Sorry you lost your home: Americans deserve more than an apology for the foreclosure fraud epidemic

Despite talk of “recovery,” former homeowners remain scarred after their government abandoned them

DAVID DAYEN

“I lost my home of 30 years to fraudclosure.”

“I have been fighting this bank for over five years now. I am finally losing everything to their fraud.”

“We feel captive in our own home.”

This is a sampling of what I have awakened to practically every day for the past few months, since my book “Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud” came out. Hundreds of people have emailed me, sent me letters, attended my public events, to relate their personal horror stories of foreclosure and dispossession. They come from across America, from different social and economic backgrounds. Some lost everything, and some haven’t given up.

They contact me, a non-lawyer who has only written about and not participated in their struggle, because they have been abandoned, by a government that chose sides against them after the crash of 2008. They seek answers that I mostly don’t have and support I mostly cannot provide. Outside of referring them to legal aid, I cannot solve their foreclosure problems. I cannot convince a judge disinclined to rule in their favor, or a bank disinclined to see them as anything but a financial asset to be plucked, to change their minds. I can only note in sorrow that the massive netting of fraud laid by the mortgage industry over a decade ago continues to capture people like them.

But despite my lack of assistance, they typically express to me their gratitude, for one simple reason: just by giving voice to similar nightmares, I have instilled in them hope that they aren’t utterly alone in their misery, that they haven’t been singled out by a vengeful nation, that somewhere out there they have an ally and a confidant.

I wrote my book for them, for everyone who suffered as a result of the largest consumer fraud in American history and the greatest economic collapse in nearly a century. They shouldn’t be forgotten. In fact, somebody should apologize to them for having to bear the weight of the financial collapse on their shoulders, even while that suffering was exacted through outright fraud. It might as well be me.

In “Chain of Title”, I detailed how three foreclosure victims uncovered an unparalleled pattern of deceit: mortgage companies systematically using false evidence in courtrooms and county offices to take people’s homes away. This routine document fabrication covered up the unspeakable crime of breaking the chain of title on millions of home mortgages, confusing the underlying ownership and damaging 350 years of functioning property records law.

Read on.

Australia cracks down on banks with annual grilling

Sydney, Aug 4, 2016 (AFP) –

Australia’s largest banks will have to face a parliamentary committee for an annual grilling to “drive cultural change”, Prime Minister Malcolm Turnbull said Thursday as he addressed public disquiet about their behaviour.

The country’s “big four” lenders — among the developed world’s most profitable — have been under scrutiny in recent years amid allegations of dodgy financial advice, life insurance and mortgage fraud.

Former investment banker Turnbull has resisted opposition Labor party calls for an independent inquiry into banking misconduct, but he has taken a more strident tone against them over the past few months and said Thursday they needed to be “open and accountable”.

“Our big four systemically important banks operate under a social licence from the Australian people. They are built on a foundation of trust,” Turnbull told reporters in Sydney.

“What we’re setting in place here is ongoing, permanent cultural change and change that will make the banks ensure that they are accountable.”

The banks — ANZ, Commonwealth Bank, National Australia Bank and Westpac — will have to face the Senate’s economics committee, which previously hammered tech giants such as Google and Apple over corporate tax avoidance claims, at least once a year.

Read on.

No, a New Glass-Steagall Is Not Good News For Citigroup, JPMorgan, Bank of America

For a while now KBW’s Frederick Cannon and Allyson Boyd have been urging big banks likeCitigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM) to break up. A new Glass-Steagall, something backed by both Democrats and Republicans, would not be the ideal way to accomplish that, however. They explain why:

We along with others in the marketplace have shown that there is potential shareholder value creation from the breakup of some of the largest financial institutions, including Citigroup. Investors should not view the reinstatement of Glass-Steagall as a potential way to unleash value in large banks, however. A Congressional approach to breaking up the banks would not be based on economic value creation, but be based on the politics of applying penalties to the largest banks. Therefore it is difficult to develop a positive view on potential regulations for the shares of the largest banks, specifically JPMorgan Chase, Bank of America and Citigroup…

Read on.

