Inner City Press: Community Reinvestment Reporter

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...

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

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

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:

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.

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.

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

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.

"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.

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

UNITED NATIONS, January 14 -- While working for the UN-affiliated International Monetary Fund earlier this decade, Treasury Secretary-nominee Timothy Geithner did not pay required taxes to the Treasury Department's Internal Revenue Service. This would seem to be problematize, to be diplomatic, Geithner's ability to gain confirmation by the U.S. Senate to oversee the IRS.

This would seem to be problematize, to be diplomatic, Geithner's ability to gain confirmation by the U.S. Senate to oversee the IRS. But Democratic Senators and Barack Obama himself are calling Geithner's an "innocent mistake" which should not impinge on confirmation. Some ask how a financial whiz, head of the Federal Reserve Bank of New York, would claim ignorance of basic tax law as a defense.

Worse, Geithner initially hid behind the statute of limitations to refuse to pay $25,000 in taxes for 2001 and 2002: "A three-year statute of limitations had precluded the [IRS] from auditing the 2001 and 2002 tax returns." But his supporters argue that Geithner's expertise is needed to confront the global financial crisis.

But what of Geithner's role, as the President of the New York Fed, in mis-regulating Citigroup, an institution which has already swallowed $45 billion in Troubled Assets Relief Program funds, and billions more in guarantees for toxic loans still on its books? Said otherwise, how can those who oversaw -- or turned a blind eye to -- the origins of the financial meltdown be presented as the only ones who can now save the day?

Also on Citigroup, sources say that the Feds are pushing Richard Parsons to take over as the embattled company's chairman. He ran Dime Savings Bank, part of the now-collapsed Washington Mutual franchise. At Citigroup's annual meetings, at Inner City Press asked questions about predatory lending from the floor of Carnegie Hall, Parsons never spoke up. What did he think of the questions, of Citigroup's venture into predatory lending with Commercial Credit, Associates First Capital and CitiFinancial? The questions should be answered.

Leaving the Federal Reserve Board is Randy Kroszner, who had served the Fed's point Governor on community and consumer issues. A new Fed advisor on these issues was recently withheld from the press without explanation by the Fed's public relations office. Fed chairman Ben Bernanke hides behind the Federal Open Markets Committee news blackout requirements in order to skip speaking to non-financial audiences, but disagrees with and ignored the requirement of public notice and comment while granting bank holding company status to Morgan Stanley, CIT, Goldman Sachs and GMAC.

So JPMorgan Chase has closed its wholesale mortgage business, after virtually promising not to. They claim this way they can better control the terms of loans. But the ones they made through brokers, they made decisions on. Back on Nov. 6, 2007, David Lowman, CEO of JPMorgan Chase's home lending division, and Patrick Sheehy, business-to-business channel
executive at Chase Home Lending, told mortgage brokers of “an unwavering commitment to our wholesale … lending” business. Jamie Dimon made this type of about-face and close-down before. It's just what he does.

BofA is making layoffs, BofA is getting sued. And yet BofA is getting more and more billions of TARP, including the share that would have been Merrill's. For shame. Bank of America Corp. filed a letter with Charlotte, N.C., Mayor Pat McCrory verifying that it is laying off about 139 employees in the city’s Ballantyne neighborhood. The layoffs are expected to be completed by March 10. The bank is also laying off about 85 workers at a Preferred Services site in Dallas. Meanwhile, a group of Washington state homeowners filed a lawsuit against Bank of America Corp. unit Countrywide Financial Corp., alleging that the company illegally manipulated the appraisal process in a plan to increase profits at the expense of homeowners and independent appraisers. The lawsuit, filed in the U.S. District Court in Seattle under the Racketeering Influenced and Corrupt Practices Act, claims that the company forced homeowners to use its unit, LandSafe, for appraisals, while subcontracting the work to independent appraisers and charging homeowners as much as 200% of the actual cost of the appraisal.

HSBC has significant exposure to toxic assets, including U.S. subprime mortgages that aren't marked to market, either because they are held directly on its loan book or because the U.K. regulator absurdly allows unrealized losses on certain assets to be written back for capital purposes. It is estimated that HSBC's true leverage is closer to 50 times and Tier 1 is 4.6%, making it one of the most highly leveraged banks in the world. How's that Household now?

Here are properties in The Bronx, New York on which Wells Fargo has foreclosed:

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."

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?

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.

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...

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

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.

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...

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.

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...

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?

"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.'

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

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

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

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

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

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

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

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

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.

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).

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.

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...

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...

In Wachovia War, Wells Fargo Would Require Public Notice and Comment, No Emergency

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.

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

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.

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.

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...

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.

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

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

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

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

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

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

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

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.

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."

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.

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.

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?

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 --

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

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."

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...

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?

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...

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...

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.

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.

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...

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...

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.

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.

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."

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.

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.

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 --

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.

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...

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....

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#

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.

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.

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:

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")

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!!

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!

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

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.

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...

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...

"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..."

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.

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.

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...

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...

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.

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...

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?

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...

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...

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...

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:

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

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...

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...

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...

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...

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?

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?

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.

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.

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."

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."

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...

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.

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...

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...

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...

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."

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

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.

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.

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?

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.

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...

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...

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...

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."

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...

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.....

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....

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?

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:

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

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.

    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 Chase Home Finance                         $3,015   $2,717   11% 3.39%
    12 Ameriquest/Argent Mortgage Corp. (E) (8)   $2,000   $8,378 -76% 2.25%

(1) Option One is being sold to Cerberus. (2) FFF is owned by Merrill Lynch. (3) WaMu no longer discloses its subprime production. Figure here is an estimate. Its B&C business is called Long Beach Mortgage. (4) This is the subprime arm of CitiMortgage. Citi stopped disclosing this data point last year. (5) EMC is owned by Bear Stearns. (6) Fremont is selling its subprime business. (7) WMC is owned by GE and has suffered major layoffs. (8) Citigroup has an option to buy certain assets of Argent/Ameriquest.

