Welcome to Inner City
Press’ Bank Beat.
We aim to scrutinize the industry, from high to low. Our other
Reporters cover Community
Reinvestment, the Federal Reserve,
and
other beats.
ICP
has
published
a
(double)
book
about the
Bank Beat-relevant topic of predatory lending - click here for sample
chapters, an
interactive map,
and
ordering
information. The Washington
Post of March 15, 2004,
calls Predatory Bender: America in the Aughts "the first
novel about
predatory lending;" the London
Times of April 15, 2004, "A Novel Approach," said it "has a cast of
colorful characters." See also, "City
Lit:
Roman
a
Klepto
[Review
of
'Predatory
Bender']," by Matt
Pacenza, City
Limits, Sept.-Oct. 2004. The Pittsburgh
City
Paper says the 100-page afterword makes the "indispensable
point that
predatory lending is now being aggressively exported to the rest of the
globe." Click
here
for that
review; click here
to Search This Site.
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July 26, 2010
IMF
Cuts
Off Funds for Central Africa, Goes on Vacation, Ignores Guinea
Bissau, Ukraine, Hungary and even Haiti Questions
By
Matthew
Russell Lee
UNITED
NATIONS,
July 24 -- The IMF, which positions itself as concerned
about lower income countries and people, cut off funding to the
central bank for six Central African states, and then went on
vacation.
The cut off was justified, based on corruption. But when
will the problem be solved and the funding be restored?
On July 22,
Inner
City Press submitted a series of questions to the IMF in connection
with Spokesperson Caroline Atkinson's online briefing, which we can
no longer call fortnightly.
Of the
questions, only one was read out
loud, about the Central African bank. The other questions were
neither read nor answered. And there will be no next briefing until
late August, after the IMF Board's vacation under August 20. (In
fairness to the IMF, the World Bank also followed with a cut-off.)
On July 22,
Ms.
Atkinson read out:
“thanks
to those of you who participated online. And I’ll get back to any
of you that have further questions that we haven’t been able to
take. Actually, I just see—sorry, there’s another one [from Inner
City Press] that’s flashed up, asking about the status of the
Fund’s review of the Bank of Central African States and 'when will
the suspension and disbursements to countries—well, to the BEAC,
which then on lends to countries be reconsidered?'
“And
just note that we have been closely engaged with the authorities at
the BEAC and with the CEMAC member country authorities to help them
to address the underlying issues that allowed it to take place. And
we hope very much that we can reach satisfactory understandings that
will provide assurance that money disbursed through the BEAC will be
properly safeguarded and that, therefore, we can continue with the
disbursements. And, of course, we’ll let you know when that
happens. Okay, thank you very much.”
She also said,
“the
Executive Board will be on an informal recess from Monday, August 2,
until Friday, August 20. We will also, by the way, be having our next
press briefing probably late in August.”
So what will
happen
with BEAC, the central bank for the six states of the Economic
Community of Central African States (CEMAC) -- Gabon, Equatorial
Guinea, Cameroon, Chad, Congo Republic and Central African
Republic? CAR for example is in chaos, with elections supposedly
upcoming but
rebels active in Birao and elsewhere.
In the interim,
in Cameroon the Finance Ministry was robbed. The Minister of Finance,
Essimi Menye said FCFA 700 million as reported by the media as having
been stolen would have required a pickup vehicle to transport. He
also said such a sum of money was not kept at the Ministry rather at
the Bank of Central African States, BEAC. Hmm...
Inner City
Press'
other questions, which the IMF has yet to acknowledge much less
respond to:
On
Guinea-Bissau,
does naming of coup leader to the top Army post have
an impact on IMF re-scheduling consideration of HIPC & MDRI?
Also
on
Hungary, why is the IMF opposed to Orban's proposed bank tax?
Regarding
Haiti,
some have questioned why the IMF's new $60 million is not a
grant but a loan. Can you please explain?
On
Ukraine,
will the Board on 7/28 be considering both a $3 billion loan
& breaches of information disclosure requirements by Ukraine?
What's the connection between the two?
Watch
this site.
July
19,
2010
A
securities
arbitration
panel ordered J.P. Morgan Securities to pay a
customer more than $2 million, including sanctions... A Financial
Industry Regulatory Authority arbitration panel in Richmond, Va.,
awarded $1.8 million, plus interest from May 2008. The Finra panel
also made an additional--and rare--award of sanctions in the form of
$218,000 in legal fees, $25,000 in expert witness fees, and $9,000 in
costs, according to the award, dated July 8. It found that J.P.
Morgan and its lawyer, Stephanie Karn of Richmond, Va., allegedly
weren't "wholly forthcoming.”
Why are we not
surprised?
At Citigroup, "I'm
very pleased we have produced solid operating results for the second
consecutive quarter," Chief Executive Vikram Pandit said during
a conference call with investors. Growth will come from overseas, CFO
John Gerspach told reporters during a conference call. The further
away from the U.S., the better Citi's prospects are for making new
loans, he said. Consumer banking revenue rose 9% in Latin America and
gained 10% in Asia, which generated a combined 90% of Citi's
second-quarter consumer banking income of $1.2 billion.
And on the
conference call, there was no answer to an analyst's request to meet
with Pandit or his bandits...
July
12,
2010
Bank
of
America
was
the world's largest private bank last year, topping
Switzerland's UBS, with $1.74 trillion in assets, ahead of UBS' $1.59
trillion. Morgan Stanley, which jumped four places from last year
after buying Citigroup's Smith Barney brokerage, held third place
with $1.51 trillion in assets. Wells-Fargo and Credit Suisse rounded
out the top five, while Switzerland's family-controlled Pictet &
Cie. cracked the top-10 for the first time, with $243.21 billion in
assets...
July 5, 2010
As
Romanian
Court
Rules
Against
Pension Cuts, IMF Nods at 5% VAT
Increase
By
Matthew
Russell
Lee
UNITED
NATIONS,
July
1
--
Romania's Constitutional Court has struck down the
pension cuts connected to the International Monetary Fund's facility
to that country. On July 1 Inner City Press asked IMF Spokesperson
Caroline
Atkinson for the IMF's reaction to the decision, and if the
government's move to boost the Value Added Tax from 19% to 24% would
be enough for the IMF.
Two weeks
earlier, Ms. Atkinson had responded to Inner City Press' question
about the Constitutional Court in this way, as transcribed
by the IMF
itself:
“I
have a question online, which is a bunch of questions, but on
Romania: 'The government’s measures are being challenged in the
Constitutional Court. What does the IMF think of the suit? What
impact might it have on the IMF facility for Romania?' And it’s
absolutely right that the fiscal adjustment measures, which are prior
actions for our program, have to be approved by the Constitutional
Court, and of course we respect that process. That’s an entirely
appropriate process. We don’t think that that will lead to any -- I
mean, that’s not something that we’re concerned about.”
And so on July
1
Inner City Press asked, “the Constitutional Court has now rejected
the pension cuts connected to the IMF facility. What is the IMF's
reaction, since two weeks ago it was said that the IMF did not expect
this result?”
Ms. Atkinson
said, “I'm not sure about that.” But she'd said of the Court
review, “That's not something that we're concerned about,” a lack
of concern that can be equated with not expecting a negative court
decision.
Now on July 1,
Ms.
Atkinson said “the Romanian authorities have identified other
measures... What we look at is an overall package, not specifying one
measure or another.”
June
28,
2010
Game on: Inner
City Press / Fair Finance Watch has filed a timely challenge with the
Federal Reserve to the pending applications of The Toronto-Dominion
Bank to acquire The South Financial Group and its Carolina First
Bank.
FFW obtained TD's
2009 HMDA-LAR, which has not been reviewed or taken into account in
any regulatory review of TD. The data are troubling, showing for
example that in 2009 Toronto Dominion denied fully 83% of mortgage
loan applications from African Americans, versus only 42% of
applications from whites. TD's denial rates for Latinos and Native
Americans, both 68%, were also troubling. Public hearings should be
held and the applications not approved.
TD in fact makes
rate spread or subprime loans, but not in a fair manner. African
Americans at TD are 1.93 times more likely to be confined to higher
cost loans than whites.
While the FRB,
despite the stated purpose of HMDA in helping to identify
discrimination, has shifted to a dismissive approach to HMDA, it will
be hearing different at its upcoming HMDA hearings, testimony at
which should be considered by the FRB in connection with this
application.
On a recent
investors' conference call, TD bragged about its “FDIC-assisted
transactions” -- which , significantly, were not reviewed for CRA,
and on which there was no comment period. A public hearing is needed
on this one. FFW's request in this letter for a complete copy of the
applications includes also any and all information in the possession
of the FRS concerning TD's “FDIC assisted transactions.”
Meanwhile,
shareholders of South Financial have filed suit against the deal.
See, e.g., Greenville (SC) News, June 22, 2010. TD has told its
shareholders it will somehow convert fast food restaurants into bank
branches. See, e.g., Globe & Mail, June 17, 2010. Before serving
up its disparate lending, public hearings should be held. These
issues must be explored, under managerial and financial factors, in
connection with these applications. FFW has requested public
hearings.
June
21,
2010
As
Romania's
Wage
Cuts
Challenged
in
Court,
IMF Says Not Concerned, Lead Nowhere
By
Matthew
Russell
Lee
UNITED
NATIONS,
June
17
--
A
day
after Romania's opposition filed a
challenge to the government's
cutbacks
of
public
sector
wages
by 25%,
International Monetary Fund spokesperson Caroline Atkinson said, we
don't think it will lead to anything, it's not something we're
concerned about. Video here,
from
Minute
30:04.
Inner City
Press
had asked, "What does the IMF think of the suit and what impact
might it have on the IMF's facility for Romania?" Ms. Atkinson
said this was "absolutely right, the fiscal adjustment measures
which are prior actions for our program, have to be approved by the
Constitutional Court."
This makes it
sound like review by the Court is routine -- or "entirely
appropriate," as Ms. Atkinson put it. But Reuters reported
that
the "government can start applying the austerity measures ahead
of any court judgment, but if declared unconstitutional they would
have to be revoked."
If Reuters is
correct that the pending challenge in the Constitutional Court could
result in the austerity -- or "fiscal adjustment" --
measures being revoked, why does the IMF so blithely predict it will
lead to nothing, and say they are not concerned about it?
Ms. Atkinson
began
by saying, there is a question from Inner City Press online, "a
bunch of questions, but on Romania." She then never read out or
answered any of the other questions, about Hungary, Poland, Zimbabwe
and Kyrgyzstan. There was, however, another question about
Kyrgyzstan, the IMF's answer to which we will include in a
forthcoming wider piece about the bloodshed there. Stay tuned.
Footnote:
From
the Taylor Bean indictment -- ""[Farkas] and a TBW
co-conspirator had in fact diverted that $25 million from an Ocala
Funding bank account," the document said. "Further,
[Farkas] and other co-conspirators supplied the 10% down payment on
behalf of the two $50 million investors without the investors'
knowledge or consent." The 30-page indictment included a
forfeiture notice listing assets including a 1963 Rolls Royce, a 1958
Mercedes Benz Cabriolet 220 and a 1961 Porsche." Rev rev.
June
14,
2010
So while Citigroup
is looking to sell its $50 billion portfolio of retailers' credit
card loans, as with CitiFinancial it says it cannot find a buyer. Is
Citigroup trying to become the unwilling but continuing predator?
Among those not willing to buy: HSBC and GE Money. Those perhaps
looking: Santander. Sears, Citi's "partner," is getting
pissed.
June
7,
2010
So JP Morgan Chase
was hit with the UK FSA's largest fine ever, for blending its own
money with that of clients. Why are we not surprised?
May
31,
2010
Citigroup in
cemetery scam: The Financial Industry Regulatory Authority has hit
Citigroup Inc. (C) with $1.5 million of sanctions for allegedly
failing to supervise millions of dollars in trust funds belonging to
cemeteries in Michigan and Tennessee. The agency accused the company
of mishandling funds as broker Mark Singer and two of his customers
were involved in a scheme to misappropriate more than $60 million in
cemetery trust funds in 2004 through 2006. Citi, which neither
admitted nor denied the allegations but consented to the entry of
Finra's finding, will pay a $750,000 fine and $750,000 in commissions
repayment
May
24,
2010
Amid
Protests,
IMF
Says
Wage
Cuts
Were
Romania's
Choice,
IMF
for Vulnerable
By
Matthew
Russell
Lee
UNITED
NATIONS,
May
20
--
With
Romania
wracked
by
the
most serious protests
since its 1989 revolution, Inner City Press on May 20 asked
International Monetary Fund spokesperson Caroline Atkinson if the IMF
would consider re-negotiating the 25% pay cut to public sector
employees portrayed by the government as a condition for receiving a
Greece-like bailout.
On May 6 when
Inner City Press asked
about Romania, Ms. Atkinson said there were negotiations going on.
On May 20, Ms. Atkinson's
lengthy answer denied IMF responsibility for the cuts, saying they
were choices of the government.
Ms. Atkinson of the IMF said:
"This
gives
me
an
opportunity
to
clarify
that
the
IMF
did not specify or
insist on any wage cuts with Romania... we did agree with the
Romanian government that some further fiscal tightening would be
needed in order to put their program back on track .. the goal is to
have sustainable public finances that will allow for a recovery and
there are of course different combinations of expenditure cuts and
tax increases..
"The
government
chose
to
focus
on
the
expenditure
side
in
particular on
wage cuts. That was the government's decision. Of course there are no
easy options when there are budget cuts. We have been clear that we
want to protect the most vulnerable and to have measures that limit
the impact on society and can get the most ownership within society."
Tell that
to
the tens of thousands protesting in Romania's streets. Watch this
site.
Citi
costs the public: Citigroup received a $45 billion investment under
Treasury's Troubled Asset Relief Program. The bank repaid $20 billion
and converted, with Treasury's approval, the remaining $25 billion to
common stock giving taxpayers 27% of the New York bank. Treasury
hired Morgan Stanley and gave it "discretionary authority"
to sell the Citi shares at market prices, according to a prospectus
filed in April. Selling the shares at market prices is in contrast to
a follow-on offering of shares in which Treasury could have sold
substantial blocks at once. That process gives the seller price
certainty but often depresses the share price because of a surge in
supply. Selling at the market, as Treasury has chosen to do, buffers
the shares from a sudden change in volume. However, the recent 21%
plunge in Citi's value will probably
diminish returns for Treasury and raises the possibility some of the
shares could be sold at a loss.
May
17,
2010
J.P.
Morgan
Chase
&
Co.
and
Deutsche
Bank
have
both
removed themselves
from the running for RBS Sempra's energy-trading and
retail-energy-supplier businesses, largely because of expectations of
a "Volcker Rule" that would force banks to exit from
proprietary-trading businesses. Good.
May
10,
2010
Citigroup
said
a
one-notch
downgrade
of
its
long-term
debt
and
short-term
commercial paper rating would likely mean the bank has to replace
$10.8 billion in commercial paper, $2.5 billion in tender option
bonds, and $1.1 billion in margin requirements. However, the bank
said it has $82.3 billion in liquidity resources it could use as a
contingency for such a downgrade, Citi said in its first-quarter
earnings filing with the Securities and Exchange Commission. Congress
is debating a financial reform bill that might end the concept of
"too-big-to-fail," defining banks that would pose too big a
systemic risk to the financial industry and the economy to be allowed
to fail. If enacted, such legislation would result in rating
downgrades, bond-rating agencies warned they might downgrade big
banks.
May
3,
2010
Notable is the
lawsuit against Wells Fargo for failure to maintain ten apartment
buildings in the Bronx, New York that it is foreclosing on, including
3018 Heath Avenue. The case involves over 500 families, tenants of
Millbank Real Estate before it defaulted on its $35 million mortgage.
Then Wells Wargo and LNR Partners moved in.
April
26,
2010
FOIA, and
Citigroup's cheapskatery, in the news: Citigroup Inc.'s unsuccessful
bid for the teetering banking operations of Washington Mutual Inc.
proposed that the U.S. government absorb a majority of the thrift's
loan losses and limited Citigroup's financial exposure to $10
billion, according to a document released by regulators. Terms of the
offer by the New York bank previously were kept secret by the Federal
Deposit Insurance Corp., which sold the failed banking units to J.P.
Morgan Chase & Co. for $1.88 billion in September 2008. The
document was disclosed following a Freedom of Information Act
request...
April
19,
2010
Three
former
JPM
Chase
executives
Denis
O'Leary,
Stephen
Rotella
and
Harry
DiSimone have formed Encore Financial Partners, funds raised by
Goldman Sachs, to "target" U.S. based banks...
Large
loans
from
foreign
banks,
including
Citigroup
Inc.
and
Deutsche
Bank
AG, helped to feed "the buildup of risk" in Iceland's
banking system, which collapsed spectacularly in 2008, a
comprehensive report from a parliamentary commission concluded.
According to the
report, Kjalar hf, an investment company controlled by Ólafur
Ólafsson, borrowed from Citigroup's Citibank unit in 2007, using
as
collateral shares in Iceland's Kaupthing Bank held by a Kjalar
subsidiary, Egla Invest. Mr. Ólafsson was a big Kaupthing
shareholder.In January 2008, with Kaupthing's share price falling,
Citibank made a margin call. So Kjalar turned to Kaupthing. Kaupthing
granted a €120 million loan. In March, after Iceland's currency
weakened, Kjalar borrowed more. The next month, Glitnir also made a
loan to Kjalar.
Björgólfur
Thor
Björgólfsson,
an
Icelandic
mogul,
received
a
€153
million
($208
million)
loan
from Landsbanki, in which he and his father had a 41%
stake, to satisfy demands from Deutsche Bank. The report said the
German bank lent him €800 million in July 2007 to finance the
takeover of generic-drug company Actavis Group. Landsbanki's former
chief executive described the deal in an interview with the
commission: "Then it ends...with us lending Björgólfur Thor
our own money so he can honor certain things in Actavis," an
apparent reference to satisfying debt covenants. Such transactions
between a bank and its major owners are out of step with banking
rules elsewhere. "Here, we call it insider dealing," says
Cornelius Hurley, director of the banking-law program at Boston
University. Prof. Hurley notes that U.S. regulations put "Draconian"
restrictions on the amount and terms of loans to insiders.A Deutsche
Bank spokeswoman declined to comment.
April
12,
2010
In
the
first
study
of
the
just-released
2009
mortgage
lending
data,
Inner City Press / Fair Finance Watch has found that U.S. Bancorp
confined African Americans to higher-cost loans above the Federal
defined subprime rate spread 1.72 times more frequently than whites.
U.S. Bancorp confined Latinos to higher-cost loans above the rate
spread 1.71 times more frequently than whites, the data show. 2009 is
the sixth year in which the data distinguishes which loans are higher
cost, over the federally-defined rate spread.
Regional bank BB&T in 2009 confined
African Americans to higher-cost loans above the rate spread 1.90
times more frequently than whites, and confined Latinos to
higher-cost loans above the rate spread 1.43 times more frequently
than whites.
Regions in 2009 confined African
Americans to higher-cost loans above the rate spread 1.68 times more
frequently than whites, and confined Latinos to higher-cost loans
above the rate spread 1.33 times more frequently than whites.
Several
lenders, including a large credit union, exhibited disparities denial
rate beween African and Latinos compared to whites in 2009. Citigroup,
for example, denied applications by African Americans 1.45
times more frequently than whites, while denying Latinos 1.35 times
more frequently than whites. JPMorgan Chase denied applications by
African Americans 1.54 times more frequently than whites, while
denying Latinos 1.41 times more frequently than whites. The Pentagon
Federal Credit Union denied applications by African Americans 2.04
times more frequently than whites, while denying Latinos 1.84 times
more frequently than whites. Further
studies
will
follow.
April
5,
2010
JPM Chase's Dimon
remains both arrogant and evasive. "'For JP Morgan Chase, it was
not a question of access or need–to the extent we needed it, the
markets were always open to us–but the program did save us money,'
Dimon said. J.P. Morgan stopped using the guarantees in April 2009
because 'it just added to the argument that all banks had been bailed
out and fueled the anger directed toward banks.' Dimon d idn’t say
how much the bank saved from the FDIC’s lending program." Why
not?
March
29, 2010
China
and Boston: BofA's "Brian Moynihan said China Construction Bank
is a key strategic partner for the U.S. lender. He made the comments
at a media briefing during his first official visit to China since he
took up the post at Bank of America. Moynihan said the bank is
'comfortable where we are,' in response to a question on whether the
U.S. lender will raise its stake in the Chinese bank."
Some
say that Moynihan still living in Boston, where activists visited him
while he was painting his house, means he'll try to move BofA right
out of Charlotte NC. We'll see.
March
22,
2010
More and more
complains are pouring in about Citigroup, Citifinancial and Citi card
services making repeated and abusive telephone calls. One
complainants says she took out a personal loan from CitiFinancial,
and since then has been mis-charged late fees that they refuse to
explain, only call about. Citi does Radio Shack's private label
calls, and has a robo-caller calling its customers. This is the new
Citi?
With
Euro
Tanking
On
Reports
of
Greece
Turning
to
IMF,
of Half Answers, on
Dodd Bill and Sri Lanka
By
Matthew
Russell
Lee
UNITED
NATIONS,
March
18,
updated
--
As
Angela
Merkel
speaks
darkly about
ejecting
from the Euro zone non compliant countries like Greece, that
country's renewed threat of turning for help to the International
Monetary
Fund has the market selling off the Euro.
Near
the end of the
IMF's fortnightly press briefing on Thursday morning, spokesperson
Caroline Atkinson, beyond saying the IMF has not had a request for
financial assistance, declined to describe various aspects of Greece's
relations with the IMF. Her boss, Dominique
Strauss Kahn, previously
bragged that the IMF would "intervene" in Greece upon
request.
France's
finance
minister Lagarde, belatedly added to the UN's climate finance group
after Secretary General Ban Ki-moon was confronted with the fact he'd
named men to all 19 positions on the panel, has said the EU can still
be Greece's interlocutor and helper, not the IMF.
Her
president
Sarkozy has a personal motive to oppose IMF help to Greece: Strauss
Kahn is polling ahead of him for the next French election.
Inner
City Press
submitted to the IMF during its briefing, but without answer yet,
questions about financial reform and the Fund's apparently stalled
consideration of a third tranche to Sri Lanka. It was mostly Greece
on Thursday, with few answers from the IMF.
Update:
later
these
two
answers
came
in
from
the
IMF:
Re
Senator
Dodd’s
bill,
overall,
we
support
the
thrust
toward
comprehensive
reforms that would address the gaps in financial
regulation illustrated by the crisis. Strong and prompt
implementation would both help to secure financial stability going
forward.
Re
Sri
Lanka,
not
much
update.
As
you
know,
staff
will visit Colombo
after the parliamentary elections and the formation of the new
cabinet, to discuss with the government its plan for a 2010 budget.
Best
regards,
Yoshiko Kamata
Media Relations, IMF
March
15,
2010
The story goes
that Barclays is interesting in another North American buy. Four
institutions are mentioned as targets: Fifth Third, Comerica,
SunTrust or PNC. In Washington last week, Inner City Press mentioned
the last of these to a Pittburgher, who said such a deal would be
"terrible" for the city. We'll see.
Citigroup,
HSBC
and
JPMorgan
Chase
helped
cause
the
collapse
of
Lehman Brothers
Holding Inc. by demanding more collateral and changing guarantee
agreements, the bankruptcy examiner said last week. “The demands
for collateral by Lehman’s lenders had direct impact on Lehman’s
liquidity pool,” said Anton Valukas, the U.S. Trustee-appointed
examiner, in a 2,200-page report filed in Manhattan federal court.
“Lehman’s available liquidity is central to the question of why
Lehman failed.”
March 8, 2010
IMF
Says
"No
Agreement"
With
Sri
Lanka,
Meets
in
Hungary,
Omits
Bulgaria, Angola and Chavez Questions
By
Matthew
Russell
Lee
UNITED
NATIONS,
March
4,
updated --
The International Monetary Fund's lack of
transparency is matched by its claims to be transparent. Take for
example the IMF's arrangement with Sri Lanka, where parliament has
been suspended and the state of emergency extended.
Two
weeks ago,
Inner City Press submitted three questions to the IMF's briefing.
Spokesman David Hawley did
not take any of the questions on camera.
Afterwards, and after complains, two of the three questions were
answered, but not the one on Sri Lanka: "With an IMF team in
Sri Lanka, what is the IMF's thinking on the EU's suspension of the
GSP Plus tariff treatment, and/or the arrest of opposition politician
Sarath Fonseka?"
On
March 4, Inner
City Press submitted five questions, some repeatedly. Spokesperson
Caroline Atkinson read out her own summary of the question, about the third
tranche of the IMF's loan, and then said that the IMF "mission
returned from Sri Lanka," we don't have an agreement, we don't
expect the third tranche to be released."
Then
Ms. Atkinson
said, I understand we have more online questions, we'll wait for
technology. See transcript below.
But
it appears
that the delay is not technology related, but rather consists of IMF
staff screening and editing the questions that are submitted. Of
Inner City Press' four other questions, only one was mentioned by Ms.
Aktinson. Inner City Press had submitted, "In Hungary, why did
the IMF meet with opposition party Fidesz? What was discussed? Fidesz
says the discussions concerned the deficit, and if Fidesz comes to
power in the April elections -- is that true?"
Ms.
Atkinson read
only part of the question, then said that such meetings are
"common... an exchange of views." But the
opposition
party
said
it
had
an
agreement
with
the
IMF. Shouldn't the IMF respond?
Inner
City Press
submitted for the IMF's response this quote
last
week
from
Hugo
Chavez: ""When Venezuela used to get financing, the IMF
would come here and impose conditions and rules, and sometimes it
would even dismantle our laws. But now, with China and Venezuela,
we're on equal footing." But they woudn't even acknowledge, much
less respond to, the request for a reaction.
Update: after the
expiration of the IMF's embargo and the publication of the above, an
IMF spokesperson replied, "I have nothing for you on this. However, I
can confirm that Venezuela and China are both members of the IMF. "
Two
of the
submitted questions were either not passed on to Ms. Atkinson, or
were omitted by her and she said there are no more questions:
On
Angola,
is the IMF any closer to assigning a resident representative
to Luanda? What progress has Angola made to the transparency
discussed by the IMF, particularly in the oil sector?
Bulgarian
Finance Minister Simeon Djankov says he's asked the IMF to inform him whether
Greek
owned
banks
are
"draining
funds
from
their
Bulgarian
units"
-
can the IMF confirm the request, if so will
it respond in the 3 weeks given, and separately what does it think of
this "draining" issue?
This
Bulgaria /
Greece question, Inner City Press submitted repeatedly. But it was
not acknowledged.
Update: after the
briefing was over, an IMF spokesman wrote to Inner City Press that
"I’ve asked Olga to get back to you on this. Not familiar with this
request. We’re checking." Olga would seen to be Olga Stankova, Senior
Press Officer. Numerous publicly available article quote Bulgarian
officials about their request to the IMF.
Of those few
journalists present in person at the
IMF's briefing, many of the questions were about Greece:
would
there
be
a
meeting
is
DC?
No.
There were
questions about Iceland and
Ukraine, an expression of condolance for Chile, dodging on gold. Mr.
Strauss-Kahn will be in Kenya, with Bob Geldoff and Raila Odinga.,
then on to Zambia. What about Angola? Watch this site.
Update:
Later
on
Thursday,
the
following
on
Angola:
Subject:
Angola
From: Thomson, Alistair at IMF
To: Inner City
Press
Date: Thu, Mar 4, 2010 at 5:15 PM
Matthew,
Thanks
for
your
question
on
Angola.
We
are
in
the process of
considering possible candidates for the post of resident
representative. On your second question, fiscal transparency is a key
part of the authorities' economic program agreed with the Fund. A
mission is currently in the field to conduct the first review of the
stand-by agreement.
We
will continue to
follow all this. Watch this site.
From the IMF's
transcript:
Ms. Atkinson: I have a
question online
about the IMF's third tranche to Sri Lanka due in March. I believe we
have announced that the mission's return from Sri Lanka that we don't
have an agreement with them so we don't expect that the third tranche
will be released at least until we have an agreement with them.I
understand there are more online questions so we have to wait for
technology....
I wanted to go to a
question that I'd
had online about Hungary. He was asking if there was significance in
the mission meeting with the opposition party when they were there. I
wanted to note that it's common practice that we will meet with —
and this has happened before — that we've met with the opposition
party, and of course there were no negotiations with people who were
not in the government, but an informal exchange of views.
InnerCityPress.org
footnote: The banks that
helped conceal Greece's debt bomb included not only Goldman Sachs but
also, on an arms deal no less, Deutsche Bank....
March
1,
2010
Just asking: if a
bank funds settlements illegal under international law, and comes
before the Fed on an application subject to public comment where this
is raised, what happens? Watch this site.
With
Citigroup
moving
to
put
Ernesto
Zedillo
on
its
board
of directors,
questions are re-emerging about Zedillo's actions on the 1997
massacre at Acteal in Chiapas...
February 22, 2010
IMF on Zim,
Backtracks on Greece, Rebuffs Questions About Sri Lanka, Terse on
Pakistan and Gbagbo
By
Matthew
Russell
Lee
UNITED
NATIONS,
February
18,
updated
-- The IMF board will vote tomorrow on
Zimbabwe's request to regain voting rights, the IMF's David Hawley
said at the organization's biweekly media briefing on February 18.
While
not taking
any online questions, Hawley fielded repeated questions about Greece,
essentially backing away from Dominique
Strauss-Kahn's previous
blustered about the IMF being ready to intervene. Pundits says the
Europeans want to keep the IMF out -- Germany because it wants to
retain the centrality of a European process it is about to head,
France's Sarkozy because he does not want Strauss-Kahn to become any
more prominent before the 2012 elections.
While
Strauss-Kahn's IMF preaches to developing and troubled countries, it
cannot comply with its commitment to conduct an online media briefing
every two weeks. On February 18, the IMF's David Hawley presided over
an ill-attended session in the organization's new briefing room.
His
colleague Caroline Atkinson had inaugurated the room by saying it
should make online participation easier and more seamless. But on
February 18, despite online questions being submitted by Inner City
Press and surely others, Mr. Hawley did not acknowledge or answer a
single online question. Nor in the twenty minutes between the briefing
and
the expiration of the IMF's embargo did the IMF answer a request for
an explanation of the freeze-out.
Here
were the three
questions Inner City Press submitted:
On Pakistan, does
the IMF's recent
announcement mean that the bank supervision and power tariff goals
have been met?
Regarding Cote
d'Ivoire,
how
does
the
IMF
view
the
suspension
of
the
government and further delay of
elections by Laurent Gbagbo?
With
an
IMF team
in Sri Lanka, what is the IMF's thinking on the EU's
suspension of the GSP Plus tariff treatment, and/or the arrest of
opposition politician Sarath Fonseka?
On
other matters, Hawley said he would not speculate or comment about the
motivations of
Central Banks. Fine -- but why can't the IMF, despite the spending on
its new briefing room, manage to acknowledge and answer online
questions about its operations? Watch this site.
Footnote: While the
IMF took some online questions on February 4, after Ms. Atkinson said
the IMF would provide an answer about Yemen, none has been provided in
the fortnight since...
Update:
after
publication
at
embargo
time
of
the
report
above,
the IMF
indirectly justified its refusal to even acknowledge the three online
questions above:
Subject:
Re:
Three
online
questions
ignored
at
930
"online"
briefing,
please
explain and answer, thanks
From: Murray,
William
Date: Thu, Feb 18, 2010
To: Inner City Press,
"Atkinson, Caroline, Hawley, David
Matthew,
I
have
asked
the
press
officers
to
review
your
questions
and get back
to you where possible. Most of the questions contained stuff that
fell far afield of the IMF's role or mandate. So where we can answer
we will, but a big chunk of your questions could be better answered
by institutions not focused on financial and macroeconomic issues.
Well,
no. As linked to in the questions above, the IMF
has a team in Sri Lanka, has opined on power
tariffs and bank
supervision in Pakistan -- in fact, Inner City Press got answers on
those questions on a previous IMF conference call -- and is
reviewing Cote
d'Ivoire.
The IMF's
attempt to portray itself as divorced from politics, conditionality,
and governance is ham-handed and illegitimate. It is not for the IMF to
decide which questions to
acknowledge or not. Or, who in the IMF makes these decisions, and on
what basis? Watch this site.
