Welcome to Inner City Press’ CRA Report.  Our other Reporters cover the financial services industry, human rights, the Federal Reserve, and other beats.  ICP has published a book about the CRA-relevant topic of predatory lending - click here for sample chapters, a map, and ordering information.  CBS MarketWatch of April 23, 2004, says the the novel has "some very funny moments," and that the non-fiction mixes "global statistics and first-person accounts."  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']," City Limits, 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.

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 For or with more information, contact us.

July 26, 2010

Now the US Government buys into subprime, in a field left unregulated by the financial reform bill: “Government-owned General Motors is acquiring Fort Worth’s AmeriCredit in a $3.5 billion deal. AmeriCredit gives GM something it sorely lacked: a lender that can reached car buyers of all stripes, including subprime borrowers.”

Through the revolving door, in a move that should be illegal, from regulating Citigroup to getting paid to work for them: Citigroup last week bragged “it has hired Irene Fang, a long-time veteran of the U.S. Treasury's bank regulatory agency, as the New York bank's corporate fair lending director. Fang most recently served as a division head in the Economics Department of the Office of the Comptroller of the Currency. The Economics Department contributes to the fair lending reviews that the OCC conducts in banks of all sizes, Citigroup said in a statement. Fang, who has a doctoral degree in economics, will report to Lloyd Brown, Citi's director of community reinvestment, Citi said.”

Isn't it a conflict of interest, to be in charge of reviewing Citigroup, then getting rewarded with a job at the company?

Goldman Sachs' “Tax Evasion” Hit by Rep. Doggett, Citi's and Transocean's Offshoring

SOUTH BRONX, July 20 -- Goldman Sachs, recently let off the hook by the Securities and Exchange Commission with a mere $550 million fine, dropped its tax rate in one recent year from 34% to 1%. On July 20, Inner City Press asked Rep. Lloyd Doggett (D-Tx) what he thought of Goldman's decline in tax rate, and of the SEC deal.

Rep. Doggett replied that this was “outrageous,” that Goldman Sachs' decrease in tax rate “suggests a company among the most profitable on the Street is not paying its fair share” and is using “gimmicks.” But what's going to be done?

Inner City Press asked the question on a media conference call including Senator Carl Levin (D-Mich) and several “responsible investors” including Amy Domini. Ms. Domini recounted how she had to pull funds recently from Chicago-based Shorebank, and that some of her customers then pulled funds from her.

Doggett was asked about Citigroup, with more than 400 offshore subsidiaries. He said this should be investigated, as should Transocean, owner of the leaking Gulf oil platform, which shifted business to the Cayman Islands and then Switzerland to evade U.S. taxes.

   Senator Levin spoke out against companies shifting their patents and other intellectual property offshore to evade taxes. The loopholes should be closed -- but will they? Watch this site.

July 19, 2010

While even in the vaunted financial reform bill, U.S. banks are hardly pushed to lend to small businesses, in the UK they are being summoned. Bosses of the U.K.'s biggest banks last week had to push back against government claims they aren't doing their part to grow the economy by lending more to small businesses, at a meeting held between top executives and Treasury officials to discuss lending and coming regulatory reforms. “It was a very constructive meeting that will help inform the Government's Green Paper on business finance which will be published shortly," said Chancellor of the Exchequer George Osborne and Secretary of State for Business Innovation and Skills Vince Cable in a joint statement following the meeting. Also at the meeting were Financial Secretary of the Treasury Mark Hoban, Lloyds Banking Group CEO Eric Daniels, Barclays PLC boss John Varley, Royal Bank of Scotland Group's post-Shred CEO Stephen Hester and HSBC Holdings' still chairman Stephen Green...

By Toronto Dominion's own admission, in response to Inner City Press / Fair Finance Watch's comments opposing its South Financial application, TD in 2009 denied 74% of mortgage applications from African Americans, and 65% of applications from Latinos. Despite this, and the subprime loans it admits it makes, it says no issues are raised by its attempts to expand, including by converting fast food restaurants into bank branches serving up... 74% denial rates to African Americans and 65% denial rates to Latinos. TD's worse for you than burgers...

On June 30, the Federal Reserve System approved a Morgan Stanley application which Fair Finance Watch had challenged in April, based on Morgan Stanley's subprime Saxon Mortgage subsidiary and Morgan Stanley, among other things, funding makers of cluster bombs.

Amazingly, the day AFTER the Fed sent its conclusory approval letter, it released improperly withheld information to FFW:

Date: Thu, Jul 1, 2010 at 10:08 AM
Subject: Morgan Stanley Application
From: Federal Reserve
To: fairfinancewatch.org

Good morning Mr. Lee:

Previously, you'd requested a copy of Morgan Stanley's Section 3 application.  The business plan was not properly redacted by Morgan Stanley.  I have attached the application below for you.

Best,

Kimberly Hooks

This information should have been released during the comment period, and certainly prior to approval. In fact, “Mortgage” activities are still improperly redacted. On this basis alone, the approval should be rescinded...

Watch this site.

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.

Under the shadow of the Volcker Rule, Citigroup is trying to raise $3.5 billion for investment funds. Also fighting Volcker are J.P. Morgan Chase, owner of hedge-fund manager Highbridge Capital Management, and Morgan Stanley, owner of Greenwich, Conn., hedge fund FrontPoint Partners.

Here's a trend: as troubled loans in communities of color are bulk-sold by Wall Street titans, the neighborhoods are more and more undervalued and local wealth destroyed...

Meanwhile, to take the lead on Community Reinvestment Act modernization, Barney Frank has designed Maxine Waters of Los Angeles. We'll see...

Now it's reported that CitiFinancial hopes to expand its subprime lending in at least 45 US states later this year -- while General Electric's GE Money has already picked up subprime lending overseas. We had predicted both. Citigroup claims it only seeks to grow in subprime in order to sell the business off, while GE downplays its subprime growth. Thou dost protest too much?

So Morgan Stanley has purported to respond to comments Fair Finance Watch filed with the Federal Reserve, opposing Morgan Stanley applications subject to the Community Reinvestment Act. It is an arrogant response, largely that FFW's points about predatory mortgage servicing and "other predatory practices, including 'land grabs' and the financing of 'cluster bombs.'"

Its vague response on these last two is that "Morgan Stanley and its subsidiaries engage in corporate underwriting and lending activities for various clients, including those involved in national defense related activities. Morgan Stanley also engages in real estate investment activities on a global basis."

It's Morgan Stanley which put "cluster bombs" in quotation marks. To those impacted, air quotes will not help. Same with the victims of the predatory loans services by Morgan Stanley's Saxon, or of loans enabled by Morgan Stanley as an investment bank.

Morgan Stanley admits to a Saxon settlement in Missouri, and to not timely responding to consumer complaints. Yet it argues that none of this is relevant to the Federal Reserve. Like we said, arrogant. And to be continued.

Protests of JPM Chase on Wall St, of Predatory Loans and Mining, Laissez Faire

WALL STREET, May 18 -- Of the Big Four American bank, JPMorgan Chase has perhaps benefited more than any other from the financial meltdown. While having securitized many and made some of the most predatory mortgage loans, it was given Bear Stearns, and then Washington Mutual on the cheap. It proceeded to close scores of WaMu branches.

Tuesday in lower Manhattan outside JPMorgan Chase annual shareholders meeting, environmentalists sang songs about the bank's support of mountain top removal mining. As Inner City Press has reported, JPMorgan Chase pays former UK prime minister Tony Blair as an environmental consultant.

  The bank's security officers handed out leaflets about less than living wages from Chase's subcontractors Allied Barton and Summit Security. A protest of predatory lending by Chase was right around the corner, including NYRL, CRA-NC and, in from West Coast including wtih wronged borrowers, the California Reinvestment Committee. "What do we want? No redlining! When do we want it? Now!"

  Fair Finance Watch got an early copy of JPM Chase's 2009 mortgage lending on disk. Its analysis, the first in the country, found that in 2009 JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost mortgage loans as defined by the Federal Reserve 1.98 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.17.

Still Chase and its CEO Jaime Dimon lobby against regulatory reform, and call it unfair that they are tarred with the stigma of the bailout they accepted. Dimon's speech last weekend at Syracuse University was protested, although some spun it as a success, with cheers for his commencement speech about free thinking. Laissez faire is more like it. Private profits, socialized risk.

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 federal court, also in lower Manhattan.

Footnote: Simultaneous with the protest and shareholders' meeting, Chase's previous Community Reinvestment Act officer organized a CRA breakfast talk. At least two activists were asked to skip the protest in order to speak, but declined. Willis is known to oppose any legislation to expand CRA to cover, for example, investment banking including the securitization of subprime mortgages.

  Rather, he is promoting a more limited regulatory fix to CRA, on such matters as expanding the areas in which banks are assessed. Whether legislators like House Banking Committee chair Barney Frank, who argued CRA should not be under the Consumer Financial Protection Agency, will now move forward with the CRA modernization bill is not yet known. Watch this site.

May 17, 2010

Too little, too late: After demanding last year that Citi fill its board with more financially savvy directors and improve its risk management, Fed officials in Washington pressed the New York Fed to follow up with tough oversight, people familiar with the matter said.

"The supervision program for Citigroup has been less-than-effective," the Fed board said in a draft of a review of the New York Fed's performance last year, according to documents released by the bipartisan Financial Crisis Inquiry Commission. The final review said Mr. Dudley's staff "did not take timely and appropriate action" to follow up on the Fed's demands in a memo of understanding with a big bank. A Citi representative declined to comment.

May 10, 2010

The Federal Reserve is advocating for itself:

"Charles Plosser of the Philadelphia Fed, Thomas Hoenig of the Kansas City Fed, Jeffrey Lacker of the Richmond Fed and Narayana Kocherlakota of the Minneapolis Fed have met with the Joint Economic Committee of Congress opposing the proposal under which the Federal Reserve would oversee banks with more than $100 billion in assets, while smaller institutions would be regulated by other agencies. The Fed banks also oppose a provision that would make the president of the New York Fed a presidential appointee, calling it an attempt to politicize the agency appointee, calling it an attempt to politicize the agency."

What -- so it's better to have banks, which own stock in the Federal Reserve Banks, regulate themselves?

May 3, 2010

As Goldman Sachs is belatedly grilled in Congress, so to at the Federal Reserve. Last week Inner City Press ' Fair Finance Watch put in a comment that began this way:

RE: Timely Opposition and Hearing Request on the Applications The Goldman Sachs Group to acquire, inter alia, up to 24.9 percent of SKBHC Holdings LLC, Corona del Mar, California, which is applying to become a bank holding company, & thereby indirectly acquire Starbuck Bancshares, Inc.& The First National Bank of Starbuck

Dear Chairman Bernanke and others in the FRS:

On behalf of Inner City Press' Fair Finance Watch, this is a timely comment opposing and requesting public hearings on Goldman Sachs' above captioned pending applications, which were re-noticed on the Board's H2A.

As you know, Goldman Sachs was allowed to become a bank holding company without any public comment period or consideration of the Community Reinvestment Act, which would otherwise have been required. Since then, and since 2009, Goldman Sachs has been charged with misrepresentation by the SEC. The emails which recently emerged, about the failure of little subprimes and selling toxic bonds to widows and orphans, militate for public hearings on these Goldman applications. See also, since October, the NY Times' ""Testy Conflict With Goldman Helped Push A.I.G. to Edge."

We are requesting, in connection with this application, a full disclosure of any and all assistance Goldman Sachs received from the Federal Reserve System in the past four years.

On the consumer side, Goldman Sachs has been charged with involvement in predatory lending, including for the acts of its subprime servicing subsidiary, Litton Loan Servicing. Even Goldman's settlement left the public in the dark. See, e.g., Bloomberg News, May 17, 2009, "Deal in Goldman probe leaves public in dark."

April 26, 2010

As financial reform comes to a boil in DC, Inner City Press / Fair Finance Watch filed timely comments with the Federal Reserve Board opposing applications by Morgan Stanley, moving its banking around. The grounds are its subprime affiliate Saxon, as well as general sleaze, from land grabs to financing cluster bombs. Will the Fed care? Watch this site.

April 26, 2010 - click here for BloggingHeads.tv debate on Afghanistan cover up, Bhutto, Iran, Sudan and the UN's Love Boat in Haiti, by Inner City Press

April 19, 2010

So Goldman Sachs has finally been accused by the SEC -- not with enabling predatory lending, for which it should be charged, but for setting up for John Paulson to short a pool of dubious subprime securities and then selling it to others as a legitimate and objective investment. Well, just like Al Capone's Achilles Heel was tax evasion, perhaps misrepresentation is Goldman's. But we doubt the SEC's stomach to follow this fight through. We'll see.

We have reported on the banks which left The Bronx, snooping for example around old Chase Manhattan branches turned into churches. But it's time to mention Melrose Credit Union, which runs radio advertisements during Yankee games. Perhaps you've seen their sign, if you drive to or from JFK airport. The institution says, right on its website, that

"since 1922. Melrose was initially established to provide financial resources for individuals and small business owners from the Bronx, NY. Through the Credit Union, community residents were afforded the means to pursue their American Dreams. The success of Melrose Credit Union has not diminished its original mission statement: Empower the community by offering affordable financial products and services. Today that community commitment has helped transform Melrose into an over $1 billion credit union with over 20,000 members residing across the country and around the world."

Melrose is a neighborhood in the South Bronx, which this "successful" credit union left behind. It has no branch in The Bronx; it left the borough but speaks about empowerment of (presumably other) neighborhoods. What was that again, about there being no need for a Community Reinvestment Act on credit unions?

April 12, 2010

Too Big To Be Fair, Citi, Wells, BofA & JPM Chase Disparate in Subprime Loans in 2009

By Matthew R. Lee, Inner City Press

NEW YORK, April 11 -- In the first study of the just-released 2009 mortgage lending data, Bronx-based Fair Finance Watch has found that the Big Four survivors of the banking meltdown, Citigroup, Wells Fargo, Bank of America and JPMorgan Chase, continued with high cost loans and had worse disparities by race and ethnicity in denials and higher-cost lending than before 2009, Fair Finance Watch concluded.

 The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 2.25 times more frequently than whites, according to Fair Finance Watch. Citigroup confined Latinos to higher-cost loans above the rate spread 1.72 times more frequently than whites, the data show. 2009 is the sixth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread.

 JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 1.98 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.17. HSBC, perhaps due to its shrinking, some say dying, business had disparities of 2.57 for African Americans and 1.61 for Latinos.

 For Bank of America's Countrywide Bank FSB, the disparity for African Americans was 2.11 and for Latinos, 1.95.

 For Wells Fargo Bank NA, the disparity for African Americans was 2.40 and for Latinos, 2.09. For its subprime affiliate Wells Fargo Funding, the disparities were even worse: African Americans were confirmed to high cost loans four times more frequently than whites.

"Call them 'too big to be fair' -- the banks the regulators have favored, 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 racially disparate lenders," said Fair Finance Watch. "The regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts. As things are going, it will be worse and more disparate in 2010.  Global predatory lending seems unlikely to be discussed at the G-20 finance ministers' meeting in Washington later this month. The disparities in the 2009 mortgage data of the big four militate for breaking up these banks."

The weakness of the Federal Reserve as regulator on this was highlighted by the March 24 settlement by CitiFinancial when non-reporting of loans under HMDA was discovered by Massachusetts authorities - and not the Fed, which is putatively regulating CitiFinancial.

 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.

U.S. Bancorp in 2009 confined African Americans to higher-cost loans above the rate spread 1.72 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread 1.71 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.

  The law required that the 2009 data be provided by April 1, following March 1 requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline. Trustmark and Bank of Hawaii provided their data at the deadline but only in paper format, such that it could not yet be computer-analyzed. Further studies will follow.

April 5, 2010

This week the Angelides Commission will hear from Alan Greenspan, Robert Rubin and Chuck Prince. This goes back to the Citicorp - Travelers merger, about which Inner City Press was asked this week:

When Travelers met and swallowed Citicorp in 1998, the Federal Reserve didn't just approve an illegal merger -- it illegally pre-approved an illegal merger. Sandy Weill and John Reed and their lawyers got the green light from the Alan Greenspan Fed before even announcing the merger. The group I worked and work with, Inner City Press/Fair Finance Watch, demanded all records of the meetings, but got only two cryptic letters, talking about the marriage of "Red" and "Blue." The Fed approved, and predatory lending took off. And now in the aftermath, even the Chris Dodd bill would house consumer protection inside the same Federal Reserve, a huge mistake. Red and Blue indeed...

March 29, 2010

The Fed is belatedly concerned -- but not too concerned. Following Inner City Press / Fair Finance Watch's comments, the Fed conducted an after the fact inquiry and in an approval order last week included this footnote:

A comment from the public expressed concern that FNF Group acquired control over Harleysville before obtaining Board approval of the application because of an extension of credit FNF Group made to Harleysville. In December 2009, and after FNF Group filed its application with the Board to acquire Harleysville, FNF Group loaned Harleysville $50 million, secured by the shares of Harleysville Bank. Harleysville invested the loan proceeds in Harleysville Bank to increase the bank's capital.

The Board is concerned when a banking organization seeking to acquire . another banking organization makes a loan to the acquiree in advance of the Board's approval of the acquisition. Those types of loanss raise concern thatthe transactionon would ~e, in substance, the acquisitioof af a controlling interest or would provide the acquirer with the ability to exercise a controlling influence over the management and policiof thethe bank holding company before receiving Board approval. The Board has reviewed carefully the loan to Harleysville, including the circumstances and terms of the loan, the merger agreements, the purpose of the loan, and the relationships of the organizations after the loan transaction. Based on all the facts of recordd, the Board does not believe that the loan resulted in FNF Group acquiring voting securities of, or a controlling equity interest in, Harleysville, or in FNF Group exercising, or having the ability to exercise, a controlling influence 'over Harleysville in this case. The Board continues to believe that loans made by an acquirer to a target organization before agency approval of its acquisition proposal raise important issues, and it will review these arrangements critically and carefully.

But the Fed apparently didn't know about the loan until it was raised in comments, and it let the deal go forward, after reams of arguments by banking insider H. Rodgin Cohen. This is another example of Fed lassitude, another reason that consumer protection should not be put under the Fed....

From the WSJ, we annotate in italics: "CitiFinancial, a consumer lender, has a business model that is similar to CIT Group Inc., which suffered as wholesale funding dried up and sought bankruptcy-court protection last year, exiting in December. CitiFinancial used to be known as Commercial Credit Corp. and was the cornerstone of the empire Sanford Weill built into Travelers Group before merging with Citicorp in 1998 to form Citigroup. As a stand-alone firm, CitiFinancial could have trouble getting access to cheap credit, some analysts said."

It's also a widely known predatory lender. Could that have something to do with the difficulty in selling it?

"Another business up for sale: a credit-card portfolio with an estimated $40 billion in receivables and private-label cards pitched through retailers like Sears Holdings Corp."

And that business repeatedly calls people, even those on the Do Not Call list, just as CitiFinancial does...

March 22, 2010

Wal-Mart plans to open 500 more of its MoneyCenters. Asked for comment, Inner City Press opined

"Wal-Mart's proliferation of check cashing and $4.50 for bill payment (same day) into 500 more stores must be seen in the context of the company's recent gender discrimination settlement, use of tainted cotton from Uzbekistan, and standardless sale of the resources of the Democratic Republic of the Congo. We are still monitoring Wal-Mart, as it become more banklike without any of the regulation. We would suggest that the Consumer Financial Protection Agency, wherever housed, also look at Wal-Mart."

The domestic and CFPA portion of the comment appeared in the Charlotte Observer and elsewhere.

"Wal-Mart adding financial sites," by Christina Rexrode, Charlotte Observer, March 16, 2010

March 15, 2010 -- As Congress Dithers for Payday Lenders, CRA Activists Raise Stakes in St. Louis

By Matthew R. Lee

WASHINGTON, March 10 -- As legislators from both political parties dally on Capitol Hill, considering handing consumer protection to the Federal Reserve like Democratic Senator Chris Dodd or leaving enforcement over payday lenders off to the side like Republican Bob Corker, the real work of protecting consumers is done by grassroots groups.

Inner City Press learned on Wednesday of an all too rare Community Reinvestment Act challenge filed recent in Missouri, which has delayed the recalcitrant bank's application for regulatory approval for several months. The Metropolitan St. Louis Equal Housing Opportunity Council, which filed the protest, says that CRA has been largely moribund in St. Louis for the last 20 to 30 years.

