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
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here for
a recent BBC piece on Inner City Press' reporting from the United Nations.
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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
By
Matthew
R. Lee
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...
July
12,
2010
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...
July
5,
2010
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.
June
28,
2010
Game on: Inner
City Press / Fair Finance Watch has filed a timely challenge with the
Federal Reserve to the pending applications of The Toronto-Dominion
Bank to acquire The South Financial Group and its Carolina First
Bank.
FFW obtained TD's
2009 HMDA-LAR, which has not been reviewed or taken into account in
any regulatory review of TD. The data are troubling, showing for
example that in 2009 Toronto Dominion denied fully 83% of mortgage
loan applications from African Americans, versus only 42% of
applications from whites. TD's denial rates for Latinos and Native
Americans, both 68%, were also troubling. Public hearings should be
held and the applications not approved.
TD in fact makes
rate spread or subprime loans, but not in a fair manner. African
Americans at TD are 1.93 times more likely to be confined to higher
cost loans than whites.
While the FRB,
despite the stated purpose of HMDA in helping to identify
discrimination, has shifted to a dismissive approach to HMDA, it will
be hearing different at its upcoming HMDA hearings, testimony at
which should be considered by the FRB in connection with this
application.
On a recent
investors' conference call, TD bragged about its “FDIC-assisted
transactions” -- which , significantly, were not reviewed for CRA,
and on which there was no comment period. A public hearing is needed
on this one. FFW's request in this letter for a complete copy of the
applications includes also any and all information in the possession
of the FRS concerning TD's “FDIC assisted transactions.”
Meanwhile,
shareholders of South Financial have filed suit against the deal.
See, e.g., Greenville (SC) News, June 22, 2010. TD has told its
shareholders it will somehow convert fast food restaurants into bank
branches. See, e.g., Globe & Mail, June 17, 2010. Before serving
up its disparate lending, public hearings should be held. These
issues must be explored, under managerial and financial factors, in
connection with these applications. FFW has requested public
hearings.
June
21, 2010
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.
June
14,
2010
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...
June
7,
2010
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?
May 31, 2010
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
By
Matthew
R.
Lee
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
By
Matthew R. Lee
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
Once subprime, always subprime.
Or, subprime never dies -
"Kyle Walker, a former top executive at Fremont Investment
& Loan - a once-high-flying subprime lender - has a new firm that
is buying distressed homes, some for as little as $1,000... 'We have a
pitch book out with Cohen Financial and hope to raise between $6
million and $7 million,' said Mr. Walker. The company he owns and
manages is called Home America. His management team includes Bob
Clafford, a former executive vice president in charge of wholesale
lending at FI&L." NMN
Our first run-in with Fremont was when, despite a timely request for
the Home Mortgage Disclosure Act (HMDA) data in electronic format, they
refused and gave it in a format that could not be analyzed. Later,
Fremont settled predatory lending charges for $10 million with
Massachusetts Attorney General Martha "Don't Go There" Coakley.
Now Fremont's Walker and Clafford resurface, buying foreclosed homes
and renting or "land contracting" them back to lower income people
while holding the note or deed in portfolio.
Some might call this impunity. And they would be correct.
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--
As
Obama
Proposes
Goldman
De-Bank
and
Liability
Cap,
of
Dodd
and BofA's
Evasions
By
Matthew
R.
Lee
NEW
YORK,
January
21
--
Two
hours
before
President
Barack
Obama unveiled
additions to his financial reform proposals, limiting the mix of
banking and proprietary trading and setting a cap on liabilities and
not only deposits, several of his senior officials briefed the press.
They
were relentlessly "on message," emphasizing how
comprehensive the package is, how they are "working with Senator
Dodd" without mentioning that he will not run for re-election.
They
repeatedly referred to the proposed Consumer Financial Protection
Agency (or "Consumer Protection Agency," as one of them
called it), without address that Dodd himself is said to be moving
away from the proposal, eager some say to have his name on a bill,
any bill.
The
new proposals would, by barring a company that owns a bank from forms
of proprietary trading or owning, investing in or advising a private
equity or hedge fund, seem to require Goldman Sachs and Morgan
Stanley to de-bank. Two questions directly raised Goldman, but the
senior administration officials dodged both of them. One asked if the
timing of the announcement is tied to Goldman's release of earnings.
This was denied.
A
second proposal, not clearly spelled out in the briefing, would set a
cap on liabilities similar to the 10% deposit cap ostensibly in place
since 1994. That cap has been evaded. As South Bronx based Fair
Finance Watch and Inner City Press have repeatedly shown, Bank of
America has been at or over the cap but still allowed to make
acquisitions.
B
of A simply reduces the visible level of deposits by pricing, and
then picked them up afterwards. The regulators helped evade the cap
by including deposits outside of the United States in the denominator
calculating the 10%. Why would this be any different?
Inner City Press on
BloggingHeads.tv about Haiti, Sri Lanka, Afghanistan... and
Massachusetts, here.
January
18,
2010
On Goldman Sachs,
the New York Banking Department has belatedly provided to Inner City
Press portions of Goldman's application. But key sentences are
blacked out with magic marker. Inner City Press has submitted an FOI
appeal; watch this site.
January
11,
2010
There is a wave of
bank branch closings, as yet unacted on by the regulators. Two
examples are Regions Financial, closing 121 branches in over a dozen
states, and PNC which is closing three dozen branches in Ohio. On the
former, HEED in Jackson, Mississippi fought back and kept their
branch open. But from Florida to Tennessee, communities have not been
so lucky. What will the regulators do?
January
4,
2010
From an SEC Form
8-K filed on New Years Eve: "In February of 2010, Republic Bank
& Trust Company (the “Bank”), a subsidiary of Republic
Bancorp, Inc., expects to meet with the Federal Deposit Insurance
Corporation (the “FDIC”), at their request, to review the future
viability of the Bank’s Refund Anticipation Loan program beyond the
upcoming tax season."
These tax RALS are
so predatory, one wonders how the FDIC considers this tax season's
victims: cannon fodder? If the FDIC knows it's wrong, why allow
another season of victims?
Meanwhile,
beginning this week in Kentucky, payday loans cannot exceed $500, and
the service fees are not to be more than $15 per $100 borrowed during
a two-week period...
In India, despite
public statements that Citigroup and CitiFinancial would be getting
out of their subprime lending, now Citi has decided to continue:
"Shriram Transport Finance Company (STFC), which has acquired
the assets of GE Transportation Financial Services, a part of GE
Capital, is looking aggressively for more such acquisitions, R
Sridhar, managing director, said. Sridhar added that talks of
acquiring assets of Citi Financial have not fructified. 'We have been
negotiating with Citi Financial for a while now, but the company is
not up for sale anymore as they want to enter the market again.'"
So Citi's predatory
lending will continue...
December
28,
2009
Goldman
Sachs,
which has evaded regulatory scrutiny at every turn, has applied to
open a branch of Goldman Sach Bank USA at 200 West Street in New York
City. Inner City Press' Fair Finance Watch has just submitted to the
New York State Banking Department a timely comment opposing and
requesting public hearings on Goldman
Sachs' pending application:
We wish to
emphasize that Goldman
Sachs Bank USA, a New York State chartered
bank, is the direct parent of controversial subprime services Litton:
"Goldman acquired Litton from C-BASS on Dec. 10, 2007. Litton is
headquartered in Houston, Texas and is a wholly owned subsidiary of
Goldman
Sachs Bank, USA a New York state chartered bank."
As the regulator
of Goldman Sach Bank USA, the NYBD has a responsibility, including in
response to this timely comment, to closely examine and solicit
public comments on Litton's performance.
As you know,
Goldman
Sachs was allowed to become a bank holding company without
any public comment period or consideration of the federal or state
Community Reinvestment Act, which would otherwise have been required.
Since then, as simply one example, 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." Watch this
site.
December
21,
2009
Of a possible CRA
in the UK, "ministers are to 'explore options' with banks on
improving the information available on banking services available in
disadvantaged areas, the chancellor announced. The Pre-Budget Report
said it is 'important to understand how banks are supporting our
broader community regeneration work'. The document added: 'The
Government will therefore explore options with the banks to improve
the information available on services delivered in deprived
communities.' Earlier this year, Liam Byrne, the chief secretary to
the Treasury, said the Government was 'earnestly exploring' the
possibility of US-style legislation that prevents banks from
discriminating in their lending practices against individuals and
businesses in deprived areas (R&R, 12 October, p4). But last
month the Treasury moved to play down reports that it is exploring
the idea of introducing a UK version of the US Community Reinvestment
Act."
So which is it?
December
14,
2009
The Federal
Reserve has written not to Goldman
Sachs but to its target Avenue
Financial, asking for information necessary to complete the Board's
record of information with respect to the filing by The Goldman
Sachs
Group, Inc., New York, New York, to retain its interest in Avenue
Financial Holdings Inc., Nashville, Tennessee.Discuss Avenue Bank's
policies and procedures for ensuring that its lending activities
comply with applicable consumer protection laws and regulations, in
particular, the Equal Credit Opportunity Act, the Fair Housing Act,
the Truth-in-Lending Act, the Real Estate Settlement Procedures Act,
the Home Mortgage Disclosure Act, and the Home Ownership and Equity
Protection Act. Discuss Avenue Bank's activities to serve the credit
needs of its low- and moderate-income communities throughout its CRA
assessment area, since the reorganization of the bank and the change
in its business model."
The response is
that one in four of Avenue's branches serves moderate income. What
about low income?
December
7,
2009
The FDIC's study of
the un- and under-banked, released last week, was heard around the
world, via the Financial
Times,
here.
In repurchases from
Fannie Mae and Freddie Mac, Wells Fargo said in the third quarter it
set aside an additional $146 million for its repurchase reserve "due
to higher defaults, anticipated higher repurchase demands and overall
deterioration in the market." But of course it didn't spell out
the actual size of the reserve.
Bank of America
disclosed in the third quarter that it bought back, through Sept. 30,
$922 million of mortgages tied to faulty underwriting. Of course B of
A also doesn't break down the size of its repurchase reserve. J.P.
Morgan, as of the third quarter, had $1.1 billion set aside to meet
repurchase claims from investors, including those from Fannie and
Freddie, because of problematic underwriting. The repurchase reserve
"won't run at that high level," claimed Michael Cavanagh,
J.P. Morgan's chief financial officer, in October during the
quarterly earnings conference call, but "looking ahead it will
still be something though." Yep...