Overall, subprime originations rose from $160 billion in 2001 to $600 billion in 2006, according to Inside Mortgage Finance. Subprime loans are mortgages and refinancings typically offered to borrowers with weak credit. Roughly 75% of the subprime adjustable-rate mortgages offered last year were known as 2/28s or 3/27s - loans with a flat introductory rate for the first two or three years and then a higher, floating rate for the life of the 30-year mortgage. Close to 2 million of these loans are expected to reset by the end of 2008...

From Fed Governor Randall Kroszner: "The guidance on adjustable-rate mortgages underscores that the Federal Reserve and other banking regulators expect lenders to make sure subprime borrowers not only can afford their monthly payments while the introductory rate is in effect but also after the interest rate resets." We note that at the latest Fed Consumer Advisory Council, Bernanke skipped, while Kroszner attended. Meanwhile, Bernanke is slated for an "off the record" lunch at a wire service this coming week. Priorities, priorities...

Just after the Federal Reserve's rubber stamp approval, Mellon Bank has agreed to pay $16.5 million to the federal government to settle claims that it allowed overwhelmed employees to destroy thousands of federal tax returns and payments in 2001. Mellon had a contract with the Internal Revenue Service to process income tax returns and tax-payment checks. Mellon employees, feeling overworked and unable to meet deadlines imposed by the contract, destroyed more than 77,000 returns and checks totaling $1.3 billion ....

As the subprime crisis worsens, the spin from all sides accelerates. Mortgage Bankers of America economist Jay Brinkmann last week laid the blame on, what else, the economy. "The problem is the greatest in Michigan, Ohio and Indiana. We've seen very large job loses, particularly in the manufacturing sector in those three states," he said. The "situation in Ohio right now is worst than what we saw in Texas in the oil bust of the 1980s."

So according to the Mortgage Bankers, the problem is not the mortgage bankers. The problem is the Rust Belt and secondarily, the blame is on the victims, for succumbing to illusions that "you can pay off the car loan and you can take care of the credit card bills, that is too good to be true."

Here in Seattle, however, the Rust Belt argument does not hold. There were 832 foreclosure filings in May in King and Snohomish counties - up 9.5 percent from April and 76.6 percent from May 2006. Across the United States, May's foreclosure filings were up 19 percent from April and up nearly 90 percent from May 2006. Brinkmann's own Mortgage Bankers Association has reported that 2.31 percent of Washington State mortgage payments were at least 30 days late during the first three months of this year, up from a year earlier. According to the MBA, six percent of Washington mortgages are subprime adjustable-rate loans, and 8.75 percent of those in the state were delinquent in the first quarter.

The Federal Reserve on June 14 hauled off and approved BONY - Mellon, saying in footnote 19 that ICP / Fair Finance Watch as

A commenter expressed concern about BONY’s relationships with unaffiliated third parties engaged in subprime lending. BONY has represented that it provides corporate trust and custody services relating to some issuances backed by subprime loans or involving issuers who originate or securitize subprime loans. BONY also indicated that it provides commercial credit to some originators of subprime mortgages. In addition, BONY noted that it acts as a swap counterparty in connection with some subprime loan securitization transactions and that its proprietary treasury portfolio, and some funds for which BONY acts as investment manager, include securities that may be partially backed by subprime assets. BONY has represented that it does not play any role in the lending practices or credit review processes of its customers who engage in subprime lending.

So banks can enable predatory lenders, as long as at the last minute they look the other way...

And even the NY Attorney General's Office, when asked for documents about their subprime lending disparity investigations, on which *they* called around for help, now wants at least $1,250 to see the documents...

As the subprime meltdown worsens, and even the industry's most staunch defenders acknowledge that it needs more oversight, federal regulators like the Office of Thrift Supervision are giving major subprime lenders... less scrutiny.

This week our example is the OTS' stealth switching and limitation of comment periods on the proposed acquisition of Republic Bank by Merrill Lynch, which was allowed to acquire First Franklin without any comment period or review. This is Merrill Lynch's first bank application since, and as Fair Finance Watch put it

On behalf of the Fair Finance Watch and its affiliates (collectively, 'FFW'), this is a timely comment opposing and requesting public hearing on, and complete copy of, the applications by Merrill Lynch Bank & Trust Co., FSB, affiliate to a large and disparate subprime lender First Franklin, to acquire First Republic Bank, R1-2007-0134.

This application was on the OTS' web site as set forth below with a filing date of May 11, 2007 --

14460 * NON-DELEGATED NORTHEAST R1-2007-0134 First Republic Bank
Merrill Lynch Bank & Trust Co., FSB MERGER 05/11/2007
4 World Financial Ctr., 250 Vesey St. VOLUNTARY 08/09/2007 Las Vegas, NV
New York, NY 10080 ACQ A NON-OTS NOT AN S&L R0-0000-0000 IN PROCESS

FFW is puzzled to see, and hereby requests a detailed explanation of, the fact that the OTS at some subsequent time changed the filing date for the application, thusly

14460       NON-DELEGATED NORTHEAST   R1-2007-0135
Merrill Lynch Bank & Trust Co., FSB   OPERATIONS   04/05/2007
4 World Financial Ctr., 250 Vesey St. BUSINESS PLAN MODIFICATION 08/20/2007
New York, NY 10080 NO SIGNIFICANT CHANGE R1-2007-0134      IN PROCESS

The result of this unexplained and presumptively unsavory change is to try to exclude public comment on this acquisition by a major subprime lender and securitizer. In any event, this comment must be considered timely.