Update -- after the
IMF's embargo expired, and after the above was published, responses
came in to two of the three above questions, which the IMF had tried to
argue somehow where not relevant:
Mr.
Lee:
The following statement can be
attributed to Adnan Mazarei, mission chief for Pakistan:
The
reforms to
strengthen the effectiveness of banking supervision in Pakistan are
proceeding as envisaged. The parliament is discussing amendments to
the banking law. The lower house has approved the amendments and they
are being discussed by the upper house. Electricity reform is also
proceeding, but somewhat slower than planned earlier due to delays in
implementing certain tariff adjustments.
Kind
Regards,
Olga Stankova, Sr. Press Officer
and
Matthew,
Further to your question on Côte d’Ivoire, I’m afraid it’s
still too early to say. You can attribute the following to me if it’s
helpful.
“The IMF, through its
resident
representative, continues to monitor the situation in Côte
d’Ivoire. It is
too early to assess any impact on the authorities’ IMF-supported
economic program.”
Best
regards, Alistair
Thomson, Press
Officer - External Relations Department
Apparently the question about Sri Lanka, where the IMF current has a
team on the ground, was deemed even less IMF relevant that this. Watch
this site.
* * * *
Why are we not
surprised, about JPM Chase? "A federal judge has rebuked J.P.
Morgan Chase & Co. for taking part in an what he called an "end
run, if not a down right sham" in the way it arranged a $225
million loan deal for Mexican telecom company Empresas
Cablevisión
SAB. In a ruling unveiled late last month in U.S. District Court in
Manhattan, Judge Jed Rakoff said the New York bank structured the
deal so it would have allowed a major competitor of Cablevisión
to
gain confidential information about the company, which is Mexico's
largest cable-television operator. That competitor, Telmex
Internacional SAB, is owned by Mexican billionaire Carlos Slim."
February
15,
2010
Fifth Third Bank is not only
involved
in
foreclosing
on
families’
homes
– it is also seeking to find a
horse that it lent against, or actually 203 horses. From the
Thoroughbred
Times:
“Fifth Third Bancorp claims Ahmed Zayat concealed a
mortality insurance claim for multiple Grade 1 winner Thorn Song last
summer in order to hide $2,750,000 in proceeds that he should have paid
to the bank. Zayat Stables owned Thorn Song, who was pulled up in the
Eddie Read Handicap (G1) on July 25 at Del Mar after bolting to the
outside rail in the first turn… Fifth Third said it made multiple
inquiries into the whereabouts and well-being of the Unbridled’s Song
horse… Fifth Third said the concealed insurance payment is evidence
that a receiver should be appointed to oversee Zayat Stables' 203
horses, which are collateral for $34,265,970 in loans that he owes the
bank.”
So Fifth Third, still fueled with TARP bail out funds, has been
lending tens of millions of dollars secured by horses. We first ran
into Fifth Third when they bought Old Kent, coming into the Detroit
market. Click
here
for
a
scan
of
a
newspaper
article
about the Community Reinvestment
Act challenge, complete with St. Patrick’s Day karaoke and happy hour
ads, courtesy of Google.
After the Federal Reserve approved the Fifth Third’s Old Kent
acquisition, in the Detroit MSA “
at Fifth Third
Mortgage, American Americans were over 10.3 times more likely to be
confined to higher cost loans than whites, and Hispanics were over 6.3
times more likely to be confined to higher cost loans than non-Hispanic
whites.” And now, horses. Fifth Third deserves more scrutiny….
A profile of the business press,
Congress and Geithner, during the Snowmaggedon lull -- following a
recent Geithner appearance on Capitol Hill, business reporters at a
major Mayor-named publication spent countless hours trying to identify
the person behind Geithner, nodding off. Who could they be?
Ultimately this press concluded it had been a Geithner staffer with
narcolepsy. One opined that maybe Geithner brought this staffer on
purpose, for sympathy. And still it won't save him. Nor should it....
Footnotes:
annual reports say J.P. Morgan has $18.4
billion in exposure to Spain....
February
8,
2010
Missing
from
New.Citi.com
are
admission
like,
"Yes
CitiFinancial
trained
its
employees
to hard sell unnecessary credit insurance, even on
items like fishing rods which weren't collateral for loans. But what
of it? We've produced a new video! We're here for you!"
Through
the
first
nine
months
of
2009,
about
54%
of
donations from Bank of
America Corp.'s political action committee and employees went to
Republicans, according to campaign-finance data compiled by the
nonpartisan Center for Responsive Politics. That was a switch from
the 2008 campaign, when 56% of the company's donations went to
Democrats..
Click
here
for InnerCityPress.com's IMF's Strauss-Kahn Coy on Opposing Sarkozy and
Intervening in Greece, IMF and Greek Denials, Yemen Deferrals
February
1,
2010
Trends and echoes:
Bank of America
repurchased nearly $4.5 billion of loans during the
first nine months of 2009, according to data compiled by Barclays.
That was triple the $1.5 billion repurchased in all of 2008. Along
with the Countrywide acquisition, the sleaze is growing.
At
J.P. Morgan Chase,
total
buyback
demands
from
the
GSEs
surged
to
$5.3
billion
in 2009 from $4 billion in 2008, according to Barclays Along
with the WaMu acquisition, the sleaze is growing.
Citigroup
jacked up its stake in the controlling shareholder of Banco de Chile,
acquiring an additional 8.52% in LQ Inversiones Financieras for $511
million. Banco de Chile, the Andean nation's second largest bank, is
controlled by the local Luksic family, which also controls
U.K.-listed copper miner Antofagasta PLC (ANTO.LN) and U.S.-listed
beverage company Compania Cervecerias Unidas SA (CCU), among other
assets. In a 2007 deal Citigroup Inc. took a 10.44% stake in Banco de
Chile, through LQ, and the Chilean bank acquired Citibank's local
assets. Under the terms of the Banco de Chile-Citigroup deal, the
Chilean bank took over all of Citibank's local clientele, while the
U.S. bank retained control of Banco de Chile's operations on U.S.
soil.
And where are
Citigroup's home
country regulators?
January
25,
2010
As the financial
crisis commission claims to be zeroing in on Citigroup, so far
interviewed were Lloyd Blankfein, CEO of Goldman, Brian Moynihan, CEO
of Bank of America, James Dimon, CEO of J.P. Morgan, and John Mack,
chairman of Morgan Stanley. Who will appear for Citi? And where will
it all end?
January
18,
2010
As
Obama's
Bank
Fees
Under-Target
Citigroup
and
AIG,
Geithner
Questioned
By
Matthew
R.
Lee
NEW
YORK,
January
14
--
The
night
before
President
Barack
Obama was
scheduled to unveil a scheme of fees on the three or four dozen
largest financial firms, the Administration held a then embargoed
conference call with the press.
Several
questions
centered around why the auto manufacturers which took TARP funds
would not also be fined. Others wondered, if the fee regime yielded
more than what the government and taxpayers lost through TARP before
it expired in ten years, would the money still be collected and how
would it be used?
The
Administration
representative, who the press was told could only be called a "senior
administration official," replied that once the basis of
calculating the fee had been decided on, car companies didn't fit it.
Before
all
questions were answered, the Administration signed off, noting that
Obama would be making his announcement at 11:20 the next day. Among
the questions not taken or answered was this, from Inner City Press:
why assess all of the financial firms under the program at the same
rate, fifteen basis points?
Citigroup,
for
example, received much more TARP and other payouts than other covered
banks. And as South Bronx based Fair Finance Watch and others showed
at the time, the government tried to help Citigroup scoop up
Wachovia, until another less subpsized offer won the day. Why benefit
Citigroup again by treating it like other, less subprime heavy banks?
The same holds for AIG.
The
"senior
Administration official" went out of his way to portray the
program as a matter of principle for not only Obama but also "his"
Treasury Secretary, Tim Geithner.
To
some, the timing
is meant to blunt renewed bipartisan criticism of Geithner, this time
only only for not paying his taxes to the IRS -- which would be
collecting the fees from the financial firms -- but for having told
AIG not to disclose the preferential basis of the bailouts it was
receiving, while he was at the Federal Reserve Bank of New York.
But
it was hard to
note that his seeming favorite, AIG, and the bank most benefited by
his Federal Reserve Bank of New York, Citigroup, are benefited by the
structure of this proposed Financial Crisis Responsibility Fee program.
In fact, some
say it has an aspect of a Tim Geithner bail out.
And
that's... a
question that should be asked, and answered. Watch this site.
January
11,
2010
Too little, too
late, Citigroup's ex-spook director John M. Deutch last week intoned
that "directors that served on Citi's board during this
financial crisis should rotate off in an orderly fashion." Mr.
Deutch was among the deadwood directors targeted last year by
Citigroup shareholders who contended that the directors should be
removed. Also needing replacement are former AT&T Corp. Chief
Executive Michael Armstrong, Alcoa Inc. Chairman Alain Belda, Dow
Chemical Co. CEO Andrew Liveris, Xerox Corp. Chairman Anne Mulcahy,
Rockefeller Foundation President Judith Rodin and Robert L. Ryan,
retired finance chief of Medtronic.
January
4,
2010
Wells Fargo,
already being sued by Baltimore for targeting people of color with
high cost loans, has now been hit with a similar law suit in Memphis,
Tennessee. "Ghetto loans," they call them.
December
28,
2009
As
UN's
Ban
"Divides
and
Rules"
G-77,
Pachauri's
Bank
Links
Unexamined
By
Matthew
Russell
Lee
UNITED
NATIONS,
December
21
--
While
most
observers
and
even
participants
describe the Copenhagen global warming talks as a disappointment, UN
Secretary General Ban Ki-moon on Monday told the Press that they
"sealed the deal" and were a success.
Inner
City Press
asked Mr. Ban about the scandal erupting around the undisclosed
business interests of the chairman of the UN's Intergovernmental
Panel on Climate Change Rajendra Pachauri, from the Tata Group
through Deutsche Bank to Credit Suisse, and about the criticism by
the chairman of the Group of 77 and its now 130 member states.
Mr.
Ban entirely
dodged the first question, paradoxically using it as an opportunity
to praise business. On the second, he asserted that the chairman of
the Group of 77 was not, in fact, speaking for the Group, since
others' of its members spoke more positively.
Moments
later,
Inner City Press asked Sudan's Ambassador to the UN about Mr. Ban's
comments. "Divide and rule," he answered, calling the
Copenhagen process "climate apartheid." This phrase steps
back from his counterpart in Copenhagen who analogized it to the
Holocaust.
Pachauri's
conflicts of interest are extensive and emblematic of the UN's lack
of transparency and safeguards.
As detailed
in the Telegraph
In
2008
he
was
made
an
adviser
on
renewable
and
sustainable energy to
the Credit Suisse bank and the Rockefeller Foundation. He joined the
board of the Nordic Glitnir Bank... This year Dr Pachauri joined the
New York investment fund Pegasus as a ‘strategic adviser’... He
is on the climate change advisory board of Deutsche Bank... One
subject the talkative Dr Pachauri remains silent on, however, is how
much money he is paid for all these important posts, which must run
into millions of dollars.
So,
notwithstanding
the non-responsive answer Monday morning, does Mr. Ban believe that
Pachauri should make public financial disclosure of these interests?
Watch this site.
December
21,
2009
IMF
Silent
on
Climate
Change
Proposal
to
Use
Its
Gold
and SDR Interest
By
Matthew
Russell
Lee
UNITED
NATIONS,
December
18
--
While
world
media
reports
that
the
International Monetary Fund might play a role in climate change
adaptation funding, as proposed by among others George Soros, IMF
spokesperson Caroline Atkinson told the Press on Thursday that how
SDRs (special drawing rights) are used is "up to individual
countries." Video here.
But
the
proposal
involves
the
IMF
using
the
gold
it holds, already
ostensibly directed to less developed countries, for the purpose of
adaptation. So shouldn't the IMF have a response?
Sitting "idle"
in the IMF's coffers are $150 billion for just 15 countries. But the
IMF apparently doesn't have the funding or staff or commitment to
prepare a transcript of its mere biweekly press briefing the same day
it is held.
Below are
portions
of the proposal.
Developed
countries'
governments
are
laboring
under
the
misapprehension
that
funding
has
to come from their national budgets but that is not the
case. They have it already. It is lying idle in their reserves
accounts and in the vaults of the International Monetary Fund (IMF),
available without adding to the national deficits of any one country.
All they need to do is to tap into it.
In
September
2009,
the
IMF
distributed
to
its
members
$283
billion worth
of SDRs, or Special Drawing Rights. SDRs are an arcane financial
instrument but essentially they constitute additional foreign
exchange. They can be used only by converting them into one of four
currencies, at which point they begin to carry interest at the
combined treasury bill rate of those currencies. At present the
interest rate is less than one half of one percent. Of the $283
billion, more than $150 billion went to the 15 largest developed
economies. These SDRs will sit largely untouched in the reserve
accounts of these countries, which don't really need any additional
reserves... The United Kingdom and France each recently lent $2
billion worth of SDRs to a special fund at the IMF to support
concessionary lending to the poorest countries. At that point the
IMF assumed responsibility for the principal and interest on the
SDRs. The same could be done in this case.
The IMF owns a lot
of gold, more than a hundred million ounces, and it is on the books
at historical cost. At current market prices it is worth more than
$100 billion over its book value. It has already been designated to
be used for the benefit of the least developed countries. The
proposed green fund would meet this requirement...it could make the
difference between success and failure in Copenhagen.
So
shouldn't the
IMF have had something to say about the proposals? Watch this site.
An
arbitration
claim
by
the
Abu
Dhabi
Investment
Authority
against
Citigroup,
seeking to rescind an agreement to invest a total of $7.5
billion in the U.S. lender or damages of over $4 billion has been
filed, alleging that there were "fraudulent misrepresentations"
in the investment agreement. Sort of like CitiFinancial's "fraudulent
misrepresentations" to its lower income
borrowers...
December
14,
2009
IMF
Studies
Congo
Deals
by
India
and
China,
Quid
Pro
Quo by Canada at Paris
Club on
Mining, UN's Kivu Spin
By
Matthew
Russell
Lee
UNITED
NATIONS,
December
11
--
The
Congo
battles
for
and
is embattled by its
natural resources, the International Monetary Fund made plain on
Friday, perhaps inadvertently. During a press conference call
explaining the IMF's
$550
million
facility
to
the
Democratic
Republic
of
the
Congo,
the IMF's Brian Ames put the DRC's external debt at
$13
billion.
Inner City
Press
asked about new debts to China and prospectively India, about
conflict and mining in the East, and Canada's use in the Paris Club
of debt relief to strong-arm for two of its mining firm.
Ames, who
traveled
to Kinshasa to negotiate about what he called the "China deal,"
described how with IMF pressure the deal decreased in size from $9
billion to $6.2 billion, with "only" $3 billion guaranteed
by the Congolese government.
Even this
guarantee, he emphasized, could only become due in 25 years. Still,
the IMF urged the restructuring of the China deal. Inner City Press
asked about a newly reported loan proposal by India to the Congo, for
$263 million.
Ames said that
was
just an announcement, when Congolese officials were in India. To
Inner City Press, a connection with the Congo's loud demand that
Indian peacekeepers leave the UN Mission in the Congo, MONUC, is
inescapable. India is paid by the UN and makes money on these
peacekeepers. How does this sum relate to whatever concessional rates
India will offer to the Congo?
Inner City
Press
asked what the IMF thinks of Canada's delay of a Paris Club vote on
debt relief to the Congo based on contracts canceled to Canadian
mining firms. Ames agreed that this had happened, saying it was
really about 1st Quantum. But what about Toronto-based Lundin Mining,
whose 24% stake in the Tenke Fungurume mine and its $1.8 billion
contract are being "re-negotiated"?
After Ames said
that Canada had, after a week's delay in November, agreed on a
conference call to go forward with debt relief, Inner City Press him
if 1st Quantum's contract was restored. No, he answered, but the
Congolese government, which already won a round of litigation in its
own courts, has agreed to international arbitration.

Congo's Kabila and China's Hu Jintao, Indian UN
peacekeepers and IMF and Canadian pressure not shown
Ames'
colleague,
whom Ames instructed to "earn his paycheck," added the 1st
Quantum has other mines in the Congo, that the dispute involves only
one mine. Yes, but that is the $553 million Kolwezi copper and
cobalt project.
Inner City
Press
asked if the IMF has concerns, similar to those evidence on the China
deal, about the prospects of an Indian infrastructure loan. It is
just a proposal, Ames said, adding that it would be for two hydro
electric projects and one water project. Actually, the third would be
$50 million towards the rehabilitation of the rail system in
Kinshasa.
When Inner City
Press asked about reports, including by the UN's Group of Experts, of
illegal mining in the Kivus, Ames said that since this revenue stream
has yet to go to the government, its diversion does not have an
impact and is not considered. Actually, the UN Group's report shows
that units of the Congolese army are involved in the illegal mining.
Inner City
Press
asked the UN about reports its own Office of Legal Affairs advised
MONUC not to work with units of the Congolese army involved in these
and other crimes. The response:
Subj:
your
question
on
the
DRC
From:
unspokesperson-donotreply [at] un.org
To:
Inner City Press
Sent:
12/10/2009 1:33:20 P.M. Eastern Standard Time
I.
The
tasks
carried
out
by
MONUC
are
determined
by
the Security
Council. The mission has a mandate to provide support to the
Congolese Armed Forces (FARDC) in disarming illegal armed groups
while protecting the civilian population. MONUC continues to give the
highest priority to protection of civilians.
II.
In
furtherance
of
this
mandate,
MONUC
and
DPKO
requested
advice from
the Office of Legal Affairs regarding the conditions governing their
collaboration with the FARDC. In full transparency, the Secretariat
and the Mission advised the Security Council of the risks involved
and potential consequences of cooperating with the FARDC. The
Security Council has repeatedly expressed their unanimous support for
MONUC and for the joint operations with the FARDC against the FDLR,
with full respect for International Humanitarian, Human Rights and
Refugee Law.
III.
After
extensive
consultations
between
the
Secretariat
the
Mission
and
OLA,
a policy was developed, setting out the conditions under which
the Mission would support FARDC. This policy was transmitted to the
DRC Government in November. It specifies that all MONUC participation
in FARDC operations must be jointly planned and must respect
international humanitarian law, human rights and refugee law. The
policy also includes measures designed to improve FARDC performance
as well as to prevent and sanctioning violations. This
'conditionality' provision is why the Mission suspended support to a
specific FARDC unit believed to have been involved in the targeted
killing of civilians in the Lukweti area of North Kivu.
Let's remember
that the IMF is ostensibly part of the UN system. We will continue to
follow this -- watch this site.
Footnote
revealed by the
WSJ: "More than $2 billion allegedly held on behalf of Iran in
Citigroup Inc. accounts were secretly ordered frozen last year by a
federal court in Manhattan, in what appears to be the biggest seizure
of Iranian assets abroad since the 1979 Islamic revolution. The legal
order, executed 18 months ago by the U.S. District Court for the
Southern District of New York, is under seal and hasn't been made
public." Call it Citi's secret sleaze...
December
7,
2009
IMF
Rebuffs
Stanford
Victims
on
Antigua
Despite
Iceland,
and
Romania,
Ukraine
and UN
By
Matthew
Russell
Lee
UNITED
NATIONS,
December
3
--
As
the
victims
of
the
Stanford scam petition
the U.S. Congress to stop the flow of any funds from the
International Monetary Fund to Stanford's home base of Antigua and
Barbuda, the IMF says such considerations play no role in its
decisions.
On
December 3,
Inner City Press asked the IMF since, "there is a proposal in
the U.S. Senate seeking to block IMF funds to Antigua until the
victims of the Stanford scandal are compensated. Given the IMF's
recent actions on Iceland, does the IMF acknowledge any link in
Antigua between IMF funds and the compensation of banks' victims?"
IMF
spokesperson Jennifer Beckman responded that "it isn’t
part of the IMF’s mandate to help private parties in their claims
against our member governments."
But
in Iceland, the
IMF held back its loan or stand by arrangement until the victims, in
the UK and the Netherlands, of Icesave were made whole. The IMF is
inconsistent, and refuses to forthrightly explain its policies.
Every
two weeks,
the IMF is supposed to hold a press briefing including online
participation by accredited media like Inner City Press. There are
been technical snafus, but those on December 3 reached a new low.
Inner
City Press,
with three or four questions to ask, logged in to the password
protected IMF Media Briefing Center before the 9:30 a.m. start of the
briefing. But the screen remained dark. This was no out of the
normal, as Spokesperson Caroline Atkinson has several times started
late.
At
9:58 a.m..,
thinking that the briefing may have been delayed or canceled, Inner
City Press called the IMF. The answer was that the briefing would be
"rebroadcast" later in the day. But what about online
participation by accredited media?
There
have been
technical issues, Inner City Press was told, and was advised to
submit its questions in writing, they would be answered. At 10:04
a.m., Inner City Press submitted its questions, to Ms. Atkinson and the
general inbox, with a cover note that
for
some
reason,
the
Webcast
of
this
morning's
IMF
briefing
didn't work.
I waited, thinking the briefing was delayed as sometimes happens.
Just now I called the IMF and was told there was a "technical
issue," that the briefing would be re-broadcast. When I said I
had questions to ask, I was told to send them here and they will be
answered. Here they are, I am writing on these topics today:
There
is
a
proposal
in
the
U.S.
Senate
seeking
to
block IMF funds to
Antigua until the victims of the Stanford scandal are compensated.
Given the IMF's recent actions on Iceland, does the IMF acknowledge
any link in Antigua between IMF funds and the compensation of banks'
victims?
In
Romania,
the
party
of
the
presidential
frontrunner
has
come
out
against what it calls IMF imposed layoffs in the public sector. Will
the IMF confirm it is urging such layoffs, if so how many, and what
ramifications if they are not implemented?
Yesterday
2
UN
experts
told
the
Press
the
IMF's
Flexible
Credit Line
discriminates against poorer countries, & that rather than moving
beyond conditionality, IMF simply imposes conditions later.
Video here.
What
is the IMF's response? And to allegation that health crisis in
Ukraine is due to IMF imposed cuts? On deadline.
Even
twelve hours after these four questions were submitted, the IMF had
answered only one of them.
Subj:
On Antigua
From:
JBeckman@imf.org
To: Innnr City Press
Sent:
12/3/2009 11:11:00 A.M. Eastern Standard Time
Although
we are concerned about the Stanford Victims Coalition, it isn’t
part of the IMF’s mandate to help private parties in their claims
against our member governments.
What
about the other answers? Watch this site.
The Kuwait
Investment Authority's exit from Citigroup comes as another Gulf
sovereign wealth fund, the Abu Dhabi Investment Authority, may have
to overpay on about $7.5 billion worth of the Citi's shares it's
committed to buy at $31.83 a piece in a deal struck two years ago.
The UAE-based investment fund, also known as ADIA, committed in
November 2007 to pump billions into Citi in return for an 11%
dividend up to March next year when it has to start buying the bank's
common stock.
November
30,
2009
IMF
Murky
on
Angola's
Oil,
Bond
and
China
Deals,
Doles
Out $1.4 Billion
By
Matthew
Russell
Lee
UNITED
NATIONS,
November
25
--
Days
after
announcing
a
$1.4
billion
arrangement with Angola, the International Monetary Fund held a press
conference call to offer explanations. At the end, things were
murkier than before. Inner City Press asked if the IMF had been able
to fully assess the income and distribution of revenue from the state
owned oil company Sonangol.
The
IMF's Lamine
Leigh, who led the Fund's missions to Angola in August and September,
replied that "in the context of our negotiations, Sonangol
participated fairly well." Inner City Press asked, since
Sonangol has accounts in off shore financial centers and tax havens,
if the IMF had gotten to the bottom of these accounts.
After
a long
pause, Lamine Leigh proffered another answer, that the government has
"committed to steps in the more general area of resource revenue
transparency." But what about the Sonangol accounts?
Inner
City Press
asked about the statement
by IMF Deputy Managing Director and Acting
Chair Takatoshi Kato that in Angola "measures will be taken to
strengthen further the regulatory and supervisory framework."
The IMF's Senior Advisor on Africa Sean Nolan replied that the IMF
analyzed the effect of the exchange rate on borrowers and "on
the banks."
In
fact, Angola's
government has gotten billions in pre-export oil loans from, for
example, BNP Paribas, Standard Chartered and Deutsche Bank. The
latter has made similar loans in Turkmenistan, assailed by
transparency and human rights advocates. How much of the IMF's new
arrangement benefits these banks?
In
fact, the
questioner after Inner City Press, cutting off follow up, was from
Standard Bank. Other than Inner City Press, the only other media
questioner was from Reuters.
Before
the call
ended, Inner City Press was able to ask about Angola's reported $4
billion bond sale planned for December. Sean Nolan said that the
IMF's "understanding" with Angola does involve a
"fundraising effort," but that the timing was not agreed
to, the IMF does not "micromanage" to that extent. Nolan added
that there is an agreement on an "overall limit."
"Is
it four
billion dollars?" Inner City Press asked.
Nolan
replied that
the precise limit will be "clear in the documents," which
have yet to be released. Why play hide the ball?
Nolan
praised the country for "appointing reputable financial and legal
advisers for the transaction" -- JPMorgan Chase will be the manager.
Nolan
continued
that the actual size of the bond sale will depend on how much
"concessionary lending" Angola gets from "countries
with a strong record of financial support to Angola."
Inner
City Press
asked if the size of China's loans to Angola -- China gets 16% of its
foreign oil from Angola -- were known by the IMF or considered.
"That
hasn't
figured in our discussions," the IMF's Nolan responded. Why not? Watch
this site.
No honor among
thieves: Deutsche Bank AG and a unit of BNP Paribas SA separately
sued Bank of America Corp. on Wednesday, alleging that the bank has
failed to repay about $1.7 billion in secured notes issued by a
special-purpose entity. The breach-of-contract lawsuits, filed in
U.S. District Court in Manhattan, allege that Bank of America has
failed to redeem $480.7 million in secured notes held by BNP Paribas
and $1.2 billion held by Deutsche Bank. The notes were issued by
Ocala Funding LLC, a special-purpose entity that provided short-term
liquidity funding to Taylor, Bean & Whitaker Mortgage Corp..."
November
23,
2009
Amid
Reports
of
War
Crimes,
IMF
Gives
More
Funds
to
Sri Lankan Government
and Spins on Human Rights
By
Matthew
Russell
Lee
UNITED
NATIONS,
November
18
--
The
International
Monetary
Fund's
seemingly
dismissive
attitude toward human rights, including labor rights and
protections against ethnic cleansing and even torture, has been on
display this month. Managing Director Dominique Strauss Kahn defended
the IMF's disbursement of funds to the government of Sri Lanka,
without any conditions or safeguards, after detailed reports of
presumptive war crimes.
When Inner City
Press asked IMF spokesperson Caroline Atkinson if, in light of Mr.
Strauss Kahn's logic, the IMF ever considers human rights in
disbursing funds or not, she laughed and called the question's
"premise... a bit misleading." Video here
from Minute 9:07.
From the IMF's
sanitized transcript:
Inner
City
Press:
Does
the
Managing
Director’s
November
the
5th
statement
‘regardless of one’s opinion of the human rights situation’
mean that the IMF never considers human rights?”
MS.
ATKINSON:
That’s
another
question
where
the
premise
is
a
bit
misleading. The point that the Managing Director was making in his
response to a letter from Human Rights Watch was—and as you know,
the text of that letter talks quite directly about the Managing
Director’s own feelings about the importance of human rights. And
the point of that quote was that he was saying whatever you think
about what rights and wrongs of what’s happening in Sri Lanka now,
what is true is that an economic collapse would make lives worse for
everybody. And, of course, usually the most vulnerable are most hurt
by any economic collapse. So it was in that context he was explaining
the reasoning behind the Fund’s economic support for Sri Lanka.
Thank you all very much and have a good Thanksgiving.
In fact, even
the
Europe Commission in considering extending or suspending its GSP Plus
favorable tariff treatment to Sri Lanka, has taken into account
consideration of human rights and war crimes. By contrast, the IMF
has argued against any duty to consider human rights. Even Strauss
Kahn's letter refers only to "humanitarian" issues, and
uses this as an argument in favor of releasing more funds.
Since
March, Inner
City Press has asked IMF spokespeople what safeguards if any would be
attached to the loan.
(Despite Inner City Press' demonstrated interest since then, the IMF
did not tell it about its conference calls on disbursements to Sri
Lanka, neither in July nor this month).
On July
16, the IMF's Caroline
Atkinson said that the views of the international community will be
taken into account. Four days later her boss
Mr. Strauss Kahn issued a press release
with no mention of safeguards. Now a letter, and a laugh. We will
continue to follow this issue.
November 23, 2009 -
Citigroup,
which
used
to
have
five
retail
banking
locations
in
London, has
written to account holders alerting them to the closure of its
Monument branch on November 27. It’s the one just east of the
monument to the Great Fire of London, the tallest isolated stone
tower in the world. Users are being directed to the St. Paul’s
branch, which is about a mile west. That’s a 15-minute walkaway.
Accounting for the closure, a spokeswoman said: “The St Paul’s
branch has better facilities and is located on a bigger site.”
They've done this in the USA too...
November
16,
2009
House of cards -
HSBC announced last week it had agreed to sell its London
headquarters building to the National Pension Service of Korea for
$1.3 billion. The move to sell its 8 Canada Square property in Canary
Wharf, London's financial area, comes a month after the bank
announced the sale of its New York headquarters building to Israeli
investment holding company IDB Group for $330 million...
November
9,
2009
So Jaime Dimon's
father Theodore or Ted being given a job at JPMorgan Chase, can we
call that nepotism?
IMF's
Report
Buries
Its
Icesave
Conditionality,
Enforcer's
Duplicity?
By
Matthew
Russell
Lee
UNITED
NATIONS,
November
3
--
While
the
IMF
has
acknowledged
that its second
round of disbursements to crisis-hit Iceland was delayed for months
by the country's failure to placate those in the Netherlands and UK
who did business with IceSave, the IMF's just released report on
Iceland buries the issue on page 30 of the 98 page report. The IMF
states that
"[t]he
terms
and
conditions
of
Nordic
loans,
amounting
to
$2.5
billion, have
been finalized. Their disbursement has been linked to resolution of
the Icesave dispute with the U.K. and Netherlands over deposit
insurance liabilities. After protracted discussions, the three
governments have reached an agreement on this"
Once
that
agreement was reached, on October 18, the IMF then went forward with
a letter of intent and memorandum of understanding for the second
tranche of financing. But, as with the IMF's moves in Latvia for
Swedish banks, some see the Fund operating as an enforcement or
collections agent for creditors who even less would like to show
their hand.
Since
the IMF does
not like to admit or reveal its degree of control over the countries
it lends to, the de facto conditions for loans, such as paying off on
IceSave, are often not explicit in what purport to be full agreements
containing all express and implied terms.
In
fact, the IMF
has claimed that it "no longer" engages in conditionality.
But the Iceland report has an entire chart about conditionalities.
It's just that the most important one was left unsaid. Is this
diplomacy or duplicity?
The
IMF's Iceland
report continues, about other loan requests including from Russia:
"A
loan
from
the
Faroe
Islands
($50
million)
has
already
disbursed, and
a loan from Poland has been agreed ($200 million), and will disburse
alongside the next 3 program reviews. A $500 million loan originally
committed by Russia is no longer expected, but the $250 million in
over-financing in the original program, an expected
macro-stabilization loan from the EU ($150 million), and use of an
existing repo facility with the BIS ($700 million, of which $214
million is outstanding) will more than offset this."
Offset may be the right
word. Last year, in the midst of Iceland's abortive run for a seat on
the UN Security Council, the country announced it had to seek a $4
billion loan from Russia. It was after that that the IMF loan
commitment was made -- an "offset," some saw it -- and
after talks in Istanbul, on October 15 the already whittled down loan
request to Russia was formally rejected.
Then the deal
with the UK
and Netherlands, and the IMF's releasing. While the IMF calls these
types of moves only technical, others call them power politics. Watch
this site.
November
2,
2009
One TARP-er hypes
the stock of another, per WSJ: The recent selloff in BofA shares
creates a good chance to buy into the bank, say Citigroup analysts.
Bank of America shares are down some 17% from their most recent
closing peak of $18.59 hit on Oct. 14. "Given the ongoing CEO
search, fear of a capital raise only adds to the uncertainty hitting
the stock, which creates a very attractive entry point."