The Federation of
Community Development Credit Unions is canceling its seminar on CRA
this week. The seminar, "Credit Union Outreach, Community
Reinvestment, and Credit Unions: Facts. Resources. Strategies"
was scheduled for Thursday in Alexandria, Va. "A labor dispute
at our planned location forced us to cancel," said federation
President/CEO Cliff Rosenthal. "It also became apparent to us
that urgent legislative priorities were taking the attention of many
of our presenters and attendees, so we have decided to postpone this
session." Hmm...
November
30,
2009
While in Dublin
last week a conference heard a call for the "introduction of a
Community Reinvestment Act, similar to the one which operates in the
US. It rates banks negatively if they engage in unfair lending or
other discriminatory practices. British social justice activist Karen
Chouhan said banks with low ratings would not be allowed to expand or
develop their businesses until their rating went up," a UK
Treasury spokesman in London said CRA is not needed, it was designed
for a unique American problem. Really?
Thanksgiving
question "what about the 150 workers at the Stella D'Oro cookie
factory in the Bronx? They lost their jobs and their healthcare when
a company owned in part by Goldman
Sachs bought Stella D'Oro and
closed the factory down."
Ben Bernanke has
written that "the Fed played a major part in arresting the
crisis, and we should be seeking to preserve, not degrade, the
institution's ability to foster financial stability and to promote
economic recovery without inflation." But what about the Fed's
inattention to predatory lending and its role in TRIGGERING the
crisis? The Fed's lack of scrutiny of the predatory lending and
service issues raised against Goldman
Sachs pending applications does
not bode well.
November
23,
2009
In the midst of a
Community Reinvestment Act challenge, amid protests in the street,
Goldman
Sachs announces the payment of three percent of what it doles
out in bonus to small businesses. Most in the mainstream press offer
nothing but praise. What about, for example, Goldman's ownership of
subprime servicer Litton Loans?
November
16,
2009
Ah, the arrogance
of Goldman
Sachs. Nearly a month after ICP Fair Finance Watch filed
comments with the Federal Reserve, a response arrived from Goldman.
They'd ignored the directions of how to send mail to Inner City
Press, and hadn't bother to e-mail. And their response, while
claiming that detailed reports of misdeeds, including by subsidiary
Litton, by sample target Avenue Bank and in loans bought from Fremont
are "replete with egregious mistakes and factual inaccuracies,"
does not identify a single error. They're just counting on the
friendship or subservience of the Fed. Watch this space.
November
9,
2009
Primerica, a
consumer complaint challenged business even by Citigroup's standards,
is slated to be spun off via an initial public offering. Like
CitiFinancial, Primerica targets "lower end consumers," as
the WSJ diplomatically puts it. Many of those recruited to pay to
work for it also complain, including to the Federal Trade Commission,
from which Inner City Press receipt a slew of complaints under the
Freedom of Information Act. Now the spin off. But Citi's predatory
heart continues to beat...
November
2,
2009
JP
Morgan
Chase's
CEO
James
Dimon
has
trashed
the
proposed
Consumer
Financial Protection Agency, saying it "would create cumbersome,
costly restrictions and the banks will likely pass those costs onto
the consumers." Let's see how it work for Chase...
One TARP-er hypes
the stock of another, per WSJ: The recent selloff in BofA shares
creates a good chance to buy into the bank, say Citigroup analysts.
Bank of America shares are down some 17% from their most recent
closing peak of $18.59 hit on Oct. 14. "Given the ongoing CEO
search, fear of a capital raise only adds to the uncertainty hitting
the stock, which creates a very attractive entry point."
October
26,
2009
A week after Inner
City Press' Fair Finance Watch filed a formal protest to Goldman
Sachs' applications to the Federal Reserve for shares in several
bank, and after the Fed has started the clock for Goldman's response,
no defense has been offered. Perhaps Goldman is too busy paying bonus
and getting paid for doing nothing, as in New Jersey. It was reported
last week that the Garden State, run by Jon Corzine formerly of
Goldman
Sachs, is paying for interest rate protection is no longer
needs, and will keep paying until 2019, even as the state engages in
other cut-backs. Ah, what a socially
responsible institution....
J.P.
Morgan
Chase
&
Co.
made
nearly
$50,000
in
political
donations
through its PAC in September, counted by WSJ. The company donated
$2,000 to Alabama Sen. Richard Shelby, the senior Republican on the
Senate Banking Committee. The company also donated $1,000 to
Pennsylvania Rep. Paul Kanjorski, the No. 2 Democrat on the House
financial-services panel...
Citigroup
canceled
a
planned
$4.5
million
renovation
of
its
main
office in
Brazil that included an area for entertaining clients and a
landscaped terrace called a "suspended garden." Can you
say, Babylon?
"We
need
it
to
compete,"
a
senior
executive
told
the
WSJ about about
the project last week, describing it as an important way to impress
banking clients and use Citigroup's real estate more efficiently. But
on Tuesday afternoon, a person familiar with the situation said the
renovation had been reviewed by senior executives, who decided to
shelve the project. The reversal underscores the sensitivity inside
Citigroup about its spending habits, since the bank has gotten $45
billion from the U.S. government, a 34%-owner of the company's common
stock. on said the renovation had been reviewed by senior executives,
who decided to shelve the project.
October
19,
2009
Inner City Press'
Fair Finance Watch has just filed timely comments opposing and
requesting
public hearings on Goldman
Sachs' pending applications to acquire,
inter alia, Atlantic Capital Bank, Avenue Bank, Union Federal
Savings Bank and Doral Bank.
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, as simply one
example, 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.
October
12,
2009
Citifinancial
continues with its sleaze. From last week's Charlotte Observer:
"Donna
and
Ronnie
Fruia
learned
firsthand
how
difficult
it
can
be to get
help modifying a mortgage. The couple from Troutman were in the
midst of a series of health crises, and three members of the family -
the couple's son, Donna's mother and Ronnie - were in the hospital.
That's when Donna got a call that somebody from her mortgage company,
CitiFinancial, had shown up in her husband's hospital room, where he
was recovering from a stroke. 'At the time, I couldn't even really
talk that good," Ronnie said. "But he wanted me to sign a
bunch of papers.' The Iredell County couple had been trying to get a
mortgage modification from CitiFinancial. The company, however, was
pushing them to accept a modification that wouldn't have cut their
interest rate, they said. Only after the episode in the hospital room
and the involvement of state regulators did CitiFinancial cut the
mortgage's interest rate from 11.5 percent to 5 percent, lowering
their monthly payment from $985 to $602. The process took from the
start of the year until July."
So what are the
regulators going to do? Tim Geithner called Citigroup's chairman 17
times in the first half of this yet...
Hitting
a
new
low,
it
took
the
Federal
Reserve
until
September 30, 2009 to
respond to Inner City Press / Fair Finance Watch's December 8, 2008
Freedom of Information Act request for the applications to become
bank holding companies submitted by GMAC and the CIT Group. That's
more than nine months, and even then, the Fed says it is withholding
182 pages. We will be appealing...
October
5,
2009
Reports that
Citigroup is planning to cut back its retail banking presence to six
cities -- New York, Washington, Miami, Chicago, San Francisco and Los
Angeles -- and ditch branches in Texas, Boston and Philadelphia has
some community activists asking how Citi would comply with the
Community Reinvestment Act if it makes these cut backs. But Citi with
its Citibank has the worst customer service ratings, while its
Citifinancial has long engaged in predatory lending. So others thing
cutting Citi back is a step in the right direction. If they collect
deposits beyond these six cities, they should have a CRA duty there.
But subprime loans, even personal loans, is not the way to comply
with CRA. Watch this site.
September
28,
2009
Accused recently
of predatory lending are Deutsche
Bank
--
the
unaccountable
king
of
subprime
foreclosures -- and SunTrust,
on
a
larger
than
normal
loan.
As
the
legislation
to
require
auditing
of
the
Federal
Reserve
gather
strength and supporters in Congress, the Fed sent its general council
to argue that this type of accountability would just lead to higher
rates. This sounds like JPMorgan Chase's argument when Georgia passed
anti-predatory lending legislation...
As Citigroup
moves
to
ditch
its
Portugal
credit
card
business
to
Barclays
-- Pandit
deemed it "non core" -- it becomes clearer that Citi's
focus is in emerging markets, where it can still get away from
unfettered predatory lending.
Meanwhile, HSBC's
CEO says he's moving from London to Hong Kong. Same game?
September
21,
2009
Last week the
Federal Reserve issued a letter saying it will belated begin
examining non-bank subsidiaries like CitiFinancial. The Fed says in
footnote one they have the legal authority to do these exams. Then
why did they refuse to do them for so long? Iit's like the S&L
regulator which stood by as the thrifts wasted taxpayer money -- at
least its duty were passed along to the OTS.
On
merger
applications
in
the
past,
when
community
groups
like
ICP /
Fair Finance Watch put in evidence of violations by bank's
subsidiaries, the Fed would drop a footnote that the issues were
being referred to the FTC and HUD -- implying that the Fed had no
jurisdiction over them, certainly no commitment to do anything about
them
The Fed says,
"Supervisory activities will be planned based on the issues
identified ...through the investigation of consumer complaints."
So what has the Fed been doing to date with consumer complaints
against non-bank BHC subsidiaries?
Meanwhile, PNC's
National City is moving to close its branch on the East Side of
Youngstown, Ohio, in the McGuffey Mall. It has no other branch within
a mile. What will be done?
September
14,
2009
We note the Malibu
partying of Cheronda Guyton, Wells Fargo bank's senior VP for
foreclosed properties....
Meanwhile, on
another beach, HSBC is banking on the bloodbath on the beach: in Sri
Lanka, with people still interned in the camps in Vavuniya, HSBC has
bragged it is looking to open branch offices in Jaffna and elsewhere
in the North. "HSBC is looking at opening branches in strategic
locations in the North and East," its CEO for Sri Lanka and
Maldives Nick A Nicolaou said. Some call it "banking on the
bloodbath on the beach," and wonder how HSBC has to date escaped
the boycott calls that have been directed at Victoria's Secret --
will it be exposed? -- and GAP, including its ironically named Banana
Republic brand. We'll see.
