Tag Archives: financial crisis

Congressman wants FBI to release details of financial crisis investigations

It’s about time….

If you’ve ever wondered why more (any) senior executives weren’t held responsible for their companies’ conduct during the financial crisis, you’re not alone.

Representative Bill Pascrell, D-NJ, feels the same way and he wants answers.

Pascrell, who serves on the House Ways and Means Committee, sent a letter Tuesday toFederal Bureau of Investigations Director James Comey, calling on the FBI to release the details on its financial crisis investigations.

In the aftermath of the financial crisis, dozens of companies have paid out billionsupon billions in fines for various acts of malfeasance during the financial crisis, but to this point, many of the executives who lead those companies have escaped punishment, including Angelo Mozilo, the founder of Countrywide.

Earlier this year, the Department of Justice abandoned its attempt to sue Mozilo for his company’s actions.

Countrywide originated more mortgages in this country from 2004 to 2007 than any other lender. During that time, Countrywide closed so many subprime mortgages it remained a top-5 producer for that home loan product. The same goes for other loans, such as Alt-A.

One of Countrywide’s executives was actually fined for her actions during the crisis, but that fine was recently overturned.

In May, the Second Circuit overturned a $1.27 billion penalty against Bank of America in a fraud case over defective mortgages sold by Countrywide in the run-up to the housing crisis.

The Second Circuit’s May decision also voided the $1 million penalty against Rebecca Mairone, who the New York Times once referred to as the “face of the housing crisis.”

Read on.

JPMorgan, FDIC, Deutsche Bank finalize settlement in WaMu mortgage suit

JPMorgan Chase’s legal battle with the Federal Deposit Insurance Corp. andDeutsche Bank AG over its acquisition of Washington Mutual’s banking operations is finally over, closing the door on issues dating back to the financial crisis.

According to an 8-K filing from JPMorgan Chase, “As previously disclosed, JPMorgan Chase Bank signed a term sheet with Deutsche Bank and the FDIC to resolve pending litigation brought by DBNTC against the FDIC, in its capacity as receiver for Washington Mutual Bank and in its corporate capacity, and JPMorgan Chase Bank, as defendants, relating to alleged breaches of certain representations and warranties given by certain WMB affiliates in connection with mortgage securitization agreements.”

The filing also stated it resolved “JPMorgan Chase’s outstanding indemnification claims pursuant to the terms of the Purchase & Assumption Agreement between JPMorgan Chase Bank and the FDIC relating to JPMorgan Chase’s purchase of substantially all of the assets and certain liabilities of Washington Mutual Bank.”

In early August, JPMorgan’s quarterly regulatory filing revealed that the settlement was nearing an end.

Read on.

Can a Future Financial Crisis Be Prevented?

The fifth of a sixth part McCuistion TV program series aired recently. The series, a collaboration with the National Center for Policy Analysis Financial Crisis Summit, featured two of my Bank Whistleblowers United colleagues, William K. Black, Michael Winston and me.
Regards,
Richard

Trump’s Economic Adviser Said the Economy Was Fine—Right Before It Imploded

Trump’s economic adviser was the chief economist for Bear Stearns… smh…

Did we mention he worked for the investment bank that lit the fuse on the financial meltdown?

Mother Jones:

On Friday, ahead of a big economic policy speech Trump is expected to deliver next week, the Trump campaign released a list of his economic advisers. The roster of 13 men—all are men and five are named Steven or Stephen—includes a handful of billionaires and financial moguls, several of them longtime Trump friends. Also on Trump’s economic brain trust is an economist, David Malpass, who downplayed concerns about the economy shortly before his firm collapsed and the economy cratered.

Malpass is a former economic adviser to Ronald Reagan whom the Trump campaign touts as having “extensive private sector experience.” That experience includes serving for 15 years as the chief economist for Bear Stearns—the Wall Street firm that was deeply enmeshed in the subprime mortgage market—in the lead-up to the investment bank’s spectacular March 2008 collapse.

The fall of Bear Sterns lit the fuse on the economic crisis. And perhaps more so than its competitors, the 85-year-old investment bank came to exemplify the excesses and short-sighted economics that led to the financial meltdown. If Trump is counting on Malpass for economic advice, he had better hope it’s an improvement on the wisdom the economist dispensed as the financial system hurtled toward a cliff. Nine months before his company fell apart, Malpass wrote a column for the Wall Street Journal titled “Don’t Panic About Credit Markets.” He derided the “hyperventilation over the coming U.S. economic slowdown” and wrote:

The slowdown talk weighing on equities also reflects the Wall Street view that debt, mortgage and takeover businesses have replaced General Motors as the economy’s bellwether. According to the bears: As goes the credit market, so goes the economy. Fortunately, Main Street is not that fickle. Housing and debt markets are not that big a part of the U.S. economy, or of job creation. It’s more likely the economy is sturdy and will grow solidly in coming months, and perhaps years.

So, that was wrong.

Malpass did fine, though. He currently sits on the board of New Mountain Capital, a multi-billion-dollar private investment firm, and runs his own market research firm.

U.S. Appeals Ruling That Throws Out Crisis-Era Bank of America Case

Justice Department aims to salvage high-profile mortgage-fraud case

WASHINGTON—The Justice Department asked a federal appeals court to reconsider its ruling throwing out a civil mortgage-fraud case against Bank of America Corp., in an uphill effort to rescue one of its highest-profile cases tied to the financial crisis.

The U.S. attorney’s office in Manhattan said in a Thursday filing the court had “overlooked a wealth of evidence” in reaching a May decision that found the government hadn’t proven fraud by Bank of America’s Countrywide unit over a program dubbed “Hustle.”

The court said at the time the case amounted only to breaches of a contract, a stunning setback for the government’s efforts to levy tough fines on corporations and executives. The court also threw out a related penalty against a Countrywide executive, one of the few individuals fined for alleged misdeeds during the crisis.

Read on.

What Really Caused the 2008 Financial Crisis?

In a recent post, I mentioned the McCuistion Television Program, six part series on the financial crisis that I and several of our Bank Whistleblowers United team, (Michael Winston, William Black and I), participated in.
Michael and I, along with Rashad Abdel-Khalik, PhD:  Professor of International Accounting at the University of Illinois and  C.R. “Rusty” Cloutier: MidSouth Bancorp, Inc, Founding President and CEO, joined host Dennis McCuistion in the third in the series which justrecently aired, part two, of “What Really Caused the 2008 Financial Crisis?”
Our fellow panelists had diverse experiences and viewpoints. However we were in agreement on several key points including that the crisis was caused by more than just lowered underwriting standards. In fact, while that was a contributor, it was also a convenient excuse. The seven largest banks involved, the Too Big To Fail, committed fraud, and walked away. 
Michael addressed the lack of accountability in a reference to the “balance of consequences” – people do what they are rewarded for, not what they are punished for. He asked, “But what if the incentive system rewards you for doing the wrong thing and punishes you for doing the right thing?” And that’s what happened.
Regards,
 
Richard 

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.