October
26,
2009
Never-ending
sleaze: a Lewis Ranieri-led firm has cut deals with -redatory Taylor
Bean & Whitaker for Debtor in Possession financing and the bulk
purchase of $331M REO portfolio...
J.P.
Morgan
Chase
&
Co.
made
nearly
$50,000
in
political
donations
through its PAC in September, counted by WSJ. The company donated
$2,000 to Alabama Sen. Richard Shelby, the senior Republican on the
Senate Banking Committee. The company also donated $1,000 to
Pennsylvania Rep. Paul Kanjorski, the No. 2 Democrat on the House
financial-services panel...
Citigroup
canceled
a
planned
$4.5
million
renovation
of
its
main
office in
Brazil that included an area for entertaining clients and a
landscaped terrace called a "suspended garden." Can you
say, Babylon?
"We
need
it
to
compete,"
a
senior
executive
told
the
WSJ about about
the project last week, describing it as an important way to impress
banking clients and use Citigroup's real estate more efficiently. But
on Tuesday afternoon, a person familiar with the situation said the
renovation had been reviewed by senior executives, who decided to
shelve the project. The reversal underscores the sensitivity inside
Citigroup about its spending habits, since the bank has gotten $45
billion from the U.S. government, a 34%-owner of the company's common
stock.
October
19,
2009
HSBC reportedly
"hopes to list its shares in Shanghai next year, becoming one of
the first overseas companies to do so, its chief executive said. "I
don't see it being a 2009 event, hopefully in 2010. It has a very
symbolic element for HSBC. We were established in 1865 in Hong Kong
and Shanghai... we would welcome participating in the Chinese
market," Michael Geoghegan told Reuters in an interview on
Monday. Asked how much he expected the listing to raise, he said: "We
haven't got to that stage yet. We are looking at the fundamentals."
People familiar with the matter have told Reuters that HSBS could
raise $3-$7 billion as part of a Shanghai listing. The bank, which
operates in 86 countries, has investments worth about $22 billion in
China, including a 19 percent stake in Bank of Communications and a
16.8 percent stake in Ping An Insurance. HSBC announced last month
Geoghegan would move to Hong Kong from February, as the bank focused
more on Asia."
Watch out for the
predatory lending...
October
12,
2009
In the UK, there is
talk of breaking up the large banks like Royal Bank of Scotland. In
the U.S., shouldn't Citi, Chase, B of A and Wells be broken up?
October
5,
2009
The belated ouster
of Ken Lewis from Bank of America, who will now leave at latest by
the end of the year, triggers a successor search by three
ex-Fleeters, Charles Gifford, Thomas May and Thomas Ryan -- and
former Federal Deposit Insurance Corp. Chairman Donald Powell and
DuPont Co. Chairman Charles Holliday. A motley crew...
September 28, 2009 --
IMF
Disappears
Questions
on
Post-Coup
Honduras,
Sri
Lanka
Withholding
and
Jamaica
By
Matthew
Russell
Lee
UNITED
NATIONS,
September
24,
updated
-- Despite the International Monetary Fund's
rhetoric about transparency and openness, at its press briefing on
Thursday it declined to answer or even acknowledge timely submitted
questions about how it
will decide whether to allow Honduras' de
facto Micheletti regime to use the funds the IMF has allocated, after
the coup, about conditions imposed on Jamaica and staff
reports
withheld
about
Sri
Lanka.
This
is happened
before with the IMF, when the spokesperson has stood smiling on
camera in the Fund's auditorium in Washington claiming that, "There
are no more questions."
On Thursday,
it was Caroline Atkinson
delivering this line, after waiting to take two separate rounds of
questions from another media organization. (Ms. Atkinson made a
reference to the IMF's question-accepting technology -- could it be
filtering?) From among the questions
submitted to the IMF online, the IMF picks and chooses which ones to
read out loud and acknowledge. There is no transparency in how this
censorship is conducted, even that it is taking place at all.
Nevertheless,
Inner City Press has respected the IMF's 10:30 a.m. embargo.
The
questions submitted:
1)
On
Honduras,
when
and
by
whom
will
the
decision
be made on "whether
the Fund deal with the [Micheletti] regime" be made? 2) Is the
IMF considering granting Jamaica budget support, as the Prime
Minister has said? 3) And why
has
the
IMF
staff
report
on
the
loan
to
Sri
Lanka not been released?
If
and when answers
are provided by the IMF, they will be reported on this site.
Update:
More
than four hours after declining to answer or even acknowledge the
question on Honduras that Inner City Press timely submitted during
the fortnightly briefing, the IMF sent this out:
IMF
Statement
on
Honduras:
"In
recent
weeks,
the
Fund
consulted
its
membership through its Executive Directors. Based on this
consultation, IMF Management has determined that it will recognize
the government of President Zelaya as the government of Honduras."
September
21,
2009
HSBC,
whose
Household
International
unit
told
borrowers
how
to
doctor
their
applications for subprime loans, has now sued New York businessman
and prominent Democrat fund-raiser Hassan Nemazee, alleging he
fraudulently obtained a $100 million loan from the bank and used the
bulk of the money to repay a separate loan he falsely obtained from
Citigroup. The funds were used to repay a loan from Citigroup's
Citibank unit, according to the lawsuit. The HSBC loan remains
outstanding, according to the complaint. Prosecutors have said he
used fake documents to borrow money to repay the loan from Citibank
on Aug. 24. The government has said Nemazee obtained a line of credit
to repay Citibank by using the same type of fake documents - fake
account statements and forged signatures - that he used to
fraudulently obtain the Citibank loan.
September
14,
2009
IMF
Still
Murky
on
Honduras
and
SDR
Use,
Critique
on
Georgia, Serbia,
Hungary and Latvia
By
Matthew
Russell
Lee
UNITED
NATIONS,
September
10
--
The
International
Monetary
Fund
through
spokesman
David Hawley repeated on Thursday that despite its recent
allocation to Honduras of $168 million in Special Drawing Rights,
"the regime in de facto control is not able to use [the
allocation] until a decision is made if the Fund will deal with"
the regime as the government of Honduras.
But
Hawley
also
said
that
he
has
"no
details
on
how individual countries have used the
allocation," and when asked if countries have to disclose if
they convert SDRs into hard currency, he said, I'll have to get back
to you. So still the IMF's approach to Honduras, as well as other
countries with coups and de facto regimes, remains unclear.
At
the IMF's
regular press briefing on September 10, Inner City Press submitted
three questions, including "Please clarify the conditions under
which a government of Honduras could access the SDRs voted to the
country on August 28? Could the Micheletti government never do so? Or
after a new election" without UN observers?
Mr. Hawley
read the
first part of the question out loud, and then flipped through a
binder to repeat a line the IMF e-mailed to the Press on Sunday. Left
unanswered is who will make the decision about the Honduran
government and its right to the allocated SDRs, when the decision
will be made, and in light of Hawley's other answers, how any
decision, including the current supposed prohibition, would be
policed.
The
President the
UN General Assembly, which passed a resolution on Honduras after the
coup, says that no country or body like the IMF can recognize the
Micheletti government, or send observers to an election it organizes.
Does the IMF mean that its executive board could decide, tomorrow, to
recognize Micheletti? Or that to recognize a government elected in a
Micheleti organized election?
Earlier
this week,
UNCTAD released a report criticizing the IMF at length. Inner City
Press submitted this question:
"While
the
IMF
says
that
"conditionality"
is
a
thing
of
the past,
this week's UNCTAD report criticizes the IMF for imposing
"restrictive financial policies" on Latvia, Serbia, Georgia
and Hungary. What is the IMF's response?"
While
Hawley for
some reason declined to even read this question out, during the
briefing he said he and the IMF have no response to the UNCTAD
report. This is more than a little strange. During the briefing, as
simply one example, Hawley described how in connection with an IMF
package for Ukraine, gas prices to consumers had to be raised. Labor
unions are fighting it, he said, but the authorities are litigating
to get the gas price rises in place and the IMF is monitoring it.
On
September 8, Inner City Press posed questions about the IMF to Heiner
Flassbeck from the UN Conference on Trade and Development, video here.
Flassbeck
laughed
when
told
of
the
IMF's
denials
of
conditionality. For
this and other reasons, it would seem the IMF would have a response.
Watch this site.
Footnote:
Caroline
Atkinson,
who
has
presided
over
the
IMF's
past
four or five
press briefings, was said to be in Turkey, a country for which the
IMF is considering a package. Based on Thursday's briefing by Mr.
Hawley, it seems that while Ms. Atkinson is at least willing to
extemporize IMF responses to question for which there is no
"if-asked" ready in her binder, Mr. Hawley declines live
questions for which no written answer is ready, and edits out or
censors questions submitted electronically if he does not want to
answer them. We'll see.
*
*
*
Unrelated
(?)
footnote:
Another
country in which Citi is going to keep doing subprime and predatory
lending is India. “We have a comprehensive revival plan for
CitiFinancial, in terms of moving the asset base to more stable
sectors,” Citibank’s chief financial officer (CFO), Abhijit Sen,
told reporters. "The Citi group is unlikely to sell
CitiFinancial"....CitiFinancial India offers personal loans,
home loans, home finance and loans against property.
September
7, 2009
In London, the G-20
nations last week preliminarily "agreed to impose sanctions on
tax havens from March 2010. Jurisdictions that don't meet
international standards for sharing tax information may be deprived
of funds from the international financial institutions—such as the
International Monetary Fund and the World Bank—and they may also be
deprived of aid from G-20 governments." We'll see.
August 31, 2009
B of A is really suffering, or pretending
to --
in its lawsuit against the FDIC about the Colonial Bank failure (and
re-sale without any CRA comment period to BB&T), B of A has now
accused the FDIC of acting "beyond the scope of its statutory
powers" as receiver for "by making disbursements without
complying with its statutory and regulatory obligations."
Failure to supervise? The Financial
Industry
Regulatory Authority barred Citigroup employee Tamara Lanz Moon from
the securities industry for allegedly taking more than $850,000 from
at least 22 especially vulnerable customers, including $55,000
belonging to an American diplomat working overseas...
Seeking
IMF
Loans,
Service
Cuts
in
Jamaica,
Serbia,
Congo
Changes
China Deal
By
Matthew
Russell
Lee
UNITED
NATIONS,
August
27
--
While
the
IMF
states
publicly
that
it
no longer
engages in conditionality, it is reportedly requesting as a
condition
for loans significant budget cuts in Jamaica, as well as Serbia, St.
Lucia and the Maldives. At the IMF's forthnightly briefing on August
27, Inner City Press asked IMF Spokesperson Caroline Atkinson about
"what's seen as the IMF dictating cuts in government spending as
a condition for a loan... Please confirm what changes are being
requested by the IMF." Video here,
from
Minute
9:18,
IMF's
transcript below.
Ms.
Atkinson
replied that there are "discussion between the IMF and Jamaican
authorities" and argued that the "authorities are designing
the macro economic program... they are in the lead on." She said
"I don't want to go into a discussion of particular issues."
Then she ignored Inner City Press' request, in the same question, for
answers on the Maldives,
and
on
Serbia at the
provincial level.
The
requests or
"macro economic programs" done which negotiating with the
IMF look suspiciously similar, and undercut the argument that each
government is really in charge. The governments also try to avoid
questions of how they have given in to the IMF. Last week Jamaican
Prime Minister Bruce Golding, speaking at the opening of a new
financial center for the Scotiabank Group in the Jamaican capital,
refused to say "whether the cuts were required by the
International Monetary Fund as a condition for borrowing $1.2 billion
to stabilize its budget under the multilateral lender's special
drawing rights." Is this the new IMF?
Similarly,
in a
question submitted during the IMF briefing but ignored (or censored),
the IMF played a wheeler-dealer role in the Democratic Republic of
the Congo and its mining sector. Inner City Press asked, in writing,
"did the IMF's suggested changes in the country's mining deal
with China result in any offsetting changes in China's commitment to
Congolese infrastructure development? Is the IMF involved in or did
it consider the DRC's proposed Inga Dam?"
At
the IMF's
request, the
DRC cut its guarantee of income from the mines to China,
in connection with which China cut its investment commitment from six
to three billion dollars. As one analysis interviewed by Inner City
Press put it, DRC will now borrow money from the IMF instead of
taking it from China. The analysis describe the IMF as doing European
powers' work for them, trying to ween a country away from China. The dam
named
above
will
reportedly
supply
power
to
southern
Europe,
from a
region where than 30% of the population has electricity. This is
the new IMF? Watch this site.
From the IMF's August 27,
2009 transcript:
I
have
a
question
online
about
Jamaica.
It's
asking,
"In
Jamaica
there are protests about what's seen as the IMF dictating cuts in
government spending as a condition for a loan. Please confirm what
changes are being requested."
As you know, there are
discussions that
have been underway with the IMF and the Jamaican authorities. The
authorities themselves are designing their macroeconomic program and
that is something that they are very much in the lead on. I don't
want to go into discussions about particular issues and I think that
we've been having good discussions with the authorities. We are
impressed by the fact that they are taking measures and considering
measures and have committed as it is very important as we've been
stressing recently to a program that will be very much their program.
August
24, 2009
Parts
of a confidential agreement reveal that U.S. regulators directly
pushed Citigroup Inc. to replace then-CFO Edward “Ned” Kelly,
which is in sharp contrast to CEO Vikram Pandit’s earlier
statement, per SNL. According to the document, the New York-based
bank had agreed to review whether Kelly could be “more effectively
utilised” by giving him other responsibilities and if so, to
replace him. Citing people close to the matter, SNL reported that
Kelly resigned from his post on learning about the agreement, which
allowed the bailed-out bank to make Kelly the vice chairman and
promote then- Controller and Chief Accounting Officer John Gerspach
to CFO.
August
17,
2009
Citigroup's
sleaze never stops. Now they brag that they "already put to use
about a third of the $45 billion it has received from the U.S.
Treasury Department's Troubled Asset Relief Program. It said it also
has approved another $35.7 billion for future loans and investments,
bringing the total to $50.8 billion, above its TARP level. "Our
efforts have enabled businesses to keep their doors open, spurred job
creation in communities and provided families with access to
additional funds at times when they've needed it the most,"
Pandit said in a statement accompanying the report. News stories were
quick to note the more than $50 billion that Citi says it either has
or will put to work does not account for leverage."
But as we've
reported, some of these loans are just predatory lending. Meanwhile,
Citi is trying to exclude trader Andrew Hall from a review by the
government’s pay czar, Kenneth Feinberg, per SNL. Hall, the head of
the Phibro commodity trading unit, is in line for $100 million in
TARP funds for 2009...
In
Pittsburgh,
the
FDIC
handed
over
Dwelling
House
S&L
Association
to
PNC Bank with no mention of CRA. Next
month the finance ministers of the largest economies convene for a
meeting of the so-called Group of 20. In a city crippled by
foreclosures on predatory loans, and now the site of the U.S.'s
waiver of one of its few laws meant to crack down on the mis-service
of lower-income borrowers, there will be talk of improving the
regulation and supervision of banks. But it will be empty talk, and
there will be protests. Watch this site.
August
10,
2009
Bank of America has
been asked for emails and documents dealing with losses and loss
projections at Merrill Lynch; records covering negotiations with the
federal government on bailout funds received by the bank; and the
details of any legal advice received by the bank on disclosure of the
losses or government aid. - by August 14....
August
3,
2009
Sri
Lanka's
Ethnic
Cleansing
Bonds
Touted
by
StanChart
and
HSBC,
IMF
Silence
on
Vote
Is
"Policy"
By
Matthew
Russell
Lee
UNITED
NATIONS,
August
2
--
Less
than
a
week
after
five countries on the
International Monetary Fund's executive board cast rare votes of
abstention and did not support the IMF's $2.6 billion loan to Sri
Lanka, due to the continued detention of 280,000 people in internment
camps in the north, Inner City Press on July 30
asked the IMF to
finally confirm the five abstentions or to explain why it refuses to
disclose the votes of its executive board.
IMF
spokesperson
Caroline Atkinson replied
that "it's just
a matter of our policy not to... it may even be a matter of our legal
requirements... It's a matter for executive board member to disclose
their voting if they wish to. It's not a matter for IMF staff or
management, that's always our practice." But why?
Later on July
30,
Inner City Press asked the UK's outgoing Ambassador to the UN John
Sawers about the IMF loan, on which the UK abstained. Sawers too
dodged the question, saying "You'll have to ask my colleagues in
Washington about the situation at the IMF board. The loan has been
approved, as you say." Video here,
from
Minute
5:34.
After
that, Sawers mentioned the displacement -- that is, detentions -- and
of the "legitimate concerns of minorities, particularly Tamils."
UK-based
banks HSBC and Standard Chartered both gushed about the IMF loan,
without any reference to ongoing internments. The IMF loan "is a
significant positive for Sri Lanka’s external liquidity position
and should further boost sentiment toward the country," Standard
Chartered’s Mumbai-based analyst Priyanka Chakravarty wrote
in a
research report. "It is noteworthy that the final IMF loan amount
is appreciably higher than originally discussed."
Nick
Nicolaou, chief executive officer of HSBC Sri Lanka, pitched
that "the IMF endorsement provides confidence to overseas
investors... Sri Lanka has an excellent story to tell."
Fellow UK bank Barclays, along with HSBC and JPMorgan Chase, was
involved in the Rajapakse administration's October 2007 bond sale in
the run-up to the final assault on North Sri Lanka.
Now Sri Lanka says
it
wants
to
raise
$500
million
more from overseas. Some say that these
bloodbath
bonds are now ethnic
cleansing instruments. Watch this site.
July
27,
2009
After
IMF
Vote,
Sri
Lanka
Releases
Letter,
Drops
IDP
Release
from 80 to 60%
By
Matthew
Russell
Lee
UNITED
NATIONS,
July
25
--
Only
after
procuring
approval
of
a
$2.6
billion
loan from the International Monetary Fund Executive Board did the
Sri
Lankan government, under pressure, put
online a copy of its July 15
Letter of Intent to the IMF.
Contrary
to
claims
that
the
purposes
and
IMF
debate
around
the loan had nothing to do with the detention camps
and relocations in Northern Sri Lanka, the Letter of Intent describes
use
of
funds
for
the
camps,
and
states
that
"the government
aims to resettle 70-80 percent of IDPs by the end of the year."
When
UN Secretary
General Ban Ki-moon belatedly visited Sri Lanka and the Manik Farm
internment camp in late May, the government said it would release 80
percent of those being detained by the end of the year. The July 16
letter to the IMF -- withheld until after the July 24 vote on the
loan -- dropped the percentage to seventy.
In
fact, before
the IMF board voted but also before it was publicly acknowledged that
the release of detained Tamils was part of Sri Lanka's letter of
intent to the IMF, Sri
Lanka's
foreign
minister
had
already
further
dropped
the
percentage,
to
sixty.
Some now say
that the IMF board on
July 24 voted on old and inaccurate information -- which was allowed
only because the IMF and Sri Lanka withheld the July 16 letter until
after the $2.6 billion had been voted on.
At
the UN's July
24 noon briefing, before the IMF executive board vote, Inner City
Press asked UN Associate Spokesman Farhan Haq:
Inner
City
Press:
Since
it
was
said
that
the
Secretary-General
was closely
monitoring the compliance with the joint statement and all of this,
it’s just come out that the Foreign
Minister
of
the
country
has
now
said
that
the
commitment
made, including while the Secretary-General
was there, to allow 80 per cent of those in the detention camps to
return home by the end of the year no longer holds, that it’s going
to be a lower number. Has the UN taken note of that and what’s the
response to that?
Associate
Spokesperson
Haq:
We
have
always
expected
the
Government
to
abide by
the commitments that have been reached on this particular matter.
Beyond anything further, I’d check whether OCHA has new reaction to
the latest comments. I don’t know whether we necessarily would
react to the very latest comments that you just cited, though.
Those
detained by
the Sri Lankan government can, some say, legitimately be called
political prisoners. The government committed to the UN to release
80% of them by the end of the year. The government committed to the
IMF, in a letter withheld until after approval of a $2.6 billion
loan, to release 70 to 80% by the end of the year. [A reader points out
that per Mahinda Rajapakse, it is not a commitment or promise, only a "target"
--
click
here.]
Then prior to
the
IMF vote, but before the letter to the IMF was released, the
government gave itself space to continue to detain some additional
30,000 to 60,000 people past the previously committed deadline. The
UN has nothing to say, and the IMF is giving $2.6 billion to the
government.
Some call it
an IMF reward for the extended detention of
political prisoners -- apparently the IMF would look favorably on the
internment -- and opacity or delayed release -- practices of Myanmar
and North Korea. Watch this site.
IMF footnote: the
belatedly released Sri Lankan Letter of Intent to the IMF about the
loan puts in a different light the IMF
Director of Communications' public May 21 response to Inner City
Press' questions about IDPs and relocation, that
"perhaps
it's
just
helpful
to
clarify
that
when
the
IMF
lends,
it is not for specific projects. We lend to
support a country's finances. We make a loan to the Central Bank to
support reserves."
Then
why
was
the
following
in
Sri Lanka's Letter of Intent to the IMF, withheld under after the
IMF vote?
Reconstruction
of
the
North
and
East
and
the
protection
of
vulnerable groups
adversely affected by the conflict will be an integral part of our
program. To this end the government has moved quickly to provide
humanitarian assistance to those affected by the conflict and to
develop a post-war reconstruction plan. The immediate priority is
addressing the humanitarian needs of the estimated 280,000 internally
displaced persons (IDPs). The government aims to resettle 70-80
percent of IDPs by the end of the year...In 2009 the government
intends to make room within the programmed deficit targets for
spending on humanitarian assistance and the resettlement of IDPs
using savings in existing budget provisions, redeployment of certain
categories of military personnel for demining and for the provision
of basic infrastructure, and any external grants from our development
partners. About two percent of the projected government spending will
be used for the provision of humanitarian assistance and the
resettlement of displaced persons. A needs assessment is expected to
be completed by end July 2009 to determine additional funds needed
for the broader reconstruction strategy.
Watch
this site.
July
20,
2009
As
CIT
teeters
on
the
edge
of
bankruptcy,
Inner
City
Press has been
reminded of its filing to the Federal Reserve opposing CIT's
application to become a bank holding company, only to get bailout
funds. Should we say, we told you so?
After
the
financial
meltdown
exposed
the
Federal
Reserve's
inattention
to
predatory
lending and credit default swaps, one would expect the Fed
to hold off further loosening the rules on CDS. But you'd be wrong.
Last week the Fed granted
an
exemption to CDS dealer ICE Trust, owned
by crisis loser Citigroup and predatory Goldman Sachs, among others,
giving them an easier 20 percent capital treatment rather than the
100 percent applicable to uninsured banks like ICE Trust.
Bloomberg News,
notably, spun
the
story
the
other
way,
claiming
that "the Federal Reserve determined that ICE Trust is as risky as any
insured bank, according to a letter posted July 14 on the regulator’s
Web site. The Fed is requiring that bank members of ICE Trust, such
as Goldman Sachs and New York-based Citigroup Inc., set aside the
same amount of capital as parties trading as federally-backed
lenders."
But this is a
story
yet again of the Fed making it easy for the dealer community-- the
dealers sought 0% so at least the Fed is imposing 20%. Those who
don't learn from the past are condemned to repeat it...
July
13,
2009
Shares
of
CIT
Group
fell
by
a
quarter
on
July
10 on a report the FDIC is
unwilling for now to guarantee the commercial lender's debt due to
concerns over its credit quality. The stock fell 45 cents to $1.41.
CIT hasn't been given the go-ahead yet to participate in the FDIC's
Temporary Liquidity Guarantee Program. This is despite the regulator
having bypassed public notice and comment to allow CIT to become a
bank holding company to apply for bailout funds and guarantees. CIT's
subprime activities were criticized some time ago by Inner City Press
/ Fair Finance Watch, and more recently by the FDIC, which gave a
rare Need to Improve CRA rating to a CIT bank. Hate to say, we told
you so -- but we told you so....
July
6,
2009
On
July
2
the
Belgian
Chamber
of
Representatives
enacted
a
law
prohibiting investment in weapons which use depleted uranium weapons.
"The law forbids banks and investment funds operating on the
Belgian market from offering credit to producers of armor and
munitions that contain depleted uranium. The purchase of shares and
bonds issued by these companies is also prohibited. This law
implicates that financial institutions in Belgium must bring their
investments in large weapon producers such as Alliant Techsystems
(US), BAE Systems (UK) and General Dynamics (US) to an end."
We'll see.
June
29,
2009
Japan's
financial
regulator
ordered
Citigroup
Inc.'s
Citibank
Japan
Ltd.
to
suspend
all promotional sales activities in its retail-banking
division for one month as punishment for lax compliance in preventing
money laundering.....
June
22,
2009
--
While
HSBC
Gushes
About
Sri
Lanka,
IMF
"Loan
for
Ethnic
Cleansing" Still
Delayed
Byline:
Matthew Russell Lee of Inner City Press at the UN: News Analysis
UNITED
NATIONS,
June
19
--
While
human
rights
groups
call
for
investigations
of
the
killing
of
tens
of
thousands
of
civilians by the Sri Lankan
government as well as Tamil Tigers, and for the government to
release
the hundreds of thousands of Tamils including
UN
staff
whom
it
has
in
detention, HSBC Bank, like some notorious hedge fund investors,
sees
only the chance to profit while there's blood in the streets.
"The
rebound
will
be
spectacular,"
said
HSBC
Private
Bank's
chief
investment
strategist for Asia Arjuna Mahendran, hyping the
possibility of Sri Lanka becoming the "Hong Kong of India."
Another HSBC report by Prakriti
Sofat
is
being
used
to
urge
countries
to
drop
restrictions
on
and travel
advisories about Sri Lanka:
"a report released by HSBC Global Research on 25 May 2009 had
forecast... business process outsourcing (BPO), and manufacturing were
key sectors ripe for Foreign Direct Investment."
But while continuance of the EU's GPS Plus favorable
tariff
treatment of Sri Lankan textiles, proffered after the tsunami, requires
a human rights review, the Rajapakse administration has blocked
investigators' access.
The focus seems
to
be on Sri Lanka's ports, which are to be trebled in size. Getting
many of the contracts, some have noted, are South Korean firms.
But
even the International
Monetary
Fund,
which
a
month
ago
on
May
21
said that the
Rajapakse administration's application for a $1.9 billion loan would
be approved "within weeks"(click here
for the Inner City Press story) now
says
the
proposal
is
not
yet
certain,
is
not
agreed
to.
The
government's use of funds for what
many call ethnic cleansing is increasingly questionable. This does not
dissuade HSBC, or reportedly
Citigroup
and
Deutsche
Bank, under fire for standardless banking
for strongmen in Gabon and Turkmenistan, respectively.
HSBC has a
global record
of ignoring human rights. It was implicated in money laundering with
Riggs Banks, for Agusto Pinochet of Chile and other dictators. It
has raised funds for controversial Canadian oil company Talisman, and
has been sued for lending discrimination. Many now question its
blithe gushing at this time about Sri Lanka. Watch this site.
June
15,
2009
So
while
supposedly
recused
at
the
Federal
Reserve
Bank
of
New York, Tim
Geithner was weighing in on Bank of America, in support of the
shotgun marriage with Merrill Lynch, it emerged in Congress last
week. He denies it. But didn't he initially denied not paying his
taxes?
From
the WSJ: "Mr. Geithner, then head of the Federal Reserve Bank of
New York, had recused himself from individual bank matters in
November after being tapped as Treasury Secretary. Treasury officials
say Mr. Paulson kept Mr. Geithner apprised of what was happening with
the merger. A separate note from
Mr. Lewis recounts a conversation with Mr. Bernanke and suggests that
Mr. Geithner approved of the agreement to infuse the bank with more
money and guarantee its assets. A similar structure had been used to
help Citigroup Inc. A Treasury spokesman said Mr. Geithner was
informed about what was happening but didn't weigh in on specifics."
Yeah...
June
8,
2009
Bank
of
America
will
be
saved
by...
ex-regulators?
Now
on
the board of
directors are former Federal Reserve Governor Susan Bies and former
Federal Deposit Insurance Corp. Chairman Donald Powell. That is to
say, regulators who failed to stop predatory lending and the meltdown
now benefit from it....
So
the
regulators'
idea
of
change
at
Citigroup
would
be
to hand the
reigns from Pandit to former U.S. Bancorp CEO Jerry Grundhofer, who
bought a 25% stake in now-failed predatory lender New Century? Plus
ca change, plus c'est la meme chose.
June
1,
2009
The
race
for
governor
in
Florida
pits
bad
banker
against
worse pro-bank
blowhard. Bill McCollum, who while in Congress promoted every form of
deregulation and promoted predatory lending, now faces off against Alex
Sink, the former CFO of NationsBank now Bank of America, who
oversaw the former's purchase of Barnett Banks which set negative
fair lending precedents. How to choose between them? We don't envy
Floridians on this one...
In
the
UK,
according
to
a
new
study
by
the
New Local Government Network,
"There is evidence that the pernicious trend of illegal
unsecured lending at extremely high rates of interest, or 'loan
sharking,' is making a comeback At least 165,000 people already use
loan sharks in the UK and we can expect the number to rise sharply."
An additional 35,000 people, or an even higher number, are likely to
use loan sharks during the recession, the report predicts.
May
25,
2009
High
rate,
subprime
accounts
make
up
one-third
of
Citigroup's
and
Bank of
America's credit card portfolios...
May
18, 2009
Airports
operator BAA Ltd last week said Citigroup Inc.'s consortium had been
eliminated from the auction for Gatwick Airport, leaving just two
bidders still in the running. BAA said the Citigroup proposal "was
uncompetitive on price and there were no assurances on
deliverability." Many are saying that of the current
Citigroup...
May 11, 2009
Now Citi sells
its Japanese domestic securities business for 774.5 billion yen ($7.9
billion) in cash. "We will continue to look for additional
opportunities to maximize the value of businesses and assets as we
rationalize and restructure Citi," Citi Chief Executive Vikram
Pandit said. Citi had bought Nikko Cordial for $7.7 billion as the
largest foreign bidder in Japan in April 2007. However, it is now
being forced to sell its non-core assets after being hit by
credit-related losses in wake of the global financial meltdown. Citi
is also selling its Nikko Asset Management business in a separate
deal. The sell off continues...
May 4, 2009
Amazingly,
CitiFinancial continues to sponsor a Ford car -- NASCAR TARP.
So at Bank of
America's shareholders' meeting last week in Charlotte, Ken Lewis was
ousted as chairman. This same a week after he and his CFO Joe Price
fingered the bank's “Community Reinvestment Act porfolio” as
having much higher delinquency rates than other loans. Cynically,
Lewis arranged for some community groups to lobby for him to remain
as chairman. He's still the CEO -- shareholders couldn't vote on
that. Yet.
April 27, 2009
According to
the WSJ, “a long procession of grumpy investors took to the
microphone to vent about the crippling losses that have decimated
Citigroup's share price. Some shareholders lashed out at the New York
bank's directors for failing to adequately shield the company from
the credit crisis and recession. Still, by the time the meeting
adjourned roughly six hours later in the ballroom of a Manhattan
hotel, Citigroup's slate of directors had been handily elected, with
each director receiving at least 70% of the votes cast. Also, Chief
Executive Vikram Pandit managed to dodge much criticism of his
16-month tenure. There was no sign of representatives of Citigroup's
soon-to-be-largest shareholder, the U.S. government, which is poised
to own as much as 36% of the company.” How about the taxpayers? Or
the predatory lending victims Citi previously tried to belatedly buy
off?
From
the mail bag, on Wells Fargo and US Bank
Subj: My Plight with Wells
Fargo Auto Financial
From: [Name withheld in this format]
To:
Inner City Press
Sent: 4/17/2009 6:59:57 P.M. Eastern Daylight
Time
Hello Matthew, I've
been referred to you by a family member to contact you about some
trouble I've been having with Wells Fargo Auto Financial. I'd like to
share my story with you, in hopes that you will promote awareness
regarding Predatory and Discriminatory Lending Practices.
I
myself, am a young, black female; have always been a part-time
worker, and full-time student (until recently as of 4/06/09); and a
single mother. At the time I contracted with WF, these same
characteristics applied.