September
7,
2009
Despite all the
talk about Citigroup moving away from subprime and predatory lending,
even in Indonesia its high-cost unit CitiFinancial continues to grow,
having just "opened two new branches in Makassar and Palembang.
Djamin Nainggolan, consumer finance business head at Citi Indonesia,
said: "The expansion of CitiFinancial to Makassar and Palembang
reinforces our commitment to growth and development in Indonesia.
Within four years, we have grown from 16 branches to a 69-outlet
network." Predatory lending in Indonesia...
Having tangled
repeatedly with the Federal Reserve about Freedom of Information Act
compliance, we note Bloomberg LP v. Board of Governors of the Federal
Reserve System, U.S. District Court, Southern District of New York
(Manhattan), No. 08-9595. Chief District Judge Loretta Preska of the
SDNY wrote in a 47-page opinion, "The Board essentially
speculates on how a borrower might enter a downward spiral of
financial instability if its participation in the Federal Reserve
lending programs were to be disclosed. Conjecture, without evidence
of imminent harm, simply fails to meet the Board's burden."
Preska concluded that the Fed "improperly withheld agency
records in response to a FOIA request by conducting an inadequate
search." Why are we not surprised?
August 31, 2009
President Obama's decision, announced from
Martha's Vineyard, to re-nominate Ben Bernanke to chair the Federal
Reserve represents even to some of Obama's most fervent supporters a
sign that, at least on banks and the economy, his "Change We Can
Believe In" may be no change at all. That Obama nominated and
then stood behind the New York Fed's Tim Geithner, even after the
public disclosure that the man he would put in charge of the Internal
Revenue Service had himself neglected to pay his taxes, and even when
caught only partially paid up, using the statute of limitations,
these supporters excuse as a bittersweet decision made early on, when
the economy was in crisis. That is no longer the case, according to
Team Obama. So to give another term to the very same Fed chairman who
presided over the predatory practices of Citigroup et al., and then
bailed them and AIG out, can't be defended on crisis grounds. As
we've noted, Bernanke's approach to the Community Reinvestment Act is
that it needn't be enforced on mergers -- which is the law's only
enforcement mechanism. This defanging of CRA is an idea that appears
to be spreading. Watch this site.
As
IMF
Funds
Latvia,
It
Evades
Questions
of
Conditions
and
Props
Up Swedish Banks
By
Matthew
Russell
Lee
UNITED
NATIONS,
August
28
--
As
the
International
Monetary
Fund,
after
haggling with the government in Riga, decided to release an
additional $280 million to Latvia, the IMF's Dominique Strauss-Kahn
offered canned praise that "authorities have made good progress
in stabilizing the financial sector. Important measures include
strengthened intervention capacity, an enhanced financial supervision
and monitoring framework, and steps to contain risks in Parex Bank.
Looking ahead, in light of binding fiscal constraints, the
authorities should minimize contingent liabilities from domestic
banks."
On
an IMF
press
conference call that followed, Inner City Press asked for an
explanation of Strauss-Kahn's directive on Latvian banking, whether
the IMF expects more bank failures and merger in the country, and
whether the measures taken are, at least indirectly, meant to benefit
as well Sweden's banks, absolving them of exposure to the Latvian
market.
Anne
Marie Gulde,
Senior advisor in the IMF's European Department, began by saying,
"That's a lot of questions." Then she proceeded to dodge
most of them. She said, "we are looking at how the budget can be
made consistent with the economic realities in the country. This will
involve possible further structural reform in spending and possibly
revenue measures." The "we" presumably means the IMF.
She
went on, "the
authorities are working on improving their bank resolution framework,
so we are reasonably confident that any problems that will be
emerging in this improved framework can be addressed." There was
the matter of the Parex Bank; in the U.S., there was the sale by
the
FDIC of Colonial Bank to BB&T with very little transparency.
The
IMF opines on Latvia because they need the money. But does the IMF
opine on the U.S.?
Mark
Griffith,
the
IMF's
Latvia
mission
chief,
added
that
"a
number
of banks have taken measures to increase capital to strengthen their
position in Latvia." Was this the response to the question of
whether the IMF's demand in Latvia benefit Swedish banks?
Footnote:
at
least
in
this
case
the
IMF
provided
notice
to the Press of a
conference call on the decision. In the more controversial
case
of
Sri
Lanka,
where
at
least
four
countries
abstained
on human rights
and / or war crimes grounds, no such notice was given. Afterwards
the
IMF told Inner City Press that the Sri Lanka call had been only for
journalists in Colombo. Here, priority was given to questioners from
Riga, and at the end it was said that the IMF wants to engage more
about Latvia with the press, especially in Riga. Does the IMF play
politics on how it provides notice of conference calls? Watch this
site.
From
the IMF's
transcript:
Inner
City
Press:
Mr.
Strauss-Kahn's
statement
talked
about
additional
fiscal
consolidation.
I was wondering if, one, you could explain
that, and two, separately whether the IMF expects any further
bailouts of banks or mergers of Latvian banks. Also the effect of
this program on not only Latvian banks, but let's see the Swedish
banks that are exposed there and whether the idea of the government
helping consumers pay banks, is it a matter of the banks
restructuring the debt of consumers or of funds going to consumers in
order to have the banks receive 100 percent of what's owed to them.
MS.
GULDE-WOLF:
Those
are
a
lot
of
questions.
Let
me
start maybe on the
fiscal consolidation. Clearly, this is a part of the program as we
had explained before. The decline in economic output in Latvia
following a boom has a severe impact on the way the budget has to be
structured and in looking at the next budget we are looking at how
the budget can be made consistent with the economic realities in the
country. This will involve possible further structural reform in
spending and possibly revenue measures.
Clearly
the
issue
of
banks
and
possible
further
banking
problems
is critical
in the forward-looking strategy of where we are going to go. There
has already been significant progress made in stabilizing the
financial sector. At this stage, the sector as a whole is well
capitalized and liquid. With the continuing economic problem it is
very important to keep vigilance in the financial sector. Also it
cannot be ruled out that there might be problems emerging. The
authorities are working on improving their bank resolution framework,
so we are reasonably confident that any problems that will be
emerging in this improved framework can be addressed.
MR.
GRIFFITHS:
I
think
the
financial
sector
has
really
stabilized
since
the end of last year, and a number of banks have taken measures to
increase capital to strengthen their position in Latvia, so I think
they are making a lot of progress there and I think the authorities
have worked very hard there. So I think things are getting better
there.
* * *
August
24, 2009
What
an outrage-- now the FDIC, when it chooses which bidder to award a
bailed out bank to, refuses to release even the names of the rejected
bidders, and information about their bids. Why was one chosen over
the other? There's no way to know. This change in policy should not
be allowed to stand.
August
17, 2009 -- As Colonial Bank is
Handed to BB&T, Regulators Ignore Community Reinvestment Act and
BB&T's Predatory Lending, G-20 Preview
By
Matthew
R.
Lee
SOUTH
BRONX,
NY
--
Lost
in
the
late
Friday
coverage
of the handover of
Colonial BancGroup to BB&T was the way that this acquisition of a
$25 billion bank was shielded from any public comment or
consideration of the Community Reinvestment Act. The CRA of 1977,
which requires that regulators consider public comments on banks'
records of serving low and moderate income neighborhoods when they
apply for approval for mergers or expansion, has been ignored on a
number of large acquisitions, such as JPMorgan Chase's pick-up of
Washington Mutual.
At that time, the
regulators were in crisis mode, so to some the waiver of applicable
law was more understandable. Now under a new administration which
says the recovery has begun, the law is again waived, for a bank
whose chairman has ridiculed the CRA while engaging in predatory
lending through BB&T's Lendmark subsidiary, sure to expand into
new markets through this acquisition. There has been no mention of
any post consummation consideration of BB&T's record or any CRA
plan it might have. If this is the new era of financial regulation,
it is worse not better than what came before.
August
10,
2009
Sleazy
mortgage
lender
Taylor,
Bean
&
Whitaker,
which
gave
Inner
City
Press / Fair Finance Watch the run around about getting its HMDA
data, has been raided by law enforcement and finally stopped lending.
In March, after the Treasury Department told Colonial to come up with
capital before it would get TARP funds, home-loan provider Taylor,
Bean, "which had close ties to Colonial, led a group that
pledged to provide the troubled bank with a $300 million equity life
line. The financing deal fell apart last week, just days before U.S.
federal agents on Monday raided the Florida offices of Colonial and
Taylor Bean. On Wednesday, Taylor Bean closed its mortgage lending
business. Lawyers suspect that the incestuous relationship between
Colonial and Taylor Bean attracted the attention of regulators and
the Justice Department." The HMDA run around was a clue, too...
August
3,
2009
-- Predatory
Lending
Persists,
Despite
Rosy
Views
from
DC
and
IMF,
CitiFinancial's
Dark Side in Knoxville
By
Matthew
R.
Lee
SOUTH
BRONX,
August
1
--
In
Washington
and
New
York,
there is talk of an
uptick in the national housing market and a curtailment of
controversial subprime lending by such wounded giants as Citigroup.
On July 31, Inner City Press asked the
International Monetary Fund
about the regulation of subprime lending in the United States,
yielding a rosy answer
about consumer protection.
But
a
mortgage
broker
in
Knoxville,
Tennessee
long
known
to
Inner City Press tells a
different story on both fronts. He has in the past been sued for
whistleblowing about Citigroup, and so will remain nameless in this
article. But he knows Citigroup's subprime business well, having
worked for and then against its consumer finance subsidiary
CitiFinancial.
Reflecting
the
collapse of the housing market, he compares 2006, when he closed over
100 home purchase loans, with the year to date 2009, in which he has
closed only six such loans.
His
income
from fees has plummeted, and
he faces a car repossession by Wells Fargo (which he calls Hells
Fargo). Still he laments others' problems more than his own,
describing to Inner City Press a sample CitiFinancial loan in
Knoxville.
"They
raked
her at twelve and a half percent," he said, referring to a 63
year old African American woman who was also charged $7,000 in fees.
"This is after they took TARP bailout funds, they won't show any
flexibility and she's about to lose her house."
He describes
another borrower who has a $1700 personal loan from Citifinancial at
25.5% interest, and a $6,000 loan at 16% from Washington Mutual
Finance, which CitiFinancial bought. The loans were consolidated at
the higher CitiFinancial rate of 25%. "They're still up to their
predatory lending," the maverick broker says. Even with the
go-go years over.
