“Desperate” Chicago Schools Need Half Billion To Avoid Mass Layoffs, Partial Shutdown

Very sad…

Here’s WSJ with the story:

Chicago Public Schools—with 394,000 students and nearly 21,000 teachers—has closed more than half of a projected $1.1 billion shortfall through cuts, borrowing and other means, but is looking to the state to come up with the rest. The school board warns of deep cuts later this year if Illinois, which faces its own fiscal crisis, doesn’t deliver an additional $480 million in the coming months, representing roughly 8% of annual district spending.

“It is like the board is a desperate gambler at the end of their run,” said Jesse Sharkey, vice president of the Chicago Teachers Union, in a recent speech.

“We are really now at a point where further cuts would reach deep into the classroom,” said Forrest Claypool, who was named chief executive of the city schools in July.

Since 2011, the school board has made nearly $1 billion in cuts—including $200 million this year that involved eliminating 1,400 positions, mostly through layoffs. Enrollment declines, due to shifting demographics and Chicago’s shrinking population, have led to school closings, including nearly 50 elementary schools in 2013 alone.

Mayor Rahm Emanuel has clashed with the teachers union, which went on strike three years ago and is currently without a contract. Another strike isn’t out of the question as the two sides are wrestling over the district’s effort to get teachers to pay more of their pension costs.

A group of parents, educators and activists with the support of union leaders launched a hunger strike Aug. 17 in a push to reopen a closed high school in a historically black neighborhood on the city’s South Side. The group argues the board concentrates money in Chicago’s wealthy, predominantly white neighborhoods. Hispanic and black students make up a vast majority of enrollment in city schools, and more than 85% of students are considered economically disadvantaged.

SEC Fines Bankrate $15M, Sues Execs For Accounting Fraud

Law360, New York (September 8, 2015, 1:56 PM ET) — The U.S. Securities and Exchange Commission said Monday it has fined Bankrate Inc. $15 million to settle accounting fraud charges, and that it is suing two former executives over an alleged scheme to puff up quarterly earnings for the personal finance information company.

According to the SEC, former Bankrate Chief Financial Officer Edward DiMaria and ex-accounting director Matthew Gamsey invented revenue and avoided recording certain expenses in a bid to help the company overstate net income for the second quarter of 2012. A third former executive,…

Source: Law360

Nomura, RBS agree to pay $839M over mortgage bonds

Nomura Holdings (NMR) and The Royal Bank of Scotland(RBS) have agreed to a settlement in federal court to pay $839 million over the sale of mortgage-backed securities.

Both banks were found guilty in May by U.S. District Judge Denise Cote in Manhattan after a non-jury trial and were directed to pay $806 million including $26.6 million toFannie Mae and $779.4 million to Freddie Mac.

“The offering documents did not correctly describe the mortgage loans,” the judge said in his lengthy, 361-page decision. “The magnitude of falsity, conservatively measured, is enormous.”

Nomura and RBS denied the FHFA’s allegations at the time of the verdict.

Read on.

Judge dumps MBS class action against Goldman Sachs

U.S. District Judge Victor Marrero dismissed a five-year class action lawsuit against Goldman Sachs (GS) over the sale of highly leveraged, subprime mortgage bonds that hedge fund Dodona I LLC said Goldman planned to bet against.

The federal judge granted summary judgment to Goldman, saying the hedge fund had not shown evidence Goldman could have known the bonds would fail.

The lawsuit, filed in September 2010, was filed against Goldman on behalf of investors in a $2 billion offering of two collateralized debt obligations, Hudson 1 and Hudson 2.

The hedge fund claimed that Goldman Sachs “recklessly or intentionally” sold the Hudson Mezzanine Funding CDOs to offload subprime risk on unsuspecting investors.

Read on.

Judge tosses two shareholder lawsuits against Ocwen Financial

Ocwen Financial Corp. (OCN) on Friday won the dismissal of two securities class actions that arose from alleged compliance issues related to servicer agreeing to a $150 million settlement in 2014 with the New York’s Department of Financial Services last December.

U.S. Judge William Dimitrouleas dismissed a lawsuit filed in a federal Southern Florida district court by shareholders seeking to recover losses suffered from alleged false statements the company made about its business practices and regulatory compliance leading up to that settlement.

The shareholders in the lawsuit charged that Ocwen made false statements about its business practices and regulatory compliance.

Read on.

Federal Judge Dismisses Two Fraud Lawsuits Against Ocwen

A federal judge in Florida has dismissed two class action lawsuits against non-bank mortgage servicerOcwen Financial, according to court filings.

U.S. District Judge William Dimitrouleas in the U.S. District Court, Southern District of Florida, dismissed lawsuits filed by Ocwen Financial shareholders andAltisource Portfolio Solutions shareholders accusing the Atlanta-based servicer of fraud.