Now, in the face of the economic meltdown, it is back. On the sidelines of the NCRC conference, three EHOC staffers spoke of pouring over list of regulatory approvals, commenting on CRA performance evaluation, reaching out for allies to Kansas and Jefferson City.
 
  The applicant is Central Bancompany, based in Jefferson City, to buy Bank of Belton. It is not the biggest deal, but a fresh CRA protest is a big deal. We'll have more on these.

March 12, 2010 -- As HUD Shut Subprime Taylor Bean, What of Its Larger Financiers? Annals of Impunity

By Matthew R. Lee

WASHINGTON, March 12 -- While Congress continues to resist holding the financial institutions responsible for the meltdown accountable, five blocks from the Capitol on March 12, Federal Housing Administrator David Stevens bragged of having "shut down 356 lenders." He focused on Florida-based Taylor, Bean & Whitaker, the third largest FHA lender in the country until it filed bankruptcy in August 2009. At that time, Inner City Press / Fair Finance Watch noted that TBW had given it the run around to obtain its Home Mortgage Disclosure Act data, perhaps a clue to more fundamental illegality.

What Stevens didn't follow up on was the banks which enabled and did business with Taylor Bean and its ilk. There was, of course, Alabama-based Colonial Bank, which have been intertwined with Taylor Bean was seized by the FDIC, its branches sold to BB&T and many of them shut down.

But there were bigger players at the trough. As Inner City Press reported back in November 2009:

"Deutsche Bank AG and a unit of BNP Paribas SA separately sued Bank of America Corp. on Wednesday, alleging that the bank has failed to repay about $1.7 billion in secured notes issued by a special-purpose entity. The breach-of-contract lawsuits, filed in U.S. District Court in Manhattan, allege that Bank of America has failed to redeem $480.7 million in secured notes held by BNP Paribas and $1.2 billion held by Deutsche Bank. The notes were issued by Ocala Funding LLC, a special-purpose entity that provided short-term liquidity funding to Taylor, Bean & Whitaker Mortgage Corp..."

This a a sample of the chicanery behind the global financial crisis, and players who have not been held accountable.

Footnote: Stevens was preceded in the NCRC conference by another HUD official, John D. Trasvina, head of fair housing and fair lending. He was asked about HMDA data, but noted its time lag, that one can't get study disparities in rates of restructuring of mortgages. This publication has requested more recent data: watch this site.

March 11, 2010 -- Dodd's Bumbling Portends More Watering Down for Fed, of Groucho Marx in Reverse

WASHINGTON, March 10 -- After watering down financial reform legislation in weeks of concessions, now Senator Chris Dodd says that while a draft bill will be "unveiled" on Monday, it and he will not have any Republican co-sponsors. Insiders predict then another round of concessions, from a bill that will, they say, place consumer protection in or at the Federal Reserve.

 "Sell out city," said one consumer advocate visiting Washington this week, expressing a lack of surprise that Timothy Geithner so quickly gushed with praise for lame duck Dodd. Some consumer advocacy insiders have been defanged into supporting the Federal Reserve by the threat that if not at the Fed, the financial protection unit could be placed in the Office of the Comptroller of the Currency. Thus they resist going public with their dissatisfaction with the Fed's track record, on the "lesser of two evils" theory.

The Fed itself has placed the Consumer Financial Protection Agency issue on the agenda of the next meeting of its own Consumer Advisory Committee, half made up of bankers. Of the other half, some are in the Fed's sway on a reverse Groucho Marx theory.

Groucho said he didn't want to join any club that would accept the likes of him. The insiders won't oppose any club that has issued them an invitation. It would be funny if it weren't so sad, ill-serving consumers. Those who were previously invited but who've now left may have more freedom to speak. We will have more on this.
March 8, 2010

  While opposing the proposal to put consumer financial protection under the Federal Reserve, it's worth noting that the Treasury Department's OCC also continues to allow predatory lending, including tax refund anticipation loan (RAL) lending.

The two biggest RAL lenders are national banks of JPM Chase and HSBC (which continues "partnering" with H & R Block). Rather than publicly or even privately urging these big banks to stop RALs -- as even the FDIC has done with smaller institutions like Republic -- the OCC issued a vague policy guidance that provides no penalties, http://www.occ.gov/ftp/bulletin/2010-7a.pdf

While JPM Chase claims its fees are clear -- $32 plus one percent of the loan -- it also has a $10 technology access fee. This is a trillion dollar institution, engaged in usurious lending. And the band played on...

March 1, 2010

Bottom feeding subprime lender World Acceptance, charging interest rates up to 215%, is enabled by credit lines from JPM Chase and Bank of America, among others. It feasts off repeated refinances and roll overs, using the rule of 78s to fleeces its borrowers. Do Chase and BofA have any standards for the subprime lenders they will lend to? JPM Chase was previously exposed by Inner City Press / Fair Finance Watch for extensive lending to pawn shops and high cost check cashers. Even post crisis, the sleaze just continues. Watch this site.

February 22, 2009

Public Comment Period on Merger Only a "Technicality," Bank Law Insider Argues

When is a Federal Reserve public comment period not public? When banking law insider H. Rodgin Cohen says so, he seems to feel. In a February 17 letter copied to the Fed's general counsel Scott Alvarez, H "Can We Call You Rodge" Cohen urges the Fed to disregard a timely comment on lending disparities and other irregularities, arguing that the comment period was only open due to a "technicality."

While some would think this beneath ol' Rodge, perhaps Sullivan & Cromwell markets him as truly full service.

February 15, 2010

Subprimers from Fremont resurface as bottom feeders buying foreclosed home: Impunity

February 8, 2010

  So what did and does Hammering Hank Paulson think of the Community Reinvestment Act? He was Secretary of the Treasury, in charge of the Office of the Comptroller of the Currency and Office of Thrift Supervision, which regulate national banks and saving banks, respectively, including for CRA. But on February 2 on the Larry Kudlow show, when Kudlow included CRA among the causes of the economic crash, Paulson said nothing, then agreed, "That's right... you had all of this going on."

Mr. PAULSON: Well, what you need to understand is what had happened before even the middle of '07, which is you'd had these excesses had been building up for some times. You'd had a--we had been overstimulating housing. So if you look at the combined weight of all of our policies in the US government...

KUDLOW: Wait. It's HUD-backed, unaffordable mortgage loans, Fannie and Freddie?

Mr. PAULSON: What you have--yeah, yeah, Fannie and Freddie, the FHA, various state programs.

KUDLOW: Community Reinvestment Act.

Mr. PAULSON: You know, mortgage interest deduction. I'm not saying of them were...

KUDLOW: Zero capital gains tax on home sales.

Mr. PAULSON: That's right. And so you had--so you had all of this going on

   Meanwhile, click HERE for an InnerCityPress.com article last week about Paulson's book.

February 1, 2010

  Now, Goldman Sachs has blacked out large portions of its supposed response to the protest by Inner City Press Fair Finance Watch to the NY Banking Department, on issues of compliance by and regulatory review of its subprime subsidiary, Litton Loans. Inner City Press has appealed, specifically contesting that in the letter as provided to ICP by Goldman Sachs, under "Litton's Compliance Program," four full paragraphs are redacted. Under "Prior Regulatory Reviews of Litton," two paragraphs are redacted - the entirety of the section.Inner City Press is putting it online here. And so:

Dear FOIL Appeals Officer, Superintendent of Banks and others at NYBD:

On behalf of Inner City Press and its Fair Finance Watch (collectively 'ICP") , this is a timely FOIL appeal of your Department's denial of access to the redacted portions of Goldman Sachs' Response to ICP's Protest of the Applications by Goldman Sachs Bank USA.

Goldman Sachs unilaterally redacted large portions of the copy of its response which it mailed to ICP.

For example -- and ICP is hereby specifically contesting -- in the letter as provided, under "Litton's Compliance Program," four full paragraphs are redacted. Under "Prior Regulatory Reviews of Litton," two paragraphs are redacted - the entirety of the section.

Since it is the NYBD's duty to review the propriety of such withholdings, ICP has awaited a ruling by the NYBD -- anticipating based on the past practices of the NYBD and other regulators, and applicable law that much of the blacked out information would be released. In the interim, ICP appealed the withholding of portions of the Application.

But the NYBD has not ruled yet on Goldman Sachs' extensive and abusive redactions. Particularly given the massive public support Goldman received through TARP and otherwise, to withhold from the public its response to protests of its requests for expedited regulatory approval is inappropriate. Hence, prior to your Department making any decision on Goldman's contested application, this appeal.

Watch this site.

January 25, 2010--

Behind Bank of America's Toxic Assets, Subprime Links Obscured But Continued

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, January 21 -- Bank of America is now headed down a Citigroup-like path.  A second serving of TARP bailout funds, government insurance for a widening range of toxic assets, a chief executive on the ropes. While Ken Lewis claimed to have gotten BofA out of the world of subprime, its investment banking arm continued to buy and trade subprime mortgages, and to prop up subprime lenders. Now Lewis implies that the $108 billion in toxic assets being insured by the government came from Merrill Lynch. But a quarter of them come from BofA itself.

    As reported by Inner City Press, Bronx-based Fair Finance Watch documented this to the Federal Reserve in Communiuty Reinvestmeent Act comments filed in opposition to Bank of America's applications for regulatory approval to merge and expand. In its responses to FFW's comments, BofA begrudgingly acknowledged that it did business with, among others:

Ameriquest Mortgage Corporation, since defunct; Saxon, through which Morgan Stanley tells FFW it has stopped lending, Option One, Centex, New Century, bankrupt; Metris (a subprime card lender HSBC later acquired), Delta Financial, First Franklin, WMC (subprime lender owned by GE), Fremont Investment & Loan, rogue subprime lender which told FFW it would only give its Home Mortgage Disclosure Act data if one signed a confidentiality agreement), Capital One, CIT, WFS -- and Ownit, regarding which Bank of America blacked-out a column labeled "ABS/MBS Underwriting," after elsewhere publicly admitting it performs those functions for Ownit’s loans.

 BofA wrote:

"Bank of America indirectly owns 24.9% of the voting common equity of Ownit... In August 2005, Bank of America, N.A. transferred the Ownit residential mortgage loan portfolio purchased during March 2005 to Asset Backed Funding Corporation (‘ABFC’). ABFC is an affiliate of Bank of America Corporation that is a limited purpose corporation that securitizes residential mortgage loans... ABFC securitized these Ownit loans, along with similar loans from another loan originator, in its approximately $1.2 billion ABFC Asset-Backed Certificates, Series 2005-HE2 transaction. Banc of America Securities LLC served as the underwriter in that transaction....

 In two separate transactions on March 9 and March 14, 2005 Bank of America N.A. purchased Ownit residential mortgage loans in an aggregate amount of approximately $265 million. These loans were held for the account of Bank of America, N.A. until they became part of the August 2005 securitization described at Item 2.b above. These loans were purchased in a competitive, arms-length process at fair market terms" -- followed by more than half a page blacked out.

January 19, 2009  

Fed's Geithner Evaded Taxes at IMF, Used Statute of Limitations Later, Mishandled 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

 The chickens have come home to roost at Citigroup, with Robert Rubin leaving, and regulators encouraging something of a break-up of the illegally formed financial supermarket, brought low by involvement in predatory lending. Good riddance...

A new low -- as of 10:20 p.m. on Sunday, January 11, 2009, the Federal Reserve Board's web site  http://www.federalreserve.gov was down, "This link appears broken. DNS error - cannot find server."

  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

  Trying to make favoritism appear to be part of a program, the Treasury Department has given named and even post-hoc guidelines for its second bailout of Citigroup. The "Asset Guarantee Program," we're told, might be offered to other bans on a "case-by-case basis."  In its required filing with Congress, Treasury pontificates that "the objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security." And we thought it was just to prop up Citigroup. The $20 billion purchase of preferred Citi stock now has the high-sound moniker, "Targeted Investment Program," and Treasury has belated enunciated five principles of the unprincipled program to determine eligibility, beyond just who you know: the extent to which the "destabilization of the institution could threaten the viability of creditors" and whether or not an institution is "sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to the credit markets." That's called, too big to fail. But wasn't Lehman Brothers?

Click here for Inner City Press' review-of-2008 UN Top Ten debate

December 29, 2008

  So not only did Citigroup lose out to Wells Fargo to buy Wachovia -- it was beaten to Chevy Chase by Capital One. How low can you go?

So let's get this straight -- the Fed didn't provide any formal public notice or comment period on CIT's application to become a bank holding company, but because Inner City Press wrote in for a copy of the application and initially requesting a hearing, the Fed's approval order was mailed to Inner City Press, with a paragraph denying the hearing and making it appear that there was a fair process. But there was not.... The same applies to GMAC. The Fed has become lawless.

December 22, 2008

   A jingo-ist America might ask, so the U.S. bails out Citigroup for $45 billion and untold more in guarantees, then Citigroup turns around the lends $8 billion to Dubai. So the U.S. is direct lending to Dubai? And what of Citigroup's name on the Mets new baseball field, and on "The Pond" skating extravaganza in New York's Bryant Park?  Is this the supposed new rigor of examination of Citigroup?

The Fed's PNC - National City approval order is contemptuous of the public, including the local member of Congress. Why favor PNC over NatCity? It's not explained. And the Fed is trying to deny FOIA requests for basic information about who they lend to. Perhaps there needs to be a HMDA law for the Fed...

Click here from Inner City Press' December 12 debate on UN double standards

December 8, 2008

Citi Sleaze with Bail-Out, of Junkets and Spanish Highways, PNC and Ocwen Need Hearings

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, December 2 -- How has Citigroup used its fresh billions in government bail-out funds? On November 30, it was exposed as sponsoring a Congressional junket to the Caribbean. On December 1, it announced it is spending over seven billion Euros to buy the highway business of Spanish construction firm Sacyr Vallehermoso.

   Meanwhile, Robert Rubin who pulled in over $100 million from Citigroup began a counter-offensive, saying none of the collapse was his fault. He had no operational responsibilities, he said. Call him the Stephon Marbury of high finance, motoring down a Spanish highway without a care in the world. More seriously, the public record shows Rubin's role in Citigroup's deal with the predatory lender Ameriquest. Still he keeps on trucking.
 

  At deadline, consumer group Fair Finance Watch has put in comments requesting public hearings on PNC's application to buy National City, in a deal the regulators cooked up and now must be the judge of. National City asked for TARP funds but was denied. PNC was given the funds, to buy National City; the regulators will then buy the troubled assets from PNC. It's called unexplained favoritism: save Citigroup and AIG but let Lehman Brother go under. Turn down National City, then buy its bad loans from PNC. Maybe Tim Geithner will explain.

Meanwhile the subprime bottom-feeder Ocwen is trying to line up for the Troubled Asset Relief Program bail-out funds. Ocwen has applied to buy Kent County State Bank in Jayton, Texas.  More on this anon.

  Royal Bank of Scotland, following its bail-out by the UK government, has suddenly announced a six month moratorium on foreclosures. It applies only in the UK. In the U.S., where RBS owns Cleveland-based Charter One and Citizens Banks in the Northeast, the government has imposed very few requirements for its funds. There's now a proposal in the Senate, sponsored by Senator Durbin, which would tell TARP-recipients that they cannot pay out more in dividends than in the previous year.  Since one would expect dividends to be decreasing, even keeping them at last year's level implies using the bail-out funds to keep dividends up, to the previous year's level.

December 1, 2008

   Robert Rubin has tried to defend his $115 million in payola from Citigroup since 1999 by minimizing his role, while now saying, "I have told Vikram that I will remain part of this and try to be helpful." So the people who caused the problem just stay on and keep getting paid. Contrary to his claim to be uninvolved, Rubin helped hook up Citigroup's purchase of notorious predatory lender Ameriquest.

Flashback to March 2007, from Deval Patrick, following his $360,000 a year part-time service on the board of directors of the predatory lender Ameriquest / ACC: "As a former board member, I was asked by an officer of ACC Capital to serve as a reference for the company and agreed to do so. I called Robert Rubin, a former colleague from the Clinton administration and an executive at Citigroup, to offer any insight they might want on the character of the current management... I appreciate that I should not have made the call."

  A "senior person who has no ax to grind," Rubin calls himself. It's time to face the axe, some say...

From the mail bag --

Subj: Reporting a Wells Fargo Issue 

From: [Name withheld in this format]

To: Inner City Press

Date: 11/15/2008 12:39:20 P.M. Eastern Standard Time

Hi, after reading your “Wells Fargo Watch” page I wanted to share a Wells Fargo story with you, in hopes that you will post it. I am most curious to find out if other Wells Fargo employees have suffered the same fate as my husband. I am trying to write this account carefully so as not to reveal my husband’s identity. However, should you need more details to confirm the story, please let me know.

 My husband is – or was -- a personal banker with Wells Fargo. Over a month ago, one of his regular customers presented a $4,000 check for deposit to her account. My husband followed Wells Fargo security procedures to deposit the check to the woman’s account, cautioning her that the funds would not be available to her for at least 4 business days. Unfortunately, the check proved fraudulent, part of the widespread and apparently sophisticated “mystery shopper” scam. The customer, who claims to have been duped by the offer she received in the mail, had already sent $3,500 to the scammers’ account.

 Despite the fact that Wells Fargo employees all over the U.S. and Canada have accepted these fraudulent checks for deposit, my husband was singled out – as far as we know – by Wells Fargo, and accused of complicity in the mystery shopper scheme. Wells Fargo immediately placed him on “paid administrative leave, pending investigation”. He was instructed not to contact any Wells Fargo team member, but to await a call from a local Wells Fargo Human Resources representative. Twelve days later, Wells Fargo stopped his paycheck. To this day, four weeks later, Wells Fargo has still not contacted us, and the Human Resources representative has not returned any of my husband’s numerous phone calls.

Needless to say, this has been a financial disaster for our family. Not only have we lost my husband’s paycheck, as far as we know he has also lost his job. If he is terminated under these conditions he will be unable to “bond” to work as a banker ever again, so in that case he’s lost his career as well. Worse, without an official termination from Wells Fargo, he cannot apply for unemployment compensation, or request payment for his accrued paid leave, etc. He is essentially in limbo.

We consulted an attorney, only to learn that there is absolutely nothing we can do about this situation, we can’t force Wells Fargo to respond to us. And if Wells Fargo does eventually terminate him, we cannot challenge it: we reside in an “employ at will” state, in which a company may terminate any employee at any time for any reason, or for no reason at all.

I’m writing this because I’d like to know if any other Wells Fargo employees have been terminated for accepting these mystery shopper scam checks.

November 24, 2008

  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

LONDON, November 14, global fragments of the predatory lending meltdown -- Even in Brazil, bank mergers are considers emergencies today. Rural banks are being snatched up by their big-city brethren, with regulatory approvals expedited in the name of the global financial crisis.

  In Japan, in the face of mounting numbers of suicides by borrowers behind on their loan payments, the maximum allowable interest rate has been reduced to twenty percent. This has led U.S.-based Citigroup to move to leave the country. Citigroup's CFJ subsidiary is selling loans it holds to "illegal companies." General Electric left Japan but did not go far, having re-established a subprime beachhead in Taiwan.

  In Israel,  "gray lenders" charge interest rates up to two hundred percent. They are allowed to discriminate against Arab Israelis. Entreaties to reign these practices in have been directed to Israeli top regulator, former Citigrouper Stanley Fischer, without results.

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?

November 10, 2008

   How will the bailout funds be used? For opportunistic mergers, as we noted last week. And now we can say, for political contributions and lobbying. ICP Fair Finance Watch was interviewed on November 7 about the use of funds by Bank of America, Wachovia and Wells Fargo:

"Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to an analysis of Federal Election Commission reports. Wachovia Corp. PACs gave $1.2 million. Wells Fargo & Co., which announced a deal for Wachovia last month, gave out nearly $1 million through its PAC.... Bank of America spent $6.5 million lobbying federal officials over the same period; Wachovia spent $2.7 million and Wells Fargo, $3.6 million."

  There is no commitment that the bailout funds will not be put to these uses.  In fact, if Wachovia is any indication, the banks are entirely smug:

“'These are … voluntary, employee funded, nonprofit and nonpartisan committees,' said Wachovia spokeswoman Carrie Ruddy. PACs, she added, give to candidates and groups 'that promote responsible government and support effective financial legislation important to Wachovia and its stockholders.'