On July
31, Inner
City Press asked the
Western Hemisphere Division Chief of the
International Monetary Fund Charles Kramer about U.S. regulation of
subprime lending, current and proposed:
Inner
City
Press:
What
do
you
think
of
the
proposal
[of] separating
prudential
regulation of banks from consumer protection? It's pending in the
House. I was told that the IMF will have some view on that and you
are the guys to ask. What can you say to that?
MR.
KRAMER:
There
are
two
observations
we'd
make
on
that.
First of all,
the key principle is that prudential regulation needs to be
strengthened and be uniformly strong across the board, and a clear
message coming out of the crisis is that prudential regulation needs
to be enhanced significantly. Part of your question goes to an
organizational issue, and looking around the globe we see financial
supervision and regulation organized in a number of different ways.
In some places we see it organized along functional lines where you
have regulators for insurance companies and securities companies
individually and so forth, and in some countries we have regulation
along conceptual lines you could say, so you have prudential
regulation and consumer and investor protection regulation. We're not
of the view that there is any one sort of magic bullet or any one
formula for this. Again the key thing is that you need strong and
sound prudential regulation across the system.
Inner
City
Press:
To
the
degree
that
unregulated
subprime
lending
in some
cases by bank affiliates at least triggered or started the rumblings
of this. What protection do you think should be in place so that that
doesn't happen again?
MR.
KRAMER:
Again
I
think
the
issue
is
that
you
need strong prudential
regulation across the board. Consumer products are obviously one
area, but there are a lot of others. You mentioned nonbanks, for
example. We think it's very important that the administration has
proposed to bring nonbanks under a stronger regulatory net to the
extent that they're systemic, so we think that the proposal in
particular to designate certain banks and nonbanks as tier one
financial holding companies that would come under stronger regulation
is a very good thing.
Whether
these
moves will help people for example in Knoxville with 12.5% mortgages
and 25.5% personal loans from CitiFinancial remains to be seen.
July
27,
2009
"Robert Joss
is leaving the board of directors at Wells Fargo to join the board of
Citigroup" - WTF? Who is it, that offered him the Citigroup
position? How isn't it a conflict of interest, given Citigroup's and
Wells' fight for Wachovia? What about the other conflicts of interest
on the Citigroup board?
July
20,
2009
After
the
financial
meltdown
exposed
the
Federal
Reserve's
inattention
to
predatory
lending and credit default swaps, one would expect the Fed
to hold off further loosening the rules on CDS. But you'd be wrong.
Last week the Fed granted
an
exemption to CDS dealer ICE Trust, owned
by crisis loser Citigroup and predatory Goldman
Sachs, among others,
giving them an easier 20 percent capital treatment rather than the
100 percent applicable to uninsured banks like ICE Trust.
Bloomberg News,
notably, spun
the
story
the
other
way,
claiming
that "the Federal Reserve determined that ICE Trust is as risky as any
insured bank, according to a letter posted July 14 on the regulator’s
Web site. The Fed is requiring that bank members of ICE Trust, such
as Goldman Sachs and New York-based Citigroup Inc., set aside the
same amount of capital as parties trading as federally-backed
lenders."
But this is a
story
yet again of the Fed making it easy for the dealer community-- the
dealers sought 0% so at least the Fed is imposing 20%. Those who
don't learn from the past are condemned to repeat it...
JPMorgan Chase has
a Community Reinvestment Act duty in West Virginia and Kentucky, for
example, and in neighboring states. Meanwhile, Chase is funding 6 out
of the top 8 corporate producers of MTR coal in Appalachia. (Massey,
International Coal Group, Arch Coal, Consol Energy, TECO and
Foundation Coal.), per RAN. Chase was a co-lead arranger and
underwriter for more than $1 billion in new financing to Massey
Energy less than 12 months ago. Massey Energy is the biggest and most
controversial MTR mining company in Appalachia, and is responsible
for nearly 20% of all MTR coal mined. Others have stopped funding it
-- why not Chase?
July
13,
2009
While the fate of
the CRA in the CFSA legislation remains in the air -- or in the hands
of Barney Frank -- we recommend this week two articles in the
Charlotte Observer, both about Home Mortgage Disclosure Act. Inner
City Press / Fair Finance Watch published its
analysis of the 2008
data back in early April. But as in previous years, the Observer
beat
up other daily newspapers with its detailed story.
Notably,
the
Observer
story
--
and
that
of
ICP
/
Fair Finance Watch? -- does not
include the 2008 loans of Washington Mutual. JPMorgan Chase is
claiming that it had no duty to file the data, because of the
structure of how the regulators let JPMC buy WaMu. This is a major
loophole that should and will be pursued.
The Observer
reports that "the HMDA data supplied by banks, for example,
doesn't currently include borrowers' credit scores, the down payment
amount and other details that would give a clearer picture of a
lenders' decisions to make or deny a particular loan" and goes
on to note that Inner City Press / Fair Finance Watch "has long
argued the public needs more information about the role race plays in
lending. Now that many banks are recipients of federal bailout
dollars, [ICP] says they should submit to stricter HMDA requirements.
'It's the least they can do,' [ICP] said."
On the West Coast,
JPM Chase, Citigroup, Wells Fargo and Bank of America are all
refusing to help Californians in their time of need, announcing they
will not accept the State's IOUs. As noted
by
the
longtime
DC
watchdog
of
the
Associated
Press, "clearly, the federal
government has leverage over these institutions," said [ICP]. Hundreds
of banks have received aid from the government as part of
its $700 billion rescue plan last fall."
July
6,
2009
Citigroup,
with $45 billion in bailout funds, one third publicly owned, has
jacked up credit card rates more sharply than other banks, the FT
reports. It has also raised salaries by 50%. Ditech continues TV ads
for mortgages. And from the WSJ's account of Geithner's domination of
the process to name his successor at the New York Fed, "The
search to replace Mr. Geithner began immediately after he was tapped
in late November to be Treasury secretary...By early January, the
list was narrowed to six, including Kevin Warsh, a member of the
Federal Reserve Board in Washington; Rodgin Cohen, who specialized in
banking law at Sullivan & Cromwell LLC; and Mr. Dudley, who had
been head of the New York Fed's markets division since 2007" --
and was at Goldman Sachs before that. Dudley was Geithner's choice.
JPM Chase's Jaime Dimon, on the other hand, favored his lawyer Rodgin
Cohen....
June
29,
2009
The June 25
hearings on Capitol Hill about the Federal Reserve's role in Bank of
America's acquisition of Merrill Lynch don't auger well for Barack
Obama to renominate Ben Bernanke as Fed chairman. Bernanke repeatedly
said, I don't recollect that conversation. He was asked about
statements by top Fed lawyer Scott Alvarez but dodged the repeated
question, doesn't he work for you? He took at least some fire from
the left as well as right. Even more shameful was the Fed giving
away the store to GMAC, and now to PIMCO. Is this the change to be
believed in?
The hearings also
recounted how little confidence a Fed government had in Bank of
America CFO Joe Price, who'd go on to throw the Community
Reinvestment Act under the bus during the bank's April earnings call.
His statements have yet to be unpacked. But Ken Lewis, and perhaps
Bernanke himself, might want to start packing.
June
22,
2009
--
Obama's
Proposal
By
Splitting
Community
Reinvestment
Act
from
Mergers
Could
Cut
Enforcement, Lost in (Fed) Sauce
Byline:
Matthew
R.
Lee
of
Inner
City
Press:
News
Analysis
MILWAUKEE,
June
17
--
The
Obama
administration's
financial regulation
proposal, on the issue of the Community Reinvestment Act, bears the
fingerprints of the Federal Reserve, not only Tim Geithner but also
Ben Bernanke. While quickly praised
by,
for
example,
Paul
Krugman,
since the proposal shifts CRA evaluation away from the regulators who
review the mergers on which CRA is actually enforced, bankers will
like it, and may be behind it.
CRA
is only
enforced in connection with banks' applications for regulatory
approval for mergers and expansions, as confirmed by the Department
of Justice Office of Legal Counsel. Without taking this into account,
the Obama administration is proposing that CRA be a core function of
the Consumer Financial Protection Agency, which will not be
responsible for merger review.
Had
this proposal been made under the
Bush administration, CRA advocates would have howled that it weakened
the CRA. Since it's Obama, the response appears generally to be,
let's wait and see.
But
not only did
Obama appoint and fight for Tim Geithner, who at the Federal Reserve
Bank of New York oversaw some of the most predatory moves by
Citigroup and others -- Obama also continues to praise Ben Bernanke.
In late 2008 at the Federal Reserve in Washington, Inner City
Press
asked Ben Bernanke about his decision to waive any CRA public comment
period when he allowed Goldman Sachs and Morgan Stanley to become
bank holding companies.
Bernanke
responded
that it makes no sense to limit CRA review to regulatory approval
time -- despite that being the only legal enforcement of CRA. Now
that thinking seems to have insidiously spread within the Obama
administration.
But who will
blow the whistle? Krugman for example takes
the
proposal
as
a
"poke
in
the
eye
to
right-wingers."
To skeptics, it's a perfect post modern move: cheered by ideological
but ill-informed liberals, but actually serving big business.
Postscript --
proponents of Obama's plan have noted that the CFSA would, among other
things, hold public hearings on (some?) mergers. But if the power to
approval or deny the mergers remains with the Federal Reserve, OCC and
FDIC, the CFSA could be just a side show. The Bank Holding Company Act
and Bank Merger Act would have to be amended -- first.
On the other hand, a portion of Obama's proposal, to declare
hedge funds which pose systemic risk to be bank holding companies,
could easily be expanded to put just funds under the CRA. Whether this
happens, or for now is at least quickly proposed, may be a litmus test.
Watch this site.
June
15,
2009
--
Tales
from
the
Subprime
Meltdown
Resonate
from Coast to
Coast as Regulators Spins
Byline:
Matthew
R.
Lee
of
Inner
City
Press:
News
Analysis
SOUTH
BRONX,
NY,
June
11
--
As
subprime
enabler
Larry
Summers prepares to
belatedly propose new regulation in a speech Friday in New York,
Thursday in the Midwest one of the beneficiaries of Summers'
deregulation and the meltdown, Wells Fargo, was protested by workers
and consumers. Employees of Quad City Die Casting employees in
Moline, Illinois called on Wells Fargo to restore financing before
the plant is closed and their jobs lost on July 11.