The 2006 HMDA data including First Franklin, filed by National City Corporation and obtained by FFW, reflect fully 66.74% of loans to African Americans and 64.75% of loans to Latinos being over the Federally-defined rate spread (of 300 basis points over Treasuries on first liens, 500 basis points on subordinate liens), compared to only 43.26% of loans to whites. 19.65% of applications from African Americans, and 16.42% of applications from Latinos, were denied, compared to only 12.9% of applications from whites. FFW is requesting public hearings on these disparities.

It is particularly important that First Franklin's data be extracted and subject to public scrutiny in that Merrill Lynch has previously sought to make its own HMDA data unanalyzable. See, American Banker of April 11, 2005

'Inner City Press in New York said that Merrill Lynch Credit Corp., a unit of the New York investment bank, responded to a data request with a file in PDF format....Merrill is reviewing Mr. Lee's request that it send data in a different format.'

This should not be that difficult, and the OTS should not be switching filed-dates on applications of this magnitude. There is more to say, but FFW is filing this as soon as it saw the changed filing date, and within the comment period of the initial, accurate filing-date. FFW requests an explanation as quickly as possible...

OTS staffer says "the person who makes the entries on the system changed the file date to May 11, 2007, but a decision was then made that the file date should be changed back to April 5, 2007." Hmm...

Monday's American Banker contains an absurd story about HSBC's subprime business, styled as an analysis of "the first 100 days of Brendan McDonagh," which reads as if HSBC wrote it. As a matter of media critique, note to the American Banker: a piece like this requires at least one outside quote, one other-side-of-the-story. Heck, Crain's Chicago Business did it. As political analysis, it contains this quote from Mr. McDonagh: "at the end of the day the views of the key political public officials and the key regulators are pretty much aligned with the key financial players." And so predatory lending goes on...

Who, you ask, are the 12 biggest contributors to Dodd for President 2008, as the candidate continues saying that no new laws to counter predatory lending are needed? Here they are:

SAC Capital Advisors $207,300
Citigroup Inc $139,950 -- Citifinancial, settled predatory lending charges
United Technologies $135,250
Bear Stearns $112,350 - subprime
St Paul Travelers Companies $88,300
The Hartford $85,650
Royal Bank of Scotland $72,250 - Greenwich Capital Markets / subprime enabler
AIG Financial Products $69,300 - American General / Subprime
Merrill Lynch $64,350 - First Franklin - subprime
Goldman Sachs $55,100 - securitizes subprime
Credit Suisse Securities $52,000 - securitizes subprime
Morgan Stanley $49,700 - makes and securitizes subprime loans (Saxon) (--CRP)

Quote of the week, from the WSJ, about who's been buying subprime mortgage-backed securities: "You have no time to look really deeply at every single borrower," says Michael Thiemann, chief investment officer at Collineo Asset Management GmbH, a Dortmund, Germany-based firm that invests on behalf of European banks and insurance companies. "You're looking at statistical distributions."

Massachusetts' governor, beyond reporting another $150,000 in income from Ameriquest / Argent in 2006, now reports stock holdings in... Rent-A-Center.

Last week in Cleveland, the Federal Reserve's Sandra Braunstein was asked whether the Fed had power it wasn't using to address the predatory lending crisis. "These are things we are looking at," Ms. Braunstein said. A little late, isn't it?

Ms. Braunstein said defensively that the Fed holds hearings or public meetings on a topic such as a bank merger only if it doesn't have enough information to make a decision.

No, the Fed almost never holds merger hearings any more -- and then pretends it had no way to know what New Century -- long controlled by U.S. Bancorp -- and Ameriquest, being bought into by Citigroup, have been up to.

Ms. Braunstein claimed that the Fed can do only so much about high-rate loans, she said, because 60 percent of subprime mortgages are originated by lenders that aren't regulated directly by the Fed. "We can write rules . . . but we are not the enforcement agency for
most of these," she said.

But why didn't the Fed do anything, for example, about Deutsche Bank's links with Delta Funding? Citigroup's underwriting and lending to a range of predatory firms? HSBC Household's high cost person loans?

Along with its Cleveland claims, the Federal Reserve appears to have in essence repealed or much limited the Community Reinvestment Act, most recently with regard to FDIC-insured institutions on Guam. Issues were timely raised to the Federal Reserve Bank of New York, on ANZ's application to a bank on Guam. In any other previous case, the comments would have been referred to the Board in Washington, which would have asked ANZ to answer questions and then weighed the answers. But in a break with precedent, another diss to CRA and consumer protection, now the FRBNY takes it on itself to approve such applications without even asking any questions.

Note that in New Zealand, ANZ and its subsidiary National Bank have when added together received the most consumer ombudsman complaints (259), see, New Zealand Press Association of November 29, 2006 --

"Commission chair Sir Ian Barker noted a recent review showed a ``worryingly high'' number of bank staff knew little or nothing about their own bank's complaints procedures. And more than half of bank branches in a recent survey did not display the Banking Ombudsman leaflet. He endorsed a key recommendation on accessibility by a former ombudsman, now Governor-General, Anand Satyanand, in his review of the 14-year-old scheme this year. Ms Brown said an increasing number of complaints were about consumer finance and Internet fraud or Internet banking."

See also, "Lenders warned on limits, "The Australian Financial Review, November 14, 2006. ANZ's record in New Zealand, Australia, American Samoa, Cook Islands, Fiji, Kiribati, New Caledonia, Papua New Guinea, Samoa, Solomon Islands, Vanuatu, Tonga and Timor Leste should be reviewed, including at a public hearing, as a predictor of the impacts ANZ would have on Guam if allowed to acquire CSB.

There are other questions, and not only related to the environment and weapons, see also, "Your loss not our problem, bank tells duped investor; ANZ Bank won't discuss 'personal matter,'" The National Business Review (New Zealand), September 16, 2005.