Lee sees little difference in money from a bank or its employee PAC. 'It's a fig leaf,' he said Friday. 'When people are through their place of employment giving funds, you'd have to be pretty naive to think that there's not some corporate influence involved.' 

  More than a little corporate influence...

And see this November 7 debate: http://bloggingheads.tv/diavlogs/15731#

November 3, 2008

At UN, Stiglitz Slams Chase For Misuse of Bailout, Federal Reserve for Predatory Lending

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, October 30 -- The $700 billion bank bailout should not be used for mergers to increase market share, economist Joseph Stiglitz told the Press on Thursday. Following a UN panel discussion about the global financial crisis, Inner City Press asked Stiglitz about predatory lending and, as an aside, if he would consider the post of Secretary of the Treasury. While not directly answering the latter, Stiglitz said that the current Secretary, Henry Paulson, is ignoring the Congressional intent of the bailout and is allowing the funds to be misused by the banks.

  Stiglitz specifically cited a conference call by JPMorgan Chase, in which an executive bragged that the $25 billion it is claiming from the bailout will make Chase "more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment." Stiglitz called that an abuse, and also took a jab at the Federal Reserve, which he said had the power to crack down on predatory lending since 1994 but did not. Video here, from Minute 19:31.

  Flanking  Stiglitz at the press conference were Belgian sociologist Francois Houtart -- who spoke against the "logic of capital accumulation" -- and General Assembly President Miguel d'Escoto Brockmann, to whom Stiglitz and Houtart are two of 15 special senior advisers. The other advisers include Slobodan Miosevic's lawyer Ramsey Clark and Noam Chomsky, who has denounced the UN for, among other things, supporting Indonesia's invasion of East Timor (Failed States, page 87).

  Father d'Escoto, a former Sandinista foreign minister of Nicaragua, spoke last and equated the United States' blocking of economic reforms with its "dilatory tactics" against attempts to end apartheid.

  Afterwards, Inner City Press asked Stiglitz about the International Monetary Fund's predatory lending. Stiglitz said that the IMF has made its money of late from lending to countries in crisis, and thus has an incentive for their to be crises. He said that countries like Mexico, rather than going to the IMF, may seek capital from China, which has $1.9 trillion available, Stiglitz said, or Japan or India. He didn't mention the scandals surrounding IMF chief Strauss-Kahn. "There'll be a new President on January 20," he said, then was gone.

   Heading to the UK, where the War on Want continues: in terms of shareholdings in Britain's largest arms companies, Royal Bank of Scotland has a stake worth £36.4 million. There is a contradiction between RBS's claimed commitment to human rights and sustainable development and its support for the arms industry. HSBC  has a stake worth  £483.4 million, HSBC invests in companies that produce cluster munitions and depleted uranium. Since 2000, there has been no significant downward trend in HSBC lending to the arms sector. In 2005, there was a major rise in HSBC's lending...

October 27, 2008

From Dow Jones on the Fed's self-approval of Wells Fargo - Wachovia: " The Fed said a commenter had requested a public meeting, but the Bank Holding Company Act does not require the board to grant that request. A Federal Reserve spokeswoman wouldn't disclose the name of the group that had requested the hearing." So now, like North Korea, the Fed tries to cover up even who has commented. For the record, ICP Fair Finance Watch made the request...

   The announcement that PNC will use over $7 billion in the U.S. bailout funds to buy National City just proves the point of Inner City Press' October 21 article, below

US Bailout Will Subsidize Bank Monopolies, Chase and Goldman, Excluding CRA and Public Review

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

SOUTH BRONX, October 21 -- Banks now plan to use the Federal bail-out funds to acquire other banks, in a government-subsidized and -protected process of monopolization shielding from public comment or application of the antitrust laws or Community Reinvestment Act.

  Executives from such banks as BB&T and Zions have stated that the cheap bail-out funds will help them acquire other banks. JPMorgan Chase, which the Federal Reserve already helped to acquire Bear Stearns and Washington Mutual, is understood to also plan acquisitive use of its bail-out allocation.

  The Federal Reserve and other regulators, however, have shielded each of their moves in recent months from any public much less judicial review. Even such non-FDIC proposals as Wells Fargo's proposal to acquire Wachovia are deemed emergencies, and applicable laws of public notice and comment are over-ridden.  Now the deals will be government-funded.

Consider that Hank Paulson's Goldman Sachs, deemed a smart institution not in need of a bailout, has veered into subprime via Litton Servicing and now what's called Sendera. Given low-cost funds by the government, it's foreseeable Goldman will snap up additional subprime firepower, to deploy after the shakeout.

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

   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...

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...

  Click here for Inner City Press in Wash Post and Miami on CRA, here in Charlotte on the mergers, and here even praising the FDIC (on other grounds)

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.

  Citigroup's low-ball $2.16 billion supposed deal, announced Monday, had rubberstamp approval with no public notice or comment, including under the Community Reinvestment Act on CitiFinancial's widespread involvement in controversial subprime lending. Click here for Monday's story by Inner City Press. Now, in the face of Wells Fargo's announced, the regulators have rushed out a strange press release:

Statement by the Board of Governors of the Federal Reserve and the Office of the Comptroller of the Currency

A new proposal to acquire Wachovia has emerged from Wells Fargo.  The Citigroup proposal has undergone extensive review by the Federal Reserve and the Office of the Comptroller of the Currency.  We have not yet reviewed the new Wells Fargo proposal and the issues that it raises.  The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability. 

  The scuttlebutt is that the regulators, although having no basis to waive public participation this time, are considering doing it, among other things to equalize the playing field between Citigroup's and Wells Fargo's bid.

 It is clear which bid is financial superior -- but Wells Fargo, too, has been involved in predatory lending, through Wells Fargo Financial and overseas.  Some advocates are saying they prefer the Wells proposal on the basis that it should finally allow some public process in the spate of supposedly emergency mergers and conversions.

September 29, 2008

Subprime Stoked By Deregulation and Bipartisan Greed, not CRA,  Community Reinvestment Act

Byline: Matthew R. Lee of Inner City Press in the South Bronx: News Analysis

SOUTH BRONX, September 28 -- 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.

  Likewise, when community groups from all over the country 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.

  The list goes on and on. Non-U.S. institutions that now stand to benefit from the bailout bill being quickly considered in Congress are not covered by the CRA: UBS of Switzerland, Nomura of Japan, even some sovereign wealth funds that bought subprime securities.

  Deregulation and a lack of business ethics are major causes of the subprime meltdown; these have been bipartisan. Republicans are more closely identified with deregulation, but it was Clinton who oversaw the breakdown of the wall between investment and commercial banking, for example. Several Clinton administration officials went to work or advocate for subprime lenders, defending their cashing-in as in support of the democratization (literally) of credit.  While Republican Phil Gramm went to work for UBS as it got more and more into subprime, Democrat Robert Rubin went to work for subprime-heavy Citigroup and did nothing to reform its practices. It is notably that Citigroup has not yet showed up for bailout funds.

  Citigroup's grown in subprime had nothing to do with the CRA. Rather, insurer Travelers Group, controlled by Sandy Weill and Chuck Prince (and Robert Willumstad who would later drive AIG into the ground), which already owned subprime lender Commercial Credit, bought Citicorp and then subprime lender Associates. They renamed the operation CitiFinancial, but never sought CRA credit for Citibank for its operations. And when Inner City Press asked Chuck Prince of Ciitgroup's securitization of loans by Ameriquest, Prince said that had nothing to do with the CRA.

September 22, 2008

  So with its $85 billion bailout of AIG, the Federal Reserve will come to run a predatory lending operation. Click here for some Inner City Press / Fair Finance Watch comments. And see here. But it goes beyond that -- shouldn't the Fed have to apply to the Office of Thrift Supervision to come to control AIG's savings bank? We'll be raising this issue this week.

  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

  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...

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...

  Radio piece of the week, on NPR, concerned how little Chris Cox at the SEC has done during the subprime meltdown. His own act? To impose a temporary ban on naked short selling of the stock of 19 financial institutions. Woop Dee Damn Doo.

September 8, 2008

Subcrime Questions As Freddie Mac Handed to Moffett of Carlyle and US Bancorp

Byline: Matthew Russell Lee of Inner City Press: News Analysis

NEW YORK, September 7 -- U.S. Treasury Secretary Hank Paulson's announcement today that he is unilaterally appointing Carlyle Group advisor David Moffett to replace Richard Syron as chief executive of Freddie Mac is more than a little ironic, and troubling. The Carlyle Group invested in and lost on subprime mortgage, it admitted earlier this year. In fact, Carlyle invested in bonds issued by Freddie Mac, as well as Fannie Mae.

  In March 2008, the Carlyle Group's mortgage-bond fund, having received more than $400 million in margin calls since earlier in the month, said it couldn't reach an agreement with it lenders, who would "promptly'' take over all of its remaining assets. Through March 12, the company had defaulted on over $16.6 billion of debt. On the news, the dollar fell to the weakest since 1995 against the yen and a record low versus the Euro. How then, sources are asking Inner City Press, can Moffett be put in charge of Freddie Mac?

  In fact, Carlyle beyond its investments in military contractors has been accused of other slash and burn tactics, for example by workers at the nursing home chain Manor Care. Its buy-out of Home Depot's contractor supply unit nearly fell apart, as its lenders balked.

  Moffett previously served as chief financial officer of U.S. Bancorp, which beyond its own subprime lending was a 25% investor in the now-bankrupt subprime lender New Century. When Inner City Press investigated U.S. Bancorp's stake in New Century, the company argued to the Federal Reserve that despite having two seats on the board of directors it did not control the lender. The word subcrime began to become applicable. The Fed demurred, and eventually the stake was sold off. But Moffett's companies' involvement in the subprime field is hardly a basis for confidence in him to lead at Freddie Mac. In fact, the choice calls into question Paulson's judgment. To be continued. Watch this site, and this (UN) debate.

  Citigroup, predatory lending and whistleblowers -- saga continues. Citi last week agreed to pay a $3.5 million penalty for sweeping more than $14 million from customers' credit card accounts into the bank's own funds.  Citigroup "knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps," the California Attorney General said in a press release. "When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice."  Sounds like CitiFinancial.... The whistleblower was subsequently fired and filed a sealed wrongful dismissal law suit. Citi did not cooperate with the Attorney General's investigation...

  How to explain Citigroup changing Bob Rubin's title to Senior Counselor? Here's our guess -- as the company has gone downhill, the finger has focused on Rubin. He doesn't like it -- just as he denied having any role in Citigroup's predatory lending, saying it wasn't under his "aegis" -- and so he changes his title. But under whose aegis is it?

  GE Money narrowly avoided serious legal action when it agreed to an unprecedented enforceable undertaking with the Australian Securities and Investments Commission in May. As part of the undertaking, the company agreed to a review of how it deals with customers who are behind in their repayments. The first confidential report on the company's practices was handed to ASIC on Friday. GE Money has already agreed to compensate at least 2000 customers for intimidating tactics, which included ensuring debts were paid by urging staff to repeatedly phone or send letters to borrowers. So far no customer has received compensation.

August 25, 2008

 This week, more subprime fall-out, at Citigroup and Huntington, and continued predatory servicing by Wells Fargo.

   In Iowa, the home mortgage division of Citigroup is closing its operations in Des Moines, eliminating 190 positions, it emerged on August 21. CitiMortgage plans to close the site by the end of November. Of these, 146 workers will only be offered counseling, outplacement services and severance "based on position, length of service and other qualifying considerations," spokesman Mark Rodgers said. CitiMortgage laid off 185 Des Moines employees in March and another 100 in January. The company said it was reorganizing the division and working to reduce expenses by $200 million. Citigroup  bought Principal Financial Group's home mortgage operations in July 2004, which then had 800 employees. Citi in Iowa employs about 650 workers throughout the state in its credit card operations and about 120 at CitiFinancial loan operations.

   Yes, that's the predatory lending...

   Market-watchers note that "Shares of Huntington Bancshares were under pressure Monday after a major commercial client of the bank said Friday that it will take a second-quarter loss on higher credit provisions, and an analyst downgraded its stock. Shares of Huntington Bancshares fell 11% at the open and recently traded 6.4% lower at $7.47. The stock is down almost 60% from the year-ago period when it was trading above $18. Franklin Credit Management Corp  -- of which Huntington has lent $1.1 billion -- said Friday it will delay its financial filing and report a second-quarter loss of $280 to $285 million."

  From the mailbag -

Subj: Wells Fargo Mortgage Complaint 

From: [Name withheld in this format]

To: Inner City Press

Date: 8/15/2008 12:58:48 P.M. Eastern Daylight Time

Hello, I found your website today. My dealings with America's Servicing Company owned by Wells Fargo has been a constant struggle. Today, I am mailing a complaint to the Texas Dept. of Banking and Mortgage Lending as well to Barney Frank, Chairman of the House Committee on Financial services. The committee passed HR 5579 which directed lenders to speed the loan modification process. I made my request to ASC/Wells Fargo in April 2008. I have yet to receive a response. Also, I have been unable to speak to anyone who might be 'working' on the loan modification.

 Yep, that's Wells Fargo...

August 18, 2008

   Why did Citigroup's two predatory lending settlements escape the belated calls to "gross-up" Citi's proposed $600 million settlement for auction-rate securities improprieties to cancel Citi's ability to just take a tax write-off for misdeeds? "If the SEC decides that Citigroup should pay $600 million in connection with Citigroup's representations regarding auction-rate securities, Citigroup may be allowed to deduct this $600 million payment from its taxable income," Sen Charles Grassley has written to the SEC. "To prevent Citigroup from receiving this potential tax windfall at the expense of American taxpayers, the SEC should consider 'grossing-up' the payment by Citigroup to an amount of $923 million." The grossed-up amount would take into account that Citigroup would save $323 million in taxes if it deducted the full payment, based on a 35% tax rate.

  This should have been done on Citigroup's two predatory lending settlements...

August 11, 2008

  Subprime chickens continue to come home to roost. Now National City has admitted that the SEC is demanding "certain documents concerning its loan underwriting experience, dividends, bank regulatory matters and the sale of First Franklin Financial Corporation" to Merrill Lynch for $1.3 billion in 2006. And Royal Bank of Scotland Group announced a first-half net loss of $1.56 billion), its first loss since the bank listed in the 1960s and one of the largest losses ever posted by a U.K. bank. Can you say, Greenwich Capital Markets?

August 4, 2008

  Talk about a conflict of interest, and regulatory capture -- last week, the regulators and four big banks issued coordinated press releases. "Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, 'We look forward to being leading issuers as the U.S. covered bond market develops.'" And those they issued the statement with and for are supposed to objectively oversee them...

July 28, 2008 -- a week of shenanigans by Citigroup (in London), HSBC (in South Korea)  and GE (in Abu Dhabi).  And this --

  From the mail bag, a story involving JPMorgan Chase and Wachovia's HomEq --

Subj: JP Morgan Chase 
From: [Name withheld in this format]
To: Inner City Press
Date: 7/22/2008 9:29:41 P.M. Eastern Daylight Time

Dear Mr. Lee,

I am wondering if there are any other people who have had a similar problem to mine with JP Morgan Chase.  I am a 68 year old senior who lost her home to these vultures in an unbelievable manner.  In brief this is what happened to me.

Leon D. Black had just purchased WMC Mortgage Corp. when I did a refi with WMC in March 1998.... Loan was equity based.  I never received any copies of the loan documents and had  statements from WMC saying they were lost or destroyed.  Even had inter office communications at WMC as late as July 1998 referencing the loan documents.

 The loan was a bait and switch.  The reason for the refi was to permanently get rid of a loan I had with, The Money Store.  WMC was to be the new first mortgagor AFTER they paid, The Money Store ("TMS").  Loan was to be conventional fixed rate.  Instead payments went from 2900.00 a month to 4800.00 a month by September 2000.  I had little recourse but to try and save my home of 18 years and its tons of equity and so, I filed Bankruptcy.  Big mistake!

 I was never told that the loan was sold to Fairbanks four months before I filed BK.  WMC fraudulently represented themselves throughout my BK as the first mortgagor when they were not.

 I had a Confirmed Plan in Bk that was current yet WMC somehow managed to have the Stay Lifted in January 2005.  My home was sold at Trustee Sale by JP Morgan Chase on June 22, 2005.... In June, 2006....I was sent a thank you letter from HomEq on behalf of TMS who unknown to me had closed their doors a month after my loan closed with WMC.  Oddly, during my Bk I would get Notices from FirstUnion who could never find any reference to me, not even by my social security number.  Turned out WMC used someone else's SS number for my loan, I don't know why but they did.  First Union had taken over TMS which was ultimately taken over by HomEq. The HomEq letter also contained the cancelled Note & Deed of trust for TMS.  In short, my home was ultimately sold by JP Morgan Chase who knew there was always a question that TMS was never paid and none of these vultures had any standing to sell my home on June 22, 2005 and as noted in the Trustee Guaranty Report which clearly showed the only first mortgage to be TMS for 281,000.00.  They paid the TMS mortgage off in full three months after they sold my home at trustee sale, using a company called ALTA which  turned out to be another alias of Fairbanks.

So in fairness we can note that the Fed doesn't only do favors for JPMorgan Chase (on Bear Stearns) and Citigroup (on any and everything, including the Group's formation) -- last week the Fed belatedly released a ruling favoring SunTrust in its dealings with its presumptively illegal but "grandfathered" holdings of Coca-Cola story - click here to view.

  The Fed justifies its favor as reducing the mixing of banking and commerce. Coke as a mixer?

July 21, 2008

  The Wall Street Journal.com reports that the foreclosure-fest at Foxboro's Gillette Stadium will include Countrywide (now B of A) and... IndyMac. From beyond the grave? Or will the FDIC be (Eli) manning the tables?

 More annals of financial journalism -- from Iowa last week, we have this: "Having never 'played in' the subprime lending industry, Donohue said U.S. Bank actually stands to benefit somewhat during a time of economic downturn." What? U.S. Bancorp owned 25% of notorious predatory lender New Century, and makes its own subprime loans...

GE Money is still a major forecloser in Ireland, drawing the ire of the Financial Regulator there "on their repossessions policies, to ensure they treat homeowners who fall behind on their repayments fairly."

  And in Australia, "at least 2000 customers owed compensation by the nation's biggest consumer credit provider, GE Money, are still awaiting payment for harassment by the company's debt collection department. GE Money agreed to pay them as part of a deal with the Australian Securities and Investments Commission, which found staff had used high-pressure tactics to intimidate customers into making up for missed credit card and car-finance payments. But nearly two months after it signed an unprecedented enforceable undertaking with ASIC, GE Money spokesman Geoff Lynch said he was still unsure when it will be ready to make the first payments to victims, some of whom first complained to ASIC four years ago."

July 14, 2008

  Shouldn't it be illegal for Robert Steel to go directly from the Treasury Department, which regulates Wachovia Bank, N.A., to become CEO of Wachovia, complete with $10 million in stock and a $38 million pay package? Wasn't this revolving door supposedly closed in the wake of the Riggs Bank scandal?

 More intra-corporate revolving doors: Chuck Prince, whose subprime snafus at Citigroup led to his unceremonious departure, has resurfaced on the board of Xerox, whose CEO Anne Mulcahy is on Citigroup's board...

  Another "we told you so" -- Synovus' Columbus Bank and Trust, which Inner City Press has challenged for its weak Community Reinvestment Act record, has now been awarded a rare Needs to Improve CRA rating, which less than three percent of banks get...

July 7, 2008

   In a low-point in financial journalism, Business Week's Mara Der Hovanesian in the July 7 edition ladled praise on subprime lender HSBC, quoting as the only semi-critical voice... a mortgage broker. Nary a mention of Knight Vinke's call to sell off the subprime operation, either. We do, however, learned that Brendan McDonagh "favors pin-striped suits with bright ties." That's important information. The piece is sub-headed, "In Depth, the Housing Crisis."

  Here is an outrage on which action must be taken, although you will never see it covered, yet, in the mainstream media -- the purportedly "off the record" speeches given to audiences of select investors by Federal Reserve personnel. They are sent out by email to journalists, but not to write about. Hedge fund artists get insider knowledge from the Fed, and trade on it. Doesn't this violate, at least in spirit, Reg FD, Financial Disclosure?

 But look for Ben Bernanke to on the record defend the bailouts before Congress on July 10. Who actually questions him will be interesting to see.