The protest was
part of a nationwide day of action by NCRC members, from California
to New York. Meanwhile, Wells Fargo Bank
in 2008 confined African
Americans to higher-cost loans above the Federally defined rate
spread 2.18 times more frequently than whites, according to this
(organization's) study.
In North Hollywood,
for example, according to organizers there, "sixty community
activists and a horde of media outlets gathered in North Hollywood
for a press conference in front of a four unit apartment building
from which tenants were being evicted. Lizette Guevara, a ten year
resident of the building, who with her children and a blind neighbor
are being evicted, spoke about her efforts to stay in her home...
Participants included community organizations and neighbors from the
nearby dog park."
In
North Carolina,
numerous groups participated in a "Financial Freedom Fest Day of
Action." In the Detroit Council Chambers, it was standing room
only. In Indiana, they "talked about the foreclosure mitigation
counseling program and had 2 families there to give testimonials
about how they were helped by the program."
There were
rip-roaring events in Milwaukee, Wisconsin, but we'll have more on
that next week after a visit to Beer City.
At
an
event
in
Mississippi,
a
representative
of
the
City
Jackson
deplored "wrongful eviction of tenants
being told by landlords that they do not need to show up in court and
being offered to 'work something out' only to be evicted five days
later."
And that was a
consistent theme from coast to coast: lower income people are bearing
the brunt of the financial crisis, and the bailouts are not helping
them, despite what Larry Summers says, despite some banks now paying
back the TARP. When people feel that their champion's in power, and
still they have no justice, what do they do? Watch this site.
June
8,
2009
Questions,
questions:
Bank
of
America
will
be
saved
by...
ex-regulators?
Now on
the board of directors are former Federal Reserve Governor Susan
Bies and former Federal Deposit Insurance Corp. Chairman Donald
Powell. That is to say, regulators who failed to stop predatory
lending and the meltdown now benefit from it....
So
the
regulators'
idea
of
change
at
Citigroup
would
be
to hand the
reigns from Pandit to former U.S. Bancorp CEO Jerry Grundhofer, who
bought a 25% stake in now-failed predatory lender New Century? Plus
ca change, plus c'est la meme chose.
On
June 11, there will be Community Reinvestment Act-relevant events by
NCRC members across the USA, including New
York,
Alabama,
California,
Washington
DC,
Delaware,
Florida,
Indiana,
Iowa,
Maryland,
Michigan, Missouri, New Jersey, North Carolina, Ohio,
South Carolina, Texas, West Virginia and Wisconsin....
June
1,
2009
In the UK,
according to a new study by the New Local Government Network, "There
is evidence that the pernicious trend of illegal unsecured lending at
extremely high rates of interest, or 'loan sharking,' is making a
comeback At least 165,000 people already use loan sharks in the UK
and we can expect the number to rise sharply." An additional
35,000 people, or an even higher number, are likely to use loan
sharks during the recession, the report predicts.
The race for
governor in Florida pits bad banker against worse pro-bank blowhard.
Bill McCollum, who while in Congress promoted every form of
deregulation and promoted predatory lending, now faces off against Alex
Sink, the former CFO of NationsBank now Bank of America, who
oversaw the former's purchase of Barnett Banks which set negative
fair lending precedents. How to choose between them? We don't envy
Floridians on this one...
What
a
surprise:
the
Committee on Capital Markets
Regulation,
including
vulture
investor
Wilbur
L.
Ross
Jr.
of
WL
Ross & Co.,
is proposing that the Federal Reserve become the super-regulator...
May
25,
2009
Banco
Bilbao
Vizcaya
Argentaria
SA
is
looking
to
acquire
a
U.S. bank up to
half its size in 2010... So how did the Federal Reserve explain the
lack of public notice on its H2A web site for Bank of America's
application for a new bank? We don't know yet: we asked the Fed to
response by email, but they have not....
May
18, 2009
On
May 14, Inner City Press submitted the following to the Federal
Reserve:
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
petition, challenge and request under the Freedom of
Information Act (5 U.S.C. § 552; "FOIA") and Community
Reinvestment Act (CRA) regarding the
application by Bank of
America to acquire 100 percent of the voting shares and thereby
indirectly acquire Bank of America North Carolina, National
Association, and for the Federal Reserve System's (the "FRS's")
communications with Bank of America in 2009 and a demand for public
notice and comment, and a protest-in-advance.
The FRS
has virtually repealed banking laws, including the BHC Act and the
CRA, by approving mergers and conversion with no public notice or
comment.
Now, on an application by the largest and most troubled
US bank, the Fed provided no notice until the last day on its H2A web
site. Yesterday, ICP
was asked about a notice seen in the
Federal Register. It was not in the H2A. The undersigned called the
FRB of Richmond, and noted that it was not in the H2A, requested an
extension of the comment period.
Today May 14, suddenly
the proposal is in the updated
H2A,http://www.federalreserve.gov/releases/h2a/h2a.cfm?view=week
with the comment period ending... tomorrow. This is unreasonable, and
unwise given the issues surrounding Bank of America. It is widely
reported that B of A would have been required to raise more capital,
but that it lobbied the Fed to knock $16 billion off what it should
raise. The Fed and its governors, and B of A until recently when its
CEO was under fire, have said that CRA did not cause the financial
crisis. But on B of A's April 20 earnings conference call by Lewis
and his Chief Financial Officer
Joe Price told analysts that the
company's "Community Reinvestment Act portfolio is seven percent
of the residential book, but 24% of the losses."
Yeah --
blame your bad decisions to invest in high falutin asset-backed
securities on the CRA... We'll have more on this.The conference call
is archived
here
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324and
CFO
Price
makes
his
statement
at
Minute
26:25
ICP is
requesting an evidentiary hearing to explore this public claim by B
of A.
In its (and the) first study of the just-released 2008
mortgage lending data, Inner City Press / Fair Finance Watch has
found that Bank of America
NA confined Latinos to higher-cost
loans above the rate spread 1.51 times more frequently than whites.
Countrywide Bank, which B of A acquired, had a lower disparity, at
1.22. Bank of America NA denied applications by African Americans
1.44 times more frequently than whites, while denying Latinos fully
1.57 times more frequently than whites.
ICP Fair Finance Watch
was interviewed on November 7 about the use of funds by Bank of
America --
"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. 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...
There is more to be said, but first the comment period
must be extended.
May 11, 2009
Over 500
tenants
a month in New York City alone are served with eviction papers due to
their landlords being foreclosed on. The number one evicter? Deutsche
Bank... So the Fed even cooked the books on the stress tests, after
Wells Fargo threatened to sue. At least $16 billion was knocked off
what Bank of America has to raise. Way to regulate... Same to the
Fed's use of a Goldman Sachs director, Stephen Friedman, as the
president of the New York Fed. No conflict of interest there, right?
May 4, 2009
So at Bank of
America's shareholders' meeting last week in Charlotte, Ken Lewis was
ousted as chairman. This same a week after he and his CFO Joe Price
fingered the bank's “Community Reinvestment Act porfolio” as
having much higher delinquency rates than other loans. Cynically,
Lewis arranged for some community groups to lobby for him to remain
as chairman. He's still the CEO -- shareholders couldn't vote on
that. Yet.
Amazingly,
CitiFinancial continues to sponsor a Ford car -- NASCAR TARP.
April 27, 2009
Bank
of America calls itself a major supporter of the Community
Reinvestment Act. But as Ken Lewis comes ever-closer to his
termination date, apparently everything must go. On B of A’s April
20 earnings conference call by Lewis and his Chief Financial Officer
Joe Price told analysts that the company’s “Community
Reinvestment Act portfolio is seven percent of the residential book,
but 24% of the losses.” Yeah -- blame your bad decisions to invest
in high falutin asset-backed securities on the CRA... We'll have more
on this.
The
conference call is archived here
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324
and
CFO Price makes his statement at Minute 26:25
And now, from the
mail bag, on Wells Fargo and US Bank
Subj: My Plight with Wells Fargo
Auto Financial
From: [Name withheld in this format]
To: Inner
City Press
Sent: 4/17/2009 6:59:57 P.M. Eastern Daylight
Time
Hello Matthew, I've
been referred to you by a family member to contact you about some
trouble I've been having with Wells Fargo Auto Financial. I'd like to
share my story with you, in hopes that you will promote awareness
regarding Predatory and Discriminatory Lending Practices.
I
myself, am a young, black female; have always been a part-time
worker, and full-time student (until recently as of 4/06/09); and a
single mother. At the time I contracted with WF, these same
characteristics applied.
December
2007, I was deceived into a contract for an auto loan that did not
state the terms that was initially discussed. Based on my good credit
history, I was told that Wells Fargo would pay off all of my credit
card debt, and buy out my car loan from Bank of America and I would
end up paying a low monthly payment each month. Right before it is
time to sign the contract, Wells fargo change the terms, and decided
it was best to give me a check in the amount of $2000 to pay off my
own debt, and buy out my car loan ($18K). This was a little fishy to
my then, but I felt pressured to go ahead with the deal because (1) I
spent almost 3 hours in this office, and I had to leave quickly; (2)
I needed the money to pay off some debt and bills; (3) Wells Fargo
offered an additional line of credit (as an incentive) for $1000, and
(4) I didn't have to start paying for another month and a half.
The
terms were $505.77 per month, which was far less than what I was
paying for the bills separately. He told me where to sign, and I
left. Things were fine for the first couple of months.
May
2008, I had a life changing event occur. My daughter had chronic
bronchitis due to Chicago's weather and I had to move to Arkansas for
a better climate environment. Upon my move I had certain job leads
that fell through and was out of work for at least 4 months. During
the entire time, Well Fargo called everyday, at least 3 or 4 times a
day. My credit score dropped tremendously, and no one was willing to
help. Once I did find a job, I paid all I could to Wells Fargo to get
things back on track, but all the money was going torward the
interest and not the principle of the load, which kept me at a
standstill with paying it down.
I
now landed a job where I currently make $30K. As I discussed to Wells
Fargo, I've worked in the $505.77 in my monthly budget; but I know
that I don't have the money to pay a past due balance, late charges,
the current monthly payment, and rolocation expenses in preparation
for this new job. I've kept them up to date with all of the changes,
and yet they continue to threaten me with repossession, despite the
fact that I paid out over $1500 within the last month and a half.