December
2007, I was deceived into a contract for an auto loan that did not
state the terms that was initially discussed. Based on my good credit
history, I was told that Wells Fargo would pay off all of my credit
card debt, and buy out my car loan from Bank of America and I would
end up paying a low monthly payment each month. Right before it is
time to sign the contract, Wells fargo change the terms, and decided
it was best to give me a check in the amount of $2000 to pay off my
own debt, and buy out my car loan ($18K). This was a little fishy to
my then, but I felt pressured to go ahead with the deal because (1) I
spent almost 3 hours in this office, and I had to leave quickly; (2)
I needed the money to pay off some debt and bills; (3) Wells Fargo
offered an additional line of credit (as an incentive) for $1000, and
(4) I didn't have to start paying for another month and a half.
The
terms were $505.77 per month, which was far less than what I was
paying for the bills separately. He told me where to sign, and I
left. Things were fine for the first couple of months.
May
2008, I had a life changing event occur. My daughter had chronic
bronchitis due to Chicago's weather and I had to move to Arkansas for
a better climate environment. Upon my move I had certain job leads
that fell through and was out of work for at least 4 months. During
the entire time, Well Fargo called everyday, at least 3 or 4 times a
day. My credit score dropped tremendously, and no one was willing to
help. Once I did find a job, I paid all I could to Wells Fargo to get
things back on track, but all the money was going torward the
interest and not the principle of the load, which kept me at a
standstill with paying it down.
I
now landed a job where I currently make $30K. As I discussed to Wells
Fargo, I've worked in the $505.77 in my monthly budget; but I know
that I don't have the money to pay a past due balance, late charges,
the current monthly payment, and rolocation expenses in preparation
for this new job. I've kept them up to date with all of the changes,
and yet they continue to threaten me with repossession, despite the
fact that I paid out over $1500 within the last month and a half.
I've
called numerous times to see if my loan can be restructured, and been
given countless run arounds. Finally, Wells Fargo Bank explained that
neither them nor Wells Fargo Auto Financial work with customers (new
or existing) that live in Arkansas.
Bottom
line, there was absolutely nothing they could do to help me. All the
while, I owe $505.77 for March payment, $272.99 in late charges,
$505.77 for April, and the $505.77 in May. My credit score is shot,
so no other bank will loan me anything, and no car dealership is
willing to take a trade in for a car only worth $8000 but a loan
attached to it for $20,000.
I've
contact the CEO, John G. Stumpf, who had someone else send me a
letter back explaining that since I signed the contracted there was
nothing they could do. I'm seeking justice in that, Well Fargo needs
to be stopped. They thought it was best for my financial situation to
require a full-time student, part-time worker, single parent, young
black lady to pay them $33,380.82 on a car worth $8000. Tack on a
19.24% interest rate to a loan, which would have me pay them
$13,035.13 outright.
This
is ridiculous, and something must be done. I trusted Wells Fargo in
that they were charged to help me. They initially told me that there
was something they can do to help, and made me believe that this is
what was best for my situation. Now that I am a customer of theirs,
there is nothing they can do to assist me. I am enraged!
Us too. And on
US Bank --
Subj:
Attn: Matthew Lee, Executive Director or appropriate staff
From:
[Name withheld in this format]
To: Inner City Press
Sent:
4/17/2009 10:37:28 P.M. Eastern Daylight Time
I'm
in a fix with US Bank as they have attempted to keep me in perpetual
debt to them by using late fees, or overdraft fees. Lately I've
moved my account to a credit union, and closed my account with US
Bank. I paid in full the negative amount in doing so, and now they
claim I own them $795.50 in a negative balance. Again, "overdraft
fees".It has been hard to shake these people off. They almost
had me lose my apartment, my electricity was off for a week, my
phone was off for 4 months. During that time, I had an auto deposit I
could not stop because of a perpetual negative balance they claimed
even when the deposit was well over the negative. Is there any law I
can use to stop these idiots? I doubt I'm the only one having this
problem with there predatory practices. And can't the state pull
their charter?
April 20, 2009
In the run-up
to its annual shareholders' meeting, this time in the Hilton and not
Carnegie Hall, Citigroup has been criticized for
misleadingly offering $5,000 loans and not disclosing in the
advertising the interest rate -- 30%. But CitiFinancial has been
doing that for a long time...
Bank of
America, raising its credit card interest rates and saying that "To
continue to offer competitive products and services and responsibly
lend in this current environment, we must adjust our pricing."
April 13, 2009
Job well done? "Citigroup said longtime executive Steve Freiberg
plans to retire after nearly three decades with the company. 'Steve has
been an
extraordinary leader and has made significant contributions to building
the
great global franchise that Citi is today,' Chief Executive Vikram
Pandit said in
a statement." What exactly was so well done about the job?
Beyond the closings, "before it collapsed last September,
Washington Mutual Inc. spent roughly $1 billion on a branch-building
binge that
replaced bank-teller windows with free-standing counters and
cash-dispensing
machines. New owner J.P. Morgan Chase & Co. is now dismantling it
all,
right down to the signs that promise "free checking, free smiles,"
and basically dragging the former WaMu branches back to the past.
Traditional branches
'are superior in every way,' said Charles Scharf, who runs the Chase
unit of
J.P. Morgan. 'They might be boring, but they're practical.'" What ever
happened to Chemical Bank's promise of five dollars if you're not
served in
five minutes?
April
6,
2009
Subprime
Survivors
Wells,
BofA
and
JPM
Chase
Were
More
Disparate
By
Race
in 2008 than Wachovia or Countrywide, Trends
Will Worsen
Under Current Regulators
NEW YORK, April 2
-- In
the first study of the
just-released 2008 mortgage lending data, Inner City Press / Fair
Finance Watch
has found that the seeming survivors of the banking meltdown, Wells
Fargo, Bank
of America and JPMorgan Chase, had worse disparities by race and
ethnicity in
denials and higher-cost lending than the banks they acquired, Wachovia
and
Countrywide. Mortgage lending in the U.S. will become more and not less
disparate because of the emergency mergers and bailouts engineered by
the
regulators, the study predicts.
Fair
Finance
Watch
notes
that
JPMorgan
Chase's
massive
closing
of
branches
of
Washington Mutual will also make credit harder to come by, especially
in poor
neighborhoods. 2008 is the fifth year in
which the data distinguishes which loans are higher cost, over the
federally-defined rate spread of 3 percent over the yield on Treasury
securities of comparable duration on first lien loans, 5 percent on
subordinate
liens.
Wells
Fargo Bank in 2008 confined African Americans to higher-cost loans
above this
rate spread 2.18 times more frequently than whites, according to Fair
Finance
Watch. Wachovia Mortgage FSB, the largest lender of Wachovia which
Wells Fargo
acquired, had a lower disparity, at 1.46.
Bank
of America NA in 2008 confined Latinos to higher-cost loans above the
rate
spread 1.51 times more frequently than whites, the data show.
Countrywide Bank,
which B of A acquired, had a lower disparity, at 1.22.
JPMorgan
Chase was even more disparate to Latinos, confined them to higher-cost
loans
2.10 times more frequently than whites, almost as pronounced as its
disparity
between African-Americans and whites, 2.26. Citigroup, perhaps due to
its
shrinking, some say dying, business had disparities of 1.90 for African
Americans and 1.23 for Latinos. For US Bancorp, the disparity for
African
Americans was 1.55 and for Latinos, 1.35.
"The
banks the regulators favored in 2008, allowing emergency takeovers like
JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide
and
Merrill Lynch, and Wells Fargo's of Wachovia, were the most racial
disparate
lenders," states the Fair
Finance Watch report. "The regulators did not put any conditions on the
mergers
or Troubled
Assets
Relief
Program
bailouts, for example allowing Chase to
close dozens of Washington
Mutual
branches. As things are going, it will be worse and more disparate in
2009. The
new administration has yet to make any substantive change to this."
Several
lenders
had
worse
denial
rate
disparities
in
2008
between
Latinos
and whites then between African
American
and whites, a change from previous years. Bank of America NA, for
example,
denied applications by African Americans 1.44 times more frequently
than
whites, while denying Latinos fully 1.57 times more frequently than
whites.
Atlanta-based SunTrust in 2008 denied applications by African Americans
1.37
times more frequently than whites, while denying Latinos fully 1.78
times more
frequently than whites.
The
law
required that the 2008 data be provided by April 1, following March 1
requests
by Fair Finance Watch. Some lenders did
not provide their data by the deadline. Regions Financial provided its
data at
the deadline but only in paper format, on over 2000 pages, so that it
could not
yet be computer-analyzed. Further studies will follow.
March
30,
2009
Geithner
Promotes
Megabanks'
Monopoly,
in
DC
as
at
Fed,
17
Cut
to 7 on Derivatives
Byline:
Matthew
R.
Lee
of
Inner
City
Press
on
Wall
Street:
News Analysis
NEW YORK, March 28
-- Seven megabanks' renewed grab
for monopoly power in the over the counter derivatives market shows how
little
Wall Street's real power has changed in the transition from the Bush to
Obama
administrations.
The banks,
including Citigroup, JPMorgan Chase, Goldman Sachs,
Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying
over $1
million to p.r. firm Prism Public Affairs to "educate" the voters
weary of bonus and bailouts that those who caused the crisis should
benefit
from it.
Already,
Congress members hungry for campaign contribution have
submitted to closed door briefings by Ed Rosen of the law firm Cleary
Gottlieb,
who drafted the legislative language for monopoly.
The
connector in this story is Timothy Geithner, under Bush
the president of the Federal Reserve Bank of New York and now Obama's
Treasury
Secretary. Geithner in June 2008 convened closed door meetings with 17
banks,
essentially allowing them to propose and draft their own rules for the
derivatives
market.
This led to advocacy
by
the
Fair
Finance
Watch
that
Geithner's
meetings
were
in
fact rule making that
excluded
the public in violation of the Administrative Procedure Act, and by
Inner City
Press, as media, to get the meetings opened to journalists and the
public.
The
Administrative
Procedures
Act
(5
U.S.C.
Section
553)
and
related
laws
require that when the government engaged in rule-making, it must
provide
notice to the public, and allow and weigh public comments. The
New York Fed under Geithner tried to rule-make without any involvement
by the public, even the
public most impacted by the subprime lending that underlies these
processes. The New York Fed on June 9, 2008 met with a group of the
largest banks
to discuss, according to the Geithner himself
"Regulatory policy. These are
the incentives and constraints designed to affect the level and
concentration
of risk-taking across the financial system. You can think of these as a
financial analog to imposing speed limits and requiring air bags and
antilock
brakes in cars, or establishing building codes in earthquake zones.
Regulatory structure. This is about who is responsible for setting and
enforcing those rules. Crisis management. This is about when and how we
intervene and about the
expectations we create for official intervention in crises."
Press
accounts
made
clear
that
the
financial
instruments
and
regulatory
issues
discussed behind closed doors are
related to
issues of public interest, which in fact are disproportionately
impacting low-
and moderate- income people and communities of color -- subprime and
predatory
mortgages.
The
financial institutions invited, in mid
2008, were:
Bank of America, N.A. - Barclays
Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG -
Dresdner
Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase -
Lehman
Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of
Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC
-
Citadel Investment Group, L.L.C.
Fast
forward
to
March
2009,
with
Geithner
despite
tax
evasion
installed as
Obama's
Secretary of the Treasury, and with Lehman having failed and Wachovia
been
swallowed by Wells Fargo. Now he is promoting monopoly powers in the
market for
an even smaller group of banks, just seven: Citigroup, JPMorgan Chase,
Goldman
Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank --
which
despite European headquarters received billions of dollars in U.S.
Troubled
Assets Relief Program bailout funds through AIG.
Now the
idea is to formalize the monopoly through legislation, not rule making.
Industry friendly Congress people like Connecticut's Chris Dodd are
supporting
the monopoly for the privileged. The fig leaf policy argument is that
derivatives should runs through regulated banks. The push is made now,
before
it is formalized that non-banks, too, are regulated.
It is a pure power grab, with Timothy
Geithner as the connector. And who is fighting this monopoly of the
morally if
not financially bankrupt? To be continued.
March
23,
2009
Citigroup's
Pandit
put
out
this
spin
last
week,
"The
work
we have
all done to try to stabilize the financial system and to get this
economy
moving again would be significantly set back if we lose our talented
people
because Congress imposes a special tax on financial services
employees,"
Mr. Pandit wrote in a memo distributed to Citi's 300,000 employees.
Bank of
America's Ken Lewis claims that B of A is "part of the solution for
the
financial crisis" through its subsidized acquisitions of Countrywide
Financial and Merrill Lynch. Most say, part of the problem...
March
16, 2009
In
DC, "Inevitable"
Fraud as Obama Jokes with JPM Chase, Meets Citi and ExxonMobil
Byline:
Matthew
Russell
Lee
of
Inner
City
Press
WASHINGTON,
March 12 -- As President
Barack Obama promises to find and "call out" misuses of the stimulus
package, and to review the over 7,000 earmarks in the budget bill he
signed
this week, the chairman of his Recovery Act's Transparency and
Accountability
Board, Earl Devaney, told the Press of a "naive impression that given
the
amount of transparency and accountability called for by this Act, no or
little
fraud will occur... some level of waste and fraud is unfortunately
inevitable."
Accordingly, the same is true not only
at the United
Nations -- despite
Obama not mentioning the need for UN reform in his comments Tuesday
after
meeting Secretary General Ban Ki-moon -- but also with the bank bailout
funds
of the Troubled Assets Relief Program. Nevertheless, Obama joked with
JPMorgan
Chase's Jaime Dimon at the Business Roundtable's gabfest Thursday
in
Washington. As a smaller banker asked the final question of Obama -- no
questions were taken after his meeting with the UN's Ban -- Obama said
that
banking has of late become complex, and that he could ask "Jaime"
about it.
Also on the White House's list of Roundtable
attendees was Citigroup's longtime
board member and now chairman Richard Parsons. Citigroup veered
into
predatory
lending, JPM
Chase at a minimum securitized it, while lending to payday
lenders
and pawnshops. What then is so funny?
Obama's successor as
Senator from Illinois
Roland
Burris is said to have
a brother who is going through foreclosure. A well-known Representative
from
the
state
of
Illinois, sponsoring a pro-industry payday lending
bill, has taken
over
$10,000
from
the
lender
QC
Holdings. If this is how politics
will be in
the current Washington, predatory lending can be expected to continue.
On
Sri Lanka, IMF Says Its
Pending Loan Would "Support Government Policy Goals," To Wait and See
Byline:
Matthew
Russell
Lee
of
Inner
City
Press:
News Analysis
WASHINGTON,
March 12 -- As
conflict rages in Northern Sri Lanka, with not only the Tamil Tigers
but also
the government forces killing civilians at a pace that has triggered
two calls
for a cessation of fighting by UN Secretary-General Ban Ki-moon, the
International Monetary Fund is in the final stages of negotiating a
$1.9
billion loan to Sri Lanka. Asked Thursday what restrictions the IMF
might place
on the loan IMF spokesman David Hawley said the loan funds would be
used for
"the government's policy goals."
Inner City Press asked a follow-up on possible
conditions or safeguards,
specifically with regard to the military action in Northern Sri Lanka.
Mr.
Hawley referred to the note he had just read out, saying that the loan
is still
under negotiation and to wait and see what conditions there might be.
The IMF briefing, held in basement auditorium of the
Fund's headquarters
a few blocks from the White House where Ban Ki-moon met with U.S.
President
Barack Obama on March 12, was sparsely attended and lasted less than 20
minutes. After passing through security
and waiting for an escort, Inner City Press arrived just as Mr. Hawley
was
about to close the briefing. He took Sri Lanka as the last question.
Some said
it must be a busy news day, that few questions were submitted online to
the
briefing. (Inner City Press has in the past sought to submit questions
from the
UN in New York via the IMF's web site and has watched online as it was
said,
"There are no more questions.") The IMF's own lack of funds would seem
to trigger at least a half hour of questions and answers.
During the visit of Ban and his entourage to
Washington, the word Sri
Lanka did not arise even once, chief UN Peacekeeper Alain Le
Roy told Inner
City Press on Wednesday in the Rayburn House Office Building. This
despite Ban
Ki-moon have twice called for a cessation of fighting, and his
Spokesperson's
Office's claim that he has made the humanitarian crisis in Sri Lanka a
priority.
The IMF Spokesman said to wait and see about conditions on the Fund's
loan to Sri
Lanka. Sources say while these conditions may involve not using the
Fund's funds to support the Sri Lankan rupee, what others
in the UN system are calling a humanitarian catastrophe, including
government-created and -funded detention camps for those fleeing
the conflict zone, is not even on the IMF's radar. We'll see --
watch this site.
March 9, 2009
Citigroup's
stock
went
below
one
dollar
a
share
last
week
--
along with
HSBC closing 800
HFC and Beneficial storefronts, a fitting end to an
era?
March 2,
2009
The Journal sings HSBC's praises,
that "gains from growth in Asia have helped HSBC offset deep losses
from
HSBC Finance Corp., the bank's largely subprime U.S. lender." According
to
the strategy, some of that Asia lending was subprime, too...
Eye of the beholder: the Teamsters last week came out against
KeyCorp
for lending to a company they planned to go on strike against, and
cited Key's
(mis) use of TARP funds and abuse of consumers, including a consumer
advocate's
quote. But one
report drew, at least initially, entirely negative response,
including a comment that the underlying strike had been called off.
Still the TARP was mis-used...
February 23,
2009
The
use of the subprime-triggered meltdown to justify anticompetitive
mergers
toward monopoly is a global phenomenon. Brazil's
Central
Bank
last
week
approved
the
merger
of
the
country's second- and
third-largest
banks, Banco Itau and Unibanco. "This is an initiative which
contributes
to the stability of the national financial system in the current
environment of
the international financial market," the Central Bank said in a
statement.
The authority claimed the merger
wouldn't hinder competition in the financial system, although it would
increase
the market power of the new conglomerate "in some relevant markets for
financial products." Ya don't say...
Citigroup's Pandit last week said, "The future of Citi is in
emerging markets, is in Latin America, and is in Mexico with Banamex."
While the last is dubious, one thing seems true: the future of
Citigroup, if it
has one, is not in the United States,
although it might be WITH the United States (government)...
February 16, 2009
Citigroup, to
defend its plastering of its
discredited name on the Mets new stadium in Queens, rounded up the
support of Dem
Reps Eliot Engel, Joseph Crowley, Yvette Clarke, Gregory Meeks, Anthony
Weiner
and Steve Israel. Would they write in favor of Citigroup's jet? During
the
Congressional hearings last week, Nydia Velazquez called Pandit “a
convincing
person." Convincing to whom?
So BofA's Ken Lewis
has claimed
he had no authority over Merrill Lynch's final bonuses. We'll see...
Before Congress last week,
JPMChase's
Jaime Dimon complained, “we have a Byzantine alphabet soup of
regulators,” and that banks and lenders have to deal with the OTC, the
CFTC,
the SEC and so on. He pontificated that it should be a U.S. system and
globally
regulated, and that no one should try to create a new regulator. He
suggested
the Federal Reserve -- and why not, since the Fed delivered Bear
Stearns to him
and Chase, which then got WaMu as well... The Fed's been good to Morgan
Chase.
February 9, 2009
As Royal Bank of Scotland,
bailed-out
by
UK
taxpayers,
tries
to
pay
bonuses
to
its
second layer of executives, the
UK's
Gordon Brown says the Government would only support any bonus payments
to RBS
staff through UKFI if they were consistent with the taxpayers’
interest.
Business Secretary Lord Mandelson added that RBS risked alienating the
public
by offering “exorbitant” bonuses to its traders and senior bankers.
But note that in New York, JPMorgan Chase
has just awarded bonuses, on the theory that particular units didn't
lose
money. Your tax dollars at work...
American
Eagle
Outfitters
sued
Citigroup
and accused
it of fraudulently inducing it to buy $258 million worth of auction
rate
securities that it now can sell only at a significant loss, if at all.
Citigroup represented the securities as safe and liquid and therefore
compatible with the Pittsburgh-based clothing retailer's conservative
investment policies, according to the suit. Instead, American Eagle
claimed,
Citigroup knew there was not enough demand for the securities to keep
them
liquid. A Citigroup spokeswoman declined to comment.
February 2, 2009
Too little too late,
accountability awaits: Sanford "Sandy" Weill says he will end a
10-year consulting contract with Citigroup that gave
him millions of dollars in
perks, including an office, car and driver and the use of company jets.
Weill,
who retired as chairman and started the consulting job three years ago,
now
wants to opt out. But what about returning ill-gotten gains?
Beyond the branch closing
listed
last week, JPMorgan
Chase plans to axe another 13 in San Antonio -- the
countdown will continue.
January
26,
2009
As
JPMorgan Chase Shutters WaMu
Branches, Regulators Missing, Commitments Gone
Byline:
Matthew
R.
Lee
of
Inner
City
Press
on
Wall
Street:
News Analysis
NEW YORK, January 23
-- JPMorgan
Chase is moving to closed down dozens of the Washington Mutual bank
branches
the government allowed it to acquire last year with no public notice or
comment
period. In Dallas, Chase has targeted 23 WaMu branches for closure, and
another
six in Fort Worth. In the Chicago area, Chase says it will shutter 57
WaMu
locations. More branch closings will follow across the nation.
Community and consumers groups are belated protesting the
acquisition,
which was a one of a slew of
so-called emergency transactions on which no
Community Reinvestment Act comments were considered, including the
accession of
Goldman Sachs and Morgan Stanley to bank holding company status,
and Bank
of
America's now discredited acquisition of Merrill Lynch.
JPMorgan
Chase
benefited from regulator-protected acquisitions not only of WaMu but,
before
that, of Bear Stearns. As first
reported by Inner City Press, Bronx-based Fair
Finance Watch submitted to the Federal Reserve Board comments on
these
transactions, but was told that emergency did not allow consideration
of the
issues raised, including prospective branches closings.
JPMorgan Chase has now told groups who have asked if it will
continue
Washington Mutual's CRA programs and commitments that since there is no
more
Washington Mutual, there is no more commitment.
This
comes
in
the
wake
of
JPMorgan
Chase's
Jaime
Dimon
reversing
himself from a stated commitment to mortgages
through
brokers to abruptly shutting down Chase's wholesale mortgage unit.
While groups
are told this will give Chase more control over the terms of loans,
brokers point
out that Chase ultimately had control in the wholesale business, too. Commitments are made to be broken,
apparently, particularly those by companies the federal regulators
bailed out
or merged out of existence. What, the question grows, is Timothy
Geithner's
position on this Main Street issue?
Update: later on January 23,
community groups were told that JPMorgan Chase plans to close over 40
WaMu branches in New York State...
January
19,
2009
Fed's
Geithner
Evaded
Taxes
at
IMF,
Used
Statute
of
Limitations
Later,
Mishanded Citigroup
Byline:
Matthew
Russell
Lee
of
Inner
City
Press
at
the
UN:
News Analysis
UNITED NATIONS,
January 14 -- While working for the
UN-affiliated International Monetary Fund earlier this decade, Treasury
Secretary-nominee Timothy Geithner did not pay required taxes to the
Treasury
Department's Internal Revenue Service. This would seem to be
problematize, to
be diplomatic, Geithner's ability to gain confirmation by the U.S.
Senate to
oversee the IRS.
This would seem to
be problematize, to be
diplomatic, Geithner's ability to gain confirmation by the U.S. Senate
to
oversee the IRS. But Democratic Senators and Barack Obama himself are
calling
Geithner's an "innocent mistake" which should not impinge on
confirmation. Some ask how a financial whiz, head of the Federal
Reserve Bank
of New York, would claim ignorance of basic tax law as a defense.
Worse,
Geithner initially
hid behind the statute of limitations to refuse to pay $25,000 in taxes
for 2001
and 2002: "A three-year statute of limitations had precluded the [IRS]
from
auditing the 2001 and 2002 tax returns." But his supporters argue that
Geithner's expertise is needed to confront the global financial crisis.
But
what
of
Geithner's
role,
as
the
President
of
the
New
York Fed, in
mis-regulating Citigroup,
an institution which has already swallowed $45 billion in Troubled
Assets
Relief Program funds, and billions more in guarantees for toxic loans
still on
its books? Said otherwise, how can those who oversaw -- or turned a
blind eye
to -- the origins of the financial meltdown be presented as the only
ones who
can now save the day?
Also
on
Citigroup,
sources
say
that
the
Feds
are
pushing
Richard
Parsons to
take over
as the embattled company's chairman. He ran Dime Savings Bank, part of
the
now-collapsed Washington Mutual franchise. At Citigroup's annual
meetings, at
Inner City Press asked questions about predatory lending from the floor
of
Carnegie Hall, Parsons never spoke up. What
did
he
think
of
the
questions,
of
Citigroup's
venture
into
predatory
lending with Commercial Credit, Associates First Capital and
CitiFinancial? The questions should be answered.
Leaving
the
Federal
Reserve
Board
is
Randy
Kroszner,
who
had
served
the Fed's point
Governor on community and consumer issues. A new Fed advisor on these
issues
was recently withheld from the press without explanation by the Fed's
public
relations office. Fed chairman Ben Bernanke hides behind the Federal
Open
Markets Committee news blackout requirements in order to skip speaking
to
non-financial audiences, but disagrees with and ignored the requirement
of
public notice and comment while granting bank holding company status to
Morgan
Stanley, CIT, Goldman Sachs and GMAC.
A cavalier
approach to the law, by both
Bernanke and Geithner -- is this what would help to solve the financial
crisis?
Let Citigroup fall
apart, let it fail without further bailout. For sale: "CitiFinancial,
which
does
real
estate
lending,
personal
and
auto
loans,
had 3,799
locations,
compared to Citi's 4,057 Citibank branches, as of the third-quarter.
Though
CitiFinancial does not offer the same range of products as the Citibank
branches, it does cross-sell Citi credit cards through most of its
locations.
" Terminate it - it is rotten.
So JPMorgan Chase
has
closed its wholesale mortgage business, after virtually promising not to.
They claim this way they can better control the terms of
loans. But the
ones they made through brokers, they made decisions on. Back on Nov.
6,
2007,
David
Lowman,
CEO
of
JPMorgan
Chase's
home
lending
division, and
Patrick
Sheehy, business-to-business channel
executive at Chase Home Lending, told mortgage brokers of “an
unwavering
commitment to our wholesale … lending” business. Jamie
Dimon made this type of about-face
and close-down before. It's just what he does.
BofA is
making layoffs,
BofA is getting sued. And yet BofA is getting more and more billions of
TARP,
including the share that would have been Merrill's. For shame. Bank of America Corp. filed a letter
with
Charlotte, N.C., Mayor Pat McCrory verifying that it is laying off
about 139
employees in the city’s Ballantyne neighborhood. The layoffs are
expected to be
completed by March 10. The bank is also laying off about 85 workers at
a
Preferred Services site in Dallas. Meanwhile, a group of Washington
state homeowners filed a
lawsuit against Bank of America Corp. unit Countrywide Financial Corp.,
alleging
that the company illegally manipulated the appraisal process in a plan
to
increase profits at the expense of homeowners and independent
appraisers. The
lawsuit, filed in the U.S. District Court in Seattle under the
Racketeering
Influenced and Corrupt Practices Act, claims that the company forced
homeowners
to use its unit, LandSafe, for appraisals, while subcontracting the
work to
independent appraisers and charging homeowners as much as 200% of the
actual
cost of the appraisal.
HSBC has
significant exposure to toxic
assets, including U.S. subprime mortgages that aren't marked to market,
either
because they are held directly on its loan book or because the U.K.
regulator absurdly
allows unrealized losses on certain assets to be written back for
capital
purposes. It is estimated that HSBC's true leverage is closer to 50
times and
Tier 1 is 4.6%, making it one of the most highly leveraged banks in the
world.
How's that Household now?
Here are properties in The Bronx, New York
on
which Wells Fargo
has foreclosed:
2096
RYER
AVE BRONX 2862 Multi-family $374,900 N
5730
POST
ROAD BRONX 1809 Multi-family $599,000 N
605
WALES
AVE BRONX 2700 Duplex TBD N
2194
WASHINGTON AVE BRONX 2403 Multi-family $325,000 N
4027
EDSON
AVE UNIT 1 & 2 BRONX 1848 Duplex $339,900 N
2782
CRESTON AVE BRONX 2000 Multi-family TBD N
January
12,
2009
More
chickens coming home to roost for HSBC -- "European shareholder
group Deminor said Friday it may take legal action against ... HSBC
Holdings
PLC on behalf of investors who bought products from disgraced asset
manager
Bernard Madoff."
January
5,
2009
Talk
by
HSBC and Wells Fargo that
they had cleaned up their predatory lending act has
been blown out of the water by the example cited by even the Wall
Street
Journal, of a $103,000 mortgage on a shack in Arizona, purchased by
Wells and
then HSBC --
"Less
than two years ago,
Integrity Funding LLC, a local lender, gave a $103,000 mortgage to the
owner,
Marvene Halterman, an unemployed woman with a long list of creditors
and, by
her own account, a long history of drug and alcohol abuse. By the time
the
house went into foreclosure in August, Integrity had sold that loan to
Wells
Fargo & Co., which had sold it to a U.S. unit of HSBC Holdings PLC"
We'll
wait
to hear the spinmeisters at Wells and HSBC try to explain this one
away...
December
29,
2008
So
HBOS
is
said
to
be
cutting
off
Oz
Minerals,
not
extending loans, the extractive
party
is over...
December
22,
2008
So
Capitol One goes forward to scoop up Chevy
Chase in DC... What in your wallet -- a bank with a history of
racially-based
redlining?
Who
knew? Morgan Stanley, which the Federal
Reserve let become a bank holding company with no public comment, now
applies
on an expedited basis for its Greenwich, Connecticut-based subsidiary
Frontpoint
to own a stake in a start-up bank that says it will serve Manhattan,
Brooklyn
and parts of Long Island: Heritage Bank. Then, there is a China-related
application by Morgan Stanley, on which the comment period is still
open.
Expect more on this.
December
1,
2008
HSBC client
companies' violations include... client companies embroiled in
conflicts over
lands and forests with the Penan
communities in Sarawak regarding the
establishment of oil palm plantations on community lands
.. long standing conflicts between
client companies
and communities in North Sumatra which have led to the
imprisonment of villagers and
restrictions being placed on people’s movements, which have
in turn prevented children
from getting to school and villagers from going to market or
their farmland
.. the takeover of community lands
in West
Kalimantan undermining community food security
.. repeated allegations that client
companies in
several parts of Indonesia are clearing forests and areas of
high conservation value.
Nearly all of the 17 business
groups which are
HSBC’s clients have announced plans to expand their palm oil
operations. Unless their practices
change, these operations will inevitably destroy more
forest, wildlife and peoples’ homes. Yep, that's HSBC..
November
24,
2008
In October, Fred H. Langhammer,
chairman of global
affairs of Estee Lauder quit the board of AIG, as it got a $150 billion
government bailout. His resignation letter cited the time demands of
the AIG
board seat. Between Nov. 10 and Nov. 19, the directors conferred three
times. Where -- in Biarritz? San Tropez?
PNC's proxy statement to acquire
National City
raises the question, why would NCC's regulators rule that TARP funds
were
unavailable to it, but then turn around and give them to PCC? Some are
alleging
that the Comptroller's connections to PNC played a role here. Crony
capitalism,
indeed...
The WSJ
of
November 18 reported that in February 2007 "to modify loans, HSBC tried
a
strategy called 're-aging.' If a
borrower fell behind on payments by two months or more, HSBC
effectively
allowed some to catch up by declaring the loan current and adding the
delinquent amount to the balance owed."
But re-aging began far earlier -- in fact, it was done at
Household
during the run-up to its sale to HSBC, to make the already dubious
predatory
business model look better. "Lipstick on the pig," whistleblowers
called it them to Inner City Press, who reported it at the time. Plus
ca
change...
November 17, 2008
Asked
at NCRC's
Responsible Lending conference in London on November 14: How will the
UK run
RBS, which owns
subprime lenders in the US, and securitizes subprime loans
through its subsidiary Greenwich Capital Markets? What
oversight
will
be
given
to
Deutsche
Bank
and HSBC and BNP Paribas and
their involvement in subprime lending?
Raised at the meeting in September with
the
Federal Reserve's Bernanke was his decision to allow Morgan Stanley and
Goldman
Sachs to become Bank Holding Companies with no public comment. Both of
these
investment banks helped cause the current crisis, in their role as
securitizers
of subprime loans by now-bankrupt firms like Ameriquest and New
Century.