That is, the Fed ignored consumer protection as well as environmental / managerial issues. The regular-mailed May 18 letter of the FRBNY's Ivan J. Hurwitz says by rote that the Fed is not required to consider consumer protection or other issues outside of the United States. As one of the common sense rebuttals, what if an applicants consumer protection record where it does business, outside the U.S., is the only predictor of how it would run a bank in the U.S.? By this Fed logic, it would approve an application by an international loan shark to buy a bank in the U.S.. It is a new low for the Fed -- if the Board does nothing, the rot has re-spread to the top.

HUD Bryan Greene has bragged that, "We do have secretary-initiated investigations in the fair lending area. Particularly, we are looking into the subprime lending pricing
disparities, also some plain old discrimination," he said. Greene did not indicate how close HUD is to filing charges. However, he noted that HUD has hired consultants - economists and legal assistants - who are working right now on one of the secretary-initiated investigations.

That's funny -- HUD has gone out its way to NOT pursue detailed complaints filed about now-failing subprime lender People's Choice, and American Home Mortgage. We'll see.

May 21, 2007 -- Banker Described As Predatory May Join Federal Reserve, a Test for Senators, (c) Inner City Press

NEW YORK, May 20 -- The newest nominee to the U.S. Federal Reserve Board, recently under fire for inaction leading to the subprime lending and foreclosure crisis, comes from a notorious subprime lender, Capital One.

With Fed chairman Ben Bernanke alternately promising greater scrutiny of and calling for restraint in restricting the subprime lending field, there are serious questions raised by the nomination of a longtime subprime lender to the Board. Whether these questions will arise in or even derail Klane's consideration by the U.S. Senate remains to be seen.

The May 15 personnel announcement stated that "Mr. Klane currently serves as President of Global Financial Services of Capital One Financial Corporation. Prior to this, he served as Managing Director of Corporate Trust and Agency Services at Deutsche Bank / Bankers Trust."

The connection to Capital One, but not Deutsche Bank, was reported without comment in the Washington Post and financial news wire services. Even casual television watchers associate Capital One with advertisements featuring Nordic or medieval rampaging hordes along with the promise of no- to low-fee loans from Capital One, regardless of one's credit history.

Capital One has been sued for these ads, and for the underlying business practices, by the state attorneys general in at least West Virginia and Minnesota. According to staff involved in these cases, Capital One has managed to get records of other enforcement actions against it sealed, as if the cases had never existed.

Sometimes the traces of Capital One's cover-ups are still available. A filing obtained by Inner City Press from the West Virginia Supreme Court of Appeals, for example, recites that "on June 8, 2005, Capital One Bank filed an action... to seal all records, pleadings and matters in Civil Action Nos. 05-C-71 and 05-C-72 and to enjoin the Attorney General from issuing press releases or public disclosures regarding any matter relating to its litigation against Capital One Bank."

In fact, in March 2005 when Capital One announced a proposal to buy Hibernia National Bank in (pre-Katrina) New Orleans, public records of state anti-predatory lending enforcement actions against Capital One were raised, regarding West Virginia and elsewhere. Associated Press on March 10, 2005 reported that

"Capital One's troubling practices were reflected most recently in Minnesota Attorney General Mike Hatch's lawsuit against the company. In the suit, filed in December, Hatch said Capital One's ads indicate that interest rates on its 'No Hassle' credit cards would remain at 4.99 percent. However, he says many consumers wind up paying higher rates, and those who miss payments or exceed credit limits could see rates in excess of 25 percent. Capital One said it continues to work with Hatch's office."

A Louisiana business publication noted Capital One's same-day public relations action:

"Spokeswoman Tatiana Stead emailed an additional statement this afternoon in response to the Minnesota lawsuit against the company: 'Capital One has cooperated fully with the Attorney General’s investigation, and believes it has acted properly and in full compliance with the law. Capital One regrets that the Attorney General has chosen to proceed with this lawsuit, but intends to continue to work with the Attorney General’s office to address the issues raised.'"

Whether because of this "work with Hatch's office" or not, comment has not been able to be obtained from office since Klane's nomination. The West Virginia attorney general's office, however, has indicated shock that an executive vice president from Capital One would be nominated to a seat on the Federal Reserve Board, which along with setting interest rates is charged with consumer protection. From another state, a regulator explicitly concerned about retaliation called this a nomination of a fox to serve as a hen-house's overseer.

Mr. Klane involvement with Capital One has extended beyond high-rate credit cards. He was a point-name when Capital One in 2005 bought the subprime mortgage lender eSmartloan. See, e.g., Card Line of Dec. 17, 2004.

A review of the last publicly-available Home Mortgage Disclosure Act (HMDA) data including eSmart;oan's information found 144 super high cost loans subject to the Fed-implemented Home Ownership and Equity Protection Act -- loans at rates more than eight percent higher than prime -- and 2193 loans over the Fed-defined subprime rate spread, of three percent over prime. While a purpose of HMDA is to allow for fair lending assessment by including racial and ethnic data, these eSmart (now Capital One) subprime loans were all were reported, as to race, "Information Not Provided."

The same might be said of the announcement and reporting of Mr. Klane's nomination: relThe seriousness of Senators' and the financial press' recently claimed concern about the subprime lending crisis will be tested during the consideration of Mr. Klane's qualifications for serving on the Federal Reserve Board.

The Bank of New York, enabler of predatory lenders, has been asked by the Federal Reserve about the scope of its subprime support, in response to ICP Fair Finance Watch's challenge the BONY - Mellon merger application. BONY responded, a month after the request -- and redacted even the number of subprime lenders it helps. Inner City Press has contested the redactions. We'll see.

