consulting firm Floridian Partners.

U.S. Century Bank filed a $15.31 million foreclosure lawsuit in Collier County on May 10 against Barreto; former business partner Warren Sands; and real estate ownership companies Doral Club LLC, Gladiolus Petroleum Developers, Hancock Petroleum Developers, Ortiz Petroleum Developers and Alico Petroleum Developers. The lawsuit targeted the 14,318-square-foot clubhouse at 8250 N.W. 112th Court in Doral, plus four gas stations in Southwest Florida.

Barreto was a director of U.S. Century Bank at the time the loans were made from 2007 to 2009.

Read on.

SIGTARP: Mortgage Servicers Have Wrongfully Terminated Homeowners Out of the HAMP Program

WRONGFUL TERMINATIONS OF HOMEOWNERS FROM HAMP BY TOP HAMP SERVICERS, Q4 2014 TO Q3 2015 Servicer Wrongful Terminations of Homeowners from HAMP Bank of America, N.A. X CitiMortgage Inc X JPMorgan Chase Bank, N.A. X Nationstar Mortgage LLC X Ocwen Loan Servicing, LLC X Select Portfolio Servicing, Inc. Wells Fargo Bank, N.A. X X Wrongful terminations of homeowners from HAMP found by Treasury. Source: Treasury’s servicer compliance examination reports covering Q4 2014 through Q3 2015, as provided to SIGTARP

Ugh!

Stopforeclosurefraud:

TARP’s major foreclosure prevention program, the Home Affordable Mortgage
Program (“HAMP”), was created to provide sustainable and affordable mortgage
assistance to homeowners at risk of foreclosure.1 Although this program is at a
turning point in its lifecycle, mortgage servicers administering HAMP will continue
to need strict oversight in upcoming years. While HAMP was already scheduled to
stop accepting homeowner applications on December 31, 2016, Congress recently
terminated HAMP as of that date, but protected homeowners’ ability to stay in
HAMP and receive TARP-funded assistance for up to six years.2
To give homeowners in HAMP the best shot at keeping their homes, the
greatest concern going forward should be helping the homeowners who are in
HAMP to stay in HAMP for the full six years. Already, as of December 31, 2015,
507,359 homeowners with permanent HAMP modifications fell out of the program
by missing three payments (referred to as “redefaulting”) – which is almost one out
of every three homeowners in HAMP.3,i

The harm to a homeowner falling out of HAMP is significant, as they are
no longer eligible to receive TARP incentive and other benefits.ii According to a
Treasury survey of HAMP servicers:4
• 23% of all homeowners who redefaulted out of HAMP moved into foreclosure,
• 12% of redefaulted homeowners lost their homes through a short sale or deedin-
lieu of foreclosure, and
• 28% of redefaulted homeowners received an alternative modification,
usually a private sector modification that is less advantageous than a HAMP
modification.iii

Given the high percentage of homeowners falling out of HAMP and known
problems with servicers not following HAMP rules, in October 2013, SIGTARP
recommended that Treasury research and analyze whether, and to what extent, the
conduct of HAMP mortgage servicers contributed to homeowners redefaulting on
HAMP permanent mortgage modifications.iv Although Treasury has not conducted
a full analysis, Treasury has partially implemented SIGTARP’s recommendation,
and reviews samples of 100 homeowners who had redefaulted out of HAMP at
each of the largest HAMP servicers each quarter as part of Treasury’s on-site and
remote compliance testing at each of the largest servicers.

SIGTARP’s concerns over servicer misconduct contributing to homeowner
redefaults in HAMP have been borne out. Treasury’s findings in its on-site visits to
the largest seven mortgage servicers in HAMP over the most recent four quarters
show disturbing and what should be unacceptable results, as 6 of 7 of the mortgage
servicers had wrongfully terminated homeowners who were in “good standing” out
of HAMP.v

These staggering findings clearly show that servicer misconduct is contributing
to some homeowners falling out of HAMP. Homeowners were wrongly terminated
from HAMP by their servicer despite making timely mortgage payments, putting
them at risk of losing their home. These homeowners were forced out of HAMP
through no fault of their own. Mortgage servicers did not give these homeowners a
fair shot. As these instances were found through sampling, Treasury does not know
how many other homeowners were also wrongfully forced out of HAMP.

IN THE LAST YEAR, SIX OF THE SEVEN LARGEST
HAMP SERVICERS WRONGFULLY TERMINATED
HOMEOWNERS OUT OF HAMP WHO WERE PAYING
THEIR MORTGAGE

Here is SIGTARP report. Click here.

Florida senators want “slumlords” held accountable for public housing conditions

Florida’s senators are deeply concerned about the living conditions for some of the state’s residents who live in federally subsidized housing and want the government to do more to hold the properties’ owners accountable.

To that end, Sens. Bill Nelson, D-Fla., and Marco Rubio, D-Fla., said Thursday that they are introducing a bill in the Senate that would “hold slumlords of low-income public housing accountable for poor conditions.”

The “Housing Accountability Act of 2016” would, among other things, require theDepartment of Housing and Urban Development to survey tenants living in subsidized housing twice a year about property conditions and management performance, and create new penalties for property owners who “repeatedly fail the tenant surveys.”

The Florida senators say that the bill is in response to the “deplorable” living conditions discovered in several federally subsidized housing developments in Florida, such as Eureka Gardens in Jacksonville, Windsor Cove Apartments in Orlando, and Stonybrook Apartments in Riviera Beach.

Read on.