 So Chuck Schumer trashed IndyMac. In one sense he's to be congratulated, as IndyMac is, to be charitable, an enabler of predators. But Schumer's motives are always in question.  Some asked, did he cause a run on the bank only to promote himself? He's already a Senator. When, oh when, does he think he'll run for President? He'll lose, of course. But how many Sunday press conferences will be called before that becomes clear?

June 30, 2008

   Weeks late, the Federal Reserve has written to Inner City Press that

This is regarding your FOIA request for documents related to the JP Morgan / Bear Stearns transaction. We have interpreted your request to include the Board meeting minutes from Mar. 14 and 16. The minutes are now available online on the Board's public website:
http://www.federalreserve.gov/newsevents/press/other/20080627a.htm
We will be contacting you shortly about the scope of the remainder of your request.

   For now, as even the Dow Jones story on the minutes reports, "four Fed board members were involved in making the decision to come to the rescue of Bear, the Fed's minutes show."

  California's Countrywide lawsuit names President David Sambol as well as Angelo Mozilo. The AG of Illinois also filed a lawsuit alleging deceptive practices, Governor Gregoire of Washington said the state will seek to fine the company for predatory lending -- she went easy on Household and then hit the documents, so we'll see -- and Countrywide shareholders approved Bank of America 's pending $3 billion acquisition. But the combination could face legal costs as high as $2 billion, according to a report from CreditSights Inc.. BofA says it will lay off 7,500...

  On global issues, click here for hour-long debate...

June 23, 2008

The filing on June 15 by Inner City Press / Fair Finance Watch against the Federal Reserve Bank of New York's closed-door meetings and rule-making with 18 investment banks has given rise to questions about whether or not the Fed is a government agency with any duties to the public. On Daily Kos, for example, various commenters say that the Fed is owned by banks. We note that's the Federal Reserve Banks; the BOARD had governmental duties, including compliance with the Administrative Procedures Act. Expect more comments to the Fed.

HSBC will start banking operations in the republic of Georgia on Monday, from a six-story building on Rustaveli Avenue in Tbilisi. The move means HSBC and concurrently or prospectively its predatory lending operation are now present in 84 countries and territories. In March, HSBC received approval to incorporate a business in Vietnam and announced a $200 million cash injection to fuel expansion in Russia and open three new offices there.  In December last year it bought the Chinese Bank in Taiwan and also started operations in central China. In October it established a branch network in Peru and acquired Grupo Banistmo in Panama in July 2006.

   The State Bank of Vietnam has announced that it has allowed GE Money, to start operating in the country. "The SBV has issued a license to establish GE Money Vietnam Finance Co. Ltd, or GEMVF, with its office in Ho Chi Minh City," the SBV said in a statement published on its Web site.  GEMVF, which has a 50-year license, will have a registered capital of $18.2 million, it said. The company will be permitted to issue bills and bonds, issue credit cards and provide loans in Vietnam, the SBV said.  GEMVF will be the fourth foreign financial firm to operate in Vietnam. The other firms are owned by U.K.'s Prudential Insurance, France's Societe Generale and Czech's PPF Group. From GE, watch out for predatory lending...

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 engaged 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

   In Australia, the Minister for Corporate Law, Nick Sherry, last week released a green paper on the replacement of "disjointed state regulation" by a Federal Government regulator. "The current regulation in these areas is either duplicated, patchy, confusing, very hard to change or even non-existent," Sherry said. The minister has proposed changes that will push the regulation of mortgages towards disclosure and advice regimes similar to other financial products available through financial planners. This is also an option being considered for margin loans. The green paper highlights the situation in which home loan lenders have no requirement to be licensed and there is no Corporations Act regulation of advice about mortgages. It also referred to "predatory lending" by fringe players in the mortgage industry, who target borrowers who are in default on their mortgage repayments. The paper refers to one example in which a "refinancing expert" charged $22,340 to refinance a $220,000 loan on a property valued at $310,000. This charge was more than 22 times higher than the industry average and did not address the borrowers' fundamental problem: the repayments in the refinanced loan were higher than the original loan. The green paper also noted that some fringe players had circumvented state regulation, known as the Uniform Consumer Credit Code, by describing consumer home loans as business loans....

  In the U.S., Massachusetts' attorney general Tuesday accused H&R Block and its former Option One Mortgage Corp. subsidiary of discriminating against black and Latino borrowers as it made allegedly predatory loans to them. Massachusetts Attorney General Martha Coakley said the suit filed in Suffolk Superior Court alleges that Option One and Block engaged in unfair and deceptive conduct by offering many Massachusetts borrowers risky subprime loans that the lenders knew or should have known would fail. Last month, Block sold Option One's remaining loan servicing operations to billionaire Wilbur Ross, whose American Home Mortgage Servicing Inc. affiliate in Texas continues servicing old mortgages. American Home Mortgage is also named as a defendant in the Massachusetts lawsuit...

   Profiles in spin, in Ad Age, "Citigroup's head of marketing Lisa Caputo... leading the strategy to unify Citigroup 's numerous brands into one master brand: Citi.  Citigroup  previously used Citi  as a prefix in many of the company's businesses-such as Citibank, CitiFinancial, CitiMortgage and Citi  Smith Barney-but Citi  now refers to the company overall. Leveraging the logo's red arc as a symbol of Citi 's capacity to turn financial dreams into realities, 'we've positioned Citi  as a partner in helping you achieve financial success in whatever way you define it,' says Ms. Caputo."

  Yeah, getting ripped off by CitiFinancial is how many people define success... Let's remember that Citigroup is the only company to twice settled charges of predatory lending with federal authorities...

June 2, 2008

  Hedge funds profit from the subprime meltdown. In Germany, state-owned development bank KfW is looking to sell off its 45.5 percent stake in IKB, which announced big losses from investments in subprime mortgages. Among the bidders? US investment funds Ripplewood, Lonestar and Texas Pacific Group...

At HSBC's annual general meeting last week, the company was urged to consider selling off its "losing" subprime lender in the U.S.. Managers were urged give back their bonuses. CEO Green dissed Knight Vinke accusations that the bank had poured more than $62 billion into HFC and said the business was "funding itself perfectly satisfactorily." That is, blood continues to be sucked from a stone...

  More on rats leaving a sinking ship. After much fanfare in putting him in charge of Citi's mortgages, Bill Beckmann, the president of CitiMortgage, is now leaving Citi at the end of this month "to spend more time with his family." In the memo, Citi's Steve Freiberg says he'll work with Mr. Beckmann, meanwhile, "on a new leadership structure." New leadership is certainly needed, all the way to the top...

May 26, 2008

In a motion filed last week, Baltimore says Wells Fargo  uses predatory lending practices in Baltimore's predominantly African American neighborhoods "to make a quick profit because it believes it can successfully exploit those communities" by

Charging higher interest rates;
Underwriting certain types of adjustable-rate mortgages without regard for whether the borrower can repay after the initial "teaser" rate expires;
Stripping borrowers' equity through unnecessary refinancings;
Paying rebates to mortgage brokers for inflating interest rates;
Requiring prepayment penalties that prevent borrowers from getting help through refinancing;
Charging excessive points and fees with no corresponding benefits to the borrower.

  Yep, that sounds like Wells Fargo...

In the UK, after Citigroup infuriated customers by sending out warnings to customers that it would end their agreements in 35 days because they had a "higher than acceptable risk profile," Citi hit another new low, firing employees by conference call. Staff were told to listen in while the business's UK divisional head John Wiggins told them they were fired. Citi under Vikram Pandit: very classy...

  Annals of impunity: Hugh Miller, who ran Delta Funding when it settled charges of predatory lending, is now opening a new mortgage lending firm. Reliance First Capital Llc will be based in Woodbury, Long Island, Miller wrote in a May 8 posting on dfcconnect.com, a Web site for Delta's ex-employees. Reliance has also bought about $40,000 in assets from the defunct subprime lender.  "We did sell some assets, equipment and furniture, to Reliance ... computers, office furniture, things like that," said Mark Power, partner in the Manhattan-based Hahn & Hessen law firm, which represents the creditor committee in Delta's bankruptcy case.

May 19, 2008

   Attempts to buy time for homeowners facing foreclosures have reached a peak in New York State, where an Assembly-passed a bill with a one-year moratorium on foreclosure is stalling in the state Senate.  To the north, Massachusetts Governor Deval Patrick, previously on the board of directors of predatory lender Ameriquest, a part of which has been sold to Citigroup, has spoken of a six-month foreclosure moratorium. New York's one-year proposal is being undercut by new governor Patterson's alternative proposal, which includes only a sixty day notice to borrowers that they are being foreclosed on.

  At a hearing last week in Albany, the rate of foreclosures on Long Island was the buzz among legislators and advocates, but surprisingly not of the two-county region's newspaper, Newsday. Could it have been Rupert Mudoch's interest, or Cablevision's seemingly winning bid? Will the Dolans do for journalism watch they've done for basketball with the Knicks?

Broadcasting Citigroup's firm commitment to global predatory lending, the CEO of Citi India Sanjay Nayar said Citi has no plans of exiting its consumer finance business in India. "We have a large portfolio in CitiFinancial  which offers finance to low and middle-income consumers. We are not exiting the business but there will be some repositioning, re-segmentation of some consumer base," said Nayar, adding Citigroup  had recently infused capital of $250 million into its Indian operations for 2008.

  Closer to home base, and in a field where Citigroup is also active, a group of students in California say they were ripped off by KeyBank which teamed up with dubious vocational schools to leave students deep in debt. KeyBank Education Resources and Great Lakes Educational Loan Services allegedly sought to defraud students at sham vocational schools by offering loans, and when the schools' Ponzi schemes collapse, the students are left in debt and have no new job skills, according to a class action lawsuit filed last week in Alameda County Court. The lawsuit, filed on behalf of California students who enrolled in Silver State Helicopters vocational school, accuses Cleveland-based KeyBank of predatory lending and enabling fraud to be perpetrated. The plaintiffs say, "The Bank, in complicity with the sham schools, has preyed on unsuspecting California resident students."The complaint claims that tuition and lending scams at unlicensed and unregulated trade schools have become common in recent years. "Their growth has been fueled by unscrupulous lenders that have willingly and irresponsibly 'partnered' with these sham operations to provide expensive private loans to the high-risk students these schools tend to attract," the complaint says. The lawsuit charges that KeyBank USA partners with the Silver State Helicopters vocational school as the school's preferred lender "and followed its usual script from which it has reaped millions of dollars over the years," the complaint said. "Like KeyBank's previous failed vocation school 'partners', SSH was unregulated and unaccredited and, when its Ponzi scheme collapsed, SSH filed bankruptcy filed bankruptcy, leaving its students with nothing but KayBank's threats to enforce the loans," the complaint reads. The lawsuit claims the defendants deliberately based themselves in Ohio because state laws there "exempt Ohio-domiciled banks from that state's consumer protection laws."

May 12, 2008

   This week we reach into the mailbag, from inside Wells Fargo Financial, and about Citigroup's auto lending and JPMorgan Chase --

Subj: Attention Inner City Press

Date: 5/2/2008 2:10:09 P.M. Eastern Daylight Time
From: [Name withheld upon request]
To: Inner City Press

I am currently a Wells Fargo Financial employee.  I didn't know if you would be interested or not but I have some interesting information you may want to look into further.  I've been with Wells Fargo Financial since [redacted to preserve confidentiality of whistleblower].  I came right out of school and landed what I thought was a great career with a great company.  Little did I know that I am actually a consumer lender in the subprime mortgage industry.  Our main product is our Real Estate refinance which is subprime.  The average rate is about 10.5%.  My belief is that wells fargo financial is now downsizing and have found a clever way to lay off a lot of employees without getting into headlines as officially laying people off.  We have seen a huge decline over the last six months.  I come from a smaller state, last year around march of 2007 we had 50-some full time selling employees.  We are now down to 20-some.  People are leaving left and right and I am hoping to get out of here by the end of summer.  I am an assistant branch manager.  I have two points of interest that I would like to let you in on to see what your opinion is about the situation.

Point number 1:  New Performance Improvement Plan process (The PIP process as it is referred to here regarding the process of terminating a team member)

The process used to be that if you did not book 100k of new money lent over a 2 month period you were given a month to do at least 50k and over the next three months to book 150k total of new money to get off of the PIP. If you did not reach this, the company could recommend termination.  It has only happened to two team members since I have been with the company. 

The new pip process is as follows, if you have one month without doing 50k of new money you can be recommended for termination.  You have the following month to do 50k and if you do not you are out basically.  Another process that has changed recently that leads me to believe that we are currently downsizing is that processor role in our branches.  A processor processing all of the payoffs, paid outs, deals with title work, and insurance as well as ordering supplies for the branch and maintaining the current loan pipeline.  Every branch had one processor, until this month.  There are only 3 main processors in our district now, (there are 7 branches in our district)  the other 4 have now been placed into part time, glorified secretary rolls.  A processor now has up to 2-3 branches each to process for and did not receive any type of pay increase as a result outside of performance branch based bonuses.  Some of the part-timers have already decided to quit and there isn't any rush to replace them.

Point Number 2: Sub-Prime loans and Prime loans or (A-Paper Loans)

Our business model is confused.  We are supposed to be subprime lenders, we sell to customers with 620 or below fico scores, that is our target market.  Anyone who has been in a sales position knows that sales is about persistence, hard work, and of course leads.  Our lead base is mainly retail sales finance accounts (ex: tractor supplies financing, heating and cooling, carpet, furniture stores etc.)  Most of these customers usually finance with 12 months same as cash periods or 24 months same as cash periods etc.  Lately things are tight you basically have to have at least somewhat decent credit to get approved for this financing.  Somewhat decent credit is above 620 fico score.  Most of these retail sales accounts are 700 credit score customers and so forth.  Our job is to call these customers and service those accounts and cross sell, credit cards, auto loan refinancing to pay off credit cards, and most importantly real estate restructuring.  Taking the equity you have in your home to combo other bills to put them into one ultimate loan with a lower payment and hopefully an overall lower total payback (which is rare).

Most of these customers could go to their bank and do the same thing at a much lower interest rate. Our company doesn't want us selling prime loans because we don't make money on these loans.  If we book a loan and it ends up going prime we do not receive credit for it as a unit or a loan.  We do get paid 175 bucks for each prime loan we book but if you do nothing but prime loans you will show no new money credit for these loans and zero units thus making it look like you didn't do anything.  As a result you would be pipped and begin the process of termination.  There is a way for us to keep a prime customer from going prime, if we can convince the credit grade A, no matter what the fico score it could be and 850, to take a loan over 91% of the total loan value (example 100k home value, 91k loan amount) it will not go prime. 

The tricky part is this, we as team members do not know what rate the customer will qualify for, we have a matrix, every customer falls into a certain pricing non-prime grade meaning a 720 credit score can come up and it will show up as a 10% rate but if you go below 91% ltv it will show that it can be recommended for prime pricing. 

Let me give you a recent example:

I had a 736 fico customer coming in wanting to do a 124k total loan on a home he just had appraised about 6 months ago for 137k.  The appraisal itself was done by a friend of the customers to purposefully bring it down because the loan he was trying to complete was the result of a divorce.  I still took the chance and put in the total value as 137k.  At a 124k total loan his total interest rate quoted was 9.38%.  He had no choice, because of the way he was paid the bank would not cash flow him but we are very conservative as well but we were able to legitamitly cash flow him for the loan.  (wells fargo doesn't mess around when it comes to cash flowing loans, we get heavy documentation) We got an appraisal done (wells fargo also doesn't mess around when it comes to appraisals, we have absolutely no contact with the appraisers, we have a separate company that we pay to have the contact) the appraisal came back for 185k.  So obviously at this point, it would be tough for me to get this loan up to 91% ltv.  For me it was simple, i want to do the right thing but at the same time i have to book loans, they put pressure on you to book it subprime, i tried like hell to sell 91% loan and nearly succeeded.  The customer ended up only taking an extra 15k which still kept it below the 91% required to keep it from going prime.  Still at this point i am not able to disclose to the customer that all he had to simply do was take any loan under 91% and he would simply sign the final pricing disclosure showing a 9.38% rate but after a final review it will come back and give him a 5.5% -7% loan.  I still had to sell with the customer having the intentions he would be getting a 9.38% rate.  We sent up the final pricing disclosure it was recognized as prime and the customer ended up with a 5.5% fixed rate for 30 years to his surprise and glee.  That turned out great, of course it looks like I never booked a loan.  Second scenario would have been if the customer had agreed to take an extra 60k out putting him over the 91% ltv mark and thus keeping the loan at 9.38% for a 720 fico customer.  We can never inform them of this until after they agree to a higher rate like that is what they are getting and they get a prime loan.  If i would have booked this loan subprime in that particular month i would have received over 1k in total bonus money.  Instead, I didn't hit the mark required for bonus money and only received the 175k for booking a prime loan. 

This is of course a Cover Your Ass scenario for wells fargo but believe me, it is not a good thing to book a prime loan, i had my district manager yelling at me for not being able to sell the extra 60k because once it is prime it doesn't count for the branches records, or the districts record or the regions record.  No one gets credit. 

That is my fundamental reason for wanting to leave wells fargo financial.  I know we are in business to make money, but not at the expense of humanity. 

   We aim to have more on this... Now, about Citigroup's little known auto lending --

Re: Your Website

Date: 5/1/2008 4:27:46 P.M. Eastern Daylight Time

From: [Name withheld in this format]

To: webstaff@innercitypress.org

I, too found your website from the Google search, but only after my situation and grown extremely bad. I had a car financed with Arcadia Financial, which was bought out by Citi. I thought things were ok, I am a single mom and have had my problems financially, but always came through.  Last year, I had a $530 a month decrease in monthly income.  Since my car payments were $518, I asked for help after struggling for several months.  I was told, they did not refinance.  I would receive letters in the mail stating they would work with you if you had a loss of income. I again phoned and was told I could not do that.  I bought this car at the end of 2003 and it was financed for 5 years.  At this time, my balance is 12,297.  Can you believe this?  Furthermore...when I phoned and asked for the payoff on the vehicle, I was told it was $13,320.  I told them I was paying the vehicle off and should not have to pay for the remaining time, which God only knows how long that is. Forever it seems.  They told me they would receive all the interest and also that I had to pay interest for each day I was late on the payment, even though I had already paid late charges.  I informed this lady that this was insane and they were screwing people.  She hung up on me.  I have been constantly berated, talked to like I was nothing and they act as though I am scum of the earth.  I have explained the loss of income and that I was having trouble making the payments as they were.  All they could say is, why are you late now?  I have spoken with person after person at Citi about this situation and I'm at the end of my rope.  If I had another vehicle, they could have this one, because I could buy a NEW car for what they are charging me. Thank you for your insightful website.

Finally, for this week, on Chase's "mortgage fraud" --

Subj: Fwd: Chase mortgage fraud

Date: 5/2/2008 3:08:29 P.M. Eastern Daylight Time

From: [Name withheld in this format]

To: Inner City Press

I have been with Chase for years.  This is my 3rd mortgage through them.  When I applied for the mortgage, they told me I needed to take a 2nd out so I did not have to pay the PMI.  They told me this 2nd loan would be at 9.6% but could easily be paid off at anytime by me.  They told me I had to do this b/c the house I was buying appraised for $170,000 (we were buying it for 159,000)  I never received any other good faith estimates in the mail beside the 1st one at 9.6% for a loan of $8000.  I called them weeks before closing stating I wanted to take out $18000. (John Priesta from Chase).  The loan was then given to woman named Heather at Chase.  I asked Heather if there were any problems with the loan and if I would be getting anything in the mail stating the new APR..she said no.  A week before closing she called and said the loan apr would be 11%.  Since it was so close to closing I said that was fine since I was told I could pay it off early.  Closing was on Feb 28th and 5 pm.  when arriving at Conrad Law firm in WV they as well as the seller's of the house (Bank of Charlestown) were shocked that they had closing papers there with an interest rate of 12.4% and that if we paid the loan off early we would receive a penalty!  We were never notified of this, and b/c it was so late at night..nothing could be done about it..we were forced to sign the papers or lose the house.  When I phoned Chase a supervisor told me he couldn't do anything b/c I signed the papers.  I then phoned my loan officer John Priestas who refused to take my calls, he would only e-mail me and avoided my ?..why wasn't I notified of this rate hike??  I then turned to Susquehanna bank to take over my loan..they told me that my credit was almost 700 and that the rate shouldn't have ever been that high..I was also told (less than 2 months after Chase appraised my home) that my house appraised for $220,000 and I shouldn't even had to pay a PMI!!  Why is Chase practicing Mortgage Fraud..I have phoned John Priestas supervisor several times and they will not return my call.  I was also told that a credit check revealed that Chase check my credit score several unnecessary times..affecting my score.  In the summer of 2007 I received several papers stating my and my husbands credit scores (that time they were 723)..John assured me that the printer just spitted them out..that it would not affect my credit score...