The Fed's chairman Ben Bernanke, in some places described as finally taking predatory lending seriously, was in fact dismissive in his May 17 Chicago Fed speech. ''We must be careful not to inadvertently suppress responsible lending or eliminate refinancing opportunities for subprime borrowers,'' he said, adding that the Fed -- or he -- sees ''no serious broader spillover.''

As we predicted on May 14, and will cover going forward, the predatory lending industry is spilling over into the Federal Reserve Board...

AIG, one of the sleaziest yet under-the-radar of the subprime lenders, is this week in the news, taking a charge of $128 million for over-charging borrowers. Ever since AIG bought American General, it has been fleecing borrowers. Now even the Office of Thrift Supervision, which enabled much of it, is requiring that something be done. AIG says that "talks are at an advanced stage."

What about Lehman Brothers, which also does much questionable subprime, right under the OTS' nose?

Last Tuesday Citigroup made a greenwash announcement in the FT's pink pages. On Wednesday, under the headline "Citi's Green Push Underwhelms Environmentalists," the WSJ walked through the pledge, then quoted one of group's Citigroup in its annual reports and elsewhere characterizes as its partner...

Past 4 p.m. on Friday, May 4, the office of Senator (and nomination wannabe) Chris Dodd bragged to selected media that "Wells Fargo will join the other organizations and companies that have agreed to the Homeownership Preservation Summit Statement of Principles that he helped forge over the past two weeks." The statement calls these the "Dodd Principles." The other partners (in subcrime) include Citigroup (with two federal predatory lending settlements under its belt, now propping up and seeking to buy another predator, Argent), JPMorgan Chase, Litton Loan Servicing (a bottom feeder long known for predatory end-game servicing, Bear Stearns, Countrywide (which settled lending discrimination charges in New York), and HSBC, the successor the predator Household International, without reforming Decision One unit. Meanwhile Dodd is saying that no new legislation is needed. Principles? What principles?

Sources who sat with Dodd's sister at the South Carolina debate note that mortgage lending isn't the only issue on which Dodd's talk differ from his actions (and his funders). Incredibly, Dodd is using "his" Committee's resources for this blatant campaign (contribution raising) initiates: States News Service of May 2 reported that "Senator Dodd has invited other organizations interested in agreeing to the principles to contact Banking Committee staff." Loan sharks, give Dodd a call...

Citigroup analysts last week said GE should spin off NBC Universal, the real estate division and GE Money, including its subprime lending unit. "GE's size and complexity is working against investor interest in the stock and has contributed to further valuation erosion," the Citi analysts wrote. Talk about the pot calling the kettle black...

Now as the industry implodes, a smaller sub-industry grows of subprime lending pundits, even among those who allowed the scandal to grow. Look who's jumping in -- Edward Gramlich, Federal Reserve governor from 1997 to 2005 now identifies himself as author of the forthcoming book "Subprime Mortgages: America's Latest Boom and Bust." This in a Knight Ridder article that reports that "at least 21 non-bank lenders have filed for bankruptcy protection or shut down since early last year. And the stocks of investment banks with large subprime holdings, such as Merrill Lynch and HSBC, are taking a hit as mortgage defaults and foreclosures climb." Uh, HSBC is hardly an "investment" bank. And HSBC was the largest subprime lender in the U.S. in 2006. The article also ran as a correction: "A story on problems in the subprime mortgage market suggested that First Franklin Financial Corp. was not subject to federal regulation. Before its recent sale to Merrill Lynch, it belonged to National City, which as a nationally chartered bank was regulated by the Office of the Comptroller of the Currency." Who would have an interest in pointing this error out?

From: [Name withheld in this format]
Date: 4/26/2007 10:37:42 AM
To: Inner City Press

Subject: Wells Fargo
Hello, In April 2006 I purchased a set of mattresses from a local furniture company, Banner Mattress. Their finance service is with Wells Fargo. The terms were no interest until 2010. I was never told there were to be minimum payments or when/if they were due.
Years ago I purchased new appliances from Home Depot and had the same terms. I chose to pay them off in full on the date it was due. I did so with no problem. Well immediately I started receiving phone calls from Wells Fargo telling me I was late and would be charged a $35.00 late charge. I told them that's impossible I have a no interest loan until 2010. Needless to say I paid them through my online banking account the $35.00 plus $35.00 late charge=$70.00. There was no date given as to what would be a PAYMENT DATE. Another time I spoke with the caller and
when I asked why they kept calling me after I paid them he shouted at me and said they never received the payment. While talking to him I went to the bank's web page and pulled the payment history for Wells Fargo. Not only had they received payment it told me the day and each month thereafter a payment for $35.00 He told me he would call me non-stop if he had to. They continued to call/harass me NINE times a day SEVEN days a week. I stopped answering the phone when I saw it was them.
The pillow top mattress slowly became defective four months after I got it. I thought I was imagining it as the salesman specifically told me it would "bounce back immediately". After stopping into the store I was told to give it some time. I did to the point I was waking up each night and the next morning with a terrible backache. I then sent an e mail to Simmons explaining the problem which they never responded to. I again went to the store and insisted he make a formal complaint. With that he sent someone out to measure the depth of the permanent
depression=1 3/4".
The store contacted me a week later and told me their representative from Simmons said they would replace it. At this point with all the hassle from Wells Fargo and now a defective mattress, I said no, I wanted my money back. The store called back and said their Simmons contact refuses to return the mattress. I then called Simmons myself and was rudely told the same thing by someone there. At this point I called the store back and told them the same thing I did Simmons, fine I would write a letter to the Attorney General's office and to the BBB. Debbie at the store told me to hold off as I wasn't the only one having problems with Simmons and she would see what she could do. A week later she called back and said they would return it and repay me what I had paid Wells Fargo.
Herein lies the problem. I paid Wells Fargo $245.00 in 2006 and $105.00 in 2007(online bank statements as proof). They told Banner I would only receive $280.00 back as I had 8 late charges of $25.00 each. The store and I both do not understand how they can say this as that is not what the salesman presented as the contract when purchasing the mattresses. Before I call Wells Fargo I would like to know what I can tell them to get my full refund? How do you fight a company who treats their customers as badly as they do by harassing phone calls each and every day to an obsessive amount of nine times?

