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Policy Changes aka eNotes are Here! New Paragraph 11 in Promissory Notes.

Deadly Clear

monopoly_electronic_banking_editionWe’ve discussed UETA and eSign and the significance of explicit consent…in most cases pre-2008…there isn’t any. Here is a Indiana case that is riveting: Good v. Wells Fargo. Read it HERE.

In this case, Bryan Good stated that in this 2008 transaction there were apparently 2 notes. Wells Fargo asserts that Good signed an eNote with a new (policy change) paragraph 11 – and that is still not enough.

Yes – go get your promissory notes and look for paragraph 11. You probably won’t see it if your note pre-dates 2008.

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Rolling Rebellion, Lawyers and Citizens Protest Seattle Bankster UCC Uniform Law Conference

Deadly Clear

Coming up on July 11th is the national Uniform Law Committee conference in Seattle at the Westin Hotel.

Whether or not you are in foreclosure, if you own a home and have a mortgage or intend some day to own a home, this national ULC conference affects you. For hundreds of years states have owned and recorded their own lands – and now it appears the United States federal government would like that to change.

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In Banking World, Fraud Is an Epidemic

In Banking World, Fraud Is an Epidemic

Truthout is serializing Beatrice Edwards’ book, The Rise of the American Corporate Security State. To read more excerpts from this book, click here.

Reason to be afraid #6:

Systemic corruption and a fundamental conflict of interest are driving us toward the precipice of new economic crises.

In the early spring of 2010, my phone rang, and the caller ID read “Unknown.” On the other end of the line was an AIG whistleblower. Until the 2008 financial crisis, AIG was a rogue elephant in the zoo of the US financial world, unknown to most Americans. After that, though, everyone who read a newspaper knew what AIG was. AIG Financial Products Division (AIG-FP), the London-based unit that took on the risk for the Wall Street banks, became a familiar villain in the developing story of fraud and corruption underlying the Great Recession of 2008–2009.

My caller spoke tentatively at first, without specifics, as cautious whistleblowers do, but she was concerned about the way in which the AIG compliance office at corporate headquarters worked. This was the office responsible for ensuring that the huge insurer did not break the law in any one of the 145 or so countries where it operated.

According to the caller that morning, the mainstay of AIG’s compliance program was “a joke,” and it had been for a long time. For years the program consisted mainly of a list of about four hundred email addresses for compliance and law enforcement officials around the world, many of which were defunct (either the addresses, the officials, or both). Whenever AIG wanted to inform the offices abroad and their government counterparts of a new legal or ethical obligation, AIG Compliance would blast out the news using this listserv. Then the office director would order the deletion of the plethora of bounce-backs and consider her mission accomplished.

Over the next few weeks, we started getting names and numbers of other sources at AIG who would validate the fact that much of the compliance work there was substandard, leading up to and away from the weekend in September 2008 when the financial captains at the helm of the banking world finally realized they had steered it off a cliff. The AIG allegations we heard were awful, and the people who made them were afraid to have their names used in any public way. All of the claims hung together, though. One corroborated another. And the charges were quite specific.

Everyone I talked to mentioned James Cole, who worked in the office as an independent consultant for the SEC. He was positioned in the compliance office, went to AIG board meetings, wrote reports, interviewed people, and generally hung around. The Wall Street Journal reported that this assignment earned his law firm, Bryan Cave, around $20 million, for about five years work.

Sources at AIG pointed out that an independent consultant/ monitor for the SEC in the compliance and regulatory office was a condition of a deferred prosecution agreement that AIG struck with the SEC, the Bush administration’s Department of Justice, and the New York State Department of Insurance to settle allegations of aiding and abetting securities fraud dating back to 2000. At the time, deferred prosecution agreements (DPAs) were typically used to deal with low-level narcotics cases, and the New York Times called the agreement “somewhat unusual in white collar cases.”

Under the terms of the DPA, AIG paid a fine and appointed Cole to report to the SEC and the Justice Department on compliance. In this position, he reviewed the dubious financial transactions from 2000 forward, structured by AIG that supposedly violated accounting regulations and securities laws. These transactions were developed and handled by AIGFP PAGIC Equity Holding in London, headed by Joseph Cassano. At the time, Cassano was also the also the head of AIG Financial Products Corporation, the unit that sank AIG, its banking counterparties, and the US economy in 2008.

Then US deputy attorney general Eric Holder established the first guidelines relevant to DPAs for corporations in 1999 in a document that came to be known as “the Holder memo.” In the years since then, the memo has been criticized for its failure to address the DPA scenario specifically and the nebulous standards it set out. Among other things, the Holder memo failed to define compliance or to specify the requirements for selecting external monitors of corporate governance. The lack of definition caused great power to default to prosecutors, and left the door open to more and more flexible DPAs. These agreements have increased in number substantially, surging to thirty-eight in 2007, up from four in 2003.

Despite Cole’s monitoring after 2004, AIG was once again in trouble with the SEC and the Justice Department by 2006. The corporation faced charges of additional financial improprieties and bid-rigging but settled with a second DPA, despite the fact that one of the factors applied to assess eligibility for a DPA under the guidelines of the Holder memo is the lack of an earlier offense. Under the 2006 agreement, admittedly, the fine was much stiffer than that exacted in 2004: AIG paid $1.6 billion in 2006 and broadened the scope of Cole’s monitoring authority. At that point he became responsible for examining AIG’s controls on financial reporting as well as corporate governance in the compliance area. In exchange for this deal and the two payments, the charges against AIG were resolved two years before AIG-FP was identified as the epicenter of the 2008 financial cataclysm.

