Daily Archives: January 20, 2017

Another Wells Fargo? CFPB says TCF National Bank tricked people into overdraft charges

The Consumer Financial Protection Bureau has accused TCF National Bank (TCB), a Minnesota-based bank with 360 branches in seven states, of tricking hundreds of thousands of customers into accepting costly overdraft services.

Back in 2007, the Federal Reserve gave consumers overdraft protections, requiring banks to ask customers to opt-in to overdraft services that came with expensive charges.

“The Opt-In Rule posed a serious threat to TCF, which depends on overdraft revenue to a greater degree than its competitors,” the CFPB wrote in its complaint suing the bank. According to CFPB Director Richard Cordray, this is because the bank doesn’t rake in substantial revenue from other common consumer banking products like credit cards and mortgages.

“A substantial part of [TCF’s] revenue comes from fees,” Cordray said on a conference call Thursday. The opt-in rule would be a problem. “In 2009, TCF estimated that $182 million in annual revenues was at risk.”

Read on.

US Department of Labor says JPMorgan Chase paid women less than men

The U.S. Department of Labor on Wednesday filed a lawsuit againstJPMorgan claiming the bank engaged in pay discrimination against women.

The department in a complaint filed with an administrative judge said New York-based JPMorgan has paid at least 93 women in four different job categories less than comparable male coworkers over the last five years.

Read on.

The complaint is available at http://src.bna.com/lvt .

Sen. Brown asks for FBI files tied to Mnuchin company

A top Senate Democrat is pressing the FBI for any information it may have about a possible probe into a film production company with deep ties to President-elect Donald Trump’s pick to head the Treasury Department.

After a public records request indicated that there could be “enforcement proceedings” involving the company Relativity Media, Sen. Sherrod Brown (D-Ohio) wants to know more. That company, which declared bankruptcy in 2015, once counted among its top investors Steven Mnuchin, Trump’s nominee for Treasury Secretary.

Read on.

Deutsche Bank Now Has — Count ’Em — Five Outside Monitors

Banks that settle government investigations often receive an outside monitor to ensure that they make good on their promises to reform.

Deutsche Bank AG now has five.

To resolve the Justice Department’s investigation over its mortgage-backed securities business, the bank agreed Tuesday to a $7.2 billion penalty, more than half of which will provide relief to consumers hurt by its conduct. To check its remediation work, the bank agreed to hire an independent monitor, Michael Bresnick, a former prosecutor.

The monitoring job brings Bresnick full circle. He was a Justice Department lawyer who helped start the task force that investigated Deutsche Bank and many other U.S. and European banks. The probes led to multibillion-dollar settlements with the banks — which created work for monitors like Bresnick, who’s now with the law firm Venable LLP.

Bresnick and a Deutsche Bank representative declined to comment on his appointment. Chief Executive Officer John Cryan apologized for the conduct when the settlement was announced earlier Friday, saying the bank had exited many of the underlying activities and has improved its standards.

Read on.

Supreme Court limits Fannie Mae’s ability to take cases to federal court

In a unanimous opinion handed down Wednesday, the Supreme Court limitedFannie Mae’s ability to transfer cases to federal court, ruling that the government-sponsored enterprise’s charter does not grant it the right to move all state cases to the federal level.

The decision, written by Justice Sonia Sotomayor, overturns a lower court’s ruling, which held that the “sue-and-be-sued” clause in Fannie Mae’s charter allowed for the GSE to transfer any lawsuits against it filed at the state level to federal court.

In the opinion, Sotomayor writes that none of Fannie Mae’s arguments about the interpretation of the  “sue-and-be-sued” clause are “persuasive.”

Sotomayor writes that the Court previously ruled on several other arguments from other federally chartered organizations, but notes that Fannie Mae’s charter differs in that “sue-and-be-sued” clause states that cases can be transferred to “any court of competent jurisdiction.”

The clause in question authorizes Fannie Mae “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.”

That distinction places Fannie Mae on the losing end of this argument, according to the court’s ruling.

Read on.

[Video] Morgan Stanley CEO: “Not a fan of getting rid of Dodd-Frank”

Morgan Stanley CEO James Gorman defended Dodd-Frank in an interview with CNBC on Thursday, weighing in on the uncertain future of the act under the incoming Trump administration.