April 23, 2007 --At Citigroup, Prince Eyes Predatory Argent, Standing Where Sandy Weill Once Stood

At Citigroup's annual shareholders' meeting on April 17, Chuck Prince stood alone on the stage of Carnegie Hall, as Sandy Weill used to do. Prince propped up his presentation with PowerPoint slides and two videos. The first was of Citigroup's volunteer day in 100 countries, from Guam to Pakistan. The second was of the new "Citi" brand, which Prince described as "representing everything our company stands for."

Inner City Press asked how these state principles are consistent with Citigroup's 2006 lending record -- confining African Americans in New York to higher cost loans 4.4 times more frequently than whites -- and with "propping up and taking an option in Argent," an affiliate of admitted predatory lender Ameriquest.

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." Prince and Citigroup appear to be in denial. Prince said, "we've had reputation issues in the distant past, we're not going down that road." We'll see.

The question arose during discussion of those re-nominated to Citigroup's board of directors, including former Treasury Secretary Robert Rubin. During another Citigroup subprime purchase in the past, Inner City Press asked Mr. Rubin to comment on the fair lending record of the target, Washington Mutual's finance company. "That's not really under my aegis," Mr. Rubin answered.

Among the shareholder-speakers on Tuesday, much invective was directed at Robert Rubin, for being primarily concerned with his own compensation. In 2006 Rubin's compensation was over $15 million; Prince's was $24 million. Rubin would qualify for more if terminated, which his employment agreement defines as including any "diminution of Mr. Rubin's position." Nice work if you can get it.

Citigroup will be participating Wednesday in Washington in a mortgage "summit" convened by Sen. Chris Dodd -- a summit that was closed to the press, although a press release about it was sent out. Citi has been a good friend (read, donor) to Sen. Dodd, and at the summit, Citi's counter-parties would largely consist of groups that it has funded. Afterwards, Dodd announced that he sees legislation as unnecessary. On Tuesday in Carnegie Hall, Prince showed a slide of laudatory quotes from Sen. Dodd and Rep.'s Bachus and Frank. It's nice to have friends. It might allow you to buy another predator.

Other board members also tasted fire. Kenneth T. Derr, listed in the proxy statement as the long retired chairman of Chevron Oil, was fingered as more recently involved in the bankrupt Calpine Corp. It was pointed out how much better AT&T did after Michael Armstrong left it. Andrew Liveris of Dow Chemical has faced shareholders' action and protests on environmental grounds. The U.S. CIA's John M. Deutsch would, the proxy says, "retire from Schlumbeger Limited's Board of Directors on April 11, 2007." Chuck Prince was asked why, instead of moonlighting on Johnson & Johnson's board, he doesn't "stay home" and focus on Citigroup. Prince turned that into a joke, as he did two references to Mad Money's predication that Citi's shares would rise five dollars if Prince quit. "I guess I should watch more TV," Prince deadpanned.

Prince propounded his business model, to open branches, to build consumer lending. He showed a photograph of a branch surrounded by well-water lawns. "That," he said, "is in Bangalore, India." He added that Citi's 1200 new branches in 2006 constitutes the fastest branching "in recorded history." And before history was recorded, how many branches were being opened?

Citigroup has and opens more subprime finance offices than prime-lending bank branches. Citi stands for subprime, a model it takes global. "We're the only ones who can do it," Citigroup-ers said on film about their 100 countries reach. That's the problem....

Come to find out, Wells Fargo received my November payment, but claims to have reversed that payment and sent it back. Unfortunately, that money was never received by me or my bank. So I faxed my bank statements showing the payment being deducted from my account and a confirmation number showing it going to Wells Fargo.

I get 4 to 5 calls from collections everyday, unless I ask to be removed from the call pool. Then I only get calls every 5th day. They claim that I am behind. They are assessing $10 late fees all over the place and reporting my payment history to the credit bureaus. All because they cannot see that they made a simple mistake and correct it.

Do you think that anyone has actually taken the time to apologize for all of this? One person named Wayne was very apologetic...and I felt he was sincere. I have talked to approximately 100 people...and only one had the guts to say that Wells Fargo should not be taking this long to correct the issue. As others have stated, I will never again do business with Wells Fargo.

April 16, 2007 -- Predatory Lending in NY Compared to S&L Crisis, As Subcrime Disparities Worsen

Investment banks on Wall Street have been facilitators of the shady loans that have the subprime lending industry in crisis. This message was delivered on Wednesday April 11 by Richard Neiman, the ex- Wall Street banker nominated as Superintendent of Banking in New York, the headquarters of the largest conglomerate engaged in subprime lending, Citigroup.

Delivering his first speech in that capacity, Mr. Neiman had comparisons to the savings and loan crisis in the 1980s, and harkened back to the 1970s for the lending discrimination called redlining, which he implied was a thing of the past. Now, he said, there is reserve redlining, in which African Americans and Latinos are targeted for high cost loans.

Eliot Spitzer, now hitting his 100th day as New York's governor, picked as his Banking Superintendent a long-time bank lawyer with Citigroup and more recently part of the Toronto Dominion conglomerate. Some community representatives who spoke to Inner City Press on condition of anonymity, because they have to deal with the Banking Department, expressed concern that despite the speech Mr. Neiman may based on his resume be too close to industry, or unwilling to consider that his previous employers have engaged in abusive lending practices. Citigroup, for example, is noteworthy for having twice settled predatory lending charges, with the Federal Trade Commission for $240 million and with the Federal Reserve Board for $75 million in 2004.