Bernanke said CRA could be considered later. But under the law, the
only time
to consider it is before granting these regulatory approvals.
And,
one reason
for the crisis was the lack of sufficient oversight of financial
institutions
and their practices, which the Fed is now making more widespread by
overriding
the oversight laws.
The
same
evasion of the law has just be done for American Express, will be done
for CIT,
while General Electric
complains loudly that it will not become a bank holding
company, protesting too much, some opine.
November
10,
2008
So
how many
WaMu branches is JPMorgan Chase
planning to close? The bank refuses to say, but
we aim to find out...
HSBC,
one
of
the
first
banks
to
have
to
announced
big
subprime write-offs, is trying
to pull
back in some segments of the U.S. consumer finance market. Through
their
purchase of Household International (and affiliates of its like the
secured /
subprime card lender Orchard Bank), HSBC became huge in subprime, and
then had
to pay the price. (They are exporting the business model elsewhere, but
cutting
back in US at least for now, as evidence by card solicitations down.
And see this November 7
debate: http://bloggingheads.tv/diavlogs/15731#
November
3,
2008
Great
job,
Pandit:
in
the
last
year,
Citigroup
shares
have lost 65% of their value, and
$68 billion in mortgage-related losses later, the company has so many
troubled
assets that its days as a leader in U.S. finance appear to be over.
“Citi no
longer matters,” says Bill Smith, head of Smith Asset Management, a
shareholder
in and longtime critic of the bank. “It's a black hole.” Even after
massive
write-downs, the bank still has $138 billion of “problem assets."
Crain's
says that with $25 billion in federal bailout money safely in its
coffers,
the company will also get another chance to snap up an even weaker
rival or two
on the cheap.
But see Inner City Press' interview
with Joseph
Stiglitz, in this week's CRA Report, www.innercitypress.org/crreport.html
From
the mail bag
Subj:
A US Bank
story
From:
[Name withheld in this
format]
To:
Inner City Press
Date:
11/1/2008 12:53:33 P.M.
Eastern Standard Time
In an
issue of the Portland
Oregonian in late 2001, there was a small 4-5 paragraph article buried
in the
last pages of the front part of the paper. It spoke of a high level
security
employee of US Bank that was gathering evidence to present to the FBI
regarding
US Bank account and Branch managers.
Apparently, they were selling names of consumers who had
accounts to
certain Cincinnati, Ohio Consumer Finance Division’s loan officers.
Aggressive
sales tactics were employed to recruit potential loan applications in
which
somehow dummy accounts were established not to the benefit of the
person
applying for a loan, rather those who were behind the scheme.
The US
Bank security person who
uncovered this scheme never did submit her documentation to the FBI,
because
she apparently decided to suddenly retire, and conveniently was
unavailable for
comment on the story. It never went nowhere. I consider myself as one
of the
victims of the scheme here 6 years later still have not found any
closure nor
justice.
It is
unfortunate because I had
not learned of this article until 3 maybe even 4 years after it had
appeared in
the Oregonian. Had I known, perhaps the outcome that personally tore
this
family to shreds may have been avoided. There was an accounts manager
at my
local Scappoose, Oregon branch that pursued me to refinance to the
point of
being totally annoying, so much so that I would not even go into the
branch,
opting to either going to a different branch or banking through the
ATM. The
most extreme was one morning while at the ATM, this individual saw me
and came
outside to ATM to once again “sign us up”.
Strange?
Perhaps
not
except
for
the
fact
that
it
was
during
a torrential downpour.
The
owner of the company my wife
was consulting for had some issues with a competitor over patent rights
or
something along those lines, and decided to retire and dissolve the
company. My
wife, being tired of traveling and being away from home decided to go
back to a
firm on a salary basis, the consequence being a drastic reduction in
income.
That is not to mention the coinciding terrorist attacks of 9/11 and
consequences that rippled through the economy that affected my
business.
Finally,
we
succumbed
to
the
pressure
and
gave
permission
to
this
accounts manager to forward our
name to
the Consumer Finance Division. Of course, we were investigating our
options
with our lenders and such, but none pursued us on a daily basis as did
the loan
officer from US Bank, promising this and promising that. The heavy
handed sales
tactics and pressure clouded our better sense, because we lost sight of
all the
problems we had at the local level branch level. Tellers posting to
incorrect
accounts resulting in bounced checks and overdrafts, I mean it was
constant. If
we are guilty of anything it is moving forward with US Bank on a refi,
given
all the problems we were already having.
It was
after one of these
“mispostings” that I had gone to see the same accounts manager that
doggedly
pursued us, to correct the tellers mistakes and set our personal
accounts
correct. We walked through it, he saw the mistakes made and promised
that it
would be taken care of and to stop in tomorrow if it was not done yet.
The
following day nothing was corrected and so I stopped in and to
amazement this
accounts manager was gone for good. I was told that he transferred to a
location closer to his home, which I found very odd because he was from
a rural
area, more so than Scappoose, and this was a considerable step up for
him. Just
like that, overnight, he was gone. This “disappearing” act, I would
come to
learn over the years to come is a tactic used to keep consumers at bay.
After
discovering the article in the Oregonian, I went back through my
records and
checked for timeframe. Turns out that the day that the article was
published
was the same day I had met the accounts manager regarding the
mispostings.
Coincidence? It is one of those questions that never has been answered.
We
were given assurances,
verbally, time and again, that we were all approved for this refi and
that was
holding it up was the appraisal and if it would come in high enough.
Once that
was done, we would essentially be done in a couple of days. That was
nothing
more than deceit, lies and simply keeping us on the line of their hook.
The
appraisal was done and we were well above where it needed to be and we
assured
it would be wrapped up by Christmas of 2001. Christmas came and went
with nothing
done.
We
were getting very concerned as
estimated business taxes on my wife's consulting and my business we
rapidly
coming due. We were going fall 7800 dollars shy and part of the
disbursements
from the refi were going to cover that. It became apparent that this
was going
to drag through past the 15th of January and we were furious that all
their
promises had been unfulfilled, yet we had come this far and to start
all over
someplace else was just unthinkable at this point. Our loan officer
suggested
that we find someone to lend us the 7800 and that she would personally
secure a
note with that person to the disbursements funds, in essence
guaranteeing
payment back to this person.
I
asked my mother in Cleveland
Ohio and she agreed to lend the money, everything else was handled by
the loan
officer. She contacted my mother and explained that she would have some
sort of
document that would secure her name to the disbursement funds. As we
are in
Oregon, the funds needed to transfer via Western Union. This loan
officer went
as far as walking my mother step by step on how to do so. The note that
guaranteed repayment that was promised never did arrive, nor for that
matter
did the refi.
People
look at me when I tell
that part of the story as if I am an idiot, a liar or a bad
storyteller, and
who is to blame them. After all it's totally outlandish. Preposterous,
absolutely so, but totally true. Is it in writing? Of course not, US
Bank puts
none of their promises in writing, only what they can screw you with,
not what
would screw them.
However,
phone
records
and
transference
of
fund
records,
and
my
mother
don’t lie. We later came to
find
out that this scheme was concocted by the loan officers supervisor. I
call that
fraud.
Finally,
on
morning
in
mid
February
2002,
as
we
walking
out
the door to go and sign the paperwork
finalizing the refi. We get phone call from our loan officer. She tells
us that
their has been a stipulation added that simply destroyed the whole
deal. We were
told that because of my wife's short time at new place of employment
and my
being unemployed suddenly had caused concern as to whether we should be
loaned
money to. Never was this even a concern to them prior. We later came to
find
out that it was a concern long ago and that they had farmed us out to
other
lenders and they found one in a place call Greenpoint, but never shared
that
information with us, as a matter of fact it was deliberately held from
us. All
the while we were being told everything was hunky dory.
The
stipulation for approval is
again something that people look at me as if I am idiot.
I am
in Architecture and I
designed and built our home. It sits on a slight downslope because of
that
there is a basement area that is known as a daylight basement. I
designed it as
such so that in the future it could be modified into living space.
However,
that would be under a separate building permit and was for all
intensive
purposes is deemed as nothing but a crawl area. US Bank and Greenpoint
decided
in their infinite wisdom that in order to get the refi we would now
have to
make the daylight basement livable.
In
other words, we would have
had to obtain a building permit, bring
in rock and pour a slab over, and additionally insulate and drywall the
walls
at a cost of 15,000 – 20,000 dollars. That did it that was the final
straw, to
which we walked away very, very angry. We felt like we were raped. On
top of
that our loan officer told us not to pay the mortgage payment to
Washington
Mutual, that she had it worked out with them with all these prior
delays and
that it was all taken care of. Naïve our part? Absolutely it was,
but this is
their business, a consumer should be able to put trust in that. For
that we
were very very stupid.
In the
early part of 2002 the
lending practices were still rather strict and we found ourselves not
being
able to get a refi anywhere. No one would touch us because of a past 30
day on
our mortgage that showed up on our credit report. It did not matter
what the reason
was.
Our
intention to adjust our
finances to our personal and economic changing times was destroyed. The
stocks
we held and the savings we had all withered away to keep pace with what
had
become financial chaos. I was determined to fight back because I
believed in
justice and truly believed that we mattered. I came to find out that we
do not
matter. I filed a complaint with the OCC, and they contacted me back
asking me
to send them all the info I had so they could review it and proceed
further. They
even told me to fax it as opposed to mailing my docs, as it would find
its way
quicker into their hands. I did that, on a Sunday evening. I faxed
about 150
pages if not more, and the following day I called to ensure that it was
received.
I was
stunned when the woman on
the side of the line admonished me for having the nerve and stupidity
to fax
that many documents. I asked them if they were going to review and she
said
that they do not have time to pour through that many pages and that
they
wrapped it all up with a cover letter and sent it to US Bank. As I
understand
it in a civil matter I am not obligated to provide the defendant with
discovery. Any chance of that happening went right out the door when
the agency
designed to protect me as a consumer
Did
just the opposite.
If you
have ever missed a car
payment then you know that the calls come daily if not 2 or 3 times,
and that’s
what my life became. A balancing act, paying the mortgage one month and
skipping other ones and then the following month doing the opposite,
all the
while the credit report overall number divebombing. Being a one person
office
those calls came to that phone line. Every single I made it a point
that I was
going to find justice, and I called the 800 number of US Bank, never
speaking
to the same person twice, and being bounced all over the country to get
nowhere. While at the same time I was also receiving phone calls from
their
collections department looking for the payment on a second that we had
with
them. I exaggerate not when I say that in a 1-1/2 year period I spoke
with over
one thousand different US Bank personnel, and the small handful that
took an
interest in my pleadings for help would
disappear……be transferred. To this day, I am still appalled by
that.
The
day that the refi fell apart,
and after we were done screaming at the loan officer she had faxed me a
copy of
a field review that was commissioned by US Bank, which is common
practice, but
nonetheless a document that is to be used in house and not privy to us,
the
loan applicant. Their was so much emotion that day that it did not
occur to me
until long after a statement that she had made to me, and that was that
“you
did not get this from me”. In an effort to shorten an already very
lengthy
letter, what it came down to was that the person who did the field
review was
not licensed to appraise our particular zone or type of estate
property, as we
sit on 5 acres.
It
took about a week of spouting
off about the appraisal when all of a sudden, after months of getting
nowhere,
I suddenly find myself taking a call from The President of Consumer
Finance.
Which is just another long story ending in corporate America screwing
the
common man and getting away with it.
October
27,
2008
PNC
proposing to buy Nat City on the cheap is a deal with many echoes.
There was
National City's purchase in Pittsburgh of Integra, with the favor now
being
returned. There's PNC's purchase of Riggs after its money laundering
for Chile's
Pinochet and Equatorial Guinea came to light. National City's sins have
been
closer to home and if the past is any guide, PNC wouldn't clean them up
either.
HSBC's
stock
fell
13.5
per
cent
last
week
to
a
five-year low. "We question how
long the [HSBC] shares can tread water in the face of falling earnings
and increased
pressure on capital, and we think the dividend is exposed," Morgan
Stanley
said. Takes one to know one...
October
20,
2008
It's
telling, in terms of how sloppy the corporate giveaways have been, that
neither
the Fed nor Treasury thought through how buying warrants in the big
banks would
put them in the position of reducing book value or recording a loss.
They plan
to pumps a combined $125 billion in Bank of America Corp.
(BAC)
-
including
Merrill
Lynch
&
Co.
Inc.
(MER)
-
as well as JPMorgan
Chase
&
Co. (JPM) and Citigroup
Inc. (C), Wells
Fargo Corp. (WFC), Goldman Sachs &
Co. (GS), Morgan Stanley (MS), Bank of New York Mellon Corp. (BK) and
State
Street Corp. (STT).
Meanwhile --
As FDIC Offers Bail-Out, Its
Conference Calls Are
Full Then Off the Record
Byline: Matthew R. Lee of
Inner
City Press on Wall Street: News Analysis
SOUTH BRONX, October 14 --
If the
way the FDIC dealt with the Press on Tuesday is any indication of how
they will
offer guarantees as part of the bank bail-out process, the corner may
not yet
be turned. The FDIC emailed the press corps at 9:57 Tuesday morning,
announcing
a briefing at 10:45 a.m. to
"provide details of the FDIC’s plan, what it includes, how it will be
funded and who will be eligible to participate." A phone number was
provided, but when called the message was that the conference call was
full.
Then
at
11:22, the same notice of 10:45 press conference was sent out, this
time with a
new phone number and pass code. But even if one called immediately, the
call
was ending, with some anonymous participant griping that only JPMorgan
Chase,
Wells Fargo, Citigroup and Bank of America will benefit.
This
was
followed
at
1:48
on
Tuesday
afternoon
with
a
notice
of a new conference
call,
at 3:15. Once on, an FDIC official said it would all be not for
attribution. Inner City Press asked two
questions. First, why are some savings and loan holding companies being
excluded from the guarantee program? Because some were grandfathered in
and
engage in commercial activity was the answer. No list of excluded
S&L
holding companies was provided.
Inner
City
Press then asked if the FDIC believes that the proposal to acquire
Wachovia by
Wells Fargo is an emergency transaction, or that requirements of public
notice
and comment should be adhered to. The official said the FDIC is "not
prepared to comment on particular institutions." Inner City Press
asked,
Why will you be? But the phone line had been cut off. The masters of
the
universe moved on, corporate welfare in their wake.
And see this Oct
17
(UN)
debate,
including
Musing of One-Term
Limit for Ban
by Obama, at http://bloggingheads.tv/diavlogs/15262#
October
13,
2008
The WSJ transcribes for Citigroup
that "Citi
will mainly seek to expand overseas, particular in Asia and Eastern
Europe,
which has long been a major focus of Citi's growth strategy. Retail
banking and
consumer lending returns there by far outweigh the returns in the U.S.,
Citi
has long argued. Citi has 'exactly the same strategy as before,' the
source
said." And that strategy includes predatory lending -- now in Asia and
Eastern Europe...
Tales for a time of lawless
regulators giving
rubber stamp bank merger approvals without any public notice or
comment, Chase
and now Wachovia --
On October 10, the Federal Reserve
Board sent Inner
City Press a partial response to a Freedom of Information Act request
made back
in March, about the Fed voting without public notice or comment to bail
out
JPMorgan Chase's acquisition of Bear Stearns without even following the
law
requiring the involvement of Fed governors. Six months after the fact,
the Fed
releases an April letter to Congress saying the Governor Mishkin, who
has since
left the Board, was in the air on a flight from Finland to the U.S. and
therefore couldn't be involved. Click here to view. And
now he's gone...
There
are
other responsive records which Inner City Press is pursuing.
Meanwhile,
while
Inner
City
Press
/
Fair
Finance
Watch
has
already commented to
the Fed
demanding they hold a comment period on Wells Fargo's proposal to buy
Wachovia,
now Wachovia says it will bypass its own shareholders -- with the
NYSE's rubber
stamp. Note to Fed: this doesn't make it an emergency to bypass the
public too.
But the Fed on Friday said, vaguely, that it will begin "immediate
consideration" of Wells Fargo's application. But
no
FDIC
involvement
=
no
emergency.
RBS is pleading for a bailout from
the UK... When Inner
City Press / Fair Finance Watch commented, at length and over years,
about RBS'
involvement in and exposure to predatory subprime lending, RBS always
said it
wasn't true...
October
6,
2008
-- So why not
let Germany's Hypo
Real Estate fail? For an angry debate to this effect by Inner City
Press on the
bailout, click here
In Wachovia War, Wells Fargo Would Require
Public
Notice and Comment, No Emergency
Byline:
Matthew
R.
Lee
of
Inner
City
Press
on
Wall
Street:
News Analysis
NEW YORK, October 3, 5 -- With Wells Fargo's
announcement that is it outbidding Citigroup for Wachovia, and would
consummate
its proposal, without FDIC assistance, by the end of the year the
question
arises: how could the regulators bypass public notice and comment on a
transaction that has no FDIC involvement? Since
this still hasn't been answered as of October 5, Citigroup's
announcement that it's gotten a judge to restrain the deal is much more
sizzle than steak.
September
29,
2008
When Inner City Press / Fair
Finance Watch complained
to the Office of Thrift Supervision about the subprime practices of
Washington
Mutual's affiliate Long Beach Mortgage, the OTS responded that is was
only
concerned with WaMu's savings bank, not its finance company. WaMu never
got CRA
credit for Long Beach's loans, but now WaMu has failed and been bought
at fire
sale prices by bottom-feeder JPMorgan Chase...
-- First on the fringes
and now on Fox News, the Community Reinvestment Act is being blamed by
some for
today's financial crisis. The argument is that by encouraging
FDIC-insured
banks to lend in lower income neighborhoods, the government -- read,
Democrats,
from Jimmy Carter to Bill Clinton -- created the explosion in high
interest
rate subprime loans.
There's a major factual problem, though: with a single
exception, no bank sought CRA credit for its subprime loans. And the
investment
banks which were purchasing, bundling and securitizing the loans were
not
covered by CRA. Bear
Stearns was not covered by CRA, but was bailed
out by the
Federal Reserve Board for $30 billion dollars. AIG, an
insurance company, was
not covered by CRA, but its subprime activities have led to a $75
billion loan
from the Federal Reserve, whose chairman Ben Bernanke
nevertheless claimed to Inner City Press that the Fed does
not control AIG, despite owning warrants for 79% of its stock, click here for
that story.
In
fact,
community
advocates
had
been
telling
the
Federal
Reserve
about
the
dangers of
subprime lending since the 1990s. For
example, Bronx-based Fair Finance Watch commented to the Federal
Reserve about
the practices of now-defunct non-bank subprime lender New Century, when
U.S.
Bancorp bought warrants for 24% of New Century's stock. The Fed, rather
than
take any action on New Century, merely waited until U.S. Bancorp sold
off some
of the warrants, and then said the issue was moot...
September
22, 2008
On
the
rumors of Wachovia looking to buy Morgan Stanley, just as its bigger
sibling
Bank of America bought Merrill Lynch (click here for
Inner City Press' 10%
deposit cap analysis), consider that both deals involve
Utah-based
industrial loans companies, which are covered by the Community
Reinvestment
Act, but whose acquisition, it is argued, is not subject to CRA
scrutiny and
public comment. This is something that should be fixed, clearly, in the
pending
bail-out legislation...
How did Citigroup slip the bit? Now
they're listed
as a possible bidder for WaMu... HSBC finally ended
its pact for Korea Exchange
Bank, denied rumors of interest in Morgan Stanley and Halifax...
September
15,
2008
Alan
Fishman, who shepherded Independence Savings Bank in Brooklyn toward
its
ill-fated sale to Sovereign, has now brought another Independentista
over to
the fast-collapsing WaMu, Frank Baier...
Citigroup said last
week that it expects a $450
million quarter-to-date pretax impact on revenue from trading losses
and
write-downs of Fannie Mae and Freddie Mac securities...
When
asked
on September 12 if it was making an offer for Lehman Brothers, HSBC through a
spokesperson said, " "We have made it clear that our strategy
relies on focusing on emerging markets and businesses with a genuine
global
connectivity." Yeah, like Household
International and predatory lending...
September 8, 2008
GE said it received a
Wells notice that staffers at
the Securities and Exchange Commission are considering recommending the
SEC
file civil charges in a long-running probe of GE's accounting. GE
said
Friday that the SEC staff is considering civil charges on its
accounting for
four items over various periods: derivatives; sales of spare parts,
particularly in its aviation unit; the timing of revenue recognition on
the
sales of locomotives; and revenue recognition on several other items.
What about subprime?
Merrill under John Thain has
reached down into
Citigroup's
mortgage operation for James De Mare to run its mortgage trading
operations. As reported, De Mare has been with Citigroup for 11 years.
He most
recently was the firm's global head of mortgage trading, overseeing the
trading
of all securitized products in the firm's fixed-income currencies and
commodities group. Great track record...
September
1,
2008
Commerzbank
AG
was
poised
Sunday
to
announce
the
purchase
of
Dresdner Bank AG in a
$13.2
billion deal -- to compete with predatory lending enabler Deutsche
Bank...
HSBC
Holdings brags it has increased its stake in Vietnam Technological
and
Commercial Joint Stock Bank from 14.4% to 20% for $77.1 million. The transaction follows the granting of
special approval from the State Bank of Vietnam and Vietnamese Prime
Minister
Nguyen Tan Dung in July to increase HSBC's investment in Techcombank
beyond the
foreign ownership cap of 15%, HSBC said...
August 25, 2008
Per DJ, "Russian police have raided the offices of four law
firms representing
Hermitage Capital Management Ltd., once the country's biggest portfolio
investor, the fund's chief executive, Bill Browder, said Friday. The raids come after Hermitage, together with
HSBC Holdings,
turned to Russian courts to recover ownership of three Hermitage
investment vehicles that they say were stolen last year with the help
of the
Interior Ministry."
So HSBC, in most parts of the
world a rogue and spreader of predatory lending, is draped in the
banner of
corporate reform in Russia...
Genpact Ltd.,
a business process outsourcing provider with
its Latin American headquarters in Juarez, has acquired a delivery
center in
Guatemala City, the company announced this week. Genpact
will provide services to GE Money from the
facility, which it acquired from GE Money, a division of General
Electric.
Financial details were not disclosed. The Guatemala facility extends
Genpact 's
Latin American presence beyond Mexico, the company said in a news
release. The
delivery center will initially employ more than 700 people, and can
grow to
2,000 workers, it said.
August
18,
2008
This week we note the sale of ABN Amro's private
equity
business this week to a Goldman Sachs (CS)-led consortium for 600
million
Euros, just part of the $95 billion carve-up of the Dutch bank by
new
owners Banco Santander, Royal Bank of Scotland Group and Dutch-Belgian
financial services company Fortis NV. The fall-out continues.
HSBC Auto Finance will lay off
about 400 workers in
San Diego in the next three months as the giant London-based bank stops
making
auto loans in the United States. After exiting auto lending, HSBC's consumer
finance unit intends to focus on its credit card and home mortgage
businesses,
said bank spokeswoman Cindy Savio in Chicago. And still much of it is
predatory
-- now to employees as well.
August 11, 2008
Per
WSJ,
"the SEC didn’t want to impose an upfront fine
against Citi, say people familiar with the matter, while the states
pushed for
-- and eventually got — a $100 million fine. Also, as part of the deal,
the SEC
wants Citi to use its 'best efforts' to help help institutional
investors sell
roughly $12 billion of auction-rate securities it sold to retirement
plans and
institutional investors by the end of 2009, or else face possible
sanctions
from the commission. (In other words, this is the SEC’s version of a
deferred-prosecution agreement.)" Another sleazy deal by Citigroup...
In
Ireland,
"GE
Money is to make 85 staff redundant and stop
offering personal and commercial loans, in a major restructuring of its
operations in Ireland. The lender, which is part of America's largest
company
General Electric, is to continue offering sub-prime loans, loan
protection insurance, and car finance through motor dealers." The
subprime
continues...
Also per WSJ, "HSBC North
America's
risk-weighted assets rose 11% to $374 billion in the first half, under
the new
Basel II banking rules, with most of the rise at HSBC Finance. That is
the old
subprime-dominated Household International, HSBC's U.S. unit into which
it has
pumped $2.2 billion in equity this year and which continues to need
intensive
treatment." Great purchase, that...
August
4,
2008
GE is
getting out of
mortgages in Canada, while expanding elsewhere. Apparently Canada is
too
regulated for GE...
HSBC is
playing hard ball in Seoul. DJNS: " HSBC
Holdings PLC (HBC) said
Thursday that it hadn't received regulatory approval to buy a
controlling stake
in Korea Exchange Bank (004940.SE) by a July 31 deadline. The bank, recently ranked by Forbes as the
world's largest company, has an exclusive agreement to buy the stake
from
U.S-based Lone Star Funds. HSBC and Lone
Star have imposed a deadline on the deal, valued at around $6 billion,
of July
31 to coincide with the required regulatory approval. 'The
required
regulatory
approval
was
not
obtained
by
31
July
so,
under the terms of the acquisition agreement,
either
HSBC or Lone Star may terminate the agreement,' HSBC said in a
statement... Earlier
Thursday, an official at South Korea's Financial Services Commission
said that
HSBC hadn't submitted an amended application. " We'll see...
July
28,
2008 -- a week of shenanigans by Citigroup (in
London), HSBC
(in South Korea) and GE (in Abu
Dhabi). And this --
Triggering
a
hurried
correction,
AFP
on
July
25
reported
that
Late
Friday, the Treasury's
Office of the Comptroller of the Currency took over First Heritage Bank
of
Newport Beach, California, and First National Bank of Nevada, based in
Reno,
Nevada, declaring both undercapitalized and facing losses that would
wipe out
their capital.
"The 28
offices of the two
banks will reopen on Monday as branches of Mutual of Omaha Bank," the
Federal Deposit Insurance Corporation said in a statement.
"All
depositors, including
those with deposits in excess of the FDIC's insurance limits, will
automatically become depositors of Mutual of Omaha Bank for the full
amount of
their deposits."
In
addition to taking over the
deposits, Mutual of Omaha Bank will pay 200 million dollars for assets
of the
two closed banks, which are now in receivership under FDIC control.
The
closures took to 10 the
number of banks closed in the country in the past 18 months, as the
collapse of
real estate prices, the spread of mortgage defaults and the crumbling
of the
markets for billions of dollars worth of securities tied to mortgages.
Earlier
in July, the FDIC seized
control of the large IndyMac Bank, which was weakened by heavy exposure
to
risky subprime mortgages and collapsed after a run by depositors.
Then they added the N.A....
July 21, 2008
So
why did
Richard Holbrooke resign last week from AIG's board? AIG
while announcing the
resignation, "effective immediately," did
not
list
a
reason...
From the earnings: "
At Citigroup,
about 8.5% of its subprime mortgage borrowers, which make up
about 16% of the bank's total mortgage portfolio, have fallen at least
90 days
behind on their loan payments, and therefore are considered at high
risk of
defaulting."
Slinking
out
of
Slovakia,
"in Slovakia Citibank of the US made several
redundancies after its consumer finance division CitiFinancial
was
liquidated. At the beginning of 2008 the bank said that it plans to cut
55 jobs
in Slovakia out of almost 230 jobs. In the near future Citibank
Slovakia will
operate as a branch of Ireland-based Citibank Europe."
July
14,
2008
After
GE's
sell-off of Lake to Shinsei in Japan, where will the $5.4 billion be
redeployed
-- in predatory lending elsewhere? "In an extremely challenging
environment, we have completed an agreement that fully meets our core
strategic
objectives: giving our Japanese business the opportunity to work with a
partner
committed to investing in Japan, and allowing GE Money
and GE to redeploy its capital to areas which
will generate strong sustainable long-term growth and returns for our
shareowners,'' said GE Money's CEO Bill Carey said-in-a-statement...
Korea
Exchange Bank's CEO said Friday that the government should decide soon
whether
to approve HSBC
to purchase of a controlling stake in the bank from U.S.-based
Lone Star Fund. "It is very
difficult for the bank not to have clarity on when the deal can be
closed," Richard Wacker whined at a press conference. If
Lone
Star
has
to
find
a
new
buyer
for
KEB
as a result of the delayed decision, then the outcome may not be what
the
Korean government wanted, he said. Is
that a threat?
July
7,
2008
Pandit's pitch about a great
turn-around just
around the corner is falling on deaf ears. Meanwhile, Threat Level
quotes the
FBI that Citi's
servers were hacked, leading to mass withdrawals from ATMs, the
reissuance of cards and, to be sure, some truly sleepless nights from
the Citi
that never sleeps (except when it comes to consumer privacy)... Ex-Chaser Don Layton, now at E-Trade, has
scooped up an old crony, Joe Sclafani....
Hat
tip to
CR: CapitalOne Healthcare Finance says, "Expert cosmetic
surgery
and procedures like liposuction, hair restoration, tummy tucks, and
more are
now within reach." GE Money CareCredit
provides this testimonial from Laser Elite, a hair and skin clinic in
McLean,
Va.: "Having CareCredit has definitely had a positive impact on our
business. It helps us attract more patients and has increased our sales
by 25
percent." GE's website for its CareCredit card lists endorsements from
31
state medical and veterinary associations and 11 national groups,
including the
American Dental Association, American College of Eye Surgeons, American
Society
of Plastic Surgeons, American Society of Bariatric Physicians, and
American
Animal Hospital Association. Like we've said before, pet loans. But how
does GE
collect?
June
30,
2008
As
desperate Citigroup
looks to sell its German operations, probably to Deutsche
Bank, its unions have laid down conditions that "management also
emphasizes the need of employees in the talks with the bidders," that
working conditions shouldn't deteriorate and the current locations be
kept. Citibank's
German retail operations, Citibank Privatkunden AG & Co. KGaA,
employs
around 6,500 people in Germany, at Duesseldorf headquarters and a call
center
in Duisburg. Can you say fire sale? As
noted, Citi's stock is at a 10 year low; it has cut its dividend and
been forced
to raise, so far, $42 billion...
RBS has finagled
approval from China's banking
regulator to buy nearly 20% of Suzhou Trust Co., sources say, a
follow-up to
RBS' stake in Bank of China Ltd. in 2005. Desperate swashbucklers...
In
other
desperation news, GE
is trying to sell off its credit cards, but nobody is
interested...
June 23, 2008
Citigroup has said it's buying a brokerage firm Intra S.A. Corretora
de Cambio e Valores in Brazil which has about $745 million in client
assets
--but would not disclose how much it is paying for the firm. Ah,
transparency.... On the spin front, Leah Johnson jumped ship
earlier
this month after about eight years of spinning, replaced by Kate James,
who was
Standard Chartered Bank's head of public affairs and strategy for the
Americas.
James will report to Lisa Caputo, Citigroup's chief
marketing officer, whom the
company has now put in charge of both marketing and communications
operations.
JPMorgan Chase's
securities
arm
sued
a
former
private
banker
on
Monday,
alleging
he stole confidential
and proprietary
information about the bank and its clients. The
lawsuit,
filed
in
U.S.
District
Court
in
Manhattan,
is
seeking
an injunction against Hernan E. Arbizu, a former
senior
private banker for the Argentina and Chile region at J.P. Morgan
Securities'
private banking department in Manhattan. Live by the sword...
June
16,
2008
First,
we're
glad
to
see
that
CompuCredit,
and
First Bank of Delaware,
are
getting sued by the government for $200 million. Inner City Press /
Fair
Finance Watch filed comments opposing CompuCredit as a predatory lender.
This
week,
Inner City Press / Fair Finance Watch filed
comments against the
applications by Spain's Caja Madrid, funder of biofuel projects and 23%
owner
of Iberia airlines, to acquire City National Bank of Florida, and
against the
Federal Reserve's secret process with banks, in essence a rule-making
excluding
the public even those the topic, credit derivatives, has come up
because of the
subprime lending crisis. The financial institutions invited -- and now
challenged -- are listed below.
Bank of America,
N.A., Barclays
Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG -
Dresdner
Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase -
Lehman
Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of
Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC
- Citadel
Investment Group, L.L.C.
The
Administrative Procedures Act (5 U.S.C. Section 553) and related laws
require that
when the government engages in rule-making, it must provide notice to
the
public, and allow and weigh public comments. Here, the FRBNY has
tried to
rule-make without any involvement by the public, even the public most
impacted
by the subprime lending that underlies this FRBNY process. Rather, for
example,
the FRBNY on June 9 met with a group of the largest banks to discuss,
according
to the FRBNY's president,
"Regulatory
policy.