I've
called numerous times to see if my loan can be restructured, and been
given countless run arounds. Finally, Wells Fargo Bank explained that
neither them nor Wells Fargo Auto Financial work with customers (new
or existing) that live in Arkansas.
Bottom
line, there was absolutely nothing they could do to help me. All the
while, I owe $505.77 for March payment, $272.99 in late charges,
$505.77 for April, and the $505.77 in May. My credit score is shot,
so no other bank will loan me anything, and no car dealership is
willing to take a trade in for a car only worth $8000 but a loan
attached to it for $20,000.
I've
contact the CEO, John G. Stumpf, who had someone else send me a
letter back explaining that since I signed the contracted there was
nothing they could do. I'm seeking justice in that, Well Fargo needs
to be stopped. They thought it was best for my financial situation to
require a full-time student, part-time worker, single parent, young
black lady to pay them $33,380.82 on a car worth $8000. Tack on a
19.24% interest rate to a loan, which would have me pay them
$13,035.13 outright.
This
is ridiculous, and something must be done. I trusted Wells Fargo in
that they were charged to help me. They initially told me that there
was something they can do to help, and made me believe that this is
what was best for my situation. Now that I am a customer of theirs,
there is nothing they can do to assist me. I am enraged!
Us too. On US
Bank --
And
on US Bank --
Subj:
Attn: Matthew Lee, Executive Director or appropriate staff
From:
[Name withheld in this format]
To: Inner City Press
Sent:
4/17/2009 10:37:28 P.M. Eastern Daylight Time
I'm
in a fix with US Bank as they have attempted to keep me in perpetual
debt to them by using late fees, or overdraft fees. Lately I've
moved my account to a credit union, and closed my account with US
Bank. I paid in full the negative amount in doing so, and now they
claim I own them $795.50 in a negative balance. Again, "overdraft
fees".It has been hard to shake these people off. They almost
had me lose my apartment, my electricity was off for a week, my
phone was off for 4 months. During that time, I had an auto deposit I
could not stop because of a perpetual negative balance they claimed
even when the deposit was well over the negative. Is there any law I
can use to stop these idiots? I doubt I'm the only one having this
problem with there predatory practices. And can't the state pull
their charter?
April 20, 2009
When Cash
America International has its annual general meeting in Fort Worth on
April 22, there will be a long overdue shareholders' resolution to
“request that the board of directors of Cash America
form an independent committee of outside directors to oversee the
amendment of current policies and the development of enforcement
mechanisms to prevent employees or affiliates from engaging in
predatory lending practices.” The company, engaged in payday
lending, needless to say opposes the resolution...
In other predatory lending news, Pacific
Capital Bancorp -- TARP funds for tax refund anticipation loans: TARP
for RAL.
In the run-up
to
its
annual shareholders' meeting, this time in the Hilton and not
Carnegie Hall, Citigroup has been criticized for misleadingly
offering $5,000 loans and not disclosing in the advertising the
interest rate -- 30%. But CitiFinancial has been doing that for a
long time...
Of Chris Dodd,
former Congressman John LaFalce said "I would tell
him to run as a populist - run on the side of the consumer.”
LaFalce, as we've noted, went from Congress to... working for noted
predatory lender Household International, bought by HSBC...
April 13, 2009
Following up on ICP / Fair
Finance Watch's first study of 2008 HMDA
data, a complaint has been filed with the Federal Reserve:
Re: Need for FRB Action on Mockery Made of HMDA,
by Regions
and others
Dear Ms. Johnson, Mr. Alvarez and others:
This letter
concerns attempts to avoid public review of Home Mortgage Disclosure
Act
information by Regions Financial and, prospectively, other financial
institutions. As you know, under 12 CFR § 203.5, institutions are
required to
provide their HMDA Loan Application Registers to requesters. Virtually
all
banks provide the HMDA LAR in .dat or other analyable electronic
format. In
fact, searching the Federal Reserve Bulletin we find notation of only
two
institutions refusing to provide their data in useful form: AmSouth
(now
Regions Financial) and New York Community Bank. (Lehman Brothers and
AIG also
took this approach; significantly, the former went bankrupt and the
latter
survives only as a ward of the FRB.)
Now,
Regions
has
continued
what
was
AmSouth's
stance
as
a
HMDA
outlier, by responding to a request for its HMDA LAR
in .dat
format by providing the data in a PDF file of over one thousand pages,
which
cannot be analyzed using SPSS or other statistical program. The effect
is to
make Region's 2008 lending performance unanalyzable until September,
unlike
nearly all other large banks...
Beyond
instructing
Regions,
NYCB
and
others
to
move
into
the
mainstream
of HMDA reporting to the public, the FRB is
encourages to revises its outmoded staff commentary on 12 CFR Part 203,
Section
203.5 (which as is relevant here already encourages "mak[ing] the
modified
register available in census tract order... in order to enhance its
utility to
users." It is imperative that the
Federal Reserve, given its responsibilities under HMDA, make clear to
Regions
and other institutions that the HMDA LARs they are required to provide
to the
public should be provided in analyzable electronic format to enhance
its
utility, particularly following the financial meltdown and the lack of
oversight it has highlighted. We await your response.
April
6,
2009
Subprime
Survivors
Wells,
BofA
and
JPM
Chase
Were
More
Disparate
By
Race
in 2008 than Wachovia or Countrywide, Trends
Will Worsen
Under Current Regulators
NEW YORK, April 2
-- In
the first study of the
just-released 2008 mortgage lending data, Inner City Press / Fair
Finance Watch
has found that the seeming survivors of the banking meltdown, Wells
Fargo, Bank
of America and JPMorgan Chase, had worse disparities by race and
ethnicity in
denials and higher-cost lending than the banks they acquired, Wachovia
and
Countrywide. Mortgage lending in the U.S. will become more and not less
disparate because of the emergency mergers and bailouts engineered by
the
regulators, the study predicts.
Fair
Finance
Watch
notes
that
JPMorgan
Chase's
massive
closing
of
branches
of
Washington Mutual will also make credit harder to come by, especially
in poor
neighborhoods. 2008 is the fifth year in
which the data distinguishes which loans are higher cost, over the
federally-defined rate spread of 3 percent over the yield on Treasury
securities of comparable duration on first lien loans, 5 percent on
subordinate
liens.
Wells
Fargo Bank in 2008 confined African Americans to higher-cost loans
above this
rate spread 2.18 times more frequently than whites, according to Fair
Finance
Watch. Wachovia Mortgage FSB, the largest lender of Wachovia which
Wells Fargo
acquired, had a lower disparity, at 1.46.
Bank
of America NA in 2008 confined Latinos to higher-cost loans above the
rate
spread 1.51 times more frequently than whites, the data show.
Countrywide Bank,
which B of A acquired, had a lower disparity, at 1.22.
JPMorgan
Chase was even more disparate to Latinos, confined them to higher-cost
loans
2.10 times more frequently than whites, almost as pronounced as its
disparity
between African-Americans and whites, 2.26. Citigroup, perhaps due to
its
shrinking, some say dying, business had disparities of 1.90 for African
Americans and 1.23 for Latinos. For US Bancorp, the disparity for
African
Americans was 1.55 and for Latinos, 1.35.
"The
banks the regulators favored in 2008, allowing emergency takeovers like
JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide
and
Merrill Lynch, and Wells Fargo's of Wachovia, were the most racial
disparate
lenders," states the Fair
Finance Watch report. "The regulators did not put any conditions on the
mergers
or Troubled
Assets
Relief
Program
bailouts, for example allowing Chase to
close dozens of Washington
Mutual
branches. As things are going, it will be worse and more disparate in
2009. The
new administration has yet to make any substantive change to this."
Several
lenders
had
worse
denial
rate
disparities
in
2008
between
Latinos
and whites then between African
American
and whites, a change from previous years. Bank of America NA, for
example,
denied applications by African Americans 1.44 times more frequently
than
whites, while denying Latinos fully 1.57 times more frequently than
whites.
Atlanta-based SunTrust in 2008 denied applications by African Americans
1.37
times more frequently than whites, while denying Latinos fully 1.78
times more
frequently than whites.
The
law
required that the 2008 data be provided by April 1, following March 1
requests
by Fair Finance Watch. Some lenders did
not provide their data by the deadline. Regions Financial provided its
data at
the deadline but only in paper format, on over 2000 pages, so that it
could not
yet be computer-analyzed. Further studies will follow.
March
30,
2009
Geithner
Promotes
Megabanks'
Monopoly,
in
DC
as
at
Fed,
17
Cut
to 7 on Derivatives
Byline:
Matthew
R.
Lee
of
Inner
City
Press
on
Wall
Street:
News Analysis
NEW YORK, March 28
-- Seven megabanks' renewed grab
for monopoly power in the over the counter derivatives market shows how
little
Wall Street's real power has changed in the transition from the Bush to
Obama
administrations.
The banks,
including Citigroup, JPMorgan Chase, Goldman Sachs,
Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying
over $1
million to p.r. firm Prism Public Affairs to "educate" the voters
weary of bonus and bailouts that those who caused the crisis should
benefit
from it.
Already,
Congress members hungry for campaign contribution have
submitted to closed door briefings by Ed Rosen of the law firm Cleary
Gottlieb,
who drafted the legislative language for monopoly.
The
connector in this story is Timothy Geithner, under Bush
the president of the Federal Reserve Bank of New York and now Obama's
Treasury
Secretary. Geithner in June 2008 convened closed door meetings with 17
banks,
essentially allowing them to propose and draft their own rules for the
derivatives
market.
This led to advocacy
by
the
Fair
Finance
Watch
that
Geithner's
meetings
were
in
fact rule making that
excluded
the public in violation of the Administrative Procedure Act, and by
Inner City
Press, as media, to get the meetings opened to journalists and the
public.
The
Administrative
Procedures
Act
(5
U.S.C.
Section
553)
and
related
laws
require that when the government engaged in rule-making, it must
provide
notice to the public, and allow and weigh public comments. The
New York Fed under Geithner tried to rule-make without any involvement
by the public, even the
public most impacted by the subprime lending that underlies these
processes. The New York Fed on June 9, 2008 met with a group of the
largest banks
to discuss, according to the Geithner himself
"Regulatory policy. These are
the incentives and constraints designed to affect the level and
concentration
of risk-taking across the financial system. You can think of these as a
financial analog to imposing speed limits and requiring air bags and
antilock
brakes in cars, or establishing building codes in earthquake zones.