More recently, just-released 2006 data distinguishing which loans are over a 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 show that Citigroup 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. Toronto Dominion's U.S. mortgage data in 2006, while generally not subprime, reflect that African Americans were confined to higher cost loans over the rate spread 16 times more frequently than whites, and Latinos 12 times more frequently than whites.

Perhaps because of his background, or also because his nomination still awaits action by the State Senate, Mr. Neiman on Wednesday thanked the many industry representatives in NYU's Lubin Auditorium, as well as other regulators. Federal Reserve chairman Ben Bernanke also spoke Wednesday at NYU, intoning that "market-based regulation has proven an effective supplement to (or substitute for) conventional command-and-control approaches." Consumer advocates expressed concerns that Mr. Neiman may share this distaste for "command-and-control" (that is, for active regulation) and rather may seek to rely on the "invisible hand" to solve these predatory lending problems.

Mr. Neiman's speech on Wednesday, however, used all of the appropriate buzzwords, from loan suitability to reverse redlining to concerns about the contagion impact of foreclosures on neighborhoods' home prices. Particularly noteworthy was his reference to Wall Street investment banks as "facilitators" who bear some responsibility for the loans they enable. But even with the flight to preemption of Citibank and JPMorgan, what about facilitator Bank of New York and major securitizer and trustee Deutsche Bank, which, a Department staffer acknowledged Wednesday to Inner City Press, remains under Department's jurisdiction? Mr. Neiman said that Eliot Spitzer had convened a working group including the state's mortgage and human rights agencies as well as the Secretary of State and the Banking Department.

Not surprisingly, Mr. Neiman decried Federal preemption of his Department and state and local laws. Eliot Spitzer, as state attorney general, chafed as such preemption when courts ruled that only the Office of the Comptroller of the Currency had jurisdiction over the national banks owned by Citigroup, JPMorgan Chase, HSBC and Wells Fargo. Spitzer ended up acting on lending disparities only at Countrywide Financial, which had yet to shift its lending under the umbrella of Federal law.

For purposes of comparison, Countrywide in 2006 in New York State confined African Americans to higher-cost loans above this rate spread 1.7 times more frequently than whites. Citigroup was more disparate than Countrywide, while denying 35.5% applications of African Americans, and 33% of applications from Latinos, versus only 21.5% of application from whites.

Other banks with Community Reinvestment Act responsibilities in New York were also more disparate than Countrywide. In New York State in 2006, Countrywide confined Latinos to higher-cost loans above this rate spread 1.38 times more frequently than whites. JP Morgan Chase was more disparate, confining Latinos to higher cost loans 1.63 times more frequently than whites. Washington Mutual was even more disparate, confining Latinos to higher cost loans 1.99 times more frequently than whites. Wells Fargo was slightly less disparate to Latinos, with a disparity of 1.3, similar to HSBCs, while being more disparate to African Americans, disparity of 2.43. Over 35% of HSBC's mortgages to African Americans in New York State in 2006 were subprime, over the rate spread. Nationwide in 2006, HSBC made 6295 super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities -- more than HSBC made in 2005.

Looking even more locally, Citigroup was most disparate in the lowest-income borough its headquarters city. Citigroup in 2006 confined borrowers in Bronx County to higher cost loans 19.6 times more frequently than borrowers in Manhattan. The disparity between Manhattan and Brooklyn at Citigroup in 2006 was 14.77.

Bank of America, which like New Century, bankrupt and now under criminal investigation for the business Inner City Press is calling subcrime, has thus far in response to requests refused to provide its 2006 data despite a requirement that it be available on March 31, also assists other subprime lenders in 2006, the report says, by securitizing loans for Ameriquest, which last year settled predatory lending charges with state attorneys general including in New York for $325 million. The settlement only required reforms at Ameriquest Mortgage and two affiliates, but not its largest affiliate, Argent Mortgage, which Citigroup now has an option to buy. The 2006 data show that Argent made 117,328 mortgages, of which 107,530 or 91.65% were higher cost loans over the rate spread.

Several other large lenders, some directly under the NY Banking Department, have sought to avoid being scrutinized by refusing to provide their data in computer analyzable form. Institutions insisting on providing their data in paper or PDF form have included Delta Funding, Lehman Brothers, AIG, Fremont Investment & Loan and other large subprime lenders, as well as banks such as Whitney Bank and Fifth Third Bank and New York Community Bancorp. Mr. Neiman on Wednesday called for transparency and action. He will be judged, activists say, not on what he says, but what he does.

April 9, 2007 - Subprime Disparities in 2006 at Citigroup, HSBC and Other Large Banks

In a study of the just-obtained 2006 mortgage lending data, ICP & Fair Finance Watch have identified disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. 2006 is the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

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 has propped up and taken an option to buy Argent Mortgage, 91.65% of whose loans in 2006 were subprime. At HSBC, over 63% of 2006 mortgages were subprime, including 6295 super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities -- more than HSBC made in 2005.

"Alongside the chaos in the subprime industry, predatory lending has grown and not diminished at Citigroup, HSBC and other companies," Fair Finance Watch opines. "The disparities in this new data call out more than ever for immediate action by the public and private sectors, from governmental enforcement agencies and private attorneys general to grassroots consumers and community groups. Despite corporate claims of best practices, predatory lending is getting worse, and is now being exported overseas."

Redlining and continued disproportional denials to people of color are also identified by FFW's first study the new 2006 data. Nationwide for home purchase loans, Citigroup denied the applications of African Americans 2.10 times more frequently than those of whites, and denied the applications of Latinos 1.84 times more frequently than whites. Wells Fargo, 19.23% of whose 2006 mortgage were subprime, denied the applications of African Americans 1.72 times more frequently than whites, while denying those of Latinos 1.57 times more frequently than whites. Wells Fargo in 2006 made 889 super high-cost HOEPA loans.