These
are
the
incentives
and
constraints
designed
to
affect
the level and
concentration of risk-taking across the financial system. You can think
of
these as a financial analog to imposing speed limits and requiring air
bags and
antilock brakes in cars, or establishing building codes in earthquake
zones.
"Regulatory structure. This is about who is responsible for setting and
enforcing those rules.
"Crisis management. This is about when and how we intervene and about
the
expectations we create for official intervention in crises."
But when rules are being set,
to use Mr.
Geithner's own analogies, for air bags, brakes, speed limits or
building codes,
the agencies at issue are not allowed to and do not only take input
from the
industry.
Press
accounts make clear
that the financial instruments and regulatory issues discussed behind
closed
doors are related to issues of public interest, which in fact are
disproportionately impacting low- and moderate- income people and
communities
of color -- subprime and predatory mortgages. AFP of June 9
reported that
"those
swaps are designed to
transfer the credit exposure of fixed income products between parties
and often
have been linked to US subprime, or high-risk, mortgages... Trading in
derivatives, financial securities whose value is derived from other
financial
securities, was a major factor in the subprime, or high-risk, mortgage
crisis
that rocked markets last August and has spread through the global
markets...
Geithner defended the Fed's decision to finance the Bear Stearns - JP
Morgan
Chase merger in March, saying it was done only with great reluctance
and only
because there seemed to be no other choice as Bear Stearns reeled from
soured
mortgage-related investments. 'It was the only feasible option
available to
avert default,' he said, and 'we did not believe we had the ability to
contain
the damage that would have been caused by default.' The Fed acted only
to
'facilitate an orderly transition,' not 'to preserve the company,'
Geithner
said."
Here, it appears that
the FRBNY is
trying to take the closed-door, no public notice Bear Stearns - JPM
Chase
process several troubling steps further, providing access to 17
mega-banks but
still not the public.
This closed-door, industry
top-heavy process is
unacceptable and, Inner City Press has now timely contended, is
contrary to
law, under 5 USC 553 and otherwise. Watch this site.
June
9,
2008
Polish financial regulatory body
KNF has
rubber-stamped GE Money's takeover of Bank BPH. 'KNF has approved for
GE to use
their rights from over 66 percent of votes but not more than 75 percent
of
votes in BPH,' said Lukasz Dajnowicz. BPH was Poland's third largest
bank until
the bulk of its assets were absorbed by peer Bank Pekao as part of a
merger of
UniCredit's local units. Italy's UniCredit last November agreed to spin
off and
sell 200 branches of BPH to GE Money to gain Polish authorities'
approval for a
merger of its local units...
GE
Money's head of global communications Robert
Rendine says that GE Money, which provided about $25 billion of the
parent's company's
$172.7 billion in sales last year, is an active player in the global
financial
services sector. While
the
economy
in
the
United
States
has
struggled,
GE
has
turned to developing
markets
like Poland, Turkey and India, Rendine says. GE Money has invested
nearly a
half-a-billion dollars in some of these emerging markets, "and they
have
become a great growth vehicle for us," he adds.
Yeah -
a
great vehicle for spreading predatory lending...
June 2, 2008
GE, advised by JP Morgan Chase,
beat
out
Natixis
and
others
to
buy
Interbanca
from
Santander -- what GE
is
doing is trading other businesses with Santander, giving it GE Money's
businesses in Germany, Finland, and Austria, and its card and auto
businesses
in the UK.
May
26,
2008
HSBC is a finalist
to become advisor to the
privatization of Nigeria Telecom...
GE Money's predatory
lending, insurance sales and
debt collection practice have hit a new low in Australia. Beyond called
debtors
up to 100 times a month, GE violated previous commitments. According
to
the
Australian
Securities
and
Investments
Commission
(ASIC),
it
"has
taken
action
over the sales and debt collection practices of companies in the
GE Money
group. ASIC has imposed conditions on the Australian financial services
license
(AFSL) of GE Money's Hallmark General Insurance Company Ltd and
Hallmark
Life Insurance Company Ltd after those companies failed to comply with
commitments each made in a 2006 Enforceable Undertaking (EU) to ASIC.
ASIC
found that parts of the insurance advice and sales business were often
poorly
managed and not meeting the legal obligation requiring there be a
'reasonable
basis' for personal advice given to customers. Specifically, ASIC was
concerned
that staff were selling insurance to customers whose needs had not been
identified or understood. Given that the Hallmark companies did not
comply with
a number of key undertakings given to ASIC in 2006, the regulator has
decided
the best way to protect consumers is to impose conditions on the AFSLs
of GE
Money's Hallmark companies.
The more
stringent conditions now included in the AFSLs of the GE Money's
Hallmark
companies replace the 2006 EU. These additional license conditions
require the
Hallmark companies;- to engage an independent expert, over a period of
up to 15
months, to review and assess the advice, sales, training, management
and
corporate governance processes in its branch network and make
recommendations
to correct any deficiencies to ensure these processes are at an
industry best
practice level;- to engage the same expert to assess the steps already
taken by
the Hallmark companies to compensate their customers and make
recommendations
as to any additional compensation steps that may be necessary;- if the
expert
makes recommendations, to provide ASIC with an Action Plan to implement
those
recommendations; and- to provide ASIC with full details of the
compensation
already paid to customers by means of a director's statutory
declaration, by 18
July 2008.
Furthermore,
the
Hallmark
companies
are
now
required
to
limit
the
insurance advice
their
staff provide to 'general advice' only and not 'personal advice'.
Separate to
the imposition of additional license conditions on the Hallmark
companies, GE
Money has entered into an EU to address ASIC's concerns about the debt
collection practices of its consumer credit business. This is in
response to
consumer complaints about harassment from the debt collection practices
of that
business. Those practices included excessive or inappropriate contact
with
customers, contact at unreasonable hours and an inflexible approach to
repayment arrangements.
As part of
this EU, the GE Money consumer credit business is required:- to engage
an
independent expert, over a period of two years, to review and assess
its debt
collection processes to ensure that it complies with the ASIC/ACCC Debt
Collection Guidelines and make recommendations to correct any
deficiencies;- if
the expert makes recommendations for improvements, to provide ASIC with
an
Action Plan to implement those recommendations;- to pay compensation to
affected customers in accordance with guidelines prepared by the
Banking and
Financial Services Ombudsman; and- to arrange and pay for an industry
workshop
to promote best practice in the debt collection industry.
May
19,
2008
Sometimes
the
attempt
to
crack-down
just
keeps
a
story
alive.
It
is not clear if that's the case regarding the
barring
from Russia of Moldovan journalist Natalya Morar for her reporting on
the
covering up of murder links to money laundering
through Russian bank
Diskont and Austrian bank Raiffeisen (see, "Strange
Games", The New Times, August 20, 2007). Morar has
been fighting the expulsion in court, without success. We aim to
continue to
follow this story.
We
bring good things to life? The several thousand
people working at General
Electric's Appliance Park
in Kentucky were blind-sided by the company's plans to sell
or spin
off its appliance business. Larry Hayes, secretary of Kentucky
Gov. Steve
Beshear's executive cabinet said, "It's the hand we've been dealt, and
now
we need to play that hand as best we can."
"We don't have any idea
who's coming
in, what kind of salaries, how much of our benefits we're going to
lose,"
said Ann Davidson, a production worker with 35 years at GE plants.
HSBC has it will
acquire a 73.21% stake in Indian
brokerage firm
IL&FS Investsmart Ltd. for $241.6 million, half of it from an
entity known
as E*Trade Mauritius Ltd. -- who knew?
May
12,
2008
GE Money and others
in Sweden
-- " The first foreign bank in Sweden was established in 1986,
with
the first branch opening four years later. Most of the 29 foreign banks
(at
end-2006) focus their activities on the corporate banking and
securities
markets. The largest foreign bank (aside from the Nordea Group) is
Danske Bank,
now established as the country's fifth-largest bank. A fairly recent
foreign
entrant is Kaupthing (Iceland), which took over JP Nordiska in 2002.
The most
active non-Nordic banks are GE Money
Bank (US), Dexia Credit (France/Belgium) and ABN Amro" -- which bet on
world food prices rising...
The U.S. "Country
Reports on Terrorism," has been closely watched in recent years after
the
U.S. offered to take the North off the list. North Korea was put on the
list,
joining Cuba, Iran, Sudan and Syria, in January 1988 after its agents
bombed a South
Korean airliner in November the preceding year. All 115 people aboard
the plane
were killed. The report said North Korea is not known to have sponsored
any
terrorist acts since then. Getting off the list is one of Pyongyang's
most
coveted benefits, since it would lift wide-ranging prohibitions that
effectively restrict economic assistance and diplomatic interchanges.
After
striking a September 2005 deal under which Pyongyang agreed to
eventually
abandon its nuclear programs, the U.S. toned down the segment on North
Korea by
striking out detailed accounts of the country's past abductions of
Japanese
citizens. This year, the report gave more emphasis to the U.S.
commitment to
delist Pyongyang once conditions are met. 'As part of the six-party
talks process,
the United States reaffirmed its intent to fulfill its commitments
regarding
the removal of the designation of DPRK (North Korea) as a state sponsor
of
terrorism in parallel with the DPRK's actions on denuclearization and
in
accordance with criteria set forth in U.S. law,' said the report. We'll
see.
May
5,
2008
HSBC begrudgingly
agreed last week to extend
the deadline for the completion of its proposed acquisition of a
majority stake
in Korea Exchange Bank from Lone Star Fund by two months to July 31. The proposed deal has been hindered by an
ongoing tax-related trial over the U.S. private equity fund's
acquisition of
the stake in KEB in 2003. The statement
said HSBC or Lone Star may terminate the agreement if the deal isn't
completed
on or before July 31. "The proposed
transaction is entirely in line with our stated strategy to focus on
high-growth economies and I continue to be of the view that it is in
the best
interest of all KEB stakeholders and of HSBC," HSBC Group Chairman
Stephen
Green said. HSBC's statement made no reference to the ongoing trial --
or the
sleaze...
Consumer
lending
is
booming
in
the
Czech
Republic
--
while
GE
Money Multiservis has not yet disclosed its economic
results, Cetelem CR granted loans worth Kc2.8bn to clients in Q1 2008,
18
percent more than a year ago. Cetelem CR operates in the Czech Republic
since
1996, and is one of the 20 subsidiaries of French bank Cetelem S.A. Cetelem is a unit of BNP Paribas... The
calm
before the storm?
April
28,
2008
South Korea's
Financial Services Commission Chairman Jun Kwang-Woo Wednesday said he
hopes to
soon find a way to resolve the issue of Lone Star Funds' stalled sale
of Korea
Exchange Bank. South Korea's sixth
largest bank by assets is majority-owned by Dallas-based Lone Star,
which
agreed last September to sell its shares to HSBC for $6.3 billion. Lone
Star's
exclusivity in the agreement with HSBC will end on April 30... "It will
be
between Lone Star and HSBC, not the government, to decide whether to
extend the
contract," said Jun. That's just how HSBC likes and pays
for it -
government and the public out of the way...
GE's
Immelt's been told to try to sell off GE
Money. But it's too late, some say...
"This week
you'll see several organization announcements from our management
committee
about their direct reports, and we expect the rest by the end of the
month," Steve Black and Bill Winters, co-heads of J.P. Morgan's
investment-banking business, told employees in a memo sent Monday.
"People
selection is the most important and most difficult task in any merger,
and we
want to make sure we spend the time to get it as right as we can." They
promised to inform all J.P. Morgan Chase
and Bear employees whether they would
have a job no later than the merger's expected close on June 1. We'll
see....
April
21,
2008
Citigroup
has recently sold - and in some markets closed -
retail bank branches "but also said it would expand
CitiFinancial, its consumer lending group," the American Banker of
April 18 reported, without noting that CitiFinancial is subprime...
HSBC bragged last
week that it is launching a new private bank in Ireland. "Ranked the
third
largest private bank in the world by Euromoney, HSBC Private Bank
offers wealth
management, banking and trust services in over 93 locations around the
world" -- including some breakaway republics, with the presumptive
offer
of creative money washing...
GE
Money spokeswoman Nora Grase said last week that GE is
likely to merge with the recently acquired Baltic Trust Bank and
operate under
brand GE Money Bank, which is used also by other banks of the
concern. GE Money communication director
in Central and Eastern Europe Jan Hainz told the press that the company
is interested
to develop in Latvia, despite the instable economic situation, and GE
Money
sees a potential for development of banking services in Latvia. Hainz
said that
there are still several countries in the Central and Eastern European
region in
which GE Money is not represented, including Estonia and Lithuania, and
the
company wants to obtain experience in Latvia's banking sector to be
able to use
it later in other countries. GE Money launched operations in Latvia's
consumer
lending market in May 2004 by purchasing RD Lizinga Grupa leasing
company. In
November 2006, GE Money acquired a 98 percent stake in Latvia's Baltic
Trust
Bank. Baltic Trust Bank ranked 14th among 24 Latvian banks by assets at
the end
of February. Watch out for predatory
lending...
April 14, 2008
Institutional
Shareholder Services -- hardly a consumer activist group -- urges Citigroup
shareholders to vote off the Citi board Alain Belda, CEO of of Alcoa, as well as former Chevron CEO
Kenneth Derr, Xerox CEO Anne Mulcahy and Time Warner Inc. Chairman
Richard D.
Parsons. ISS said it believes Citigroup's compensation committee, which
is
chaired by Parsons and includes Belda and Derr, "has lacked strong
stewardship of compensation practices.'' Yeah, you might say that...
Delaware vice-chancellor Donald Parsons has stayed
litigation challenging the proposed acquisition of Bear Stearns by JPMorgan
Chase, deferring to a similar court case in New York. Parsons noted
that the
Delaware lawsuit mirrors five lawsuits that have been consolidated on
an
expedited basis by the New York Supreme Court. That court has scheduled
a May 8
hearing on a preliminary injunction barring a shareholder vote to
approve the
deal. "The judge also noted the unique circumstances of the planned
government-assisted merger" -- so now, the Federal Reserve's outrageous
exclusion of any public review of the deal is used by court to avoid
judicial
review...
And this is not even
dealing yet with the Fed's sleazy deal with Blackrock, answers on which
are due
on April 18...
April 7, 2008
In
the first study of the just-released 2007 mortgage lending data, Inner
City
Press / Fair Finance Watch finds that National City, often rumored to
be up for
sale after unloading its subprime unit First Franklin to Merrill Lynch,
in 2007
confined African Americans to higher-cost loans above the rate spread
1.77
times more frequently than whites. National City's disparity to Latinos
was
1.73. Fully 25,012 of National City's 246,138 mortgages in 2007, or
10.16%,
were high cost loans over the rate spread.
Keycorp,
based in foreclosure-ridden Cleveland like National City, and also
rumored to
be up for sale, in 2007 confined African Americans to higher-cost loans
above
the rate spread fully 2.2 times more frequently than whites.
2007
is the fourth year in which the data distinguishes which loans are
higher cost,
over the federally-defined rate spread of 3 percent over the yield on
Treasury
securities of comparable duration on first lien loans, 5 percent on
subordinate
liens.
U.S.
Bancorp continued to make super high-cost loans subject to the Home
Ownership
and Equity Protection Act (HOEPA) -- that is, at least eight percent
over
comparable Treasury securities.
Regions
Financial, in a new low, provided its data at the deadline but only in
paper
format, on over 2000 pages, so that it could not yet be
computer-analyzed.
Lehman Brothers provided only a PDF file of over 6000 pages, to avoid
any
analysis of disparities.
Where
the rubber will meet the road will be in how the Federal Reserve and
other
agencies act on specific disparities at specific lenders, including as
these
are formally raised to them in timely comments on merger applications,
such as
that of Bank of America to acquire Countrywide, and the needed review
of JPM
Chase - Bear Stearns.
March 31, 2008
In
Australia, "borrowers who want to
take
Federal Treasurer Wayne Swan's advice and move to a new lender face
exit fees
from their mortgages of up to $8750. Swan has advised dissatisfied
mortgagors
on several occasions to "vote with their feet" and change to a
different bank. Taking that advice may prove more expensive than
staying put. Early
exit fees on a standard variable rate mortgage now average $1451. The
lowest
exit fee is $200 and the highest is $8750. GE Money charges $8750 for
ending a
$500,000 mortgage within the first 12 months."
That is, GE
Money is the most predatory lender in Australia...
From last week's NYT, consider "Randy and Dawn McLain of Phoenix. The couple
decided to sell their home
after falling behind on their first mortgage from Chase and a home
equity line
of credit from CitiFinancial last year, after Randy McLain retired
because of a
back injury. The couple owed $370,000 in total. After three months, the
couple
found a buyer willing to pay about $300,000 for their home -- a figure
representing an 18 percent decline in the value of their home since
January
2007, when they took out their home equity credit line. CitiFinancial,
which
was
owed
$95,500,
rejected
the
offer
because
it
would
have paid off the first mortgage in
full
but would have left it with a mere $1,000, after fees and closing
costs, on the
credit line. The real estate agents who worked on the sale say that
deal is
still better than the one the lender would get if the home was
foreclosed on
and sold at an auction in a few months. Mark Rodgers, a spokesman for
CitiFinancial,
declined to comment on the McLains' situation, citing privacy
considerations.
Yeah, right. This is the
company that lost millions of consumers' Social Security numbers...
March 24, 2008
GE Money announced it
has an agreement with tire manufacturer Michelin to provide consumer
financing to buy the tires. GE Money will provide the financing through
Car-CareOne, a private-label credit program managed by GE Money's sales
finance unit. Car owners can choose from 90-day, six month or 12-month
no-interest programs for buying Michelin products. Watch out for the
balloon payments after that, if GE's other predatory lending is any
guide (Michelin guide, in this case)...
"HSBC being a global local bank, aims to become the main bank in
Russia," said Stuart Lawson, acting chairman of the board in Russia of
HSBC Bank, said on March 12. HSBC announced its intention to appoint
Lawson chairman of HSBC in Russia after last year he resigned from
Soyuz Bank. "The appointment of Stuart Lawson to the position of HSBC
Russia Chairman of the Board will have a considerable effect on
business development," Stephen Green, chairman of HSBC, was quoted as
saying. The first three representative office of HSBC in Russian
regions were opened in 2007 in St. Petersburg, Yekaterinburg, and
Novosibirsk. According to Lawson, the bank will set up offices in two
or three more regions, including Rostov. "It complies with HSBC
intention to become a regional bank in all the business dimensions,
including retail financial services," he said. Look out for HSBC's
predatory lending...
March
17,
2008
WashPost
-
Guardian (UK)
The
day after news of the Federal Reserve's murky bailout of Bear Stearns
through JPMorgan Chase, Inner City Press / Fair Finance Watch filed
with the Federal Reserve Board in Washington, and the Federal Reserve
Bank of New York, a petition, complaint and series of requests,
portions of which are available by clicking
here. ICP has
now made a similar filing with the Securities and Exchange
Commission. As reported by TheStreet.com, "Bear CEO Alan Schwartz said
Wednesday on CNBC that Bear expects to meet profit expectations. As
CEOs sometimes do while struggling to ascertain what's going on at
their companies, he dismissed rumored liquidity problems and said the
broker's finances remain strong." ICP has requested SEC inquiry into
and action on these statements. Meanwhile, it's reported that Bear
Stearns' CEO recently paid cash to buy two apartment in the former
Plaza Hotel in New York, without a mortgage...
So
how
did
Eliot
Spitzer
get
caught?
North
Fork
Bank, recently
re-branded Capital One, filed a Suspicious Activity Report last July.
Like most SARs, it went nowhere. Until HSBC filed its own, about
transactions with shell companies
QAT International and QAT Consulting Group,
connected to Emperor's Club VIP. Now investigators took an interest,
tracing back to Spitzer. Why was he banking with North Fork, of all
places?
HSBC
defends
tax
evasion
--
the
head
of
HSBC
Holdings PLC's (HBC)
private banking operations in Switzerland last week criticized tactics
used by Germany in its tax evasion row with Liechtenstein, saying they
posed serious obstacles for the banking industry. "I think it's time to
leave the industry...when governments buy stolen goods to basically get
their way through," said HSBC Private Banking (Suisse) Chief Executive
Peter Braunwalder, who is stepping down none too soon in October.
Braunwalder said it should be up to national governments rather than
private banks to track down money deemed to be stashed away from the
exchequer. "If they (the authorities) find that the money is missing,
they can ask for assistance and we will help," he said. But "they want
to charge 65% tax on their people and...then they go to Liechtenstein,
Luxembourg to ask them to do their job?" he asked rhetorically.
Braunwalder was speaking at the presentation of HSBC Private Banking
(Suisse)'s annual results. "I see this industry becoming more and more
difficult...the German government is doing things that shock me,"
Braunwalder said.
And
HSBC's
Household's
predatory
lending
wasn't
shocking?
March
10,
2008
Barclays has
been contacted by the Department of Justice and the New York district
attorney with questions about payments made in dollars through its New
York branch. The payments may have been made by people or companies
from states which are on the U.S.
blacklist of
nations it believes sponsor terrorism. The probe referred to in
Barclays' notes to its annual 2007 results on February 19, where it
warned "the potential financial effect of any resolution could be
substantial''.
ABN Amro was fined $80
million in civil penalties in 2005 for transactions through its New
York offices which the U.S. government said failed to meet the
necessary controls on money laundering. RBS said in its
annual results published last week that ABN is the subject of an
ongoing criminal probe by the DoJ over the same issue. Negotiations
over a possible $500 million settlement are ongoing, RBS said.
HSBC last week
noted in its results that it has a "small representative office in
Tehran''. HSBC said it recognized that should it break the U.S. rules
on sanctions, there would be "serious legal and reputational
consequences''.
Thomas
Tobin,
the
chief
executive
of
HSBC's
operations
in
Vietnam, said
HSBC is in talks to increase the stake in Techcombank to 20%. "The law
says 15% is the upper limit, but it is possible to seek the prime
minister's permission to get 20%," he said. And we thought they didn't
lobby...
March
3,
2008
In our
last report, we covered the judicial shut-down of the Wikileaks.org web
site, in flagrant violation of the First Amendment. This week we can
report that, following outcry, the decision was reversed, and Wikileaks
continues as before. Even so the bank, Julius Baer, now tries to spin
its previous request to the court. "It wasn't our intention to shut
down the Web site," bank spokesman Martin Somogyi said. "Our
intention was to remove the documents." With extreme prejudice and
prior restraint, it seems. U.S.
District Judge Jeffrey S. White, reversing himself, complained that "to
the court's way of thinking, there is a definite disconnect between the
evolution of constitutional jurisprudence and modern technology." Ya
don't say...
February
25,
2008
We devote this week's abbreviated Inner City Press Bank Beat to
censorship asked for by Bank Julius Baer, resulting in
San Francisco
Federal District Court Judge Jeffrey S. White enjoining
Wikileaks.org for having exposed tax evasion and money laundering. This
attack on free speech and freedom of the press, if not denounced by the
wider banking industry, may be viewed as being endorsed by them. Click
here
for Judge White's order, which required its server to "immediately
clear and remove all DNS hosting records for the wikileaks.org domain
name and prevent the domain name from resolving to the wikileaks.org
website or any other website or server other than a blank park page,
until further order of this Court." There are already calls to impeach
Judge White. For now, mirror sites remain up at
www.wikileaks.de and at IP
address
http://88.80.13.160/...
February 18, 2008
In a Viewpoints
piece in Friday's American Banker newspaper, the former head of
Commerce Bank Vernon W. Hill the 2d makes reference to "so-called community activists demand an
ever-increasing number of government-mandated programs." Maybe he means
those who sounded the alarm, before regulators or investors wanted to
hear, about predatory lending. And maybe his attitude explains
Commerce's spotty record, which TD Banknorth now wants to take-over...
February
11,
2008
Another deal
that's dying: Santander - Sovereign. Last
week
Banco
Santander
S.A.
admitted
that
its
investment
in
the
Philadelphia-based thrift hasn't panned out. The Madrid-based bank took
a $1.08 billion writedown of its 24.9 percent stake in Sovereign to
more accurately reflect the thrift's declining value. Given the current
uncertainties surrounding the U.S. market and the caution needed in
these times, right now we can only consider that we have a contract
that expires,'' Santander Chairman Emilio Botin said at a press
conference in Madrid. Ole!
HSBC is
reportedly looking to sell the UK network it bought along with
Household, HFC, only waiting
for a Financial Services Authority
investigation into the way it was selling payment-protection insurance.
The investigation concluded last month with small-in-context fine. That does not mean that HSBC does not continue
expanding elsewhere its predatory lending and, as noted, predatory
credit insurance...
February
4,
2008
GE
on
the
Gulf,
from
a
press
release
last
week: "GE's
Aviation business signed orders of $10
billion in products and services at the Dubai Airshow 2007... GE Money
formed a joint venture with Al Futtaim Group, a UAE-based diversified
business group, to provide consumer finance products."
GE takes predatory
lending to the UAE...
A
South
Korean
court
Friday
found
Lone
Star
Funds
guilty of stock
manipulation, levied a fine on the company and sentenced the head of
its local unit to jail. The Seoul Central District Court sentenced Paul
Yoo, the head of Lone Star's South Korean unit, to five years in jail
for manipulating the stock price of the credit-card unit of Korea
Exchange Bank, in which Lone Star owns a controlling stake. The court
fined Lone Star and KEB each $263.6 million. South Korea's Financial
Supervisory Commission after the ruling said it will wait for the
outcome of other legal cases related to Lone Star's acquisition of KEB
in 2003, although those cases aren't directly related to the
Dallas-based fund. So Friday's verdict is likely to further delay the
sale of Lone Star's controlling stake in KEB to HSBC Holdings.
Which is
probably a blessing for Korean consumers, given
HSBC's predatory
lending...
January
28,
2008
Merrill
Lynch's new CEO, the plastic-faced John Thain, gushed to BBC from Davos
that Merrill's turned the corner, still some subprime positions, but
it's all been appropriately priced. We'll see.
In India,
Citibank has 39
branches across 27 cities. Meanwhile the subprime Citifinancial has 450
branches pitching unsecured lending and mortgages. CEO Nayar claims the
unit has pioneered unsecured lending in India, luring in 2.5 million
customers.
In Australia,
GE Money "has dropped partners that sold few mortgages and
retained about 40 of the strongest partners. The credit crisis has
affected the mortgage origination business through higher funding
costs. However, GE Money CEO Mike Cutter says mortgages continue to be
one of the company's major products." Yes, GE continues exporting
predatory lending...
January 21, 2008
GE Money said last
week that a computer tape with the credit-card information on 650,000
customers of J.C. Penney Co. and other retailers is "missing." GE Money
is notifying consumers that a backup tape is missing from a vendor's
storage facility, spokesman Richard Jones said. Jones refused to
identify the retailers whose customers will be notified, beyond J.C.
Penney. "This is not an instance of theft," Jones claimed. "The
investigation does not indicate that there was any wrongdoing
whatsoever." We'll see.
HSBC's
bottom-feeding has run into delays, now in South Korea. There, HSBC
last year announced plans to acquire Lone Star's stake in Korea
Exchange Bank. But Lone Star's salesman, Paul Yoo, now faces a ten-year
prison term and $4.5 million fine for price manipulation. Impact on
HSBC? Not yet clear.
In
further
chickens-coming-home-to-roost
news,
Bank of America
last week said it will axe 650 jobs and sell its equity prime
brokerage....And now Moody's said it will review BofA's "ability and
willingness to raise capital to support its balance sheet after a
number of sizable acquisitions, including Countrywide."
January 14, 2008
BB&T
Corp. recently paid the U.S. government $10,000 to settle allegations
that it allowed funds to be withdrawn from an account held by a known
terrorist. The Treasury Department's Office of Foreign Asset
Controls says BB&T permitted an automatic debit "against an
account held for a specifically designated global terrorist," and did
not voluntarily disclose the matter. Question: so BB&T got
fined only $10,000? Some deterrent...
There's a hole in
Citigroup's
January 8 memo
announcing a consolidated "end-to-end U.S.
residential mortgage business" including origination, servicing, and
securitization operations, with Bill Beckmann reporting to Carl
Levinson and Jamie Forese -- CitiFinancial, Citibank, and
Smith Barney would continue to originate mortgages separately.
CitiFinancial is a subprime unit, one with most risk, for some reason
not included. Meanwhile, the consolidated unit will, according to
Citi's Jeff Perlowitz, "be a
nonconforming shop." Great...
GE has
repaid some but not all of the corporate welfare it received in New
York State. The
Empire State Development Corp. has
recovered only 60 percent of $800,000 it doled out to GE's WMC subprime
mortgage unit to create jobs that never materialized. Now the WMC
office at 1 Ramland Road in Orangeburg, NY is closed. GE has said
it would hire 300 workers within three years and keep them in place
through 2010. The Rockland County Industrial Development Agency also
provided WMC with a break on sales tax on the purchase of up to $3.5
million in equipment and related expenses, a benefit that was valued a
$97,000 through the end of 2006. IDA Executive Director Ronald Hicks
has said the agency will seek reimbursement plus penalties. Watch
GE try to wriggle out of that one, too...
January 7, 2008
Now even the stock analysts are saying
National City (and Fifth Third and KeyCorp) erred in rushing to snap up
banks in the south, now hit by real estate lending losses. So what
about Royal Bank of Canada's push for Alabama National BanCorporation?
And what about irregularities in trading of the latter's stock? More to
follow, for now see "Consumer
group
protests
RBC
Centura
Bank's
pending
buyout
of
Alabama
National
Bancorporation," Orlando Sentinel, Jan. 3, 2008
HSBC
announced
on
January
2
that
it
signed
an
agreement to sell Wealth
& Tax Advisory Services USA to "participating WTAS managing
directors in a management buy-out for up to $65.9 million. WTAS
provides tax advisory services in the U.S. to high net worth
individuals including HSBC Private Bank customers." Ah, tax avoidance
-- or could it be, tax evasion?
December 31, 2007
It doesn't stop. Inner City Press /
Fair Finance Watch (ICP) has just filed a timely challenge to the
application by
Royal Bank of Canada
and RBC Centura (RBC) to acquire Alabama National BanCorporation, based
on worsening lending disparities at RBC Centura, on RBC's continuing
funding of fringe financiers such a pawnshops such as E Z Cash Pawn in Clayton County, Georgia
and Pawn Outlet OF Skyland, Inc., of
Skyland, North Carolina, and on layoffs and gun-jumping by
Alabama National. FFW's comment, filed under the Community
Reinvestment Act with the Federal Reserve Bank of Richmond, was
submitted before the Fed's December 28 deadline.
In
the
most
recent
year
for
which
HMDA
data
is publicly available,
2006, RBC Centura in the Charlotte, North Carolina Metropolitan
Statistical Area (MSA) denied the mortgage refinance applications of
African Americans 4.44 times more frequently than those of whites. In
the Atlanta, Georgia MSA in 2006, for conventional home purchase loans,
RBC Centura denied the applications of Latinos 2.9 times more
frequently than those of whites. Also in the Atlanta MSA in 2006, RBC
Centura denied the home improvement mortgage applications of African
Americans 4.2 times more frequently than those of whites, while also
declaring "withdrawn" fully 38% of home improvement applications from
African Americans. There should be an inquiry into this, including at
the public hearings FFW is requesting.
While
strikingly
excluding
people
of
color
from
its
offers
of
normally-priced, prime credit, RBC and RBC Centura have continued
funding and enabling predatory / fringe financiers such as high-cost
pawnshops. As simply two examples:
GEORGIA CLAYTON COUNTY SUPERIOR COURT CLERKS OFFICE, UCC RECORD
Debtors: JDH INVESTMENTS, INC.
Debtor Address: JDH INVESTMENTS, INC.