As the AIG monitor, Cole was to file reports with the Justice Department and the SEC. The reports, which were pages and pages of nothingness, were secret, but we obtained those Cole filed with the SEC. They were not for public consumption even in 2010, when the American public owned AIG, or 90 percent of it. Also, in light of what had happened there, the fact that Cole’s reports to the SEC in 2006, 2007, and 2008 were uniformly basic and abstract was important in itself. In August and September 2007, he issued 215 pages of stupefying, mundane recommendations that read as if they came directly from a fraud examiner’s manual somewhere. There was no meaningful interpretation, no analysis of how the law applied to AIG, even in the United States, never mind how it might affect overseas operations. There was no review of the corporation’s actual practices, nor of the adaptations required to ensure that the crimes addressed in the DPA did not recur. The whole job looked like a cut and paste, until page eight-seven of the September 30 report. There, Cole wrote:

The Derivatives Committee [of the AIG Board] should be responsible for providing an independent review of proposed derivative transactions or programs entered into by all AIG entities other than AIG Financial Products Corp. (“AIG-FP”).

He elaborated this exemption further:

For derivative transactions or programs entered into by AIG-FP, the appropriate independent review of the proposed derivative transactions or programs should be conducted by AIG-FP.

If AIG-FP reviews AIG-FP’s transactions, though, that isn’t really an independent review, is it?

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Nationstar Temporarily Restricted in Servicing Mortgages Last Year

Nationstar Temporarily Restricted in Servicing Mortgages Last Year

Nationstar Mortgage Holdings Inc., NSM -4.27% a company that processes payments for millions of mortgages, was temporarily prevented last year from buying the rights to service home-loans backed by Fannie Mae FNMA +0.26% and Freddie Mac,FMCC -0.52% according to people familiar with the matter.

Although the restrictions on Nationstar were later lifted, the incident helps illustrate why a federal watchdog is raising concerns about rapid growth of nonbank financial firms in the mortgage market. A report released Tuesday by the inspector general of the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, said some nonbank mortgage-servicing companies may lack adequate funding, putting the mortgage market at risk.

The report described the troubles of one particular company that breached Fannie Mae’s minimum capital requirement for servicers, which prompted Fannie Mae to limit the company’s ability to acquire servicing rights for additional mortgages.

The report didn’t mention the name of the company, but people familiar with the matter identified the servicer as Nationstar. In a statement, a Nationstar spokesman said the company “has strong working relationships with Fannie Mae and Freddie Mac.” The spokesman said the company currently meets “all capital requirements for conducting business.”

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Regulator Benjamin Lawsky Is the Man Banks Fear Most

Regulator Benjamin Lawsky Is the Man Banks Fear Most

When France’s BNP Paribas, one of the world’s largest banks, was targeted by U.S. investigators for conducting billions of dollars of illicit business with Iran, Sudan and Cuba, it thought the Treasury Department and the Justice Department were its biggest headaches. It was wrong. It soon got body-slammed by an obscure New York banking regulator named Benjamin Lawsky.

The miscalculation was understandable. Unlike Treasury and Justice, the nascent civil agency Lawsky leads, the Department of Financial Services (DFS), has no power to conduct criminal investigations or file criminal charges. Still, Lawsky, a former federal prosecutor and former top deputy in the New York attorney general’s office, can subpoena confidential documents and force executives to testify as part of his civil investigations. But the cudgel that has made him a formidable—and controversial—player in international finance is the power to cripple or potentially kill a major bank by yanking its license to do business in New York, the nerve center for the global economy.

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Ex-Goldman Workers Call For Class Cert In Gender Bias Suit

Ex-Goldman Workers Call For Class Cert In Gender Bias Suit

Case Title

Chen-Oster et al v. Goldman, Sachs & Co. et al

Case Number

1:10-cv-06950

Court

New York Southern

Nature of Suit

Civil Rights: Jobs

Judge

Analisa Torres

Law360, Los Angeles (July 01, 2014, 10:20 PM ET) — A group of former employees at Goldman Sachs Group Inc. upped the ante on Tuesday in a lawsuit that alleges the bank pays women less, sexualizes women and undermines their success, asking a New York federal judge to certify them as a class.

Cristina Chen-Oster and Shanna Orlich sought certification in a motion filed Tuesday, arguing that, counter to what Goldman has claimed in the suit thus far, the women working in different departments across the giant bank can be grouped together for the suit because…

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More Than $127 Million Of CMBS Loans Securitized By Natixis

More Than $127 Million Of CMBS Loans Securitized By Natixis

Natixis, the corporate, investment and financial services arm of Groupe BPCE, reports that it recently securitized $127.1 million of loans in a conduit commercial mortgage-backed securities (CMBS) transaction.

The firm served as both a sponsor, via Natixis Real Estate Capital, and a co-manager, via Natixis Securities Americas, in a $996.3 million transaction.

Specifically, Natixis contributed seven loans with a cumulative balance of $127.1 million to the securitization of 49 loans amounting to $996.3 million. The five-, seven- and 10-year fixed-rate loans were primarily secured by retail, office and multifamily properties.