Regulatory structure. This is about who is responsible for setting and
enforcing those rules. Crisis management. This is about when and how we
intervene and about the
expectations we create for official intervention in crises."
Press
accounts
made
clear
that
the
financial
instruments
and
regulatory
issues
discussed behind closed doors are
related to
issues of public interest, which in fact are disproportionately
impacting low-
and moderate- income people and communities of color -- subprime and
predatory
mortgages.
The
financial institutions invited, in mid
2008, were:
Bank of America, N.A. - Barclays
Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG -
Dresdner
Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase -
Lehman
Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of
Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC
-
Citadel Investment Group, L.L.C.
Fast
forward
to
March
2009,
with
Geithner
despite
tax
evasion
installed as
Obama's
Secretary of the Treasury, and with Lehman having failed and Wachovia
been
swallowed by Wells Fargo. Now he is promoting monopoly powers in the
market for
an even smaller group of banks, just seven: Citigroup, JPMorgan Chase,
Goldman
Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank --
which
despite European headquarters received billions of dollars in U.S.
Troubled
Assets Relief Program bailout funds through AIG.
Now the
idea is to formalize the monopoly through legislation, not rule making.
Industry friendly Congress people like Connecticut's Chris Dodd are
supporting
the monopoly for the privileged. The fig leaf policy argument is that
derivatives should runs through regulated banks. The push is made now,
before
it is formalized that non-banks, too, are regulated.
It is a pure power grab, with Timothy
Geithner as the connector. And who is fighting this monopoly of the
morally if
not financially bankrupt? To be continued.
March
23,
2009
Hate
to see
"we told you so," but... Inner City Press / Fair Finance Watch was on
the record that AIG
was among the sleaziest of companies all the way back to
the 1990s. When Inner City Press filed comments against AIG's
acquisition of
American General Insurance, AIG responded with threats. When Inner City
Press
requested that the Office of Thrift Supervision hold a public hearing,
AIG got
the OTS to change its own rules. AIG hired Ernest Patrikis, the top
lawyer of
the Federal Reserve Bank of New York, and got its way from Timothy
Geithner
when he ran the New York Fed.
Now
Geithner is reaching out, for his senior advisor, to the top economist
of...
Citigroup.
March 16, 2009
In
DC, Obama Officials Defend
Bailouts of AIG and Citigroup, Summers Speaks of Fear
Byline:
Matthew
Russell
Lee
of
Inner
City
Press:
News Analysis
WASHINGTON, March 13
-- The
ongoing bailout of insurer AIG and its counterparties was apologized
for but
defended by a range of Obama administration officials this week.
Treasury
Secretary Timothy
Geithner, until recently the president of the Federal Reserve
Bank of New York and before that at the IMF,
said he hated to have to bailout AIG,
but
"it's
systemic."
His
advisor Gene Sperling, a member of President Bill Clinton's
economic team, said the Obama administration took office only to find
AIG too
big to fail, implying that this was entirely attributable to the two
terms of
George W. Bush. But AIG was allowed to grow without control under Bill
Clinton,
just as Citigroup
was increasingly unsupervised under the tenure at the New
York Fed of Timothy Geithner, as CitiFinancial got deeper into
predatory lending (click here for Inner City
Press reports on that.)
Friday in the White House Barack Obama met and then faced the
Press with
Paul Volcker, chairman of the Federal Reserve in the time before Bill
Clinton.
Volcker rarely used his regulatory powers, at least not to protect
consumers
from predatory lending. And yet now these are the people, along with
Clinton's
Treasury Secretary Larry Summers, who are defending massive transfers
to
Citigroup and AIG, all the while laying blame everywhere except upon
themselves.
Footnote: For a local
study by ICP Fair Finance Watch, see http://www.nydailynews.com/ny_local/bronx/2009/03/09/2009-03-09_the_south_bronx_is_a_banking_wasteland.html
See also the readers' comments on that page. There's a need for
work on and under the Community Reinvestment Act...
Click here for an Inner City
Press debate last week from Washington, here
about
AIG's
secret
bailout
beneficiaries...
March 9, 2009
Congress during the debate about bailing out the banks decided
that
non-US banks should not be getting TARP funds. Now it emerges that of
the $50
billion the Feds have given to AIG's counter-parties, Deutsche Bank for
example
has gotten a full $6 billion. Also receiving hand-outs were HSBC, Royal
Bank of
Scotland and Societe Generale. Worse, the Federal Reserve is trying to
avoid
providing a listing of the companies who've gotten the public money, as
reiterated by Fed Vice Chair Don Kohn on March 5. This is a new low, to
be
followed up in DC this week.
March 2, 2009
With Citigroup
partially nationalized, who would join the board of
directors? According to the WSJ, more of the same: James Hance formerly
of Bank
of America, Jerry A. Grundhofer the ex-CEO of U.S. Bancorp; and
Robert K.
Steel, who the Journal describes as "CEO of Wachovia Corp.
when
it was acquired by Wells Fargo & Co. and now is a director at Wells
Fargo." Yeah, and just before that he was with the Treasury Department.
This is no change that can be believed it, much less with Citi's
argument that
re-treads "Robert Ryan and Lawrence Ricciardi, who joined in 2007 and
2008, respectively, count as 'new' and don't necessarily need to be
replaced." Oh yes they do...
Eye of the beholder: the Teamsters
last week came out against KeyCorp for lending to a company they
planned to go
on strike against, and cited Key's (mis) use of TARP funds and abuse of
consumers, including a consumer advocate's quote. But one report drew, at
least
initially, entirely negative response, including a comment that the
underlying
strike had been called off. Still the TARP was mis-used...
The Journal sings HSBC's praises,
that "gains from growth in Asia have helped HSBC offset deep losses
from
HSBC Finance Corp., the bank's largely subprime U.S. lender." According
to
the strategy, some of that Asia lending was subprime, too...
Rare candor: Fed government
Elizabeth Duke last week said, " As a former president of the American
Bankers Association, I advocated reductions in the regulatory burden."
AdvocateD?
February 23, 2009
In the flurry of non-banking companies rushing to become
financial
services holding companies or savings and loan holding companies in
order to
get bailout funds, Inner City Press has put in a number of Freedom of
Information Act requests, in response to which some very basic
information has
been withheld. Examples for this week include even the "Financial
Holding
Company Declaration" submitted to the Federal Reserve for the CIT Group
by
its outside law firm, Wachtell Lipton, and fully 156 pages of the
application
submitted to the Office of Thrift Supervision for Genworth, by its
outside firm
Sidley & Austin. Both the Fed and
OTS mechanically followed these firms requests that information be
withheld
from the public, even as public bailout funds were being sought and
doled out.
On related
FOIA shenanigans, see 53 N.Y.L. Sch. L. Rev. 299, Critical
Mass: Restricting Advocates' Rights Under the Community Reinvestment
Act, Inner
City Press v. Board of Governors of the Federal Reserve System, 463
F.3d 239
(2d Cir. 2006). New York Law School Law Review, 2008 / 2009
Citigroup's
Pandit
last
week
said,
"The
future
of
Citi
is
in
emerging markets, is in Latin America, and is in Mexico with Banamex."
While the last is dubious, one thing seems true: the future of
Citigroup, if it
has one, is not in the United States,
although it might be WITH the United States (government)...
February 9, 2009
After
Bailout,
ING's
Kok
Blames
Regulators,
Food
Inflation
and
Social
Inclusion
Questioned
Byline:
Matthew
Russell
Lee
of
Inner
City
Press
at
the
UN:
News Analysis
UNITED
NATIONS, February 4 -- Wim
Kok, the chairman of the audit committee of Dutch bank ING, which
received a
$14 billion bailout, Wednesday at the UN blamed "the institutions
entrusted with regulating" for not having "prevented financial
speculation." Inner City Press asked Kok how to allocate blame for the
crisis between the regulators and the banks and their directors. Did
the
regulators make ING buy, and Kok
to
presumably
oversee
the
buying
of, subprime
mortgage and other derivative securities? Video here,
from
Minute
19.
Kok acknowledged that he saw the crisis and bailouts
"like all of
us," but also "from a special position," then blamed not only
the U.S. regulators but also the "climate" and the "bonus and
compensation culture." Video here,
from
Minute
20:02.
But what was Kok's
own compensation? Kok said that "in all fairness, it is too early to
give
an accounting of how it happened." But why then did the UN, and its
Commission on Social Development, present Kok as the one to read out
the
blame-the-regulators speech? Yes, Kok
served as Dutch prime minister. But a director of a bank receiving a
multi-billion dollar bailout should not be surprised to be questioned
about it.
"In all fairness," to
use Kok's own phrase, Inner
City Press
asked him about the role of financial speculation in driving up food
prices in
part of 2008. Kok replied that while prices have declined, they could
rise
again due to inflation caused by, yes, the bailouts. As to how
speculation
could be stopped by the UN system, he did not answer. Whether ING
itself
speculates in food or agribusiness stocks, as with Kok's compensation,
is not
known at deadline.
As Royal Bank of Scotland,
bailed-out
by
UK
taxpayers,
tries
to
pay
bonuses
to
its
second layer of executives, the
UK's
Gordon Brown says the Government would only support any bonus payments
to RBS
staff through UKFI if they were consistent with the taxpayers’
interest.
Business Secretary Lord Mandelson added that RBS risked alienating the
public
by offering “exorbitant” bonuses to its traders and senior bankers.
But note that in New York, JPMorgan Chase
has just awarded bonuses, on the theory that particular units didn't
lose
money. Your tax dollars at work...
February 2, 2009
Banker
Allison
of
BB&T
in
Meltdown
Misdirection,
Subprime
Loans
Were
Shielded
from CRA by
Federal Reserve
Byline:
Matthew
R.
Lee
of
Inner
City
Press
on
Wall
Street:
News Analysis
SOUTH BRONX, February
1 -- Given
the hundreds of billions of dollars being thrown at banks in response
to the
subprime lending-triggered meltdown, holding accountable those who
turned
American finance down the subprime path would seem to be important.