E
Z
CASH
PAWN
Secured Parties: RBC CENTURA BANK
Secured Party Address: RBC CENTURA BANK
Filing Type: CONTINUATION
Filing Date: 2/12/2007
Filing Number: 03107000298
Original Filing Number: 03102002156
Filing Office: CLAYTON COUNTY STATE COURT CLERKS
OFFICE
9151
TARA
BLVD
JONESBORO,
GA
30236
--
NORTH CAROLINA SECRETARY OF STATE, UCC RECORD
Debtors: PAWN OUTLET OF SKYLAND INC
Debtor Address: PAWN OUTLET OF SKYLAND INC
PO
BOX
871
SKYLAND,
NC
28776
Secured Parties: CENTURA BANK
Secured Party Address: CENTURA BANK
PO
BOX
500
ROCKY
MOUNT,
NC
27802
Filing Type: CONTINUATION
Filing Date: 2/9/2007
Filing Time: 5:00PM
Filing Number: 20070014594C
Original Filing Number: 001481801
Filing Office: SECRETARY OF STATE/UCC DIVISION
300
N
SALISBURY
ST,
LEGIS
OFF
BLDG
RALEIGH,
NC
27603
The
companies
appear
to
be
jumping
the
gun
before
regulatory approval,
taking it for granted. See, for the record, the Birmingham Business
Journal of December 17, 2007--
"Alabama National
BanCorp. is expected to cut jobs after its acquisition by RBC Centura
Banks Inc. becomes official in early February. William Matthews, chief
financial officer of Alabama National, said the company began notifying
employees in recent weeks about the job eliminations, which will not
take effect until the bank's systems conversions are complete in late
spring and early summer. 'It is true that some redundancies were
created and unfortunately that means some positions are eliminated,'
Matthews said.
Are
these
notifications
under
the
WARN
Act?
Before
regulatory
and / or
shareholder approval? This should be explored at the public hearings
FFW is requesting.
There are
other adverse managerial factors to be discussed at the requested
public hearings. See, e.g.,
the Globe and Mail of September 25, 2007,
"RBC ordered to produce Norshield documents" --
"An Ontario judge has ordered Royal Bank of
Canada to produce all documents relating to its dealings with
scandal-plagued hedge fund Norshield Asset Management (Canada) Ltd.,
which filed for receivership in 2005. The ruling is the latest twist in
a series of legal battles involving RBC, Norshield and Cinar Corp., a
prize-winning Montreal animation company that was sold to a group of
Toronto investors in 2003 after being mired in controversy. Mr. Justice
James Spence of the Ontario Superior Court ruled yesterday that the
documents, which include bank records in Canada and offshore, were
relevant to a lawsuit filed against RBC and others... The litigation
committee has launched a series of a lawsuits aimed at recovering
$121-million (U.S.) Cinar allegedly invested eight years ago in
Caribbean firms connected to Norshield. That money has allegedly gone
missing. Norshield has insisted it did nothing wrong. The firm
collapsed after heavy redemptions which the company blamed on growing
client concern about the Cinar allegations.... RBC has been caught up
in the fray because it was Cinar's principal banker and it provided
some financial services to the Caribbean firms and Norshield. The Cinar
litigation committee has sued the bank for $121-million (U.S.) alleging
it handled the transfer and is responsible for the loss. The bank has
denied the allegations and suggested that if money has gone missing, it
is the fault of Cinar managers or the offshore companies. This summer,
as part of the lawsuit, the committee filed a motion seeking a long
list of documents from the bank... Lawyers for the litigation committee
filed hundreds of pages in court to back up their request. The
documents included an internal RBC memo which showed the close
relationship between the bank's senior executives and Cinar's
co-founders, Ronald Weinberg and his late wife Micheline Charest.
One document indicated that RBC's chief executive officer at the time,
John Cleghorn, was 'well known to Mrs. Charest.' The documents also
included an internal RBC memo dated March 27, 2000, when allegations of
misconduct relating to misuse of tax credits first surfaced at Cinar.
'Difficult relationship to manage since its inception: high number of
RBC executive interventions required,' said the memo, which was written
by a senior market manager at the bank."
For
these
and
other
reasons,
RBC's
proposals,
including
for
RBTT Financial Group in Trinidad and Tobago in the Caribbean, should be
subject to enhanced regulatory scrutiny and public hearings and, on the
current record, should not be approved / allowed.
December 24, 2007
The
Colombia unit of
HSBC sucked up a
capital injection of $20 million from its parent. "This capital
injection is a sign of the growth potential we have (in Colombia),"
Roberto Brigard, chief executive of HSBC Colombia SA, said in a
statement. In October, HSBC's workers in Colombia went on a strike
demanding higher wages...
How
green
is
GE's valley? GE
announced last week it is investing $54 million to become part owner of
a ship drilling for oil off the coast of Brazil, and that "the equity
investment in offshore drilling is a first for GE Energy Financial
Services." And now, a FCC rule change has been jammed through which
will allow a company in the 20 largest markets to own both a newspaper
and a radio or television station...
December 17, 2007
Pundits name
JPMorgan Chase as
along
the
most
likely
candidates
to
buy
GE's credit card
unit, which issues private-label and cobranded cards with a number of
retailers like Wal-Mart Stores. Good luck...
Getting over -- the
Taiwan government will pay HSBC $1.46 billion
to take over Chinese Bank, a member of the bankrupt Rebar Group,
Johnson Chen, the president of Taiwan's government-owned deposit
insurer, said Friday.
December 10, 2007
The pace of bank merger is way, way
down. Even firms not directly involved in subprime are damaged goods:
no one knows how far the problems are spread, under the surface. The
pending TD Banknorth - Commerce deal has finally been submitted to the
Federal Reserve for review, with a comment period running through
January 3...
Testifying last week in England,
Citigroup's CEO
for markets and banking for Europe, Middle East and Africa William
Mills said Citi manages its seven SIVs at "arms' length" and on
commercial terms. But when queried on the bank's responsibility to the
SIVs, Mill said: "From a reputational point of view, if we don't step
in and support these vehicles, will that somehow hurt our reputation in
the market? What the market is trying to establish is, if in fact the
liquidity crisis continues, will Citigroup provide the liquidity to
fund these vehicles so that they won't have to go into an asset
disposal mode, especially in this environment, where people think that
would add more fuel to the fire?" Citi apparently cares about its
reputation to big-ticket investors -- but less so, when it twice
settled predatory lending charges, with the FTC and Federal Reserve...
December 3, 2007
HSBC last week "became the first bank to bail out specialized
funds known as structured investment vehicles. HSBC plans to gradually
shut down two bank-sponsored SIVs [Cullinan Finance Ltd. and Asscher
Finance Ltd. Janus Capital Group Inc.] and take $45 billion in
mortgage-backed securities and other assets owned by the funds onto its
own balance sheet... Meanwhile, a group of the world's largest banks,
led by Citigroup Inc., Bank of America Corp. and J.P. Morgan Chase
& Co., are seeking to raise a 'super fund' of as much as $100
billion that would buy assets from the SIVs to prevent a mass fire sale
of assets."
Assets
in
structured
investment
vehicles
sponsored
by
Citigroup Inc.
fell 20% to $66 billion as of Nov. 30 from $83 billion at the end
of September, spokesman Jon Diat said. "We continue to focus on
liquidity and reducing leverage," Diat said in an e-mailed statement.
Citigroup runs seven SIVs...
Prosecutors arrested a former top Japanese
defense bureaucrat and his wife yesterday on suspicion they accepted
lavish gifts from companies -- including one firm linked to
General Electric Co.
--
in
exchange
for
contracts,
officials
said.
Former
Vice
Defense
Minister Takemasa Moriya, 63 years old, was arrested on suspicion he
accepted a dozen free golf trips valued at about 3.9 million yen
($35,850) from 2003 to 2006, knowing that favors were expected in
return, the Tokyo District Prosecutor's Office said in a statement...
One of the defense contracts under scrutiny is the ministry's 2004-05
purchase of five General Electric C-X engines for next-generation
Japanese cargo aircraft. The deal was handled -- without bids -- by
Yamada Yoko, which was a Japanese agent for the 600 million yen GE
engine at the time, a Defense Ministry spokeswoman said.
November
26,
2007
GE will build
two power stations in Turkmenistan. "President Gurbanguly
Berdymukhamedov has given the American partners a concrete task: build
two new power stations in Ashgabat," Vatan television reported last
week. The government had discussed modernizing the "entire
electrical system" with an official from General Electric, the report
said. Top European Union and U.S. energy officials were in Turkmenistan
on Thursday to discuss foreign investment in the energy sector of the
gas-rich ex-Soviet nation. Foreign investors have been paying increased
attention to Turkmenistan since the death last December of eccentric
dictator Saparmurat Niyazov. His successor Berdymukhamedov has signaled
he is open to closer relations with investors. But human rights are
still an issue -- though not to GE, apparently...
Singapore has
no plans to change banking secrecy laws, an official at the Monetary
Authority of Singapore (MAS) said last week. "They allow for the
necessary transparency in combating criminal activity, while
safeguarding investors' interest for safety and security," the official
said. The EU is pressing for more transparency in Singapore's banking
regime and participation in the EU savings tax directive, so the MAS
position could undermine talks for a trade agreement between Singapore
and the EU. Singapore insists that it won't become a shelter for money
laundering, particularly with the opening of two multi- billion dollar
casinos in 2009 and its proximity to countries that are battling
terrorist groups. Singapore is resisting pressure to join in the EU
withholding tax arrangements, introduced in 2005, which impose a tax on
the investments of EU nationals residing in another EU country. They
are seen as the main stumbling block to a trade agreement. Switzerland
caved in to the pressure and now collects withholding tax for
remittance to the member states of the EU. In its statement, the MAS
noted: "The Singapore constitution does not allow us to collect taxes
on behalf of a foreign country."
November 18, 2007
HSBC Holdings on
November 14 said it took a higher-than-expected impairment charge of
$3.4 billion on bad debts at its HSBC Finance unit in the third
quarter. "I don't think anybody knows if we've reached the bottom,"
Stephen Green spun on a conference call. HSBC said that the group's
principal sponsored conduits - Solitaire, Bryant Park, Regency and
Abington Square - are funding "satisfactorily" with no asset
impairments. It added that its off-balance sheet SIVs managed by
HSBC - Cullinan and Asscher - also currently have funding arrangements
in place. "Asset quality within the SIVs remains high, although two
financial institution issuers of assets held by the SIVs were
downgraded subsequent to the quarter end," it said. We'll see...
GE Money Singapore
looks down-market, its CEO Iqbal Singh told
reporters during the company's recent fifth anniversary celebration.
Alongside high-rate personal loans, GE will roll out a credit card with
a limit of $500, and pitch its high-cost loan products at 400
electronic payment kiosks across the island. Yoshiaki Fujimori, CEO of
GE Money's Asia operations, said-in-a-statement, "This represents our
long- term commitment to Singapore and our confidence in this market."
Indeed...
North
Korean officials are to meet US diplomats, Treasury officers and Secret
Service agents in talks in New York this week to discuss steps
Pyongyang could take to abandon counterfeiting and money laundering
activities for it to be integrated into the global financial system.
The two-day talks from Monday, convened at Pyongyang's request, will be
"related to money laundering and other forms of illicit finance," a US
State Department official said. The US team will be led by the
Treasury's deputy assistant secretary Daniel Glaser North Korea will be
represented at the talks by a six-member delegation led by Ki Kwang-ho,
a director at Pyongyang's finance ministry, South Korea's Yonhap news
agency reported -- hopefully, it might be added.
November 12, 2007
GE is gunning for the
Bank for Foreign Trade of Vietnam, the
third-biggest commercial bank in the country. The Vietnamese government
plans to sell at least 15 percent of the company, known as Vietcombank,
the people said Thursday, declining to be identified as discussions are
confidential. The stake may be worth about $700 million...
HSBC, the largest
bank in Europe by market value, bought a 10 percent stake in Bao Viet
Insurance & Finance for $255 million in September.
In Athens, US
embassy spokesperson Carol Kalin said Greek authorities have been asked
to "investigate" the bank as US allies have been urged to take "similar
or comparable measures" to those adopted by Washington. The US last
month blacklisted Bank Melli and Bank Mellat, accused of providing
banking services for Iran's nuclear agencies, and Bank Saderat, which
allegedly funnels funds to Hezbollah, Hamas, PFLP-GC, and Palestinian
Islamic Jihad. The bank from 2001 to 2006 transferred 50 million
dollars from the Central Bank of Iran to its branch in Beirut via
London for the benefit of Hezbollah fronts in Lebanon, and has also
transferred several million dollars to Hamas, the State Department
says. "As we announced on October 25, we had a new round of US
sanctions on certain Iranian entities, including Bank Saderat. This is
part of our effort to advance diplomacy on Iran," Kalin said. "We have
asked our allies to take similar or comparable measures to those we've
taken."
November 5, 2007
At
Citigroup Chuck
Prince, who defended Sandy Weill's purchase of Associates First Capital
Corporation and lastly engineered Citigroup's takeover of Ameriquest's
Argent, is slated to resign, subprime fallout...
BizWeek
says
Troy Norton, 84, a retired
prison guard who lives in Bismarck, Ark., claims in a lawsuit filed in
June in U.S. Bankruptcy Court in Hot Springs that he was a victim of
improper collection attempts by
Bank of America Corp. and
two
collection
agencies.
He
obtained
a
discharge
of
certain
debts in
June, 2006, after medical bills prompted him to seek Chapter 7
protection. Court documents show that he received eight collection
letters from the bank on credit-card debt of $4,218 that a judge had
canceled...
Rita Childers, 76, thought she had left
behind an $855 bill owed to GE Money Bank, when
the account was discharged in a Chapter 7 bankruptcy she filed in 2005.
The former real estate agent in Klamath Falls, Ore., had quit her
$30,000-a-year job to care for her husband, who suffers from
Alzheimer's. Social Security and his veteran's pension didn't cover
their bills. After the Chapter 7 case, Childers fell behind again and
filed under Chapter 13, which allows debtors to repay creditors over
time. GE Money had transferred the account to a debt collector that
filed new claims in the Chapter 13 to recoup the canceled $855 debt. In
April, Childers sued GE Money, which then withdrew the claim, citing a
paperwork mistake. In an e-mail, GE Money said it tries "to avoid these
errors and fixes them if they occur." Yeah but they just keep
occurring...
October 29, 2007
So Merrill's CEO
reached out to
Wachovia
without his board's approval. One assumes that preliminary testing of
the waters for mergers takes place all the time. But when a CEO's under
fire, and a deal would result in huge payout, it's more controversial.
Mix in Merrill's subprime follies and O'Neal is on thin ice...
Sanctioning:
"We
call
on
responsible
banks
and
companies
around
the
world to
terminate any business with Bank Melli, Bank Mellat, Bank Saderat, and
all companies and entities of the IRGC," U.S. Treasury Secretary Henry
Paulson said in a statement. And in Toyko they wondered, how would they
pay for and settle on the 10% of their energy that comes from Iran?
Bank Melli has several subsidiaries: Bank
Kargoshaee, in Tehran; Bank Melli Iran Zao, in Moscow; Melli Bank, in
London; and Arian Bank, a joint venture with Bank Saderat in Kabul.
Bank Mellat has branches in Armenia, Britain, South Korea and Turkey.
Bank Saderat specializes in the financing of Iranian's foreign trade
balance. Its international businesses are mainly concentrated in the
Gulf countries and Lebanon, but it is also active in France, Germany
and Greece....
October 22, 2007
HSBC has disputes
not only with its subprime borrowers, but also with its workers. In
Colombia, HSBC employees went on strike for 10 days, at the end of
which
HSBC said in an emailed statement, "Both
sides reduced their pretensions to achieve mutual benefits." No, HSBC
has yet to reduce its pretensions...
While
banks
may
join
the
conspiracy
of
the
the Master
Liquidity
Enhancement Conduit being set
up by
Citigroup,
Bank of America
and
JPM Chase?
Wachovia,
HSBC and Dresdner, according to the
WSJ, as well as other non-US-based banks like Bank of Montreal,
Barclays PLC, Royal Bank of Scotland Group PLC and Standard Chartered
PLC. Bank of Montreal's SIV is Links Finance Corp., with some $22
billion in senior debt. Standard Chartered has two SIVs, Whistlejacket
Capital Ltd. and White Pine Corp., with a combined $16.7 billion in
senior debt in mid-July...
It's a way to cook their own books,
and avoid reporting losses. That non-banks like PIMCO are not
participating, despite the U.S. Treasury Department's Paulson's
closed-door claims to the contrary to Italian central banker Mario
Draghi, is telling. This is all about banks helping themselves. And
taking advantage of each other: Inner City Press has learned that JPM
Chase's Jaime Dimon has called the conduit an opportunity to make money
from his old nemesis Citigroup. "Make it worthwhile," Dimon told
Paulson. "Gouge them," Dimon in essence ordered his staff. Just as
these banks said of consumers...
October 15, 2007
Revolting revolving door: on the
American Bankers Association's committee to weaken anti-money laundering
laws are a slew of former regulators: Richard Small, the Federal
Reserve AML "guru" who sold out to
Citigroup then
GE Money; William Fox, former Financial Crimes
Enforcement Network (Fincen) director, now at Bank of America;
Werner,
another
former
Fincen
director
and
now
at
Merrill
Lynch; and
William Langford, a former director of regulatory affairs at
Fincen and now a senior vice president of global AML at
JPMorgan Chase.
The
three
top
banks,
the
biggest
brokerage
and
GE
Money all hired
directly from the agencies, and now use them to lobby for
de-regulation...
October 8, 2007
Who will buy Barclays? A deal-enabler tells
DJNS that "Bank of
America is the obvious suitor. It is interested in beefing up its
wholesale and investment banking operations." Not said is that, even
with its and the Fed's accounting tricks, BofA is at the 10% deposit
cap in the U.S. and must look overseas...
The NYT of October 5 ran a piece sucking-up to GE,
beginning
David R. Nissen, who runs GE Money, remembers
how the corporate powers at General Electric used to react whenever the
subject of joint ventures came up. ''The basic philosophy was, 'If you
don't have full control, don't do the deal,''' Mr. Nissen recalled.
Times have changed. In South Korea, GE Money, G.E.'s retail lending
arm, has 43 percent stakes in Hyundai Capital and Hyundai Card, which
offer auto loans, mortgages and credit cards. It has formed joint
ventures with several Spanish savings banks to provide consumer loans
and credit cards. And it has a consumer banking venture with Garanti
Bank in Turkey, in which G.E. and the Dogus Group, Garanti's parent,
each own 25.5 percent, with the rest owned by institutional investors.
Garanti manages that venture. Joint ventures ''have been one of our
most powerful strategic tools,'' Mr. Nissen said, noting that net
income for the ventures is growing at twice the rate of his core
business.
And
not
a
word
about
GE's
overseas
subprime
lending,
nor last
week's focus, its
U.S. cosmetic surgery loans. The secret predator...
October 1, 2007
And the spread just continues. In the past
week,
HSBC has wielded
approvals for insurance joint-venture in China, with National
Trust, for 10 branches in Peru, and to become the first international
equity broker in the United Arab Emirates. And alongside it all,
exporting and spreading predatory lending...
September
24,
2007
During
the
upcoming
month
Brussels
will
look
into
the
takeover of
mini-BPH by
GE Money. For EUR 625.5m the Americans are supposed to buy 66
percent of the bank, which remained after the division of Bank BPH. GE
Money will buy the smaller part of the bank with 200 outlets. The
bigger part will be merged with Pekao SA ...
September 17, 2007 - As Fed
Releases Mortgage Study, Subprime
Disparities Worsen at Citigroup, HSBC, Wells
HSBC is moving to
acquire a 10% stake in Vietnam insurance and financial services group,
Vietnam Insurance Corporation (Bao Viet) $255 million. The deal will
include the secondment of specialist employees and the provision of
training to Bao Viet, HSBC said. Stephen Green, HSBC Chairman, said:
"This investment and strategic partnership with Bao Viet reflects a
growing commitment to Vietnam, and is in line with HSBC's stated
strategy of targeting investment at high growth markets with
international connections."
How
long
will
it
be
before
HSBC
rolls
out
single premium credit
insurance and the other predatory product lines it acquired along with
Household International?
In
New
Zealand,
used
car lender Senate Finance has signed a deal
with
GE Money. Under the
arrangement GE Money will start financing Senate's lending book while
Senate will continue to operate as a loan broker and to service its
network of dealers and customers. A wholly owned subsidiary of
Dorchester Pacific, Senate lends in the Auckland used car market, and
was previously funded exclusively by Dorchester. "It's business as
usual at Senate," Dorchester Pacific chief executive Andrew Walker
said.
And
at
GE
Money,
which
will
apparently
buy
high-cost
loans from
anywhere...
September 9, 2007
As the chickens come up to roost at
Countrywide for its disparate lending, Bank of America
steps in to buck it up, to the tune of $2 billion. Is this foray back
into subprime lending relevant to BofA's proposal to acquire LaSalle?
You
bet it is...
The letter to
HSBC last week
from Knight Vinke Asset Management laid out a series of critiques,
including that HSBC should "a strategy more focused on emerging
markets, put more people with experience in those areas on its board,
and changed the way top executives are compensated to more closely
align performance with pay." But what about HSBC's bungling and
predatory descent into (and export of) Household's subprime lending?
September 3, 2007
So now Barclays' exposure to
U.S. subprime is reportedly taking it out of the running to acquire ABN
Amro. Live by the sword (of predatory lending), you can suffer by it
too...
Meanwhile
HSBC is buying
into South Korea, a country now belatedly imposing interest rate caps
on consumer finance, while GE Money tries to
flee Japan for just that reason.
August 27, 2007
GE is considering
leaving Japan now that consumer protections are in place, cutting
interest rates from 29 to 20 percent. Among the reported potential
bidders are UBS and Deutsche
Bank -- advised by Alan Greenspan...
On August 20,
Royal Bank of Scotland
told the Federal Reserve that its anti-money laundering
policy should be withheld from ICP Fair Finance Watch. Quickly this
counter-argument was filed:
RBS argues that its
Anti-Money Laundering policy should be withheld, "since disclosure
might provide information which might assist persons seek to circumvent
those policies and procedures and to engage in money laundering."
But Fortis and
Santander provide their anti-money laundering policies. Therefore the
record on this application contains a contradiction -- if RBS' argument
is accepted, then Fortis and Santander are assisting and enabling money
laundering. If, on the other hand, this is not what Fortis and
Santander are engaged in, RBS' policy must be released.
We note
pervious RBS AML issues, including regarding sanctioned entities in
Afghanistan. The policy should be released, including so that timely
commenters, who timely requested the application, including but not
only under FOIA, can review and comment on it.
And
lo
and
behold,
by
the
end
of
the
week RBS released its AML policy,
which is now being analyzed...
If
HSBC tries to buy KEB in South Korea from Lone Star, it would
export Household's predatory lending model into the South Korean market
-- just another reason to oppose it...
August 20, 2007
In response to the July 24
comments of Fair Finance Watch opposing
Royal Bank of Scotland's application to the
Federal Reserve
to acquire ABN Amro, including due to the fact that "RBS supports
predatory lenders," RBS' outside counsel at Shearman & Sterling,
Bradley K. Sabel, has told the Fed that
"When New Century
filed for bankruptcy, RBS Greenwich Capital agreed to provide
debtor-in-possession (DIP) financing to assist New Century in its
efforts to reorganize... RBS Greenwich Capital also agreed to provide
an initial bid on certain mortgage assets of New Century that were
being sold... In exchange for providing that bid, RBS Greenwich Capital
received a Bankruptcy Court-approved break up fee of $954,000."
It's
reminiscent
of
Royal
Bank
of
Scotland's
Greenwich
Capital's
predatory
enabling of the predatory lender ABFI in Philadelphia, and is
indicative of those still profiting even from the chaos in the subprime
lending market...
While it's good to see the American Banker
describe Chris Dodd as "in the crosshairs," there's this quote: "As a committee chairman, Sen. Dodd is about
results, and results can be achieved in many ways," a spokesman for the
senator said. "Legislation is one of those ways, but not the only way."
Question -- why not name the spokesman? Guess -- could it be... Shawn
Maher? And even further inside baseball, the same Banker article quotes
Jaret Seiberg as "a senior vice president of financial services policy
for Stanford Washington Research Group" without noting that he
previously was a reporter on just this beat for... the American Banker.
Classic Dodd,
to the Sun: on willingness to meet with foreign dictators:
"Three of them I've already met [Hugo Chavez, Fidel Castro, Hafez
al-Assad]. ... I'd never meet with Ahmadinejad, he's a thug." But what
about Kim Jong-il of
North Korea?
From the august (15) Argus Leader in South Dakota:
The court of public
opinion already appears polarized on what critics call predatory
lending practices - companies charging exorbitant interest rates and
penalty fees. "'It's not illegal, but it's very unethical,' said
Richard Cook, a former federal government analyst and author who lives
in College Park, Md. 'It's legalized loan-sharking. It was one of the
specialties of the Mafia. But that's one organized crime doesn't have
to do now because it's legalized.' Sioux Falls Mayor Dave Munson, who
worked 18 years for Citibank, calls that criticism unfair." So,
from Citibank to mayor in the city Citi ran to, to export high rate,
which are called "unethical" by an ex-Fed consultant...
From Deal Journal: " No one outside
Citigroup knows
just how much the meltdown in global credit markets has cost the
banking giant, but that hasn’t stopped analysts from guessing. Sanford
Bernstein estimates Citi could take a $2 billion to $3 billion hit to
its third-quarter earnings from the meltdown in the subprime mortgage
market and the steep decline in leveraged-buyout-related loans and
bonds. It could post losses of $1.2 billion to $1.5 billion on buyout
loans loans and $500 million to $1 billion on subprime mortgages in the
period, according to this writeup of the analysis from Bloomberg. No
one knows the extent that Citigroup may have hedged its exposure to the
risky debt, so the final tally of the damage won’t become clear until
Citi reports its results."
And even then...
From DJ Bogota: "General Electric Co.
(GE) announced a plan to carry out a tender offer to buy as much as
10.69% of Colombia's Red Multibanca Colpatria SA (COLPATRIA.BO) from
minority shareholders to boost its stake in the bank, the U.S. company
said Monday in a filing to the Colombian securities regulator...In
February, GE announced it had agreed to purchase a 39.3% stake in
Colpatria, Colombia's ninth-largest bank in terms of assets, from Grupo
Mercantil Colpatria, a Colombian holding company." And whatever GE did
with its WMC subprime unit in the United States, GE Money is still
committed to exporting the predatory lending model it has learned...
August 13, 2007
Bank of America,
so arrogantly pressing forward to swallow up LaSalle, last week saw the
payday lender it assists, Advance America, hit by a class action. And
what has BofA to say?
Meanwhile,
Citigroup last
week announced its acquisition of Waco, Texas-based Big Red -- a soda
company. Citi then brought in a new manager from Red Bull. Meanwhile,
Citigroup is said to be hunting for SunTrust...
Why
is
HSBC
Rural
Bank
Co.
opening
in
Suizhou
in central Hubei
province? To further make nicey-nicey with the Chinese government,
sure. But ever since
HSBC bought
Household International, when it says, "under-served," watch out for
the predatory lending...
August 6, 2007
The Dutch
newspaper last week quoted ABN Amro's CEO Groenink that Fortis would be
overpaying in its bid for... ABN Amro.
It has emerged in Brazil that
HSBC has lent to
and enabled an ethanol producer, Para Pastoril e Agricola, in the
Amazon state of Para, now accused of keeping its workers in
"slave-like" conditions: 13 hour days for less than $20 a month.
Citigroup says it is not considering bailing out of a deal to
finance the acquisition of energy provider TXU Corp., despite reports
to the contrary. What was that, about Citigroup's environmental
standards?
July 30, 2007
ICP's Fair Finance Watch has filed
timely comments opposing the applications of RBS, Santander and Fortis
to acquire ABN Amro:
July 24, 2007
Richard Walker
Vice President & Community Affairs Officer
Federal Reserve Bank of Boston
Public and Community Affairs Department, T-7
P.O. Box 55882
Boston, Massachusetts 02205
Re: TIMELY
COMMENT IN OPPOSITION TO THE PROPOSAL FOR ROYAL BANK OF SCOTLAND, BANCO
SANTANDER AND FORTIS TO ACQUIRE ABN AMRO HOLDINGS AND
SUBSIDIARIES INCLUDING REQUEST FOR HEARINGS
Dear Mr. Walker and
others in the FRS:
On behalf of
the Fair Finance Watch and its affiliates, including Inner City Press
(collectively, "FFW"), this is a timely comment opposing and requesting
public hearing on, and complete copy of, the applications by Royal Bank
of Scotland, Banco Santander and Fortis to acquire ABN Amro Holdings
and subsidiaries. Even as the overall proposal faces legal challenges
in Europe, the Federal Reserve Board's web site lists the initial
comment period as running through July 25. This comment is timely. In
light not only of the lending disparities set forth below, but also the
legal issues raised by the proposal(s), RBS' engagement with predatory
lenders, and legal and other questions about the deal, public hearings
should be held on this and the other ABN Armo proposals.
FFW understands
that litigation and appeals continue in Europe; the FRB should extend
the comment period until the reality or hypothetical natures of this
proposal is clear.
In 2006 nationwide
at Royal Bank of Scotland's Charter One Bank unit, African
Americans were confined to higher cost loans over the rate spread 1.49
times more frequently than whites.
In 2005, Santander's
Sovereign was 3.10 times more likely to confine Latinos than whites to
higher cost loans over the rate spread (of 3% over comparable Treasury
securities on a first lien, 5% on a second lien). Also, Sovereign
denied 26.96% of applications from Latinos, versus only 10.39% of
applications from whites, a denial rate disparity of 2.59.
Sovereign
was 2.76 times more likely to confine African Americans than whites to
higher cost loans over the rate spread. Sovereign denied 28.21% of
applications from African Americans, versus only 10.39% of applications
from whites, a denial rate disparity of 2.76.
RBS continues supporting predatory lenders. The
NY Times of April 10, 2007 reported:
"New Century Financial, a subprime lender that has filed for bankruptcy
protection, should not be allowed to sell $50 million worth of
mortgages to a subsidiary of the Royal Bank of Scotland, a United
States trustee said yesterday in court papers.
Before the sale is approved, New Century should
be forced to eliminate or reduce a $1 million breakup fee associated
with the deal and to say how it will protect consumer financial data,
the trustee, Joseph J. McMahon Jr., said in court papers filed in
Federal Bankruptcy Court in Wilmington, Del.
The breakup fee, which New Century would pay to
the Royal Bank of Scotland if the sale was not completed, is nothing
more than a '$1 million windfall' for Royal Bank, Mr. McMahon said in
the filing. Federal trustees monitor bankruptcies on behalf of the
Justice Department.
New Century, based in Irvine, Calif.,
specialized in making loans to home buyers with poor credit before it
filed for bankruptcy protection on April 2. The company is planning to
sell most of its assets within the next few weeks, including its
remaining loans, loan servicing division and loan origination platform.
New Century said Carrington Capital Management
had offered about $133 million for the loan servicing unit, which
collects and manages mortgage payments. The Royal Bank subsidiary,
Greenwich Capital, has agreed to pay $50 million for about 2,000
mortgage loans, most of which are in default.
Judge Kevin J. Carey in the Wilmington court
will consider approving the rules governing the Royal bank sale in a
hearing today, and the Carrington sale on Thursday.
Both offers would be considered opening bids in
a court-supervised auction.
A New Century spokeswoman did not immediately
return a call seeking comment. Officials at Greenwich Capital could not
immediately be reached for comment."
Public hearings
should be held. ICP is a protestant to this proposal, and should be
provided copies of all communications regarding this proposal --
including a full copy of the applications, forthwith -- and
should be provided an opportunity to participate in any communications
between the applicants and your agency. All documents and records
related the proposal (on an ongoing basis), including complete copies
of the Applications, and other records in your agency’s
possession related to the proposal, should be provides as quickly as
possible, as they become available.
Very Truly Yours,
Matthew Lee, Esq.
Executive Director
Then Banco Santander was reported to have
continued to do business with sanctioned Bank Sepah until at least
March 2007. How this might impact the Santander - RBS - Fortis
bid for ABN Amro, including their pending applications before the U.S.
Federal Reserve, remains to be seen. Federal Reserve, take notice...
July
23, 2007
... Analysts say
a takeover of Korea Exchange Bank by HSBC, would be
positive for the U.K. lender -- they don't, however, say it would be
positive for consumers in Korea, into which HSBC would bring the
predatory lending it acquired along with Household International....The
U.K.'s Daily Telegraph reported Tuesday, citing people close to the
situation, that HSBC is interested in taking a controlling stake in the
Korean bank and has contacted U.S. private-equity company Lone Star
Funds, which has been trying to sell its 51% holding in the Korean
lender.