  We aim to have more on all this....

May 5, 2008

  From the field, Inner City Press' Tennessee sources tell of fast layoffs with no notice at Countrywide Financial's operations in Knoxville. Maybe they should shut the whole thing down...

  While announced in today's American Banker in decidedly minimalist fashion, the deal between TIGRA and Dallas' Virtual Money sounds interesting, we'd like to know more about it....

   In what may or may not be a sign of leaving a sinking ship, former Citi-banker Jeff Jaffe was resurfaced as a fellow at Chicago's Center for Financial Services Innovation, which previously nabbed Ellen Seidman from the OTS. Fine fellow that he is, we are hoping for some whistle-blowing...

  Speaking of Citigroup, from the Washington Post of May 2 we have the story of the owner of the Shark Club of Bethesda, John A. Tsiaoushis, in league with a gaggle of predatory lenders including CitiFinancial. For a house on Pennycress Lane, in January 2005, while Tsiaoushis owed more than $588,000 on the mortgage, he sold the house without repaying it. Court records show he created documents purportedly from the mortgage company, opened a post office box in Beltsville and had the settlement company send checks totaling $586,000 to the "mortgage company's" post office box, which Tsiaoushis then deposited. Using friends and associates, Tsiaoushis helped refinance the house for subsequent buyers. In each case, checks settling the transactions were sent to post office boxes opened by Tsiaoushis, court records show, after he presented phony documents indicating that all liens had been resolved. Court records show that CitiFinancial of Falls Church paid more than $670,000 in a refinancing scam; Accredited Home Lenders of San Diego paid $891,000 to "buy" the house; and Wells Fargo in Alexandria lent $585,000 in a refinancing scheme. First Franklin Financial of San Jose, which made the original, legitimate mortgage on the house, is owed $588,000, court records show."

   When sleazy lender First Franklin is the "legitimate" lender in a story, and CitiFinancial and Wells Fargo come in later without any due diligence, you get a picture of the corporate role in the current crisis....

April 28, 2008

  Today in Los Angeles before the Federal Reserve, Inner City Press / Fair Finance Watch and others opposes the proposal by Bank of America to acquire Countrywide. See, Chicago Tribune of April 23, "Countrywide ripped at hearing; Bank of America  told changes needed," reporting that Jesse "Jackson also called on BofA to respond to Fair Finance Watch data showing that it puts blacks into higher-cost loans nearly twice as frequently than whites."

Meanwhile, in the past week Bank of America has announced a 77 percent drop in earnings, calling into question even the safety and soundness rationale for allowing the second largest U.S. bank to buy a troubled subprime mortgage lender. The impunity factor has risen, with the news that Countrywide's Angelo Mozillo made $121 million in 2007 alone, exercising Countrywide  stock options, while promoting predatory lending and foreclosures all over the country.

While the grounds include not only lending disparities but also predatory credit card practices, enabling of payday lenders, presumptive violation of the 10% deposit cap and money laundering, since this is in California, consider that in the first study of the just-released 2007 mortgage lending data, Inner City Press / Fair Finance Watch has identified worsening disparities by race and ethnicity in the higher-cost lending of Countrywide and Bank of America. Combining these two would only make things worse.

            In the state of California in 2007, Countrywide confined African Americans to higher-cost loans 1.43 times more frequently than whites. If combined with Bank of America, N.A., the disparity for African Americans grows to 1.54.  Watch this site -- and, on international issues, this streaming video http://www.bloggingheads.tv/diavlogs/10560#

April 21, 2008

            In the run-up to the April 22 public hearing on Bank of America's application to acquire Countrywide, Inner City Press / Fair Finance Watch has identified worsening disparities by race and ethnicity if the higher-cost lending of Countrywide and Bank of America were allowed to be combined.  The large and troubled Countrywide Financial, which Bank of America has applied to buy, confined African Americans to higher-cost loans 1.95 times more frequently than whites, and denied the applications of Latinos 1.53 times more frequently than whites.

            Combining Countrywide and Bank of America would only make things worse. In the state of California in 2007, Countrywide confined African Americans to higher-cost loans 1.43 times more frequently than whites. If combined with Bank of America, N.A., the disparity for African Americans grows to 1.54. 

            Similarly, in the state of Delaware in 2007, Countrywide confined African Americans to higher-cost loans 1.84 times more frequently than whites. If combined with Bank of America, N.A., the disparity for African Americans grows to 1.94.  The disparities for Latinos would also increase, from 1.29 to 1.32.

April 14, 2008

            As lenders claimed to cut back on subprime lending in 2007, a new ICP Fair Finance Watch study has found that HSBC and Wells Fargo continued making super high cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities. Using 2007 Home Mortgage Disclosure Act data that was required to be released on March 31, ICP Fair Finance Watch has found 3396 such loans by HSBC, at interest rates up to a whopping 19.75% over comparable Treasury bond rates. Fully three-quarters of HSBC's loans to African Americans in 2007 were subprime loans, as these are defined by the U.S. Federal Reserve Board.

            The HMDA data for 2007 is the fourth year in which the data distinguishes which loans are over the FRB-defined "rate spread," of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. 

            Wells Fargo, while making 381 HOEPA loans in 2007, placed African Americans in subprime loans 2.43 times more frequently than whites, and denied the applications of Hispanics 1.56 times more frequently than whites.

            GMAC, including its subsidies DiTech, HFN and Residential Funding, while making 80 HOEPA loans in 2007, placed African Americans in subprime loans 2.03 times more frequently than whites, and placed Hispanics in subprime loans 1.66 times more frequently than whites.

            Milwaukee-based M&I, a stealth subprime lender, in 2007 placed African Americans in subprime loans 2.45 times more frequently than whites. 63.35% of its loans to African Americans were subprime, versus only 25.89% of its loans to whites.

April 7, 2008

            In the first study of the just-released 2007 mortgage lending data, Inner City Press / Fair Finance Watch has identified worsening disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. The findings call into question the use of JPMorgan Chase to bail-out Bear Stearns, and Bank of America's proposal to acquire Countrywide Financial. 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.

            JPMorgan Chase in 2007 confined African Americans to higher-cost loans above this rate spread 2.44 times more frequently than whites, according to Fair Finance Watch. Chase's disparity to Latinos was 1.60. The percentage of Chase's loans which were over the rate spread actually went up from 2006 (19.28%) to 2007 (20.96).

            In its headquarters Metropolitan Statistical Area (MSA) of New York City, Chase confined African Americans to higher-cost loans above the rate spread 2.92 times more frequently than whites. Chase's disparity to Latinos was 2.50.

            In the New Orleans MSA Chase confined African Americans to higher-cost loans above the rate spread 2.25 times more frequently than whites. It denied over 50% of mortgage applications from African Americans. Meanwhile the Federal Reserve is bending if not breaking applicable law to allow Chase to acquire Bear Stearns and bail it out from its speculative involvement in predatory lending.

"These disparities in Chase's lending must be considered and acted on," says Inner City Press. "Particularly in New Orleans in the wake of Hurricane Katrina, Chase's denying of 50% of applications from African Americans requires an investigation, including Chase and other large banks on the Gulf Coast."

            Bank of America in 2007 confined African Americans to higher-cost loans 1.88 times more frequently than whites, and denied the applications of Latinos 1.62 times more frequently than whites. Meanwhile, the large and troubled Countrywide Financial, which Bank of America has applied to buy, confined African Americans to higher-cost loans 1.95 times more frequently than whites, and denied the applications of Latinos 1.53 times more frequently than whites.

            The U.S. Federal Reserve Board, while still trying to avoid any public comments on or review of the controversial Bear Stearns - JPMorgan Chase bail-out, has agreed to hold public hearings on Bank of America's Countrywide application, in Los Angeles on April 22 and in Chicago on April 29. Inner City Press and Fair Finance Watch had requested the public hearings, and in preparation are submitting to the Federal Reserve that Countrywide in the Los Angeles MSA in 2007 confined 18.91% of its African American borrowers to higher cost loans over the rate spread. Countrywide in the Chicago MSA in 2007 confined African Americans to higher-cost loans 1.93 times more frequently than whites, while confining Latinos to higher-cost loans 1.35 times more frequently than whites.

            "Given Countrywide's disparities and its ongoing foreclosure practices, the Federal Reserve should not allow Bank of America to acquire it has proposed," Fair Finance Watch says.  "The golden parachutes are just a form of impunity."

            Citigroup in 2007 confined African Americans to higher-cost loans above this rate spread 2.33 times more frequently than whites. Fully 109,511 of Citigroup's 448,542 mortgages in 2007, or 24.41%, were high cost loans over the rate spread.

            In its headquarters Metropolitan Statistical Area of New York City, Citigroup was even more disparate, confining African Americans to higher-cost loans above the rate spread 2.61 times more frequently than whites. Citigroup's disparity to Latinos was 1.90.

            Citigroup was most disparate in home purchase loans, confining African Americans to higher-cost home purchase loans above the rate spread 3.41 times more frequently than whites. Citigroup's disparity to Latinos was 1.76. Citigroup has acquired Argent, an affiliate of Ameriquest which, like Citigroup, has settled governmental charges of predatory lending.

            "How the 2007 data of defunct lenders like Ameriquest, New Century, American Home Mortgage and others is being reported is not clear," Fair Finance Watch notes. "The regulators have a duty to make sure those loans are reported, particularly by those still buying predatory lenders, such as Citigroup, HSBC, Merrill Lynch and Deutsche Bank."

            At Wachovia, Latinos in 2007 were confined to high cost loans 1.71 times more frequently than whites.

            Washington Mutual in 2007 confined African Americans to higher-cost loans above this rate spread 2.05 times more frequently than whites. Fully of 54,914 WaMu's 261,476 mortgages in 2007, or 21%, were high cost loans over the rate spread. 

            Royal Bank of Scotland, one of the largest banks in the world, through its U.S. subsidiaries in 2007 confined African Americans to higher-cost loans above the rate spread 1.76 times more frequently than whites. It denied over 66% of mortgage applications from African Americans, and over 62% of applications from Latinos.

            National City 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 in 2007 confined African Americans to higher-cost loans above the rate spread fully 2.2 times more frequently than whites.

            Suntrust in 2007 confined African Americans to higher-cost loans 2.51 times more frequently than whites, and denied the applications of African Americans 2.34 times more frequently than whites. Fully 15,435 of Suntrust's 2007 loans were high cost loans over the rate spread.

            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.

Methodology and scope of review: ICP Fair Finance Watch reviewed, using the SPSS program [Statistical Package for the Social Sciences], Countrywide Financial's 3,517,321 loan mortgage application records for 2007, 912,814 of which were originated loans, 157,409 (or 17.24%) of these over the rate spread. JPM Chase reported 989,683 loan mortgage application records for 2007. Citigroup in 2007 reported 1,540,325 loan application records; Wachovia reported 737,875 records. US Bancorp reported 313,908 records, including 19,206 high cost loans over the rate spread. Suntrust reported 395,188 records, including 15,435 high cost loans over the rate spread. Washington Mutual in 2007 reported 643,765 mortgage records, including 54,014 high cost loans over the rate spread.

March 31, 2008

  While the Federal Reserve at least agreed to hold two public hearings on Bank of America's application to buy Countrywide Financial, it has remained silent on its highly-questionable bail-out of Bear Stearns via JPM Chase. ICP Fair Finance Watch has submitted a second comment:

                        March 30, 2008

Board of Governors of the Federal Reserve System
Attn:  Chairman Ben Bernanke, and Secretary & FOIA Officer
20th St and Constitution Ave, N.W. Washington, DC 20551 c/o FRBNY 

Re:       Second Comment and Freedom of Information Request Regarding the FRS' Communications with, Consideration and Authorization of JPMorgan Chase  (with its affiliates, "Applicants") to lend to and acquire Bear Stearns (with its affiliates, "Target")

Dear Chairman Bernanke and others in the FRS: 

            On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a second comment and request under the Freedom of Information Act (5 U.S.C. § 552; "FOIA") regarding the Federal Reserve System's (the "FRS'") communications with, consideration and authorization of JPMorgan Chase  (with its affiliates, "Applicants") to lend to and prospectively acquire Bear Stearns (with its affiliates, "Target").

            While JPM Chase is claiming that it somehow has the necessary regulatory approvals, it is imperative that the FRB conduct a public review of this unprecedented proposal, including in light of the material hereby formally submitted to the FRS. ICP hereby contends that regulatory approval is needed, that public input must be allowed, and that the FRB is conflicted in reviewing this transaction and these requests, as it has become a participant in the deal and underlying predatory loans. 

            Bear Stearns' involvement in questionable subprime lending led to its problems. Now it has emerged, with documentary proof, that JPM Chase has been involved systemically in the worst forms of predatory lending, fraudulently inflating borrowers' income in order to make loans they can't afford. See, now in the public record, Chase's memo about how to "game" its ZiPPY system:

ZiPPY Cheats & Tricks...

If you get a "refer" or if you DO NOT get Stated Income / Stated Asset findings.... Never Fear!! ZiPPY can be adjusted (just ever so slightly)
 
Try these steps next time you use Zippy! You just might get the findings you need!!

* Always select "ALTERNATE DOCS" in the documentation drop down.  

* Borrower(s) MUST have a mid credit score of 700.

* First time homebuyers require a 720 credit score.  

* NO! BK's OR Foreclosures, EVER!! Regardless of time!

* Salaried borrowers must have 2 years time on job with current employer .  

* Self employed must be in existence for 2 years. (verified with biz license)

* NO non-occupant co borrowers.

* Max LTV/CLTV is 100%

Try these handy steps to get SISA findings . . . 
1) In the income section of your 1003, make sure you input all income in base income. DO NOT break it down by overtime, commissions or bonus. 

2) NO GIFT FUNDS! If your borrower is getting a gift, add it to a bank account along with the rest of the assets. Be sure to remove any mention of gift funds on the rest of your 1003.

3) If you do not get Stated/Stated, try resubmitting with slightly higher income. Inch it up $500 to see if you can get the findings you want. Do the same for assets. 

It's super easy! Give it a try! If you get stuck, call me . . . I am happy to help!

See also, 

Subj: Chase Home Finance LLC 
Date: 3/27/2008 11:31:14 P.M. Eastern Daylight Time
From: [Name withheld in this format]
To: Inner City Press

 Please take a look at what Chase Home Finance LLC is doing. 

If it weren't happening to me, I would think this was a scam.

They haven't to my knowledge started any foreclosure proceedings yet, but although I am current on both my mortgages, they are sending letters/statements that I am 2 months behind. 

Here in Georgia (a non-judicial state for foreclosures) one only has to be 3 months behind.

I have emailed Chase, written to them, to no avail.  I refuse to answer their calls as I find them to be harassing and the one time I did call them, I was assured that all was well.  Yet I still receive incorrect statements. 

Something needs to be done on behalf of those who have already fallen prey and those who may become victims.

            Not only due to the highly-questionable FRB assistance to the bail-out of a bottom-feeding investment bank by an above-confirmed predatory lender, but also the above consumer fraud issues, the FRB must hold public hearings.

March 24, 2008

 The Ohio Civil Rights Commission has ruled there is evidence that Argent Mortgage, which Citigroup has bought and now owns, discriminated against African Americans by targeting them with predatory home loans. The sample case is that of Elizabeth Redrick, a 77-year-old Cleveland resident who was promised by a mortgage broker that her Argent refinance loan would result in lower payments and much-needed cash to pay bills. Redrick's monthly payments on the Argent loan were higher than originally promised and that the new mortgage did not pay off a personal-finance loan as she had hoped. Redrick received only $651 in cash from her refinanced mortgage. Loan documents show that the broker submitted two applications on Redrick's behalf. One application noted that she was white and had a monthly income of $2,630. The other application correctly said that she is black and earns $1,871 a month. The broker who submitted the mortgage to Argent made more than $5,000 from the deal. And Citigroup bought Argent...

Since the Federal Reserve        is essentially a participant in the JPM Chase-Bear Stearns deal, how can it purport to regulate it? And since the Fed is now an interested party in how Bears' portfolio of subprime loans performs, how can it be objective?

    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 exotic consumer loans are discredited in the United States, General Electric takes them overseas. In Singapore, GE Money brags of introducing a loan product called James, "with last installment waiver; pay interest only; payment holiday; step up or step down interest rate," according to Alok Kumar, chief marketing officer at GE Money Singapore. Ah, GE's export of predatory lending...

From testimony on Capitol Hill on March 13 --

"I came today to testify about my husband's credit card. It was CitiFinancial. He had been a customer for at least 10 years, no late payments, no over the limit. Twice last year, we were over the -- not over the limit, but we made the payment late, and only by a matter of one -- it was like an hour past 5 o'clock, so it was considered the next day. And the other one, we were on vacation. By the time we got back, it was maybe four days late. My interest went from 12.99 percent to 31.40 percent. So when I got the bill in the mail, I was happy to see that I had to pay an extra $400 to $500 every month on my payment. And the interest that was being paid on the card was -- we used to pay maybe $205. It was over $600 in interest.

We tried to work with the card company. They said they'd refer it in six months if we had a good standing. I just felt that's very unfair. Nowadays, who can afford to pay an extra $400 or $500? I understand we were late, don't dispute that. I just wish they'd be more fair in the rates that they're choosing, whether -- even though we were a customer for so many years, there's other people out there that just have situations nowadays. I mean, it's hard out there. Just listen to people, taking consideration before you double and triple their payment. It's just crazy to me...I went on the Web site, just jotted this story down. And, you know, my husband always says things just don't get done in government. That's why he's not here; he has a bad attitude.

But, I mean, something's happening now. They contacted me. Things are being done. And from the hearing today, I really don't believe that -- their argument is, "Oh, it's only a small percentage of people that this happens to." So I urge everyone out there with this kind of story to just send it in..."

  Yep.

March 10, 2008

            Foreclosure tales from New York, by a charter-bus driver in the East Bronx who has a mortgage payment that went from $2,482 to $3,500 a month. I had a two-year teaser rate, now going up every six months to a maximum of 13.2 percent, "I spoke to Wells Fargo.  I tried to get them to keep the rate at the teaser rate, 6.8 percent...  I'm in a home that cost us $35,000 in the sixties. We refinanced three times, and we owe $400,000."

            The ACJ notes that in September, Citigroup bought the assets of the mortgage servicing company owned by Ameriquest's parent, ACC Capital Holdings. It also bought the assets of Argent Mortgage. That deal gave Citigroup the servicing rights for the Andronicas' mortgage and $45 billion in other loans... A Citigroup spokeswoman said Friday that the lender was awaiting information from the Andronicas to "determine their eligibility for a modification." Kelly and David Andronica think Citigroup should make things right, especially since the problems with Ameriquest loans were well known when Citigroup decided to buy the Ameriquest servicing company.

  And see, on Inner City Press and free speech, www.bloggingheads.tv/diavlogs/9329#

March 3, 2008

            Now Citigroup, HSBC, JPMorgan Chase, Bank of America, Wells Fargo, U.S. Bancorp, First Horizon National Corp and National City must file reports on their mortgage delinquencies and foreclosures with the Office of the Comptroller of the Currency. Information from October 2007 through February is due by March 31. Better late than never.

            Also on Citigroup, a stock analyst chimes in that, "I do not believe that Mr. Pandit has a strong commitment to this business in the US. He is more oriented to overseas expansion."  The same article quotes "Edward B. Kramer, executive vice president for regulatory programs at PCi Corp. in Waltham and a former banking regulator in New York state... whose firm does consulting work for Citi, that 'Sometimes the branch itself doesn't have to be in a low- or moderate-income tract to serve people who live in adjacent and surrounding low- and moderate-income areas.'" But then why don't the regulators act on branch closings in middle income tracts which impact customers in "adjacent and surrounding low- and moderate-income areas"?