Conservatives blame the Community Reinvestment Act, saying that this
law
enacted in 1977 to combat the redlining of and refusal to lend in inner
city
areas was something of a time bomb, set to explode 30 years later.
But the explosive growth of subprime
lending took place in parts of financial holding companies which are
not
covered by CRA, like Citigroup's CitiFinancial and similar consumer
finance
subsidiary in Wells Fargo and HSBC, purchased as Household
International. The
subprime loans were securitized by investment banks not only like the
defunct
or swallowed Lehman Brothers, Bear Stearns and Merrill Lynch, but also Goldman
Sachs and Morgan Stanley, entirely outside of CRA, before they ran to the
Federal Reserve to get their bailout money.
One tier down the world of finance, the chairman of regional
bank BB&T
John
Allison
gave
a
speech
on
January
29
in
which he blamed the CRA
for the
financial crisis. This is more than a little ironic, given BB&T's
engagement under Allison in subprime lending.
When the Bronx-based Fair Finance Watch documented to the
Federal
Reserve that BB&T's banks referred turned-down loan applicants to
their high-cost
subprime affiliate Lendmark Financial Services, during the public
comment period on BB&T's
application for approval to acquire Georgia's Main Street Banks, the
Federal
Reserve ignored the issues. Click here for 2006
coverage from Inner City Press, and here in 2009 for Lendmark's
own
website,
still reciting "non-conforming mortgage loans" from "104 branch
locations throughout Georgia, Tennessee, Virginia, Maryland, Florida,
North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."
Click here
for the Federal Reserve approval
order, which recited from the comments of Fair
Finance Watch
"concern about
referrals of loan applicants to
Lendmark Financial Services ('LFS'), a nonbank subsidiary of BB&T
that
makes subprime loans. BB&T has represented that it might refer to
LFS
applications denied by a BB&T subsidiary bank that do not meet the
bank's
underwriting guidelines. Before making a referral, however, these
applications
undergo an internal second-review procedure. In addition, BB&T
notes that
LFS has a policy to refer applicants who meet the Freddie Mac
underwriting
guidelines to BB&T's subsidiary banks."
But as Inner City Press noted,
BB&T's
referrals up and down do not use the same standard. On fringe finance
the Federal
Reserve said that Fair Finance Watch
"expressed
concern
about
BB&T's
relationships
with
unaffiliated
pawn
shops
and
other
nontraditional
providers of financial services. As a general matter,
the
activities of the consumer finance businesses identified by the
commenter are
permissible, and the businesses are licensed by the states where they
operate.
BB&T has stated that it does not focus on marketing credit services
to such
nontraditional providers and that it makes loans to those firms under
the same
terms, circumstances, and due diligence procedures applicable to
BB&T's
other small business borrowers."
BB&T
admitted
in
its
responses
into
the
record
before
the
Federal Reserve
relationships
with 45 payday and other fringe financiers. BB&T under Allison
ran
headlong into subprime -- as Fair Finance Watch and then the Fed noted,
in its
order
"A commenter
asserted that the Board should, in the context of the current proposal,
review
BB&T's recently announced plans to acquire the assets of FSB
Financial Ltd.
('FSB'), Arlington, Texas, a nonbanking company that purchases
automobile-loan
portfolios. The FSB acquisition is not related to the current
proposal.
Moreover, if the FSB acquisition is consummated under authority of
section 4(k)
of the BHC Act, the acquisition would not require prior approval
of the
Federal Reserve System. BB&T would require prior Federal Reserve
System
approval if the acquisition were proposed under sections 4(c)(8) and
4(j) of
the BHC Act, and the transaction would be reviewed in light of the
requirements
and standards discussed above."
The Gramm-Leach-Bliley
Act of 1999
amended the Bank Holding Company Act of 1956 and made it easier for
subprime lenders to be acquired with no prior review by the
Federal Reserve, no public comment period, no CRA review. BB&T John
Allison's fulimations notwithstanding, that deregulatory GLB Act,
passed in part to
legalize after the fact the merger that created Citigroup, is the
statute
investigators should be looking at. And the acts of subprime-hungry
bankers
like John Allison of BB&T. We'll have more on this meltdown
misdirection, in the spirit of accountability.
For now, consider this buzz
about Lendmark in 1997, this 2006
BB&T
investor
relations
presentation (also of its subprime
Liberty Mortgage Corporation), and again, Lendmark's own website,
still reciting "non-conforming mortgage loans" from "104 branch
locations throughout Georgia, Tennessee, Virginia, Maryland, Florida,
North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."
January 26, 2009
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.
This was
the level of secrecy in the time leading up to the subprime lending
meltdown.
Now Ken Lewis implies that the assets being insured by the government
all came
from Merrill Lynch, when 25% are from BofA itself. Will Ken Lewis go
the way of
Citigroup's Chuck Prince and Robert Rubin? Many
say
that
he
should.
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.
A cavalier
approach to the law, by both
Bernanke and Geithner -- is this what would help to solve the financial
crisis?
Let Citigroup fall
apart, let it fail without further bailout. For sale: "CitiFinancial,
which
does
real
estate
lending,
personal
and
auto
loans,
had 3,799
locations,
compared to Citi's 4,057 Citibank branches, as of the third-quarter.
Though
CitiFinancial does not offer the same range of products as the Citibank
branches, it does cross-sell Citi credit cards through most of its
locations.
" Terminate it - it is rotten.
So JPMorgan Chase
has
closed its wholesale mortgage business, after virtually promising not to.
They claim this way they can better control the terms of
loans. But the
ones they made through brokers, they made decisions on. Back on Nov.
6,
2007,
David
Lowman,
CEO
of
JPMorgan
Chase's
home
lending
division, and
Patrick
Sheehy, business-to-business channel
executive at Chase Home Lending, told mortgage brokers of “an
unwavering
commitment to our wholesale … lending” business. Jamie
Dimon made this type of about-face
and close-down before. It's just what he does.
BofA is
making layoffs,
BofA is getting sued. And yet BofA is getting more and more billions of
TARP,
including the share that would have been Merrill's. For shame. Bank of America Corp. filed a letter
with
Charlotte, N.C., Mayor Pat McCrory verifying that it is laying off
about 139
employees in the city’s Ballantyne neighborhood. The layoffs are
expected to be
completed by March 10. The bank is also laying off about 85 workers at
a
Preferred Services site in Dallas. Meanwhile, a group of Washington
state homeowners filed a
lawsuit against Bank of America Corp. unit Countrywide Financial Corp.,
alleging
that the company illegally manipulated the appraisal process in a plan
to
increase profits at the expense of homeowners and independent
appraisers. The
lawsuit, filed in the U.S. District Court in Seattle under the
Racketeering
Influenced and Corrupt Practices Act, claims that the company forced
homeowners
to use its unit, LandSafe, for appraisals, while subcontracting the
work to
independent appraisers and charging homeowners as much as 200% of the
actual
cost of the appraisal.
HSBC has
significant exposure to toxic
assets, including U.S. subprime mortgages that aren't marked to market,
either
because they are held directly on its loan book or because the U.K.
regulator absurdly
allows unrealized losses on certain assets to be written back for
capital
purposes. It is estimated that HSBC's true leverage is closer to 50
times and
Tier 1 is 4.6%, making it one of the most highly leveraged banks in the
world.
How's that Household now?
Here are properties in The Bronx, New York
on
which Wells Fargo
has foreclosed:
2096
RYER
AVE BRONX 2862 Multi-family $374,900 N
5730
POST
ROAD BRONX 1809 Multi-family $599,000 N
605
WALES
AVE BRONX 2700 Duplex TBD N
2194
WASHINGTON AVE BRONX 2403 Multi-family $325,000 N
4027
EDSON
AVE UNIT 1 & 2 BRONX 1848 Duplex $339,900 N
2782
CRESTON AVE BRONX 2000 Multi-family TBD N
January
12, 2009
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.
Reportedly,
Suntrust and Regions Bank, along with
Morgan Stanley, are
eying RBS' Charter One and Citizens, to buy them with TARP funds.
Morgan
Stanley, which the Fed declared to be a financial holding company with
no
public notice or comment or Community Reinvestment Act review, has now
applied
to buy up to 9.9% of something called Heritage Bank. On this one, Fair
Finance
Watch has commented, requesting public hearing on Morgan Stanley's
subprime
Saxon and the other issues swept under the carpet so that Morgan
Stanley could
get TARP. What double-standards and
sleaze are being swept under this TARP? Public hearings are needed.
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.
Footnote: a last
minute addition to the panel was
economist Calestous Juma, who close Inner City Press readers
may
remember as declining to characterize Ban Ki-moon's consolidation of
the Office
of the Special Advisor on Africa with another post, while encouraging
Inner
City Press to keep reporting on it. We have -- click here for
a recent story
about conflicts of interest and corporate entree by Microsoft into
the UN --
but were glad to see Juma in the Trusteeship Council chamber speaking
about
economic diplomacy, using a green and white "One Laptop Per Child"
computer. We note in closing that Microsoft, among others,
problematized the
idea of a $100 computer. Oh, intellectual property and corporate abuse.
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.
The
regulators' failure to consider predatory lending and other
bank-specific issues
on mergers is one for the causes or determinants of the present crisis.
Rather
than bring about increased scrutiny, the Fed's Ben Bernanke and
Treasury's Hank
Paulson are increasingly dispensing with any scrutiny at all. And now they'll be using government to
subsidize and speed up the mergers.
Footnotes: Better
late
than
never,
we
suppose,
for
Alan
Greenspan
to
apologize
for ignoring
evidence
of predatory lending. But pointing the other way, Canada's National
Post /
Financial Post of October 25 blames "the 1970 U. S. Community
Reinvestment
Act, forcing banks to lend equally to all geographic areas, regardless
of risk." Ever heard of the safety and
soundness requirement?
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.
There is
more than enough blame to discredit both political parties. But it's
not the
Community Reinvestment Act statute that's to blame. If anything, the
CRA
provided a venue by which many of the problems were raised, and some
were even
solved. When Atlanta-based SunTrust, for example, applied to the
Federal
Reserve for approval of a merger in Memphis, Fair Finance Watch showed
the Fed
that SunTrust was lending to a slew of predatory lenders. SunTrust
ultimately
committed to get out of some of these fields, and had its application
approved.
That was CRA at work, in a way conveniently not mentioned in the sloppy
arguments being advanced.
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.
September
1, 2008
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