Seeking
the
super-profits
to
be
made
by
exporting
predatory
lending to
the developing world,
GE Money Bank "plans
to withdraw from Austria and is seeking a buyer for its business in the
country," GE Money Bank spokesperson Aida Peter told Austrian daily
Oesterreich on July 19, 2007. The move is attributed to the smaller
profitability in the country. Earnings in Austria have remained below
the expectations of GE, Peter added. The Austrian activities will be
sold in 2008., he said. GE Money Bank is said to be interested in
foreign investors as potential buyers, informed sources said. German
Bayerische Landesbank (BayernLB), which is in the process of taking
over Austrian bank Hypo Group Alpe Adria (HGAA), is said to be among
the possible candidates for buying GE Money Bank Austria.
But it makes
sense to GE to remain in the Czech Republic, since it has received
corporate welfare, upheld by the European
Commission,
which
announced
last
week
it
has
decided
that
the
state-aide guarantee measures and other measures in favor of the Czech
banks Agrobanka Praha a.s. and GE Money Bank a.s. (former GE Capital
Bank a.s.) are compatible with EU state aid rules and has closed its
formal investigation procedure. Ahead of Czech accession to the EU in
May 2004, the Czech Republic notified the EC a series of measures in
favor of Agrobanka Praha, a.s. and GE Capital Bank, a.s. adopted by
Czech authorities during 1996 to 1998 to assist the restructuring of
Agrobanka Praha, a.s. and facilitate its sale to GE Capital Bank. "As a
result of the formal investigation proceedings, the Commission decided
that the measures constitute state aid within the meaning of Article 87
(1) of the EC Treaty," the EC said. That is, legalized corporate
welfare for GE...
July 16, 2007
Bank of America,
fast becoming one of the most arrogant financial institutions in the
world, last week wrote to the Federal Reserve Board, in response to the
comments of Fair Finance Watch, that "at the time of Board approval...
the combined company will hold less than 10 percent of nation's
deposits." If so, it's by cooking the books. Reportedly, B of A has
complained, inaccurately, that "foreign" banks like Royal Bank of
Scotland, regarding which we'll soon have more, are exempt from the 10%
deposit cap. That's a lie, but for B of A, increasingly, that's nothing
new. It no longer even responses to issues raised about its enabling of
payday lenders like Advance America Cash Advance. But see a forthcoming
alternative weekly story coming out in North Carolina. Maybe B of A
will try to sweep this predatory lending issue under the rug by buying
(or withholding) advertising in alternative weekly. For shame...
Meanwhile,
B of A's Frans van der Grint told
DJ that Bank of America now wants to complete the transaction as
quickly as possible. We'll see.
Citigroup,
sued
last
week
in
the
U.S.
for
racial
discrimination
in mortgage
lending, claims it has industry-leading practices. At a higher level,
from Citi's point of view, its CEO says the company wants to list on
the Tokyo stock exchange "as soon as possible"...
July 9, 2007
Fortis
plans to open 230 Fortis Credit4me credit shops in Germany by 2009,
Marc Hentgen, head of Fortis Consumer Finance Deutschland, told German
Handelsblatt daily on July 6, 2007. Fortis' concept is similar to the
loan shop chain easycredit of German Norisbank, subsidiary of local
banking group Deutsche Bank AG. The Belgian-Dutch group plans to also
offer investment products at its "Credit4me" outlets.
Meanwhile, the
UK
Daily
Mail
reports
that
the Financial
Services Authority is understood to be investigating mortgage firm GE Money Home Lending
for its troubled 'sub-prime' lending...
From a press release -- "HSBC
has formally opened its third Customer Service Unit in Abu Dhabi at
Khalidiya Area. The unit is located inside the Spinneys Supermarket,
Khalidiya. The Centre was inaugurated by Mohamed Almulla, Chief
Executive Officer of HSBC in Abu Dhabi in the presence of Lester
Wynne-Jones, Regional Head of Personal Financial Services. The new
Centre, the ninth for HSBC in the UAE, will offer a one-stop-shop for
customers to submit applications for new accounts, loans, credit cards"
-- and predatory loans...
July 2, 2007
This week, focus on Latin America:
shares in Banco de Chile SA jumped on
Friday after the company said its parent, Quinenco SA had resumed
negotiations with
Citigroup. Late
Thursday, Banco de Chile said that Quinenco, an investment holding
company, had "reinitiated conversations with Citigroup to carry out a
strategic association of its financial operations in Chile." Predatory
lending descends on Santiago...
GE Money will
reportedly install an $11 million call center in Guatemala that is
scheduled to be operational by May or June next year. The call center
will employ some 1,400 Guatemalans and the decision comes after more
than a year of studying where to put it, the newspaper quoted GE
Money's Latin American director Edmundo Vallejo. The center, which is
being built in conjunction with Banco America Central, will primarily
serve both the bank's local clients as well as Spanish speaking GE
Money customers in the US and Mexico.
The National Association of Securities
Dealers has fined
Wells Fargo
Securities LLC $250,000 for not disclosing that a series of research
reports about Cadence Design Systems Inc. were written by an analyst
who was seeking a job with the semiconductor designer...
Just after the Federal Reserve's rubber
stamp approval,
Mellon Bank has agreed to pay $16.5 million
to the federal government to settle claims that it allowed overwhelmed
employees to destroy thousands of federal tax returns and payments in
2001. Mellon had a contract with the Internal Revenue Service to
process income tax returns and tax-payment checks. Mellon employees,
feeling overworked and unable to meet deadlines imposed by the
contract, destroyed more than 77,000 returns and checks totaling $1.3
billion ....
June 25, 2007
Fresh from their rubberstamp approval by
the Federal Reserve, BONY intends to close on Mellon on July 1, and to
start cutting jobs. Although we're not crying, they've already cut
board members. The survivors, from Mellon, are Mr. Kelly, are Mellon Vice Chairman Steven
Elliott; former Carnegie Mellon University President Robert Mehrabian;
University of Pittsburgh Chancellor Mark Nordenberg; U.S. Steel Chief
Executive Officer John Surma; Wesley von Schack, former CEO of
Pittsburgh energy company DQE; Edmund Kelly, chairman of insurer
Liberty Mutual; Ruth Bruch, a senior vice president at Kellogg Co. and
the intrepid Mr. Kelly...
Consider this, from the Straits Times of
Singapore:
"On June 8, my
father went to HSBC Jurong East branch to help me deposit money in my
bank account, which I had just opened recently. A bank teller first
asked about the origins of the money and then remarked that she was
afraid my dad was a terrorist. My dad had a rude shock. Although I
understand banks are required to carry out Customer Due Diligence (CDD)
measures under MAS Act Cap 186 Prevention of Money Laundering and
Countering the Financing of Terrorism, the bank teller could have
handled the matter more appropriately. After I gave my feedback to
HSBC, its reply was less than satisfactory. Instead of accepting
responsibility for poor customer service, the customer service manager
of Jurong East branch explained in a phone conversation that the teller
was temporary and even suggested my dad go to the branch to receive an
apology. In a subsequent letter, she advised me of the bank's
requirement to seek details of the source and use of funds to comply
with strict international regulations regarding money laundering and
terrorism. A check on MAS Act Cap 186 reveals that banks undertake CDD
measures only if the transaction exceeds $20,000. However, my dad's
transaction was less than this amount... With all the government
initiatives to make Singapore the regional banking centre and service
centre, it is worrying that a temporary employee, I would think not
properly trained by HSBC, is allowed to handle sensitive banking
transactions. Even more disturbing is how
HSBC management
handles customer feedback."
June 18, 2007
JPMorgan Chase calls it patriotism, to build in Lower Manhattan for
its investment bank. Of course, the tax breaks, discounted electric
power and rent subsidies worth $100 million didn't hurt. Chase has
previously threatened to move to Connecticut or New Jersey...
Citigroup and
Deutsche Bank
will have to go on trial for market
rigging related to Parmalat SpA's collapse in 2003...
June 11, 2007
Increasing
exposed
as
a
predator,
Deutsche
Bank
buys
subprime
loans
already in default then tries to foreclose on them:
Michelle Tucker in Jacksonville, Florida,
Sima Shwartz in Worchester, Mass. Now Ohio Attorney General Marc
Dann has said he might sue. Here's hoping...
Deutsche Bank's
misdeeds
are
not
limited
to
predatory
lending
and
service
to dictators
like Turkmenbashi. Pending now in New York's highest court in Albany is
a case concerning Deutsche Bank Trust Company of NY's
mis-administration of the trust of Harry Winston. App. Div. Docket No.
2006-01070. As recited in the pleading, Deutsche Bank was "woefully
unprepared to oversee a diamond business. Richard Ritzel, [Deutsche]
Bank's officer response for the day to day operations of the trust had
no expertise in the jewelry industry and no experience in running any
kind of business. In fact, no one in the Bank's trust department,
including any member of its Special Assets Group, which supervised
operating businesses, had any expertise in the jewelry industry"...
Deutsche "Bank did not prepare (or did not preserve) records reflecting
its performance as trustee or the performance of the trust." $120
million are simply unaccounted for...
June 4, 2007
HSBC last week was
fined $850,000 for mismanaging "hundreds of
containers of abandoned chemicals... NYS said HSBC knew of the
abandoned chemicals, as well as frozen pipes and faulty fire
suppression system at the site. However, HSBC didn't contact the NYS
Department of Environmental Conservation or any state or local
emergency responder to report the threat as required under state
law." Meanwhile HSBC makes loud claims about carbon neutrality
and climate change funding. Environmental responsibility begins at
home, though, no?
Among
the
consortium
trying
to
buy
Doral Financial Corp. is not only Bear
Stearns, but also... GE.
May 28, 2007
Sleazy Fremont has belatedly disclosed
that Ellington Capital Management had
bought its subprime residential mortgage business for $2.9 billion.
What does this say about Ellington's standards?
A
leaked
Citigroup memo by
Steve Freiberg says that Ray Quinlan has
decided to retire as president of retail distribution in the North
American division of
Citigroup's consumer-banking unit. Peter Knitzer will temporarily take
charge of New York-based financial services company's operations in
North America. The subprime Citifinancial unit will report directly to
Freiberg. Citigroup also named Ed Eger head of international credit
cards. He
will report to Ajay Banga, Freiberg's fellow co-chairman in the global
consumer group. Predators all...
Mystifying
subprime:
GE has rejected any
suggestion of a bad debt problem for its local consumer and business
finance operations after a jump in the reported level of impaired loans
last year. A spokesman said the accounts for GE Capital Finance
Australasia, as reported yesterday, did not fully reflect the
performance and profitability of the operations. ''This particular
legal entity includes some parts of our commercial finance and some
parts of our consumer finance business, rather than our actual
operation,'' the spokesman said. GE Capital Finance includes the AGC
consumer and business finance operations, acquired for $1.65 billion
from Westpac five years ago.
May 21, 2007
Bank
of
New
York,
now
sued
for
$22
billion
by the Russian customs
service, still argues that its merger application to acquire Mellon
should go forward, without even a re-opening of the Fed's comment
period. We'll see.
From a
National Mortgage News report last week, 2006 subprime mortgage volume
and status of "
CitiFinancial (e)
$23,500
Parent
stopped
reporting
B&C
vol
in
06."
How
transparent...
And how 'bout this? Citigroup has now purchased a
10% stake in RRR, formerly ZAO Centrosol, a railway car leasing company
in Russia...
Strange days: on
May 17, Wachovia's
spokeswoman Christy Phillips-Brown
announced that Wachovia was asked
"by the U.S. State Department to help them process an interbank
transfer of funds held at other banks, which are the subject of
negotiations with North Korea. We have agreed to consider this request
and our discussions with various government officials are continuing."
Since dealing with Banco Delta Asia is still illegal, one wonders both
how the U.S. could cynically waive the law for one transaction, and
what it would owe Wachovia for this "service." It creates conflicts,
which will be explored...
May 14, 2007
Why
is
it
not
surprising
that
Chase's Jaime
Dimon would be dining with the CEO of Dow Chemical -- under attack by
Amnesty International for still not addressing the Bhopal issues it
bought with Union Carbide -- and fingering some of Dow's officials, J. Pedro Reinhard and Romeo Kreinberg? Let the
depositions begin...
Kyodo News says
the US is considering letting an unnamed American bank handle the money
at Macau's Banco Delta Asia, waiving its own Patriot Act. If the deal
is approved, the Macau bank would transfer the cash to a US bank which
would in turn send it to a third country, Kyodo News said.
Asked whether the
United States would make an exception to let a US bank handle the
money, State Department spokesman Sean McCormack said it was up to the
Treasury Department. "It's a heck of a lot more complicated than
anybody would have ever thought," McCormack said of unfreezing the
money. Yep...
May 7, 2007
Story
of
the
week
was
a
Dutch
court
blocking
ABN Amro's cynical
poison-pill attempted sale of LaSalle to Bank of America, and BofA
responding by suing ABN Amro. No honor among thieves...
From
the
Guardian:
"The Swiss bank UBS has
thrown in the towel on a high-profile attempt to run an in-house Wall
Street hedge fund after suffering big losses betting on America's
controversial sub-prime mortgage industry. In an embarrassing admission
of defeat, UBS announced today that it was shutting down Dillon Read
Capital Management - a fund established two years ago by the bank's
former head of investment banking, John Costas, with a rumored
investment of between $2bn (1bn) and $3bn... Although UBS gave few
details of the hedge fund's activities, it revealed that it had run
into trouble because of difficult conditions in the US mortgage
securities market."
And
who's
big
in
UBS?
Ex-senator
and
subcrime
defender
Phil Gramm...
April 30, 2007
Citigroup
analysts said GE
should spin off NBC Universal, GE Money and the real estate
division. "GE's size and complexity is working against investor
interest in the stock and has contributed to further valuation
erosion," the Citi analysts wrote. Talk about the pot calling the
kettle black...
Bank
of
New
York's
arrogance
--
late
providing
its
mortgage data then
arguing that the disparities don't matter, through Michael T. Escue of
its law firm Sullivan & Cromwell -- hits a new low. This is another
reason this bank should not be allowed to expand. This is the bank that
seeks to withhold large portions of its application, which cite Inner
City Press v. Federal Reserve Board, then withholding the arguments
from... Inner City Press. It's almost funny.
April 23, 2007
From
the
Federal
Reserve
Bank
of
NY,
Inner
City
Press on April 21
received a copy of Bank of New York's heavily redacted application to
acquire Mellon. BONY revised its still-too-extensive redactions to its
application on April 16; ICP has a right to comment on this
material. BONY, which initially did not respond as other banks did to
ICP's request for 2006 HMDA data, finally provided its data on April
20.
In
the
most
recent
year
for
which
HMDA
data
is (now) available, 2006, Bank
of
New
York
confined residents
of The Bronx, the most predominantly minority county in New York State,
to higher cost loans over the Federal Reserve-determined rate spread
TWENTY FIVE times more frequently than residents of Manhattan, and 2.92
times more frequently than residents of Westchester County. As the FRB
will remember, Bank of New York initially fought to exclude The Bronx
from its CRA assessment area. Now BONY has a disparate lending record
in The Bronx -- and Brooklyn too, where BONY in 2006 confined borrowers
to rate spread loans 10.7 times more frequently than Manhattan.
This is much worse, particularly in
The Bronx, than in 2005, when BONY confined its Bronx borrowers to
higher cost loans over the rate spread 7.87 times more frequently than
in more affluent and less minority Manhattan. Bank of New York's
disparity-ratio between borrowers in Brooklyn and Manhattan was 6.5.
Both got worse in 2006. FFW demands public hearings, including on
BONY's multi-faceted enabling of other predatory lenders, its
admissions of money laundering, its secretiveness and anti-competitive
effects. ICP contends that this proposed combination would be
anti-competitive. BONY apparently disagreed, but the bases of its
argument are still being hidden, with entire pages of its antitrust
memo blacked-out. BONY repeatedly cites the case
Inner City Press v. FRB, then redacts even portions of its
argument. FFW has contested these redactions and withholdings, and
requested an extension of the comment period until the information to
which FFW and the public have a right is released.
From the mailbag --
Subject: RBS Watch news
From: [Name withheld in this format]
To: Inner City Press
Sent: Thu, 19 Apr 2007 4:56 AM
Fred The Shred received a massive pay rise
http://business.scotsman.com/index.cfm?id=597182007
http://thescotsman.scotsman.com/business.cfm?id=416292007
staff typically have received less than 2%
RBS have come down heavily on staff to force them to move their personal
banks to one of their group accounts:
http://news.bbc.co.uk/1/hi/business/6482979.stm
I work at one division, retail services, and staff are already
receiving disciplinary notices for failing to take up a "YourBank"
account. One of the things that particularly annoys people is that
incurring an unauthorized overdraft is considered a disciplinary
offence, which is a private matter and should be nothing to do with
one's employer!
April
16,
2007
The ICP Fair Finance Watch has filed a
timely comment opposing and requesting public hearing on the
applications by the Bank of New York (BONY) and affiliates to acquire
Mellon Financial and affiliates ("Mellon"), emphasizing BONY's
mult-faceted enabling of other predatory lenders. FFW has requested an
inquiry into and evidentiary hearing on BONY's enabling of, for
example, the now-bankrupt subprime lender People's Choice Home Loans,
the troubled lenders Novastar and Centex, the disparate lender First
Franklin, and others, in light of the current troubling
revelations about the subprime industry, which the Federal Reserve
missed.
BONY
has
enabled
some
of
the
most
disreputable
of
subprime lenders,
some of which have recently collapsed. See, e.g., the
PEOPLES CHOICE HOME LOAN SECURITIES CORP,
FORM TYPE: 424B8, filed August 11, 2006:
Swaps and Cap Provider
-- "The Bank of New York, a New York banking organization, will provide
an interest rate swap for this transaction. The office of the swap
provider is located at 32 Old Slip - 15th Floor, New York, New York,
10286."
Note
that
PEOPLES CHOICE HOME LOAN, which
refused to provide its 2005 HMDA data in any useful form, has since
declared bankruptcy. What due diligence did BONY engage in, before
enabling this rogue company? Public hearings should be held.
See
also,
NOVASTAR
CERTIFICATES
FINANCING
CORP,
FORM
TYPE:
FWP,
filed
June 23, 2006, "a pool of subprime mortgage loans consisting of two
groups -- a group of residential first-lien and second-lien, fixed and
adjustable rate mortgage loans designated as Group I (which is
comprised entirely of conforming balance mortgage loans and in which
the Group I Certificates represent a beneficial interest) and a group
of residential first-lien and second-lien, fixed and adjustable rate
mortgage loans designated as Group II (which is comprised of conforming
and non-conforming balance mortgage loans and in which the Group II
Certificates represent a beneficial interest); ... Co. has entered into
an agreement with The Bank of New York Company...
Note
that
NOVASTAR, following its well
documented problems, announced last week it has started a formal
process to explore a range of "strategic alternatives." What due
diligence did BONY engage in, before enabling this rogue company?
Public hearings should be held.
See
also,
CENTEX
HOME
EQUITY
LOAN
TRUST
2006
A,
FORM-TYPE: PROSP,
DOCUMENT-DATE: May 16, 2006, filed May 16, 2006.
BONY
is
also
a
trustee
(and
often,
foreclosure).
See,
e.g., NATIONSTAR
FUNDING LLC, FORM TYPE: 424B5, filed January 31, 2007: "The Bank of New
York. Custodian The Bank of New York Trust Company, National ...
The Bank of New York, as trustee."
See
also,
C-BASS
MORTGAGE
LOAN
ASSET-BACKED
CERTIFICATES,
SERIES
2006-,
FORM
TYPE: 424B5, filed December 7, 2006, "rate swap agreement with The
Bank of New York, as swap provider, for the benefit of the... rate cap
agreement with The Bank of New York, as cap provider."
See
also,
FIRST
FRANKLIN
MORTGAGE
LOAN
TRUST,
SERIES
2007-FF2,
FORM
TYPE: 424B5, filed February 28, 2007, "provided by The Bank of New York
in its capacity as swap ...... COUNTERPARTY AND SWAP COUNTERPARTY
The Bank of New York, whose address is 32 Old..."
First
Franklin
was
until
recently
a
part
of
National
City Corp, which
in 2005 made 177,526 higher cost loans over the Federal
Reserve-determined rate spread.
Also
in
2005, Bank of New York
confined its Bronx borrowers to higher cost loans over the Federal
Reserve-determined rate spread 7.87 times more frequently than in more
affluent and less minority Manhattan. Bank of New York's
disparity-ratio between borrowers in Brooklyn and Manhattan, at 6.5,
was almost as pronounced. FFW has requested BONY's 2006 HMDA data, but
has yet to receive it. FFW will be commenting on this 2006 data upon
receipt, and the comment period should be extended.
On
other
managerial
issues,
Bank
of
New
York,
which
the Federal Reserve
hit with a $38 million money laundering fine in 2000 (for having moved
$7 billion in hot Russian money), then settled again, without even
paying a fine, in April 2006. The Fed and the New York Banking
Department slapped Bank of New York on the wrist for new
deficiencies in the bank's money laundering controls, giving it 60 days
to comply with yet another order. The comment period should be
extended, and public hearings held.
April
9,
2007
In a
study of the just-obtained 2006 mortgage lending data, ICP & Fair
Finance Watch have identified disparities by race and ethnicity in the
higher-cost lending of some of the nation's largest banks. 2006 is the
third year in which the data distinguishes which loans are higher cost,
over the federally-defined rate spread of three percent over the yield
on Treasury securities of comparable duration on first lien loans, five
percent on subordinate liens. 4/4/07-- "Banks Prone to Sell Minorities Pricy
Loans,"
Reuters /
Washington Post
Where the
rubber will meet the road will be in how the Federal Reserve and other
agencies act on specific disparities at specific lenders, including as
these are formally raised to them in timely comments on merger
applications, Fair Finance Watch concludes -- and will test...
Meanwhile, the
award for the most smug and ill-informed article to date on the
subprime crisis goes to The
New
Yorker
and
its
business
columnist, who blames borrowers and
apparently did no research....
April
2,
2007
GE Money Bank, BNP
Paribas, Credit Mutuel are reportedly the final three bidders for the
200 branches of Unicredito's Polish BPH bank currently up for sale.
The
Bush administration has been using the Treasury Department's powers and
contacts to encourage major international banks to halt transactions
with Iran. "Secretary Paulson and Secretary Rice have used their
influence with corporate and financial leaders around the world to
essentially give the message to European Arab and Asian bankers that
Iran is not a good credit risk," Nick Burns said. According to Dow
Jones, three European banks, including
HSBC already have
acquiesced to the Treasury's requests. We'll see...
March
26,
2007
Barclays
to
buy
Holland's
ABN
Amro,
for
$80
billion
dollars, says the
Wall Street Journal. Not mentioned is Barclays significant entry into
subprime lending, first by buying Wachovia's subprime mortgage servicer
HomEq, then a nationwide lender, EquiFirst, from Alabama's Regions. Why
is this angle not being covered? The sole predatory
reference in
the
Google
News
database
for
the
past
month
is
to a Barclays Capital
report of February 22, about other companies' predatory lending and
delinquency rates. Apparently a glass house does not dictate what one
can throw, having the right friends.
March
19,
2007
GE Money, now in 54
countries, recently had CEO Dave R. Nissen in India, where he told
reporters:
"We are quite concerned about the US mortgage
market where there is a bubble in near prime and sub-prime markets.
European economies are doing quite well. The biggest worry in Asia we
have is about bubbles in credit cards. It happened in South Korea and
Taiwan. Will it happen in China and in India? We don't think so, but
there is high growth and intense competition in India."
Last week in dropping
Wal-Mart's
ILC application, Wal-Mart Financial Services President Jane Thompson
said the company's July 2005 bid was "surrounded by manufactured
controversy." Made in a sweatshop...
March
12,
2007
The pace
of global bank mergers doesn't stop. In just the past week,
Deutsche Bank is
on record eying deals in Brazil, where Goldman Sach is reported plan to
start a bank. SocGen bought into Macedonia, while Scotiabank is
hunting all over Latin America. Going subprime in Nova Scotia, GE Money last week "launched its consumer
mortgage business in the Maritime provinces, as part of its national
expansion strategy. Also known as non-conventional mortgages and
offered via mortgage brokers, the GE Money offering is primarily
directed to consumers who may find it difficult to qualify for
traditional, bank-originated mortgage loans."
The Mexican banking
arm of
HSBC Holdings
Plc said last week that Paul Thurston has been named as the company's
new CEO, replacing Alexander Flockhart. Grupo Financiero HSBC ranks as
Mexico's fourth-largest banking group, $26.04 billion in assets at the
end of December.
Meanwhile in
the U.S., Comerica unceremoniously announced it will move its
headquarters out of Detroit, and head to Dallas...
Chase on subprime
cavalier:
Charlie Scharf, the head of
JPMorgan Chase's
retail
banking
business,
said
that
the
bank
won't
be
hurt severely by
the subprime downturn. While it may have a "negative impact ... it's
quite manageable for a company like ours," Scharf said. JPMorgan
has about $20 billion in subprime loans, representing about 5% of its
total assets, the company said Tuesday. About $13 billion of that is in
mortgages, with another $1.5 billion in home equity loans. The rest of
the subprime portfolio is split between credit cards and auto loans....
March
5,
2007
From
FinancialWire: "Bank of America Corp.'s
$3.3
billion
acquisition
of
Charles
Schwab
Corp.'s
wealth
management
subsidiary
U.S. Trust will take about three months longer to complete
than originally estimated. Charles Schwab expects to close the
all-cash sale early in the third quarter instead of the early
second-quarter target established late last year when the stock
brokerage announced the deal with Bank of America."
GE Money last
week announced that it would acquire a minority position in Banco
Colpatria - Red Multibanca Colpatria S.A., a consumer and commercial
bank based in Bogota, Colombia. GE Money said it will acquire a 39.3
pct stake in Red Multibanca Colpatria in two installments, with options
to acquire up to an additional 25 pct stake from Mercantil Colpatria
S.A....
And
from
the
NYT's
pre-obituary
of
New
Century,
this:
" Morgan Stanley,
Goldman Sachs, Barclays Capital and Deutsche Bank own about 16 percent
of the company, according to securities filings. Citigroup recently
bought a 5.1 percent stake in the company and Greenlight Capital, a
prominent hedge fund, owns 6.3 percent. Its president and co-founder,
David Einhorn, sits on the board of New Century." Ah, Citigroup and
Deutsche Bank, et al... And there's an investigation into Robert Cole,
who threw up smoke screens when Inner City Press previously inquired
into
U.S. Bank's
stake in New Century...
February
26,
2007
JPM Chase
continues its stealth expansion in subprime, this week in the UK,
raising its stake in Cattles PLC, which is in takeover talks with its
smaller rival London Scottish Bank PLC...
In the U.S., subprime's
going
down:
on Feb. 23, stock
prices of mortgage lenders fell after H&R Block disclosed it will
set aside $111 million to cover losses by Option One. Countrywide
Financial Corp. fell 81 cents to $39.33. New Century Financial Corp.
lost $1.02 to $15.52. The stock is down 47.8 percent since Jan.
1. On Feb. 22, Accredited Home Lenders's stock dropped $1, or 4.1
percent, to $23.59. Delta Financial Corp. ended down 45 cents, or 4.2
percent, to $10.32 on Amex. Shares of Impac Mortgage Holdings Inc. fell
28 cents, or 3.6 percent, to $7.58. Shares of Fremont General Corp.
dropped 45 cents, or 3.4 percent, to $12.86. And
Wells Fargo last
week gave WARN Act notices to 250 subprime lending workers in South
Carolina...
February 19, 2007
The arrogance of
Bank of America
never ceases to amaze. While evading Congress' 10% deposit cap,
including pursuant to an analysis of data from SNL, BofA claims that
any questioning of its number-game are unsubstantiated, and shouldn't
even be considered by regulators. Money laundering and muni-bond scams,
too -- none of it, BofA says, should be taken seriously. We'll see.
From a February 8 letter from Bank of America to
the Federal Reserve: "ICP notes accounts of anti-money laundering
investigations related to South American money service businesses. Bank
of America provided to the Board information about its anti-money
laundering policies and practices [and] has routinely demonstrated its
strong commitment to anti-money laundering compliance." Oh, really?
In the Philippines,
GE Money Servicing
Co., is looking at the Subic free port zone as prospective site for the
expansion of call center operations. GE Philippines country manager
Renato Romero and GE consumer finance servicing head Sanjeev Jain with
local partner Genpact vice president Cecilia Ampeloquio visited the
free port and expressed guarded interest to set up its call center
operations there. GE Consumer Finance acquired Keppel Bank, its entry
into the Philippine market...
So
Citigroup's Chuck Prince last week went hat in hand into the
desert, to the camp of Prince Alwaleed bin Talal. Those who travel to
the camp invariably ask favors. As to what Chuck's was, the coming time
will tell.
February
12,
2007
Bank of America
last week announced it's paying a $14 million fine to the IRS, and
cutting a lenient side deal with the Department of Justice on
bid-rigging in the municipal bond market. So will the Federal Reserve
inquire into this adverse managerial issue, as it considers BofA
expanding its practices to US Trust? We'll see.
Subject: Another GE
Money Card Deception
From: [Name withheld in this format]
To: Inner City Press
It's still happening. I was amazed to
find your
website... Some of
your contributors wrote about the exact same problem that we have run
up against. My wife was having some extensive necessary dental work
done when the dentist suggested that she use the GE payment process for
the work. It was explained that it is non interest loan as long as
payments are made on time each month. She agreed, the dental office
called GE, GE called me at work and I gave them my information. Never
was it mentioned that payment would be due in a year.
In an effort to maintain our good credit,
when I received the first bill, I went to their online web site and set
up automatic monthly payments to insure payment was sent and received
on time each month. Never did I notice (if it was there) any reference
to the fact that the balance needed to be paid off in one year. Towards
the end of 2006, I reviewed the current mailed statement to see if
there was an interest statement and was shocked to see the balance was
about $1,100 higher than the original $4,000 borrowed. I called the
office and was told rudely that we owed that amount and nothing could
be done. I asked for a supervisor or manager and, the only thing that
did was escalate the level of rudeness with the supervisor yelling at
me that we should have paid it off and that was the way it is, no
discussion. I even offered to pay off the whole amount that day and was
told that didn't matter as I owed the whole amount whether paid that
day or not. The adding back of the interest was not the final straw,
they also begin charging interest at 22.98%. I have excellent credit,
credit cards with less than 9% rates (paid in full each month), a home
equity line of credit at less than 8% (yes, below prime) and I have no
reason to accept credit at loan shark rates.
I will be writing the California
Department of Financial Institutions, the Federal Deposit Insurance
Corporation and the Office of Thrift Supervision to let them know about
these predatory practices. I have also prepared a letter to the
Chairman of the Board of GE, Jeffrey R. Immelt and the President and
CEO of GE Money, David Nissen. Now that I know that I was not the only
one caught in their trap, I will continue to fight this. $1,100 may not
be much to GE but it is very much to me.
Last week HSBC issued
a profit warning heard 'round the world. Its purchase of the predatory
lender Household International is now bringing the whole company down.
The Times of London called Inner City Press to say, "Guess you guys
were right, when you wrote to the HSBC board of director that Household
was unsafe and unsound." Yep... See, e.g., "Sub-prime
lenders
fear
defaults
after
costly
HSBC
fallout," Times of London,
Feb. 10, 2007.
February
5,
2007
Sleazy is as
sleazy does.
Bank of America's offshore tax
shelter scheme has led to a too-small $3 million fine for
money-laundering. The National Association of Securities Dealers found
that Banc of America Investment Services failed to obtain customer
information about 34 accounts involving trust and private investment
corporations based in the Isle of Man. BofA "fundamentally failed to
meet its obligations with these high risk accounts by failing to
adequately investigate and pursue red flags," James Shorris, the NASD's
head of enforcement, said-in-a-statement. The Senate's Permanent
Subcommittee on Investigations said it thought the accounts were
controlled by two billionaire Texas brothers, Sam and Charles Wyly. As
part of a 375-page report on offshore tax havens, the committee said
the brothers, who helped build craft retailer Michael Stores Inc., used
the accounts to shield stock option gains from taxes. Sen. Carl Levin,
D-Mich, the chairman of the subcommittee, said that the fine "sends a
strong message to U.S. securities firms that when they open accounts
for offshore entities and transfer offshore dollars across U.S. lines,
they have a legal obligation to know who is behind those accounts or
risk m