Monthly Archives: August 2018

Wells Fargo diving back into securities that fueled 2008 financial crisis

Wells Fargo just can’t help itself.

The nation’s third-biggest bank is planning to ramp up trading in controversial securities tied the mortgage market — just weeks after it paid a $2 billion fine for its role in the financial crisis, The Post has learned.

Headed by Chief Executive Tim Sloan, Wells Fargo is actively working on deals with non-bank mortgage lenders to package up home loans “in mass capacity” and sell them off to investors hungry for returns, according to a person directly familiar with the plans.

Read on.

Bloomberg News Reportedly Threw Its Reporter Under the Bus After Wells Fargo CEO Complained

A good rule of thumb in investigative journalism is that if someone in power is complaining about your work, you’re probably on the right track. That, however, didn’t stop Bloomberg News from reportedly reassigning one of their reporters after a bank CEO complained about their coverage.

According to CNN, Bloomberg reporter Shahien Nasiripour had been working on a series of reports about Wells Fargo—beginning with an article in Marchabout the bank’s relationship with the National Rifle Association—when Wells Fargo CEO Timothy Sloan called Bloomberg’s Editor in Chief John Micklethwait to voice his displeasure with Nasiripour’s reporting.

The call between the two bosses reportedly came after Nasiripour and a representative from Wells Fargo go into a heated argument over a memo Sloan had sent the company in response to the article linking the bank with the NRA. Per CNN:

Following the conversation, a member of the Wells Fargo public relations team contacted Caroline Gage, the global executive editor for finance at Bloomberg News. Gage then asked Nasiripour to apologize to the Wells Fargo public relations team for his conduct during the call. Nasiripour agreed to do so and did.

Finally, the feud came to a head last month when Nasiripour was reportedly called into Micklethwait’s office, and told he’d been reassigned to cover the Trump Organization. Citing “people briefed on the conversation,” CNN reported that Micklethwait mentioned Sloan’s complaint about Nasiripour’s behavior during the meeting.

Read on.

Wells Fargo to lay off 638 mortgage lending employees

The big bank announced this week it is laying off 638 mortgage employees in California, Colorado, Florida and North Carolina, according to an article written by Hanna Levitt for Bloomberg.

The bank’s latest earnings report indicated it continues to struggle following its fake accounts scandal. Not only did the bank report a lower net income, its latest earnings report shows that although originations are increasing, it is still struggling with mortgage banking revenue.

Affected employees were informed of the upcoming layoffs on Thursday. Employees will be eligible to receive pay and benefits through Oct. 21, the company said.

However, employees unable to find another position within the company may be eligible to participate in the Wells Fargo salary continuation plan for separation benefits based upon the number of years of service with the bank, according to Wells Fargo’s SVP of Consumer Lending Operations Tom Goyda.

Read on.

Homeowner using Wells Fargo glitch admission against them

Let the blowback begin.

A New York homeowner last week fought back against the denial of a mortgage modification by Wells Fargo — using as a cudgel in the bitter spat the bank’s admission just weeks earlier that a computer glitch wrongly denied hundreds of customers home loan help.

The move by Mia Derosa is the first known effort by a Wells Fargo customer to act on the bank’s Aug. 3 admission that its goof led to about 625 homeowners being denied mortgage relief.

Roughly 400 of those homeowners who were battling a foreclosure action between April 2010 and October 2015 eventually lost their homes because of Wells Fargo’s mistake, the bank said in a regulatory filing.

Derosa, who lives in Nyack, NY, about 30 miles north of Midtown Manhattan, took out a $650,000 “Pick-a-Pay” mortgage in February 2006 — and by 2011 was in financial trouble.

“Pick-a-Pay” mortgages were all the rage in the home-buying craze early in the aughts. They offered borrowers an extremely inexpensive route to home ownership by requiring them to make monthly payments of just some of the interest on the loan — and no principal.

The unpaid interest would be added to the principal.

The loans turned toxic when monthly payments would balloon past what the borrower could afford — creating a tsunami of defaults and foreclosures.

Derosa got a mortgage modification from Wells Fargo under the federal government’s HAMP program — but defaulted on it in 2016, the bank said. Subsequently, Wells reviewed four modification requests from Derosa — rejecting each of them, it said.

In each of the rejections — the last of which came in January — Wells cited Derosa’s insufficient income, according to court papers.

That’s not true, Linda Tirelli, Derosa’s lawyer, shot back.

Derosa has a “substantial, solid, steady income” of nearly $11,000 a month, according to court papers filed Aug. 16 by Tirelli.

Read on.

Labour condemns ‘sickening’ Lehman Brothers 10th anniversary reunion party

The Labour party has condemned proposals by former Lehman Brothers staff to hold a reunion to mark the 10th anniversary of the firm going bust – a defining moment in the 2008 financial crisis.