            Die Welt reports that GE "aims to take advantage of the financial crisis to acquire businesses, especially financial service providers, in Germany, commenting that some companies will be urgently seeking buyers. Financial services represent one of the main activities of GE, which, in Germany, is active on niche markets through specialized subsidiaries such as Disko Leasing, which provides financing for vehicles and aircraft, among other objects, and GE Money Bank, active in private customer business, which counts 500,000 customers in Germany." So GE helps trigger the subprime crisis, through WMC and otherwise, then seeks to profit on it by buying impacted companies in Germany and elsewhere...

  In Russia, GE Money Bank in October-December 2007 put advertisements on the 1st Channel, Russia and STS TV channels, urging to borrow up to 300 thousand rubles at the interest rate starting from 15% annual on their terms. "The minimum interest rate on credits and the indication of a change in the interest rate were announced in the advertisement, while the other conditions determining the value of the credit were given in a small and illegible print at the last second of the commercial. That did not allow the consumer to perceive the information indicated," the regulator FAS says in a statement. According to FAS, the form of presenting the information on the credit "wasn't perceived by the consumers". Yep, that's GE, always illuminating, until darkness suits them better.

February 25, 2008

            Again, the export of predatory lending. In Russia, GE Money has reportedly by fined by the Federal Antimonopoly Service for " improper and deceptive loan advertisement"-- that is, for predatory lending. In Australia, furniture seller on credit "Gerry Harvey didn't become a billionaire by letting you drop potato chips on a couch interest-free for 24 months. He sells the debt on to GE Money. It in turn sticks you with ultra-high interest loans at the end of the term. One report had a bloke buy a $600 fridge on an interest-free deal. Perhaps sensing he needed money for groceries, GE sent him a $10,000 line of credit -- where any extra spending attracted a rate of 27.99 per cent. Flexi-renting can be confusing, so let's give an example from the Consumer Credit files. One consumer decided to flexi-rent a notebook computer worth about $2000, which worked out at $4.94 a day. After 36 months the rental paid was $4982.04, at which time they had an option to buy the computer for an unspecified "market value." Scamming around the world...

            So Citigroup's Global Transaction Services unit was handed a 10-year contract from the U.S. Department of Defense to provide 1.2 million travel cards to the Army, Navy, Marine Corps, Air Force and about 20 other independent agencies. The new travel cards will activate on Nov. 30-- but how was Citigroup selected? Did the DoD take into account not only Citi's predatory lending, but its new ownership structure? What safeguards are in place? Let's see...

February 18, 2008

  As CRA was testified about in the House of Representatives last week, at the UN in New York, analogy was made between the subprime mortgage meltdown and the undisclosed risk of climate change.

The world of high finance tipped its hat to the environment Thursday in the UN. During an Investor Summit on Climate Risk, the heads of the pension funds of several states came out to brief the press. John Chiang, the Controller of California who claimed that his state's pension fund has only "de minimus" involvement in subprime mortgage securities, said the world must turn away from coal and find new energy sources. Moderator Mindy Lubber said that global warming risk, like the subprime mortgage market, constitutes an "uncalculated risk" which could harm communities and investors. She spoke of an 80-page petition filed with the Securities and Exchange Commission lobbying for greater environmental disclosure in annual Form 10-Ks.

            Inner City Press asked if similar pressure is being brought to bear on the Federal Reserve and, globally, on the Basel Committee on Banking Supervision. Video here, from Minute 42:21. Ms. Lubber said no, that large banks are also regulated by the SEC. So next stop, Federal Reserve...

From GE Money in Australia, this: "We have people sitting in stores with calculators working out that it's cheaper to take in-store finance on goods they need, while making better use of their funds to pay off the mortgage,'' GE Money retailer solutions managing director Skander Malcolm said. "With big-ticket items, they are even more attracted to the product. For the segment under stress, we've noticed that the rising price of petrol, as much as interest rates, is causing the weekly challenges,'' Malcolm says. In-store finance can be cheaper than relying on credit cards or personal loans, but many finance schemes become more expensive if the buyer does not pay off the debt in full within the interest-free period. Neat trick...

February 11, 2008

    As an indicator that savvy predatory lenders for now look beyond the United States, GE Money announced last week that it will move its headquarters out of the U.S., to London. While U.S. consumers continue to suffer from the bender that GE's WMC unit went on -- last week, a GE / WMC loan on Staten Island in New York was deemed unenforceable by a court, as predatory -- GE Money India is seeking a partner for its personal loans and mortgage business. Elsewhere, the company has formed a joint venture with Wizard Home Loans of Australia for its home loans business.

            Meanwhile CitiFinancial has its arbitration clause stuck down in a case in North Carolina, where the court found that CitiFi "had initiated 3,700 actions in civil court -- 2,000 collections and 1,700 foreclosures. In that same span, there had been neither a civil action nor an arbitration launched by a borrower," because of obstacles in the arbitration clause, a contract of adhesion...

            In subprime fall-out from the U.S. across the Atlantic, Merrill Lynch is reportedly set to pull out of its 300 million subprime joint venture with Irish Life & Permanent (IL&P). This comes barely a year after Merrill Lynch and IL&P launched Springboard Mortgages, which offers high cost subprime loans. In the U.S., Merrill has announced losses of almost $10 billion in the last three months of 2007, forcing the sale pieces of the company to foreign investors.

            This hasn't stopped Merrill from promoting itself with a page on the program of the mis-conceived Gucci / Madonna event held February 6 on the North Lawn of the UN, the over-commercialization of which was reported as far away as Australia, click here to view (cites Inner City Press, and see this, which links in Deutsche Bank). And so it goes...

February 4, 2008

     For those who think subprime sleaze is a lesson that's been learned, think again. Citigroup last week opened the 2500th storefront of its subprime unit CitiFinancial, which has twice settled governmental charges of predatory lending. It is Citi's growth unit, offering higher priced credit in strip malls nationwide. Few reforms have been implemented on real estate-backed loans, fewer still on Citi's personal loan portfolio. Meanwhile CitiFinancial's CEO Mary McDowell told the American Banker last week, in an article referencing obliquely ICP and this critique, "'We spend a lot of time with community groups to understand what their issues with us were... There is a reason you don't hear about us' from those groups, she said." But time is not all the Citi's spent...

  Predator caught... in Australia. A finance company investigated for lending money to indigenous people unable to make repayments has paid almost $100,000 to an Aboriginal support group in far north Queensland. The Australian Securities and Investments Commission investigated about 200 loans from United Financial Services Queensland to indigenous borrowers between 2003 and 2005. ASIC acting executive director of consumer protection, Delia Rickard, said most of the loans were arranged through banks to buy second-hand cars. Many borrowers accepted loans of about $20,000 from the Commonwealth Bank and other lenders despite having incomes of as little as $200 per week.  Sounds like CitiFinancial in such places as Tennessee...

  Japan's Mizuho Financial Group said its subprime-related loss for the nine months ended Dec. 31 more than doubled from its forecast two months ago to 345 billion yen ($3.24 billion). It warned that the damage could grow to 395 billion yen for the year ending March 31. Mizuho's net profit for the April-December period tumbled 32% from a year earlier to 393 billion yen. For the full fiscal year, it now forecasts a group net profit of 480 billion yen, down 23% from the previous year.  Hate to say it, but we told ya so...

At the UN, George Clooney Says that in Lockheed Martin's Sole Source Darfur Deal, Mistakes Were Made; click here for video debate.

January 28, 2008

   Royal Bank of Canada is seeking to conceal information about not only its merger plans but also its purported fair lending plans, in a response to the U.S. Federal Reserve Board a heavily redacted copy of which is now online. At the end of 2007, Fair Finance Watch challenged RBC's application to acquire Alabama National BanCorporation, based on racial disparities in RBC's lending and announcements of deal-related layoffs before any regulatory approval had been obtained. RBC denied the charges, through a spokesperson. Then in a filing with the Federal Reserve which RBC was required to send to Fair Finance Watch, RBC blacked-out almost all of its response on the layoffs and fair lending issues. Whether the Federal Reserve will, as would seem to be required by the Freedom of Information Act, release the withheld information remains to be seen.

            According to the most recent data Royal Bank of Canada has filed as required by the Home Mortgage Disclosure Act, RBC in 2006 disproportionately excluded and denied the applications of African Americans and Latinos. In the Charlotte, North Carolina Metropolitan Statistical Area (MSA), RBC Centura denied the mortgage refinance applications of African Americans 4.44 times more frequently than those of whites....While demonstrably 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. Fair Finance Watch submitted evidence to the Federal Reserve of RBC loans to E Z Cash Pawn in Clayton County, Georgia and Pawn Outlet of Skyland, Inc., of Skyland, North Carolina. Based on that showing, the Federal Reserve Board on January 11 asked for  description of RBC's "business relationships with any unaffiliated alternative financial services provides."

            In response, RBC admitted that it "maintains relationships with some clients who are alternative service providers. These clients include check cashing business and pawn shops." The Federal Reserve also asked, based on the challenge filed by Fair Finance Watch, about a report of deal-related layoffs, and about RBC's "consumer compliance and fair lending policies and procedures." In its response, RBC blacks out more than half the page, including an entire paragraph purportedly about fair lending. What is RBC so embarrassed about?

January 21, 2008

            Try this on for irony -- Paulson & Co., the New York-based hedge fund which made massive money off the foreclosure frenzy in which predatory lender culminated, has put Alan Greenspan, who at the Fed allowed it all to happen, on its advisory board...

            Chuck Prince, whose predatory frenzy at Citigroup resulted in firing with a $31 million golden parachute, has received an invitation to testify from the House Oversight and Government Reform Committee: "According to press reports, you collected tens of millions of dollars in payments and other compensation upon your departure from Citigroup... You should plan to address how it aligns with the interests of Citigroup's shareholders and whether this level of compensation is justified in light of your company's recent performance and its role in the national mortgage crisis." Countrywide's Mozilo, too, should be in that mix, prior to any windfall from Bank of America...

            On Toronto Dominion's application to buy Commerce Bank, despite an evasive purported response from TD's law firm Simpson Thatcher, TD has had to re-apply to the Federal Reserve, opening up a new comment period...

January 14, 2008

            There's been a story that Washington Mutual had exploratory merger talks with JP Morgan Chase, since WaMu's subprime lending has gotten it into such financial straits. A follow-up article said that JPM Chase-WaMu would still be below the 10% nationwide deposit cap. Meanwhile Bank of America is arguing that the 10% deposit cap will not prevent its proposed acquisition of Countrywide, since Countrywide holds its deposits in a savings & loan. But then the
10% deposit cap means nothing -- an institution could just shift deposits into a savings and loan and keep on buying up other institutions. We'll see. Countrywide's Angelo R. Mozilo has pocketed $410 million in salary, bonuses and stock-option gains since 1999, according to the executive compensation company Equilar. Now he stands to collect an additional $112 million in severance if Bank of America buys Countrywide. Predatory profits..

            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...

    Wells Fargo was sued last week by the City of Baltimore for predatory and discriminatory lending. The U.S. Conference of Mayors projected that 361 metropolitan areas would take an economic hit of $166 billion in 2008 because of the foreclosure crisis. The Baltimore area was expected to lose more than $1.6 billion in economic output, according to the Conference of Mayors...

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...

January 7, 2008

   Because of the subprime meltdown, there have been very few bank mergers of late. The largest at present is TD Banknorth seeking to scoop up Commerce, which has been opposed not only by Inner City Press / Fair Finance Watch, but also now by DCRAC. Whether opposition will ultimately come from New Jersey as well is not yet known, see, e.g., "Activist fights TD-Commerce Bancorp deal, citing racial gap," by Richard Newman, Bergen Record, Jan. 1, 2008, Pg. L7.

   Meanwhile, even the stock analysts are now 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

A November 5 lawsuit, which is seeking class-action status, against Citigroup asserts that Citi issued false statements in its November 4 announcement that it would write off $8 billion to $11 billion in the fourth quarter for assets linked to subprime mortgages, losses that spurred the resignation of Chuck Prince. A participant in Citi's retirement plan, of which 32 percent plan is comprised of Citi  shares, alleges that the stock is “an imprudent investment” for the program and that risky mismanagement caused the plan to lose well over $1.3 billion in retirement savings. Another shareholder lawsuit followed on November 7, stating Citi  officials “recklessly spent billions of dollars of subprime loans leading to losses.” Yep. This is called the chickens coming home to roost...

December 31, 2007

   It never stops. Inner City Press / Fair Finance Watch (ICP) has just filed a challenge to the application by Toronto Dominion Banknorth (TD) to acquire Commerce Bancorp, based on worsening lending disparities at TD Banknorth, on TD's continuing funding of fringe financiers such a pawnshops, its settlement, with a gag order no less, of discrimination charges, abuse of consumers on exchange rates and even on withdrawing their own funds, TD Banknorth's previous branch closings and other issues (see, e.g., "New problems beset TD Banknorth," Toronto Star, July 21, 2007), public hearings should be held, and on the current record, TD's proposals should not be approved. The proposed merger would also be anti-competitive, in the Camden, New Jersey market (where the combined company would control over 40% of deposits) and elsewhere.

            Mortgage lending (HMDA) data reported for 2006 show that TD Banknorth disproportionately excludes and denies African Americans and Latinos. In 2006 TD Banknorth in the Newark, New Jersey Metropolitan Statistical Area (MSA) denied the mortgage refinance applications of African Americans 4.44 times more frequently than those of whites. In the Wilmington, Delaware MSA, TD Banknorth in 2006 denied the home improvement mortgage applications of African Americans 2.85 times more frequently than those of whites. In the Boston MSA, TD Banknorth in 2006 denied the mortgage refinance applications of African Americans 2.3 times more frequently than those of whites.

            In the New York City MSA, TD Banknorth strikingly excluded African Americans from its marketing, outreach and lending. For home improvement loans, of which TD Banknorth made 126 loans to whites based on 266 applications of which it denied 115 (43.2%), TD Banknorth processed only 46 applications from African Americans, denied 35 of them (76.1%). For refinance loans, of which TD Banknorth made 10 loans to whites, TD Banknorth received nine applications from African Americans, and denied ALL of them.

            While strikingly excluding people of color from its offers of normally-priced, prime credit, TD's Banknorth has continued funding and enabling predatory / fringe financiers such as high-cost pawnshops. As simply one example:

MAINE SECRETARY OF STATE, UCC RECORD

Debtors: LEWISTON PAWN SHOP, INC.

Debtor Address: LEWISTON PAWN SHOP, INC.
                379 LISBON STREET
                LEWISTON, ME 04240

Secured Parties: TD BANKNORTH, N.A.

Secured Party Address: TD BANKNORTH, N.A.
                       ONE PORTLAND SQUARE
                       PORTLAND, ME 04101

Filing Type: INITIAL FILING

Filing Date: 10/4/2007

Expiration Date: 10/4/2012

Filing Number: 2070001882881

Filing Office: SECRETARY OF STATE/UCC DIVISION
               STATE HOUSE
               AUGUSTA, ME 04330

   TD's previous acquisitions in the U.S. have been followed by charges of discrimination, which TD has settled apparently in exchange for gag orders. See, e.g., " Banknorth settles ageism lawsuit," Burlington Free Press (Vermont), February 8, 2007 --

"Banking firm TD Banknorth has settled an age-discrimination lawsuit filed by a former executive who accused the company of firing her without cause and replacing her with two younger employees. Anita Petroziello of Colchester alleged in a federal lawsuit that Maine-based Banknorth fired her in 2004 because she was in her 60s and had complained about mistreatment as she grew older.

"The company denied wrongdoing, according to court papers filed in U.S. District Court in Burlington. Terms of the settlement, which was announced in a one-page court filing dated Jan. 31, were not disclosed. Petroziello had sought an unspecified amount of damages, interest and legal fees. The settlement document said Petroziello and her attorney, John Franco Jr. of Burlington, met with lawyers for Banknorth during a 4-hour session in Arlington in late January.

"Franco said neither he nor his client could discuss the case. 'We have no option but to say no comment,' he said."

            That's called a gag order, and one the Federal Reserve should not accept / should inquire behind. There are numerous negative managerial factors at Toronto Dominion. See, e.g., " Court allows currency charge class-action suit against TD," Globe and Mail, November 16, 2007--

"Ontario's Court of Appeal has given the go-ahead for what could be a huge class-action lawsuit against Toronto-Dominion Bank that claims credit card holders were overcharged on foreign currency conversions. The ruling, written by Ontario Chief Justice Warren Winkler, overturns lower court decisions that had blocked class-action status for the suit. If the claimants are successful, it could potentially cost the bank hundreds of million of dollars.

"The lower court judges had said it would be too complex to determine damages if the case were won, and that was reason enough to refuse certification. Chief Justice Winkler disagreed, and his ruling allows the suit to proceed.

"The suit was initiated by Windsor, Ont., university administrator Paul Cassano, a TD Visa card holder. After a 1994 trip to New York City he discovered the foreign-exchange conversion costs on U.S. dollar purchases included a 'conversion fee' and an 'issuer fee.' He claimed these were undisclosed in the cardholder agreement... In his ruling, [Chief Justice Winkler] was scathing about TD's argument it would be enormously expensive and time-consuming to figure out how much each cardholder was charged on individual foreign-exchange transactions."

            Toronto  Dominion is also being sued for improperly withholding its own depositors' funds, see, e.g., The Toronto Star of March 29, 2007 --

"A Toronto business law firm has started a class-action lawsuit against Toronto Dominion Bank over delays in depositor access to their money. The action by Juroviesky and Ricci follows similar litigation filed last week by the same firm against the Bank of Montreal, and partner Henry Juroviesky said yesterday the other banks also may be in line for lawsuits. 'We are investigating other suits against the remaining large banks,' Juroviesky said in an interview. The actions against TD and BMO are on behalf of bank clients who in the past six years have made deposits but been unable to access their money quickly because the banks held the funds. The claims allege the banks wrongfully withheld the proceeds of cheques, wire transfers or other deposits after they had received payment."

            As stated, the proposed merger would also be anti-competitive, in the Camden, New Jersey market (where the combined company would control over 40% of deposits) and elsewhere.           There are overlaps in Connecticut (2 counties), New Jersey (10), New York (3), and Pennsylvania (4). FFW timely requested public hearings, on competitive effects and the other issues raised.

            In its preliminary proxy, as summarized by the American Banker newspaper of Nov. 13, 2007 --

"Commerce disclosed that its board considered selling itself immediately after it said June 29 that it had signed a consent order with regulators, and that Vernon W. Hill 2nd was forced to resign as its chairman and chief executive. On July 2 the board met for the first time with Goldman and with Sullivan & Cromwell LLP, which Commerce had hired only weeks before as its legal adviser, to discuss a sale...Thirteen of the companies contacted by Goldman "indicated either that their business models were not compatible with Commerce's ... or that they would not be willing to pay a premium to Commerce's then-current market price," the filing said. Two others backed off after receiving more information about Commerce; they also cited the largely organic retail banking focus. One company made a no-premium bid. Only Toronto-Dominion, through its Portland, Maine, subsidiary, TD Banknorth Inc., offered a premium - 6% when the deal was announced."

            TD's past acquisitiveness has bred litigation, and negative financial results, see, e.g., "New problems beset TD Banknorth after judge rejects shareholder deal; Merger price cash hike 'insufficient,' court rules," Toronto Star, July 21, 2007 --

"Toronto Dominion Bank's newly privatized U.S. subsidiary could be facing more legal woes now that a Delaware judge has tossed out its settlement of a shareholder lawsuit relating to its $3.2 billion (U.S.) buyout. The decision raises the spectre of a potential trial in the case and is the latest in a string of problems for TD Banknorth, which slashed jobs and closed a slew of branches after being swallowed whole by its Toronto-based parent earlier this year.

"TD Banknorth had struck a $4 million settlement with a group of investors who launched a lawsuit over the going-private transaction. That deal included a sum of $3 million, or about three cents a share, and an additional $1 million to cover legal fees, according to court documents. Some shareholders, however, were unhappy with that amount and the court ultimately rejected the agreement citing 'inadequacies in the settlement notice.'

"'Based on the record submitted ... the court concludes that the plaintiffs unreasonably failed to press legitimate legal claims against the defendants before consenting to the settlement," wrote Judge Stephen Lamb of Delaware Chancery Court in Wilmington in a decision earlier this week. 'As a result, the class members appear to have received insufficient consideration in the form of a token cash increase in the merger price, a virtually meaningless change in the calculation of the vote, and several proxy disclosures for which the plaintiffs cannot even wholly claim credit'...  Last November, Toronto Dominion Bank announced plans to buy the 43 per cent of TD Banknorth that it didn't already own for $3.2 billion, or $32.33 per share.