UBS rogue trader: Nothing’s changed, and next phase of financial crisis could prove it

The London trader who years ago hobbled Swiss investment bank UBS by racking up some $2 billion in losses told the BBC in an interview posted on Monday that not much has changed since he was jailed in 2012, and that the kind of crime he committed could “absolutely” happen again.

“I think the young people I’ve spoken to, former colleagues I have spoken to, are still struggling with the same issues, the same conflicts, the same pressures to achieve no matter what,” he said. “And this goes back to the structure of the industry. People are required to take risk to generate profit, because yields in the industry are consistently compressed.”

A year after being released from prison, Kweku Adoboli also said there’s an increasing likelihood of another trader going rogue to such a degree as we enter “the next phase of the great financial crisis” over the next couple of years.

Read on.

Dimon Says European Regulators Should Let Banks Do Their Job

• Most Europe banks ‘did fine’ in stress test, JPMorgan CEO says
• Next U.S. president shouldn’t restrict free trade: Dimon

European bank regulators should get out of the way and let banks there “do their job,” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said.

“They did the stress tests and most of the banks did fine,” Dimon, 60, said Monday in a CNBC interview from California during the company’s annual bus tour. “Continue pounding them and changing the rules and requirements is not good for the people of those countries, because you’re destabilizing a financial system.”

Last week’s European bank stress tests showed that many lenders still need to lift their capital levels, and some need to do it quickly. While there was no pass or fail mark, two of the 51 banks tested by the European Banking Authority — Banca Monte dei Paschi di Siena SpA and Allied Irish Banks Plc — fell below the regulatory minimum threshold, the regulator said Friday.

Read on.

3 Ex-Bankers in Ireland Sentenced for Fraud

But not in the U.S…

DUBLIN (AP) — Three former senior bankers were sent to prison Friday for their roles in concealing the loss of billions in deposits at the defunct Anglo Irish Bank, the biggest accounting fraud in Irish corporate history.
Judge Martin Nolan told the trio — former Anglo executives Willie McAteer and John Bowe and former Irish Life and Permanent chief executive Denis Casey — they were guilty of committing “sham transactions” designed to inflate Anglo’s deposit levels by 7.2 billion euros ($8 billion) in the Dublin bank’s 2008 earnings report.
Lawyers for the men argued that government and regulatory officials had spurred them to collude on transfers to maintain market confidence in Irish banking, but the judge said all three had chosen to employ “dishonest, deceitful and corrupt” tactics.
“I can appreciate the desperation of the moment. I can appreciate that everyone at Anglo wanted to save the bank. But saving the bank isn’t everything,” Nolan said.

Casey received a prison sentence of 2 years, 9 months. McAteer received 3 ½ years, Bowe two years. All were convicted last month of conspiracy to defraud and now have 28 days to lodge an expected appeal. All three stared at the courtroom floor during the verdict.
Casey’s bank supplied funds that Anglo falsely claimed as new customer deposits in full-year results to shareholders.

Read on.

How Glass-Steagall Crashed the 2016 Conventions

And pay close attention if this is mention on the campaign trail with Clinton-Kaine and Trump-Pence… Stay tuned…

The Glass-Steagall Act of 1933 was an unexpected and prominent part of the Democratic and Republican conventions this year, as both parties added a call to reinstate the law as part of their party platforms. But that will be easier said than done, considering that lawmakers from both sides of the aisle have shown little interest in the idea. Following is a look at how a Depression-era law found its way to Cleveland and Philadelphia. READ MORE »

Why Hillary Clinton thinks making the Postal Service a bank too, is a good idea

CNBC:

The 55-page platform said that a Hillary Clinton administration would work to let the U.S. Postal Service offer “basic financial services,” including cashing checks and giving USPS more flexibility in choosing with services it provides, in an effort to revitalize the government service.