“We are pleased that the Court has dismissed these two separate actions against the Company,” Ocwen spokesman Jon Lovallo said in an email to DS News. “We agree with the Court’s rulings, and will continue to vigorously defend ourselves as necessary.”

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Florida court holds surviving spouse on reverse mortgage could not be foreclosed

The Florida Third District Court of Appeal recently reversed a judgment foreclosing a reverse mortgage, holding that the surviving spouse was a “borrower” under the terms of the mortgage, and thus the lender could not meet the condition precedent of her death in order to foreclose.

A copy of the opinion is available at: Link to Opinion.

In 2008, husband and wife signed a promissory note secured by a “home equity conversion mortgage,” commonly known as a “reverse mortgage.” The wife signed the mortgage, but not the promissory note.

After the husband died in 2009, the lender sued to foreclose, alleging that he was the sole borrower and that his death triggered the acceleration clause in the mortgage.

In her answer, the wife denied that all conditions precedent to acceleration and foreclosure had been met or had occurred.

Read on.

BofA Pushes to Keep Moynihan’s Dual Role

4traders:

Stung by a wave of investor criticism, Bank of America Corp. is stepping up efforts to convince shareholders that Chief Executive Brian Moynihanshould remain chairman.

The Charlotte, N.C., bank agreed to a Sept. 22 vote on the issue after its decision to combine the two roles last October stirred up resentment among investors. The move to make Mr. Moynihan chairman reversed a bylaw that was approved by shareholders in 2009.

Activist institutional investors and major proxy advisers are lining up against the way the board made Mr. Moynihan chairman, arguing the bank’s board overstepped its authority and needs to work to regain shareholder trust.

In response, Bank of America is trying to marshal support. The bank’s head of strategy and marketing, Anne Finucane, General Counsel Gary Lynch and Jack Bovender, the board’s lead independent director, have been speaking with big investors on the phone and in meetings at some investors’ New York offices. In addition, the bank has hired two outside firms to dial up individual investors.

The bank has said in its filings it is paying the firms “$150,000 plus expenses” to solicit proxies for this month’s special shareholder meeting.

In a spring shareholder vote this year, the bank spent $19,500 plus expenses on those services.

“We Made It Wider!” Hank Paulson Bursts Out Laughing When Asked About Wealth Inequality (video)

Zerohedge:

Needless to say, in the post-crisis world where the ultra rich fork over $180 million for paintings while everyday Americans struggle even to afford rent in a one-bedroom apartment, this subject is far from funny.

In fact, it’s downright depressing and we mean that in the most literal sense possible because as it turns out, a new study released on Friday by the UK’s Office of National Statistics has proven yet again (see our previous discussion on this) that money does indeed buy happiness.

From the report:

An individual’s level of personal well-being is strongly related to the level of wealth of the household in which they live. Life satisfaction, sense of worth and happiness are higher, and anxiety less, as the level of household wealth increases.

 

Around a half hour into the discussion, Sandberg asks Paulson about income inequality. Here’s what happens next:

Sandberg: “Yeah, so let’s follow up on a bunch of the things we were [talking about]. Let’s start with income inequality.”

Paulson: “Ok, well.. income inequality. I think this is something we’ve all thought about. You know I was working on that topic when I was still at Goldman Sachs..”

Rubin: “In which direction? You were working on increasing it.”

Paulson then bursts out laughing: “Yeah! We were making it wider!”

Here’s the clip:

 

Bank of America gives customers the biggest headaches in NYC

A friend of mine who is a BofA customer told me recently that he is switching to another bank because after talking to six BofA employees over the phone, only one BofA employee assist him in his issue. This is not a surprise that Bank of America provides the worse customer service.

New York’s biggest banks are giving their customers plenty of agita.

With more than 32,000 complaints, the New York City metro-area ranks No. 1 by a large margin compared with other US metro areas for all complaints, and for gripes about large financial institutions, according to an exclusive analysis for The Post of Consumer Financial Protection Bureau complaint data since its inception by Moebs Services.

Here are some highlights from the metro New York City area CFPB complaint hall of shame:

•  Bank of America, with 18 percent, topped the list of financial institutions drawing complaints.
•  JPMorgan Chase earned second place, with 17.1 percent.
• Wells Fargo and Bank of America were named in just over half the mortgage-related complaints about financial institutions.
• Citibank had the most credit-card complaints of any financial institution, with 23.5 percent.
•  Mortgages were the leading cause of complaint, making up more than one-third of the total.
• Credit-card complaints were the second-most common problem filed by customers.

The CFPB handled more than 677,000 complaints from December 2011 to August 2015. Complaints by New York state residents rose 29 percent, to a total of 43,377, last month, according to a CFPB report.

Moebs told The Post that New York’s high number of complaints could be attributable to savvy New Yorkers who understand financial products and are more likely to complain than residents of other cities.
Read on.