"The transaction concluded this spring after the Portland, Maine-based bank replaced its top executive and announced plans to mothball up to 24 branches and eliminate about 400 jobs to cut operating expenses. With 27 mergers in 12 years, Banknorth has been a major acquisition vehicle for its Canadian parent, but its sub par earnings have been a drag on its bottom line."

            For the protection of consumers and communities, as well it seems of TD Banknorth, Commerce and their shareholders, public hearings should be held, and on the current record TD's proposals should not be approved.

   Be aware -- it is Citifinancial's and HSBC's Household's position that it can access credit reports even of a person who has not applied to it for credit. In Enoch v. Dahle/Meyer Imports, L.L.C., et al., No. 2:05-CV-409 TC (D. Utah 11/16/07, a consumer tried to hold her car dealer, two lenders, and a credit reporting agency liable after she was denied credit. Rosaline Enoch went to Dahle Mazda to buy a vehicle. Enoch chose a car and signed a note for a down payment. Enoch also signed a contract of sale, which stated that the dealership agreed to seek financing for the car loan. Allegedly, the dealership led Enoch to believe that it already had arranged financing. CitiFinancial Auto Corp. and Household Auto Finance Corp. denied Enoch credit, and the dealership was unable to arrange other financing. Dahle demanded that Enoch pay for the car or agree to rescind the deal, in which case Dahle would return the money Enoch had paid. Enoch surrendered the car and subsequently sued... The court concluded that when Enoch signed the contract with Dahle, she authorized the dealership to seek credit on her behalf. "Consequently - even though Ms. Enoch did not request credit directly from CitiFinancial and Household - there is no question that Ms. Enoch participated in the request for credit," the court wrote. Be afraid - be very afraid...

December 24, 2007

   As the subprime foreclosure wave continues to gather strength, a major Wall Street (and Frankfurt) player, Deutsche Bank National Trust Company, has issued a memorandum purporting to urge its servicers to exercise restraint or at least discretion in evicting tenants from rental properties, and, apparently most important to it, to never include the name Deutsche Bank on any foreclosure or eviction filing without emphasizing that DB is only the trustee. Of course, it's an enabling role that Deutsche Bank chose and profits from. But Deutsche Bank wants it both ways. At least the memo has Deutsche Bank National Trust Company's contract numbers, which desperate consumers often call Inner City Press to request. They are, in Santa Ana, California, Tel 714 247-6000, Fax 714 247-6009. Inner City Press is putting the DB memo online, here.

            Citi's real advocacy -- The American Financial Services Association, one of the hardest-nosed subprime trade groups, said Thursday that it has named Elvis Goddard of Citifinancial as the chairman of the advisory board of its mortgage lending division. Goddard oversees more than 550 high-cost CitiFinancial branches across eight states in the South. He began his subprime career there at Aristar Inc., later bought by Washington Mutual Finance Group, then by Citi...

December 17, 2007

  With Citigroup giving its CEO and chairman jobs to investment banker, now pundits speculate that the branch bank may be sold, saying Citi's "share in New York is way down from five years ago, when it had nearly 21% market share and 375 branches, because it moved a large amount of deposits from New York City to Nevada." Is that why Citi has felt comfortable doing less and less under the Community Reinvestment Act?

  Too little, too late -- nearly two years after the Ameriquest settlement was announced with fanfare by state attorneys general, now the relatively small payments are being made. This is for loans from 1999 to 2005: that is, up to seven years ago. In New Jersey, 9,132 borrowers will receive a total of $12.2 million, according to Lee Moore of the New Jersey Office of the Attorney General. The total awarded in Pennsylvania was $10.8 million to 12,401 borrowers. You do the math...

  UBS has (does the math) -- last Monday it announced it is writing off $10 billion  of sub-prime mortgage paper...

December 10, 2007

  What is happening in this subprime shakeout is that the non-Wall Street firms, like New Century and most recently Delta Funding, are going under, while players like Citigroup (which bought most of Ameriquest) and Goldman Sachs (which is buying bottom-feeding servicer Litton) move to clean up and consolidate the industry. Of Goldman, now there's interest in that the company pushed subprime mortgages while shorting CMOs. Hey, Goldman also owns an originator, Senderra Funding, and Avelo Mortgage LLC...  HSBC reported in mid-November that it was setting aside $3.4 billion for bad debts in its consumer lending business -- which, as not noted by Business Week, including not only credit cards but also high-rate personal loans...

   The WSJ of Dec. 6 reporting on a "loan application, which the lawyer had obtained from [GE's]  lender WMC Mortgage Corp., included bogus claims and documents intended to qualify the housekeeper for a loan that was far beyond her means to pay. In sworn testimony, Ms. Costa said she had no knowledge of the fake documents and hadn't seen all the completed forms. The loan application falsely stated that Ms. Costa was a 'U.S. person' and earned $12,500 a month -- six times her actual wages."  GE - a partner in fraud...

December 3, 2007

   Story of the week, capturing the decade, is the Charlotte Observer's Sunday overview, "Banks fail to escape sting of subprime." The subtitle is "They pulled back from scrutinized loans, but investment arms didn't," and the two main banks covered are the Charlotte twins, Bank of America and Wachovia. Both claimed to have gotten out of subprime, BofA all the way back in 2001. Then this quarter they have announced subprime-related write-downs of $3 billion and $1.1 billion, respectively. Clearly, they were not out of subprime. And what of the Federal Reserve, which repeatedly ignored detailed comments on mergers and accepted the banks' statements, now shown to have been incorrect, about their business?

November 26, 2007

  Where does responsibility lie, for the subprime meltdown? The WSJ of November 24, after blaming borrowers, estimates that "$85 billion in subprime mortgages are resetting during the current quarter, and the same amount will reset in the first quarter of 2008. That will rise to a peak of $101 billion in the second quarter. The estimates include loans packaged into securities and held in bank portfolios. Larry Litton Jr., chief executive of Litton Loan Servicing, says resetting of adjustable-rate mortgages, or ARMs, has recently emerged as a bigger driver of defaults. 'The initial wave was largely driven by a higher frequency of fraudulent loans... and loose underwriting,' says Mr. Litton, whose company services 340,000 loans nationwide. 'A much larger percentage of the defaults we're seeing right now are the result of ARM resets.'"

    Bottom-feeder Litton is, counter-intuitively, now being praised by some community groups.  What about the roles of Fitch Ratings, Moody's Investors Services, and Standard & Poor's? Moody's, for example, is said to have a profit margin of 50%, despite it's massive screw up... Could they form partnerships and get praise too?

 Goldman Sachs recommended last week that investors sell their stock in Citigroup, saying that Citi faces more write-downs of mortgage-related exposures and may have to cut its dividend to shore up its eroded capital ratios. Citigroup shares had fallen 39% so far this year, after the bank allowed its exposure to mortgage-linked securities to balloon, producing big trading losses and ultimately forcing the resignation of CEO Chuck Prince. According to Goldman's analysts, Citigroup's earnings could be hurt into 2009 by charges related to those exposures and a reluctance to take risks, especially while the bank continues to look for a permanent CEO. "The lack of leadership at this point in Citi's storied history could not have come at a worse time," Goldman wrote.
  You call what came before "leadership"?

    HSBC chairman Stephen Green has announced, "We will invest primarily in the fast growing emerging markets going forward as we reshape our business," Green said.  "If there are areas of business where we think capital is not earning a return and there's nothing we can do to restructure the business, then we will follow through the logic of that." However, he stressed that there are no plans to exit the U.S. or the bank's U.S. consumer finance business, where HSBC had taken hefty impairment charges on bad mortgages this year, saying that "just because consumer finance is cyclical isn't a reason not to be in it."  How 'bout the unethical nature of HSBC's still-predatory lending? 

November 18, 2007

  Let's recap: In the third quarter, Citigroup recorded mortgage-related write-downs of $1.8 billion, and now says that it expects to take write-downs of $8 billion to $11 billion in the fourth quarter. Earlier this month, Citigroup disclosed for the first time that it had $43 billion in CDO exposure. This accounted for the bulk of $55 billion in exposure by Citi to subprime-backed securities. Citigroup appears to have written down its CDO holdings by about 20%, compared to write-downs of 30% by Merrill Lynch and Morgan Stanley, Sanford C. Bernstein analysis has it. WSJ: "Investors have fretted about Citigroup's exposure to structured investment vehicles that have recently run into trouble. Analysts say it is unlikely the bank could be forced to take full responsibility for losses within those vehicles." Yeah -- Citi rarely takes responsibility, especially when it comes it predatory lending...

"News analysis" -- The run-up to Thursday's vote on H.R. 3915 was surreal. As the bill got weakened, some consumer groups geared up to oppose it. Press releases were issued, language of letters to Congress was vetted, to aim at unity. But other groups, sensing the bill would be passed and by all or nearly all Democrats, decided to support it, or not oppose it, as the case may be. Calls were made, unity was not achieved. And on Thursday itself, when even Maxine Waters (D-Cal) spoke in favor of the bill, the accommodators felt vindicated. They are practical, they said, they keep relations with their pols. But if you praise a bill that lets Wall Street off the hook, is the community being served? Time will tell.

November 12, 2007

    At Citigroup, it happened. "Given the size of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as chief executive officer is to step down," Chuck Prince said-in-a-statement. Honorable or now, he walks away with an estimated $99 million in vested stock holdings and a pension, according to an analysis by New York-based compensation consultant James Reda. Prince had already pocketed $53.1 million in salary and bonuses over the last four years, Reda said. And of the new chairman? "Since joining Citigroup, Mr. Rubin's performance has vacillated between disappointing to terrible," Richard Bove, an analyst at Punk Ziegel & Co., wrote in a note to investors. Punks...

Fed Governor Randall Kroszner has focused on an molehill while the mountain of subprime sleaze collapses around him.  To the Consumer Bankers Association Kroszner boldly took on lenders' failure to escrow for taxes and insurance, saying these can lead to a situation "akin to payment shock for borrowers. It is a common practice for these payments to be escrowed in the prime markets, and I see no reason that escrows should not be standard practice in the subprime markets too," he said.   His Fed-chosen boosters cheered, You go, Randy!  "Given the substantial number of resets from now through the end of 2008, however, I believe it would behoove the industry to join together and explore collaborative, creative efforts to develop prudent loan modification programs and other assistance to help large groups of borrower systematically," he said. A bit better...

As H.R. 3915 moves toward the House floor, the language on assignee liability remains weak, whether or not "and" or "or" is included... We'll have more on this.

November 5, 2007

   At the Nov. 6 mark-up in the House of predatory lending legislation, it's said that Kanjorski's bill will be folded in, and a weakened version of assignee liability will be attempted, by a manager's amendment.

  There are other problems to be fixed. 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."

            Meanwhile 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...

  Blast from the past: in the mail last week came a letter from the Office of Texas Attorney General Greg Abbott:

"As you may recall, in January 2003, you made a public information request... for certain documents regarding Household International... Subsequently, Household filed suit against the OAG for declaratory judgment to prevent the release of those documents. Recently, Household's [that is, HSBC's] suit was dismissed by the Court... Therefore the OAG is providing you with the enclosed documents." 

            Yeah -- more than three years late!

October 29, 2007

            Global predatory lending: Hungary's Office of Economic Competition (GVH) has fined GE's Budapest Bank and Citigroup HUF 12 million, saying they misled their customers in advertisements regarding the interest-free usage of credit cards. The banks failed to note in its ads that the interest- free usage was only valid when the cards were used for purchases but not for cash withdrawals. The ads also failed to inform customers that the entire debt had to be paid by the given deadline for interest-free usage.

            The Fed through Kroszner last week defended sleazy securitizers: "The securitization market is critical to increasing the resources available to fund home purchases and great care should be taken to ensure that investors in the securitization market can quickly and accurately assess and mitigate the risks, including the compliance risks, of mortgages sold in this market. Such laws should be very clearly delineated to ensure that they do not have a detrimental impact on the ability of lenders to securitize loans." Kroszner echoes the ABA's criticism that the bill "would increase costs and decrease choices for consumers."

October 22, 2007

  What is the purpose of the Master Liquidity Enhancement Conduit being set up by Citigroup, Bank of America, JPM Chase and a few other banks? Not to help consumers, that's for sure. Rather, 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...

    Subprime's hit pop culture, at least on National Public Radio's Prairie Home Companion, on which this week detective Guy Noir traveled to Charlotte to dispute a credit card bill with the "Bank of North America," whose president lives in a 400 mansion with a trophy wife but admits that while  he made subprime loans, he doesn't understand them. Yes, that's Bank of (North?) America...

October 15, 2007

   Fifteen million dollars is a lot, for hedge fund Paulson & Co. to be giving, and there's been very little debate. Money is fungible, it is noted. And now it appears a proxy war is being fought.

            The other Paulson, head of the Treasury Department, is trying to help Citigroup and others to conspire to bail-out the structured investment vehicles (SIVs) which speculated in predatory loans. One wonders about the views of this collaboration by John Paulson, who already once accused his ex-employer Bears Stearns of market manipulation. What led to the $15 million grant, after a summer of shorting subprime stocks? Maybe non-profit investors in the fund, like that Ascension Health and Wisconsin Alumni Research Foundation?  Developing.

October 8, 2007

   As the subprime meltdown hurts more and more people, the focus has shifted to spin. Lenders like HSBC prime groups to speak in their favor. Regarding HSBC, the LA Times last week also quoted HSBC's Tom Detelich gushing that "on a few occasions, HSBC has cut the interest to 0%" -- which, has said, "was possible because the company didn't sell the loans it serviced." Then, "Other housing advocates said HSBC's workout program usually resulted in only short-term modifications. 'It is not our experience that HSBC is better or more flexible than other lenders,' said Matthew Lee, executive director of Fair Finance Watch in New York." That's right...

October's Mortgage Servicing News reports that "Citigroup has acquired the $45 billion subprime servicing portfolio of Ameriquest Mortgage, a transaction that will help it challenge Countrywide Financial Corp. for the No. 1 spot among B&C servicers... Citigroup also purchased Argent Mortgage, a nonprime wholesale lender that is a sister company to Ameriquest... By purchasing the Ameriquest receivables, Citigroup will grow its subprime servicing portfolio to about $110 billion. At the end of June, CFC serviced $125.6 billion in subprime, ranking first in that niche... 'Exercising our option to acquire the assets from ACH's wholesale origination and servicing business allows Citi to secure valuable and scalable platforms in a market undergoing significant change,' said Jeffrey Perlowitz, head of global securitized markets for Citi's fixed income, currencies and commodities division, where the assets will reside."

            But why would Argent's origination capacity "reside" in Citigroup's investment bank? We'll have more on this. For now, in the 12 months to June 2007, Citigroup in Mexico opened 207 retail bank and consumer finance / Citifinancial branches, spreading predatory lending without standards...  Also south of the border approval has been procured for Banco Wal-Mart de Mexico Adelante, which, yes, Citigroup says will open 10 to 12 branches in the next year...

October 1, 2007

            Beyond predatory mortgages, GE Money lends for cosmetic surgery. How do you think they foreclose? From the Detroit News: "Jawana Edwards, a Redford Township mother of two, contemplated surgery to flatten her tummy for two years, but it was out of her financial reach until this summer, when she learned about medical loans available through her plastic surgeon's office. Edwards, 36, borrowed $6,000 from CareCredit, a unit of GE Money that contracts with doctors to provide medical loans for patients. She had the surgery in July, and convinced her friend and sister to finance their own tummy tucks this summer through the same lender... CareCredit won't disclose the dollar increase in its loan volume, but President Mike Testa said the 20-year-old company has grown 50 percent a year for the past five years. CareCredit... considered the largest lender of its type in the country -- growth it has achieved in large part through winning endorsements of state and national medical and dental associations."

            The two other top-three cosmetic surgery lenders listed by the Detroit News of Sept. 28 are Capital One -- whose Larry Klane is slated to join the august (?) Federal Reserve Board -- and Citigroup, which given its track record is not necessarily surprising. Someone should ask Citi's Chuck Prince, Robert Rubin et al. -- is this the democratization of credit? Or is it predatory lending?

    Or how about this, from USAT -- Citigroup is issuing 3.5 million credit cards to department store customers who didn't request them... This month, Citi is sending general-purpose MasterCards to Macy's customers with credit card accounts that have been inactive for two to four years. Citi bought those credit card accounts last year.... It's not just Citi. This year, GE Money reissued J.C. Penney store cards as general-purpose MasterCards that can be used anywhere, not just at the department store. GE declined to disclose the number of cards affected."

            And this just as the industry is said to be reconsidering its predatory lending practices, the two largest, Citi and GE, send out unsolicited credit cards...

September 24, 2007

   This month has seen the spectacle of Alan Greenspan claiming he wasn't told what was happening with predatory lending. But community groups, in ceremonial (or window-dressing) meetings with Greenspan raised the issues in detail, about securitization of toxic loans and who was buying them. Greenspan nodded and did nothing. And now he sells his book, and defends his right to sell advice and access. Shameful...

            So HSBC is closing its Decision One unit. Meanwhile, McDonagh tells the American Banker that HSBC "continues to feel comfortable originating subprime mortgages through its HFC and Beneficial consumer lending branches." Why?

 A Citigroup employee has leaked thousands of consumers' Social Security numbers and mortgage information over Lime Wire... Meanwhile, Geovic Mining Corp. announced that its 60%-owned subsidiary, Geovic Cameroon, PLC, has named Citigroup as its exclusive financial advisor for the development and construction of its Nkamouna cobalt-nickel project in Cameroon. Ah, resource exploitation...

September 17, 2007 - As Fed Releases Mortgage Study, Subprime Disparities Worsen at Citigroup, HSBC, Wells

            In the same week that Bank of America set a record, jacking up its surcharge for the use of ATMs to three dollars, the Federal Reserve hauled off and delivered an approval, of BofA's takeover of LaSalle. The Fed seems to have ignored most of the issues raised. For example, the Fed states that ICP and Fair Finance Watch

"expressed concerns about Bank of America’s relations with unaffiliated third parties engaged in subprime lending. The commenters provided no evidence that Bank of America has originated, purchased, or securitized 'predatory' loans or otherwise engaged in abusive lending practices."

            Did the Fed even consider BofA's re-entry into originating subprime, with its propping up of Countrywide, which has settled charges of racial discrimination in its subprime lending? The Fed also makes light of BofA's mounting compliance violations:

"A commenter opposing the proposal expressed concern about Bank of America’s connection to investigations and lawsuits related to the bankruptcy of Parmalat SpA, Parma, Italy. The commenter also expressed unsubstantiated concerns about Bank of America’s student loan policies [and] the handling of certain money transfers through the New York branch of Bank of America, National Association."

      To be continued.  And on the Citigroup regulatory evasion beat,

Subj: CitiMortgage Realignment May Reduce Oversight for Predatory Lending 

From: [Name withheld - anonymity granted]
To: Matthew Lee [at] innercitypress.org
Date: 9/5/2007 10:36:15 AM Eastern Standard Time

Dear Mr. Lee,

Please protect my anonymity, as I will be subjected to retaliation if it becomes known that I have communicated with you.  Thank you in advance.

 Last year, Citi convinced Federal and state regulators to allow it to merge its non-prime lending unit, CitiFinancial Mortgage, into CitiMortgage, Inc., its ostensibly prime lending unit. The reasons given for the merger were the usual: gaining economies of scale and presenting a single face to the marketplace.  Along with the approvals for that merger, Citi received relief from many of the restrictions designed to prevent predatory lending, which were conditions of its acquisition of Associates First Capital in 2000 and subsequent settlements with regulators.  Due to the tight controls it operated under, CitiFinancial Mortgage was only participating in an estimated 40% of the sub-prime mortgage market - for example, "stated income loans" were only a minuscule percentage of its volume, while other lenders were seeing 60% and more of their volume in "stated income loans".  "Stated income loans", especially to people living on fixed income, have a higher propensity to be predatory, since the borrower's ability to repay is not determined. 