Harry Holzer, a professor of public policy at Georgetown University, said the reasoning behind this may be “it’s the one institution that kind of exists everywhere already.”

He added, however, the government would have to spend money to make this work.

GOP platform of reinstating Glass-Steagall: Any problems of bank can be resolved through the bankruptcy code

Slate:

On Monday morning, Republican convention organizers handed out draft text of the platform, and the section on banking includes nothing on bringing back Glass-Steagall. Instead, it spends a lot of time calling on Congress to curtail the Consumer Financial Protection Bureau’s powers, then says:

Republicans believe that no financial institution is too big to fail. We support legislation to ensure that the problems of any financial institution can be resolved through the bankruptcy code. [Note: Dodd-Frank has this. It’s called the living will provision.] We endorse prudent regulation father banking system to ensure that FDIC-regulated banks are properly capitalized [Note: Dodd-Frank also has this] and taxpayers are protected on bailouts. We will end the government’s use of disparite impact theory in enforcing anti-discrimination laws with regard to lending.

And of course, the RNC blasted the final draft of the platform. Obviously, Paul Manafort, Trump’s top head minion, did think this through. Manafort stated that the Glass-Steagall bill needs to be brought back because Dodd-Frank has been a burden on small banks.

Tim Kaine, Possible Hillary Clinton Pick for Vice President, Goes to Bat for Banks

David Dayen

And I wonder what Sen. Elizabeth Warren about this…

The Intercept:

In the letters, Kaine is offering to support community banks, credit unions, and even large regional banks. While separate from the Wall Street mega-banks like JPMorgan Chase and Bank of America, these financial institutions often partner with the larger industry to fight regulations and can be hostile to government efforts to safeguard the public, especially if it crimps their profits.

They also represent a key source of donor funds, one that has trended away from Democrats. The Independent Community Bankers of America have given 74 percent of their $873,949 in donations this cycle to Republicans, according to the Center for Responsive Politics. Regional banks like PNC Financial Services, SunTrust Bank, and First Republic Bank, have given even higher percentages to the Republicans.

Presumptive Democratic nominee Hillary Clinton is expected to announce her vice presidential pick on Friday. Kaine, if selected, could now help woo fundraising dollars away from Republicans, because he’s able to point to his support for financial industry causes. The letters also show Hillary Clinton’s campaign how Kaine could be an asset with banking interests on the fundraising trail.

The letter to the Consumer Financial Protection Bureau, signed by a bipartisan coalition of 16 Democrats and every Republican senator, asked that the consumer agency “carefully tailor its regulations” to exempt community banks and credit unions. It posits these smaller banks as “essential to spurring economic growth and prosperity at a local level.”

While this seems benign, tailoring rules that exempt large classes of financial institutions leaves consumers vulnerable to deceptive practices. A rule of this type could allow community banks and credit unions to sell high-risk mortgages or personal loans without the disclosure and ability to pay rules in place across the industry.

The fact that the entire Republican caucus, from Ted Cruz and Mike Lee to Mitch McConnell, supports this idea suggests that it’s not necessarily a bipartisan measure but a Republican desire that a few Democrats agree with. Kaine counts himself among those Democrats.

The second letter, sent to the heads of the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, seeks to protect an even bigger subset of banks, the large regional institutions like PNC and SunTrust. Kaine and three Democratic colleagues want regulators to change certain rules so they don’t apply to these regional banks.

Some regional banks have become so large that they may reach a threshold triggering daily reporting requirements under the liquidity coverage ratio rule, which requires qualifying banks to hold enough assets to cover a 30-day period of financial stress. Kaine and his colleagues argue that would “impose significant burdens on the firms” and want the regulators to alter that threshold and exempt all regional banks, regardless of size.

Next, Kaine and his fellow senators want to eliminate so-called “advanced approaches” capital requirements — which governs the ratio of reserves banks must carry to cover potential losses — for regional banks, even if they have over $250 billion in assets. The rule “captures many regional banks that do not share the same risk profile or complexity as their larger, systemically important brethren,” the senators write.