John McDonnell, the shadow chancellor, said that people who suffered during the decade of austerity following the crash would be “absolutely disgusted” by the revelation that the get-together was going ahead.

His comment was prompted by a Financial News report saying staff who worked for the investment bank, which employed about 5,000 people in the UK, had received an email inviting them to an event to “celebrate” the anniversary.

Addressed to “Lehman Brothers & Sisters”, the email says: “It’s hard to believe it’s been 10 years since the last of our Lehman days! … One of the best things about Lehman was the people. What better way to celebrate the tenth anniversary than getting everyone from former MDs to former analysts back together again!”

According to Financial News, about 200 former employees are expected to attend the party, which will take place at an undisclosed location in London around the time of the 10th anniversary of Lehman filing for bankruptcy on 15 September 2008. The organisers are said to be aware of how controversial the event will be and are keen to keep the details secret.

Read on.

U.S. Pursues One of the Biggest Mortgage-Fraud Probes Since the Financial Crisis

At issue is whether income from apartment complexes was falsified to support larger loans–which often became part of mortgage securities.

Owners of an apartment complex near Pittsburgh, who wanted to take out a mortgage on the buildings, allegedly made vacant units look occupied by turning on radios, placing shoes and mats outside doors and in one instance having a woman tell inspectors her boyfriend was asleep inside.

The owners obtained a $45.8 million loan, which was wrapped into mortgage securities and sold to investors.


Read on.

Former JPMorgan Chase banker jailed for four years for selling customers’ confidential information

According to the U.S. Attorney’s for the Eastern District of New York, Peter Persaud pleaded guilty to aggravated identity theft in connection with access device fraud and was sentenced to 48 months in jail.

Court documents showed that between 2011 and 2015, Persaud sold customers’ personal identifying information and account information to others, or used it himself, to make unauthorized withdrawals from customers’ accounts.

According to authorities, Persaud’s scheme was discovered when he sold sensitive customer information to a confidential informant in 2014, and later to an undercover law enforcement officer in 2015.

Court documents showed that Persaud told the undercover officer that needed to “take it easy” otherwise Chase might realize he had accessed all of the bank accounts that “got hit” by the questionable withdrawals.

Persaud also offered the undercover officer the identifying information for a client’s bank account that contained more than $180,000.

Persaud pleaded guilty on March 7, 2017.

Read on.

Another bank whistleblower case, this time at Goldman Sachs

NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) was sued on Thursday by a former managing director who said the Wall Street bank retaliated against him and fired him after he complained about its dealings with an unidentified, “notorious European businessman.”

Christopher Rollins, now chief executive of BTIG Ltd, a London-based unit of investment banking and trading firm BTIG LLC, is seeking at least $50 million plus punitive damages in his complaint filed with the U.S. District Court in Manhattan.

The 2000 Harvard University graduate accused Goldman and Jim Esposito, promoted this week to global co-head of its trading business, of violating his rights as a whistleblower under the federal Dodd-Frank law, and also accused Goldman of defamation.

“The suit is without merit and we intend to vigorously contest it,” Goldman spokesman Michael DuVally said in an email, responding to a request for comment on behalf of the defendants and several bankers named in the complaint.

DuVally referred to a filing with a U.S. brokerage regulator that said Goldman discharged Rollins after he allowed unauthorized trades by a counterparty that had been denied a trading account because of compliance concerns.

Read on.

Feds Bring Inside Trading Charges Against NY Congressman

Geoffrey Berman, US attorney for the Southern District of New York, gestures to a chart during a news conference in New York.


Here is the court document. Click here.

Wells Fargo reveals software error wrongly denied much-needed mortgage modifications

Big bank sets aside $8 million for remediation

Wells Fargo revealed Friday that an error in its mortgage underwriting software led to hundreds of improperly denied mortgage modifications for borrowers facing foreclosure over a five-year period.

The disclosure was made in the bank’s 10-Q quarterly filing with the Securities and Exchange Commission, and the contents of the filing were first reported by Reuters.

As the Reuters report notes, Wells Fargo disclosed in the SEC filing that a review of its use of a mortgage modification underwriting tool found a “calculation error” that affected certain mortgages that were in the foreclosure process between April 13, 2010 and Oct. 20, 2015.

According to Wells Fargo, the error caused an automated miscalculation of attorneys’ fees that were used to then determine whether a borrower qualified for a loan modification with Fannie Mae or Freddie Mac, or under the terms of the government’s Home Affordable Modification Program.

In the SEC filing, Wells Fargo said that the borrowers were not actually charged the attorneys’ fees in question.

As a result of the error, approximately 625 customers were incorrectly denied a mortgage modification or were not offered one in cases where they would have qualified if not for the error.

And of those roughly 625 customers, approximately 400 of them were foreclosed upon after the loan modification was incorrectly denied or not offered as a result of the underwriting software error.

Read on.