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. Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere, which include bank-related topics.

Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere. Click here for a recent BBC piece on Inner City Press' reporting from the United Nations. New: Follow us on TWITTER   BloggingHeads.tv Until next time, for or with more information, contact us.

July 26, 2010

IMF Cuts Off Funds for Central Africa, Goes on Vacation, Ignores Guinea Bissau, Ukraine, Hungary and even Haiti Questions

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...

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...

As Romanian Court Rules Against Pension Cuts, IMF Nods at 5% VAT Increase

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.

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.

As Romania's Wage Cuts Challenged in Court, IMF Says Not Concerned, Lead Nowhere

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.

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?

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

Amid Protests, IMF Says Wage Cuts Were Romania's Choice, IMF for Vulnerable

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

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.

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.

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?

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.

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...

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.

  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