CitiFinancial Mortgage also examined each loan it originated, or purchased in the secondary market, for real benefits to the borrower, going well beyond the "tangible benefits tests" touted to regulators and consumer protection activists by not only Citi but by many other lenders, as well.  These "tangible benefits tests in fact give credit for largely illusory benefits.  Carefully scrutinizing applications for real benefits is a practice which Citi's prime lending unit does not follow.  Regardless of the reasons for the merger, by burying its sub-prime unit inside its prime unit, Citi has opened up the business to originate and purchase loans that formerly would not have met CitiFinancial Mortgage's standards for benefit to the borrower, or restrictions on predatory lending, and has made it more difficult for regulators and consumer protection activists to see what is happening with sub-prime lending at Citi. 

 Yesterday, hot on the heels of the announcement that Citi would acquire what is left of former number one sub-prime lender Ameriquest, Citi executives Al Tappe, Fred Bader, and Daniel Wu announced the that mortgage underwriters will no longer report to the Credit Risk Management department, but instead report to the Operations department.  This "realignment" was billed as a way to become more efficient and more customer friendly.  Such a move is puzzling during a time when mortgage default rates are rising across the entire industry, and, industry-wide, foreclosures are increasing at alarming rates.  However, sources within Citi revealed a possible explanation: despite the 2006 merger of CitiFinancial Mortgage into CitiMortgage, Credit Risk Management has continued to resist the pressure from Citi executive management to relax controls on customer qualifications and predatory lending.  By moving underwriters to Operations, Credit Risk Management will no longer be performing: daily supervision of underwriters, conducting underwriter performance evaluations, determining underwriter merit increases, and will no longer be in a position to influence their day-to-day decisions.  So resistance will be reduced or eliminated to the pressure to approve loans without adequate assurance that the loan benefits the customer and the customer has the ability to repay.

 It is important to note that the CitiFinancial branch network of consumer finance offices, which also makes mortgage loans, operates completely independent of the centralized CitiMortgage business, and isn't affected by either the Ameriquest acquisition or this realignment of underwriting within CitiMortgage.

            Developing...

September 9, 2007

   As the chickens come up to roost at Countrywide for its disparate lending, the company says it is laying off 12,000 workers and shifting most of its lending to its bank unit. Why would the banking regulators allow this toxin into the world of FDIC insurance? Meanwhile, Bank of America steps in to buck Countrywide 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...

   In Budapest on September 5, 2007, the investment chief of GE Money's Budapest Bank Peter Duronelly predicted that the crisis on the US subprime mortgage market is limited to the US. He added that it is "more a social crisis than a capital market crisis." We'll see.

  At Oklahoma City's Remington Park, there's a horse running named "Predatory Lender"...

Another Citigroup connection to the depths of subprime -- its "mortgage warehouse lending unit has stopped accepting new customers, according to a person familiar with the matter. The unit, First Collateral Services Inc., offers mortgage companies credit lines of up to $250 million, which allow the firms to fund their purchases and refinancings of mortgages. Amid this year's mortgage meltdown, some warehouse lenders have pulled credit lines from existing customers, essentially pushing them out of business. As of March 31, First Collateral was the nation's No. 5 warehouse lender, with $4 billion in outstanding commitments." First Collateral, based in Concord, Calif., is continuing to finance its existing customers" -- and why haven't the identities these Citi-enabled lenders been disclosed?

September 3, 2007 -- With Subprime Hot Air in DC, Cold-Blooded Citigroup Buys Ameriquest Byline: Matthew R. Lee of Inner City Press

            As President George W. Bush and Federal Reserve chairman Ben Bernanke Friday wrung their hands in Washington about the subprime mortgage meltdown, New York-based Citigroup announced it was buying a chunk of admitted predatory lender Ameriquest. Citigroup is a meta-predator, taking advantage of the foreclosure boom to scoop up one of the most abusive lenders at a temporarily reduced price. The head of Citigroup's "global securitized markets" unit, Jeffrey Perlowitz, said the takeover "allows Citigroup to secure valuable and scalable platforms in a market undergoing significant change." Some thought predatory lending was a market being discredited and shrinking. To Citigroup, it's just change that can be scaled up.

            The founder of Ameriquest, Roland Arnall, who has made billions from predatory lending, was nominated by President Bush as Ambassador to the Netherlands. While a few U.S. Senators delayed his confirmation until Ameriquest finalized a settlement with state attorneys general, now Arnall will profit again, selling the remainder of the company to Citigroup. The losers in the deal are the borrowers from whom Citigroup will even more ruthlessly squeeze payments on loans that were misleading and abusive from the start, and future borrowers whom Citigroup will target with the ex-Ameriquest "scalable platform."

            Citigroup's own existing platform has made it the only lender to have twice settled predatory lending charges with Federal agencies, for $240 million with the Federal Trade Commission, and another $70 million in 2004 with the Federal Reserve. Since then Citigroup's high-cost lending has gotten even more racial disparate.

            2006 was 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. Citigroup in 2006, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread 4.41 times more frequently than whites, according to Fair Finance Watch. Citi's disparity to Latinos was 2.38. Meanwhile Citigroup is now buying a unit of Ameriquest, 91.65% of whose loans in 2006 were subprime.

            Citigroup loves subprime, and has no scruples in this field. Its corporate DNA goes back to a Baltimore-based predatory lender called Commercial Credit, which Sandy Weill and Charles "Chuck" Prince took over in the 1980s. After their company, by then called Travelers, acquired Citicorp in 1998, the next big deal was to scale up subprime lending, by taking over Associates First Capital Corporation, which was being sued for fraud all over the country.

            Now Citigroup buys Ameriquest, another well-known predatory. Citigroup's subprime regrets, if they exist, include losing out on Household International, which settled predatory lending charges for $486 million, to HSBC in 2002.  Now Citigroup is back in the game, and big deal. Borrowers, be afraid, be very afraid. Even the downturn, Citigroup just re-loads for the next hunting season...

            At Citigroup's annual shareholders' meeting on April 17, 2007, Chuck Prince stood alone on the stage of Carnegie Hall, as Sandy Weill used to do, and took questions. Inner City Press asked about Citigroup's 2006 lending record -- confining African Americans in New York to higher cost loans 4.4 times more frequently than whites -- and about Citigroup's then just announced proposal for "propping up and taking an option in Argent," an affiliate of Ameriquest.

            "Good question," Prince began. Argent "is a company that has restructured itself. This is a company that has settled with regulators." He said it is a situation of "good bank, bad bank" and claimed that Citigroup is only thinking of buying the good part.

            But it was Ameriquest that announced reforms, none of which have been implemented at Argent. Prince cut in. "We're not going to buy anything unless it's cleaned up." So in the turbulent five months since, have Ameriquest and Argent really been cleaned up? Or have prices hit bottom, leading Citigroup to pounce?  Prince said, "we've had reputation issues in the distant past, we're not going down that road." And now, while other wring their hands to come off as concerned, Citigroup is rushing headlong with Ameriquest further down the road of predatory lending.

August 27, 2007

   With Bank of America's proposal to invest in Countrywide, consider this, from Fox News of August 23

CAVUTO: Let's step back for a minute. As you know, the press has come up, Angelo, well, you know, when times are good, you were a savior. Now, when times are bad, you're a predatory lender, and you pounced on unsuspecting people. What do you think of that?

MOZILO: I think it's nonsense. I think it's absolute nonsense.

            But Countrywide's high-cost "Full Spectrum" unit was being called a predator even when "times were good." See, e.g., Buffalo News of June 5, 2007, reporting of ICP Fair Finance Watch's study finding that "at Countrywide Financial, even upper-income black borrowers got high-cost loans 1.92 times more frequently than white borrowers." And Countrywide settled charges of its racial disparities, in a case in which the NY Attorney General's office is still trying to withhold and, even if provided, overcharge for documents requested well more than year ago...

            Talk about double-speak -- from Dodd's press conference after meeting with Bernanke:

Q You helped during the predatory lending -- (off mike) -- legislation. But why has the Senate failed to act of any of the -- (off mike)?

 SEN. DODD: Well, again, look, the Fed is moving on this. We have HOEPA legislation, which passed in 1994, which mandated that the Fed assume responsibility of dealing with deceptive and fraudulent practices. I have been critical of the Fed for not acting, particularly when we're -- we know that three and a half years ago, Fed staff was becoming aware of this emerging problem. They tell me they're going to have these regulations in place by this fall. If that's the case and they're moving, then I'm satisfied that that's going to be done. But I'm also simultaneously going to be looking at the possibility of legislating this area. But I don't want it made more confusing by taking that action prematurely.

 Q Why hasn't the Senate considered this legislation sooner?

 SEN. DODD: Well, again, I think because of existing laws here, you could deal with it here, and it seems to me the regulatory body has the responsibility of developing the regulations in this area. So we've established the law 13 years ago. The Fed was charged 13 years ago with adopting regulations. It wasn't a request of them; it was a mandate of them to do so. And so, in a sense, the power exists there for them to do what we'd be doing with legislation, I assume, anyway.

            So, according to Dodd, the Fed is "moving on this," and no new legislation is needed. As they say, follow the money...

            In non-U.S. predatory lending news, 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...

August 20, 2007

  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?

    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...

  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-Federal Reserve consultant...

August 13, 2007

            In second week in August, BNP Paribas froze three subprime funds and Countrywide gave warnings about the Great Depression, the Senate Banking chairman sputtered out two press releases about predatory lending: one from his teetering campaign for the Democrats' nomination, the other as chairman, both quite similar. Dodd's chief of staff dodges meetings with skeptical advocates.

            In other DC staffer news, ex-House staffer Dean Sager, at CUNA for only 16 months, now quits. The trade press claims he broke the one-year revolving door rules, and was never trusted by the industry. Then again, he may move on to better things...

            The UK Financial Advisor of August 9 reported that the UK "FSA is also understood to be investigating mortgage firm GE Money Home Lending, one of the biggest movers in the increasingly troubled sub-prime market. Experts fear a repeat of the experience in the US sub-prime market where poor standards have led to the market collapsing."

August 6, 2007

   Ah, subprime. On August 3, American Home Mortgage shut most of its operations and said it likely will file for bankruptcy. Earlier in the week Accredited Home Lenders let it be known that it may be in danger of going under, too.

   The Federal Reserve asked Bank of America six questions, in connection with its application to acquire LaSalle Bank. BofA's answers are vague, and in places the arrogance leaks through. The first question was about fair lending; BofA answers that its reviews are conducted "under attorney-client privilege." The remainder of the response is more vague that the Fed has previously accepted from applicants. Even on questions about how BofA would "integrate" LaSalle, and which products it would keep, BofA says "no decisions have been made at this time." Unfair and deceptive credit card practices? We're still waiting to see a credible answer...

July 30, 2007

   Last week deputy assistant attorney general Grace Chung Becker said the U.S. Department of Justice has opened "several" discriminatory lending investigations, including based on referrals from banking regulators. Since last fall, the Federal Reserve has made three referrals, she said. The Federal Deposit Insurance Corp. has made two.

  But wait -- the American Banker newspaper reports that From Jan. 1, 2004, to June 30, 2007, bank regulators referred 134 potential discrimination cases to the Justice Department - 118 from the Federal Deposit Insurance Corp., 15 from the Fed, one from the Office of Thrift Supervision, and none from the Office of Comptroller of the Currency. Great job, OCC.....

July 23, 2007

  The president of the Federal Reserve Bank of St Louis, William Poole, last week said that poor decisions led to the losses and, separately, that the funds that have suffered losses got what they deserved. A number of hedge funds have suffered significant losses, including not only Bear Stearns but also, for global example, Australian fund Basis Capital. Ben Bernanke, chair of the Federal Reserve Board, warned that sub-prime losses could increase to as much as $100 billion.
   Bernanke also said the Fed is "conducting a top-to-bottom review of possible actions we might take to help prevent recurrence of these problems." 

            An independent review, Volker-style, as they say, should be conducted into how and why the Fed was so hands-off as this happened....   

July 16, 2007

   The letters and notices of the state attorneys general's $325 million settlement with Ameriquest have started going out. The possible range of settlements? $123 to $2,418. Of what use is $123 to someone who's losing their home?

GE on July 13 announced plans to sell subprime WMC Mortgage after suffering more than half a billion dollars in losses from the business in the first half of 2007. GE may sell other financial-services businesses during the third quarter, too, CEO Jeff Immelt said. GE was the fifth-largest subprime mortgage originator last year, offering more than $33 billion worth of the low-end home loans to poorer borrowers with blemished credit records, according to IMF. Its WMC unit accounted for 5.5% of the $600 billion business last year. "We've got good opportunities to review assets right now," Immelt said. "We're going to go through the strategic review and you'll hear about it as we make our final decisions." Can you say, ex-Conseco?

  On July 12, shares of Nomura Holdings Inc., Japan's biggest brokerage by market capitalization, fell 4.8% as investors worried about the size of its exposure to the U.S. mortgage market. The selloff in Nomura shares drove the company's stock price to its lowest level in seven months, $18.04...

  HSBC, sued last week in the U.S. for racial discrimination in mortgage lending, simultaneously bragged it had gained the right, from the Vietnamese government, to buy 15% of a bank there. Spreading predatory lending?

July 9, 2007

  Opposition has been filed to Bank of America's application to the Federal Reserve to gain control over more than 10% of deposits in the U.S. by acquire LaSalle Bank. Below is a summary of timely comments filed with the Federal Reserve Bank of Richmond and Federal Reserve Board in DC. The comments also raise issues of Bank of Ameica's lending disparities in 2006 and 2005, its enabling of high-cost payday lender(s) and subprime mortgage lenders, settlement of money laundering charges, etc.. Public hearings have also been requested on any application to acquire LaSalle which may be filed by the Royal Bank of Scotland / Santander / Fortis counter-bidders. The comment is below. But first, some other items --

This week, an ex-Fed regulator who monetize his expertise and access, first at Citi and now GE: "If it's now 2007 and the control failure occurred in 2005, 2004 ... is there going to be any value to law enforcement, any value to the government in finding things that happened two or three years ago and reporting it now?" The speaker of these words was identified by the American Banker newspaper as "Richard Small, the global anti-money-laundering leader at GE Money, the consumer and small-business financial services division of General Electric Co., and a former top anti-laundering official at Citigroup Inc. and the Federal Reserve Board, where he was a deputy associate director in the division of banking supervision."

  Then again, the American Banker newspaper also has a revolving door. From North Carolina, Citi's live checks: "a 78-year-old resident of Carolina Spring Apartments received a notice in the mail... appeared to be a real check from CitiFinancial Auto Corporation in Irving, Texas, a company that lends money for car loans over the Internet. Rob Julavits, spokesman for CitiFinancial Auto, saw a copy of the check that the Carolina Spring resident received, and said it was a fake. 'It is not a legitimate CitiFinancial Auto check,' he said. 'We are looking into the matter.'" Whether the check was authentic or not does not answer whether CitiFinancial continuing to send live checks to senior citizens is legitimate. And Julavitz... used to report on Citigroup for the American Banker, until Citigroup hired him...

   On the fortieth anniversary of FOIA implementation, a bill to restore some vitality to the law has been subject to a secret block -- by Arizona's Senator Kyle, media watcher can now report. For shame... And now, the Bank of America comment:

July 3, 2007

Federal Reserve Board - DC (by fax)

Federal Reserve Bank of Richmond
Attn: A. Linwood Gill, III, Asst Vice Pres., Gaile Clark
and Wayne P. Cox, Senior Financial Analyst
701 East Byrd Street, Richmond, VA 23261-4528

Re:   TIMELY COMMENT IN OPPOSITION TO BANK OF AMERICA’S  PROPOSAL TO ACQUIRE LASALLE BANK OF ABN AMRO N.A.  INCLUDING REQUEST FOR HEARINGS

Dear Messrs. Gill and Cox, Ms. Clark 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 Bank of America ("BofA") and affiliates to acquire ABN Amro North America and LaSalle Bank.  Even as the proposal faces legal challenges in Europe, and would violate the 10% deposit cap in the U.S., the Federal Reserve Board's web site lists the initial comment period as running through July 3. This comment is timely. In light not only of the lending disparities set forth below, but also the antitrust and legal issues raised by Bank of America's gaming of the 10% deposit cap, its admission of money laundering and its engagement with predatory lenders, and legal and other questions about the deal, public hearings should be held.

 Bank of America, with the Federal Reserve's complicity, has been making a mockery of the 10% deposit cap which is one of the few consumer protections enacted along with Interstate Banking Act of 1994. It is imperative that the FRB schedule and hold public hearings on this issue.

 Meanwhile, in this case ABN Amro is trying to sell off LaSalle as a way to foil a proposal by RBS, Santander and Fortis to acquire it. 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. For the record, FFW is also requesting, in advance, public hearings on any application by RBS, Santander and Fortis.

Bank of America continues supporting payday lender Advance America Cash Advance. See, e.g., South Carolina State of June 8, 2007: "In July 2004... Bank of America Corp. arranged a $265 million credit line for Advance America. Documents Advance America filed with the Securities and Exchange Commission indicate Bank of America administered the credit line. Not long after, Advance America announced an IPO that raised $195 million In a 2004 filing to the SEC, Advance America, which is headquartered in Spartanburg and is the nation's largest payday lender, essentially said it wouldn't be as big or as successful at corralling borrowers without banks. 'We depend on loans from banks to operate our business. If banks decide to stop making loans to companies in the payday cash advance services industry, it could have a material adverse affect on our business, results of operations and financial condition,' the company states in the SEC document."

 In the most recent year for which HMDA data is available from the FRS, 2005, Bank of America was strikingly disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

            BofA's MBNA unit had a 4.23 disparity between pricing to African Americans and whites on conventional first lien home purchase loans: BofA's MBNA confined African Americans to rate spread loans 4.23 times more frequently than whites. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

 Bank of America in the New York City MSA in 2005 denied 17.4% of white applicants for conventional home purchase loans, while denying 27.5% of African American applicants, and 26.7% of Latino applicants.

 In the Chicago MSA, Bank of America denied 9.0% of white applicants for conventional home purchase loans, while denying 18.5% of African American applicants, and 17.9% of Latino applicants.

 In the Los Angeles MSA, Bank of America denied 15.7% of white applicants for conventional home purchase loans, while denying 30.1% of African American applicants, and 26.0% of Latino applicants.

 In the Houston MSA, Bank of America denied 15.1% of white applicants for conventional home purchase loans, while denying 22.9% of African American applicants, and 24.7% of Latino applicants.

 According to 2006 data provided by Bank of America, in 2006 BofA made 1655 loans over the rate cap to African Americans, 9748 to whites, and 2221 to Latinos. FFW will present further testimony on this regard at the requested public hearings.

  Bank of America continues not only supporting payday lender Advance America Cash Advance, and underwriting for problematic subprime mortgage lenders. FFW is requesting public hearings on these grounds.

  In late September 2006, Bank of America acknowledged that its lax operations allowed South American money launderers to illegally move $3 billion through a single Midtown Manhattan branch. BofA said that it ''takes seriously its anti-money laundering obligations'' and that it ''never knowingly does business with persons, organizations or businesses engaged in illegal activities and did not in this case.'' Most of the funds came from Brazil via a licensed money transmitter in Uruguay and then to the Bank of America branch, which allowed funds to reach unlicensed money transfer firms in the area.

  Bank of America is being sued for its role in the bankruptcy of Parmalat. FFW is requesting public hearings on these grounds as well as on Bank of America's student loans policies.

Very Truly Yours,

Matthew Lee, Esq., Executive Director
Fair Finance Watch and affiliates

July 2, 2007

  Even during the subprime meltdown, the big boys kept right on lending --

    Rk  Organization Name                          Q1 07    Q1 06  Change Share
    1  Countrywide Financial Corp.                $7,881   $9,205  -14%  8.87%
    2  HSBC Finance                               $7,573  $14,477  -48%  8.52%
    3  Option One Mortgage Corp. (1)              $6,200   $7,690  -19%  6.98%
    4  First Franklin Financial (2)               $5,955   $5,539    8%  6.70%
    5  Wells Fargo Home Mortgage                  $5,652   $5,596    1%  6.36%
    6  Washington Mutual (E) (3)                  $4,100   $6,422  -36%  4.61%
    7  CitiFinancial (E) (4)                      $4,000   $5,900  -32%  4.50%
    8  EMC Mortgage (5)                           $3,847   $2,022   90%  4.33%
    9  Fremont Investment & Loan (6)              $3,727   $8,539  -56%  4.19%
    10 WMC Mortgage Corp. (7)                     $3,400   $6,736  -50%  3.83%
    11