“Let me be very clear about this, I am not a fan of getting rid of Dodd-Frank,” Stanley told CNBC.

However, he continued, “There are elements of Dodd-Frank that clearly need to be curtailed.”

Shortly after winning the election, President-elect Donald Trump’s transition teamposted his plans for the first days in office, which included his plan to “dismantle” the Dodd-Frank Wall Street Reform Act.

The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including theConsumer Financial Protection Bureau.

Not too long after Trump’s team announced their plans, Trump’s U.S. Treasury Secretary nominee Steve Mnuchin also gave his thoughts on the Dodd-Frank Wall Street Reform Act in an interview with CNBC.

During the interview, Mnuchin said, “The No. 1 problem with Dodd-Frank is it is way too complicated and it cuts back lending.”

“We want to strip back parts of Dodd-Frank that prevent banks from lending and that will be the No. 1 priority on the regulatory side,” he told CNBC.

Read on.

Credit Suisse reaches $5.28 billion mortgage bond settlement

For the second time in as many days, the Department of Justice announced that it reached a multi-billion dollar settlement with a foreign-based bank over its mortgage securitization practices leading up to the housing crisis.

On Tuesday, the DOJ announced that it reached a $7.2 billion settlement withDeutsche Bank in connection with the bank’s issuance and underwriting of residential mortgage-backed securities between 2005 and 2007.

Now, it’s Credit Suisse’s turn.

As with Deutsche Bank, Credit Suisse announced in late December that it reached a settlement in principle with the DOJ, but Wednesday, the DOJ made it official.

According to the DOJ, Credit Suisse will pay $5.28 billion in the settlement, which relates to the packaging, securitization, issuance, marketing and sale of residential mortgage-backed securities between 2005 and 2007.

Under the terms of the settlement, Credit Suisse will pay $2.48 billion as a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act.

Read on.

NY AG reportedly investigating Nationstar Mortgage, OneWest Bank reverse mortgage divisions

New York Attorney General Eric Schneiderman is investigating practices related to the servicing of reverse mortgages at Financial Freedom, a part of OneWest Bank, and at Champion Mortgage, a unit of Nationstar Mortgage, as the state further heightens its recent focus on reverse mortgages, an article in The Wall Street Journal by Annamaria Andriotis stated.

“The inquiry, which is in early stages, is examining whether businesses employed tactics that pushed elderly borrowers into foreclosure,” the article sated.

Read on.

JPMorgan Chase reportedly agrees to $55 million settlement for discriminatory lending

According to multiple reports, JPMorgan Chase agreed to a $55 million settlement with the Department of Justice, which accused the bank’s brokers of charging higher interest rates to minority borrowers than white borrowers in the run-up and during the financial crisis.

Here are some of the details courtesy of the New York Times:

The proposed settlement, which was announced Wednesday, would conclude a federal inquiry that began nearly seven years ago into possible discriminatory mortgage practices by JPMorgan, the nation’s largest bank.

The discriminatory loans were originated from at least 2006 to late 2009, according to a complaint filed this month by Preet Bharara, the United States attorney for the Southern District of New York. Black and Hispanic borrowers were charged, on average, $1,000 more than comparable mortgages given to whites, the complaint said.

The mortgages were made by independent brokers and then funded by JPMorgan, a standard practice in the years before the 2008 financial crisis, when banks relied on third parties to bring them lucrative loans through what was known as a wholesale network.

According to USA Today, JPMorgan’s brokers allegedly overcharged at least 53,000 borrowers, causing “tens of millions of dollars in damages.”

Read on.

Treasury Pick Steve Mnuchin Denies It, But Victims Describe His Bank as a Foreclosure Machine

TREASURY SECRETARY NOMINEE Steve Mnuchin kicked off his confirmation hearing Thursday with a defiant opening statement, mostly defending his record as CEO of OneWest Bank. He cast himself as a tireless savior for homeowners after scooping up failed lender IndyMac. “It has been said that I ran a ‘foreclosure machine,’” he said. “I ran a loan modification machine.”

But in stark contrast to his fuzzy statistics about attempted loan modifications, the victims of OneWest’s foreclosure practices have been real and ubiquitous.

A TV advertising campaign that’s been running in Nevada, Arizona, and Iowafeatures Lisa Fraser, a widow who says OneWest “lied to us and took our home” of 25 years, right after her husband’s funeral.

Read on.