JP Morgan Chase, 19.28% of whose 2006 mortgages were subprime, was particularly disparate in the New Orleans MSA, where Chase confined African Americans to higher-cost loans 2.74 times more frequently than whites.

Nationwide and Citigroup in 2006, 59.24% of African American borrowers were confined to higher cost loans over the rate spread, versus only 31.62% of whites. At HSBC, half of white borrowers were confined to rate spread loans, versus 68.97% of African Americans and 63.27% of Latinos.

HSBC, which bought Household International in 2002 just after its predatory lending settlement with state attorneys general for $484 million, in 2005 made some five thousand super high-cost loans subject to HOEPA. This rose to 6295 HOEPA loans by HSBC in 2006, even as HSBC gave earnings warnings.

Fair Finance Watch has found that nationwide at Royal Bank of Scotland's Charter One Bank unit, African Americans were confined to higher cost loans over the rate spread 1.49 times more frequently than whites. And at Countrywide and its higher-cost Full Spectrum, upper income African Americans were confined to higher cost loans over the rate spread 1.92 times more frequently than whites. In 2006, 24.70% of Countrywide's total mortgages were subprime. Combining General Electric's two mortgage units, GE Money Bank and WMC Mortgage, fully 86.89% of 2006 GE mortgages were subprime.

Bank of America, which thus far like just-bankrupt New Century has not provided its 2006 data despite a requirement that it be available on March 31, also assists other subprime lenders in 2006, by securitizing loans for Ameriquest, which last year settled predatory lending charges with state attorneys general for $325 million. The settlement only required reforms at Ameriquest Mortgage and two affiliates, but not its largest affiliate, Argent Mortgage, which Citigroup now has an option to buy. The 2006 data show that Argent made 117,328 mortgages, of which 107,530 or 91.65% were higher cost loans over the rate spread.

Several large lenders have sought to avoid being scrutinized by refusing to provide their data in computer analyzable form. Institutions insisting on providing their data in paper or PDF form have included Lehman Brothers, AIG, Delta Funding, Fremont Investment & Loan and other large subprime lenders, as well as banks such as Whitney Bank, Fifth Third Bank, New York Community Bancorp, Regions Financial and EquiFirst, the subprime lender which Barclays just bought. Fair Finance Watch says it will be pursuing those issues as well, with each lender's regulator.

"Even with the downturn, predatory lending is a still-growing problem, impacting not only homebuyers but also consumers who take out payday, car title and tax refund anticipation loans," Fair Finance Watch states. "We will be redoubling our efforts to reign in the predatory lenders, using this data as a road map."

Citigroup was disparate in Metropolitan Statistical Areas all over the country in 2006. In Los Angeles in 2006, Citigroup confined African Americans to higher cost rate spread loans 1.70 times more frequently than whites; its disparity for Latinos was worse, at 1.90. Citigroup's African American to white disparity in the Chicago MSA in 2006 was 2.44.

”black and Hispanic borrowers taken together are much more likely than non-Hispanic white borrowers to obtain credit from institutions that report a higher incidence of higher-priced loans. On the one hand, this pattern may be benign and reflect a sorting of individuals into different market segments by their credit characteristics. On the other hand, it may be symptomatic of a more serious issue. Lenders that report a lower incidence of higher-priced products may be either less willing or less able to serve minority neighborhoods. More troubling, these patterns may stem, at least in part, from borrowers being steered to lenders or to loans that offer higher prices than the credit characteristics of these borrowers warrant. Reaching accurate determinations among these alternative possible outcomes is one goal of the supervision system."

What the Federal Reserve, which missed the foreseeable crisis in the subprime lending industry, hasn't yet disclosed is that these disparities are most stark at the largest conglomerate in the country, Citigroup, including in its headquarters city's lowest-income borough.

"Where the rubber will meet the road will be in how the Federal Reserve and other agencies act on specific disparities at specific lenders, including as these are formally raised to them in timely comments on merger applications," Fair Finance Watch concluded.

Meanwhile, the award for the most smug and ill-informed article to date on the subprime crisis goes to The New Yorker and its business columnist, who blames borrowers and apparently did no research....

Ben Bernanke and the CRA: Narrow views. Last week the Fed chairman said, "Some observers have suggested extending the CRA to nonbank providers, but this proposal neglects a fundamental premise of the CRA legislation - that banks incur special obligations in exchange for the advantages conferred by their charters, such as deposit insurance." He also said, "To date, defining 'local community' for the purposes of CRA assessment has been manageable as most banks still lend in local communities where they have deposit-taking facilities or branches. However, if these trends continue, defining a 'local community' may become increasingly difficult, and the concept eventually may require reconsideration by regulators or even the Congress."

So in Bernanke's view, the CRA must remain limited to its initial "premises," but to help the banks, the regulators or Congress should reconsider its initial focus. If it's Congress that considers it, they'd be free to change the premise too, and extend CRA to the non-bank providers...

Subj: Wells Fargo Auto Finance
Date: 3/27/2007 10:29:50 AM Eastern Standard Time
From: [Name withheld in this format]
To: Inner City Press

I purchased a vehicle in February of 2006. It was financed through Wells Fargo Auto Finance. From February to November everything was fine. Then everything started to unravel. We made our November and December payments. Then on December 28th, we got a phone call from collections saying that we were 9 days late on our December payment. I assured them that we were not. I told them the payment
was made on December 19th. They informed me that payment was to cover Novembers payment. I went back to check my bank statements. The November payment cleared on the 21st of November. The December payment cleared on the 22nd.
Come to find out, Wells Fargo received my November payment, but claims to have reversed that payment and sent it back. Unfortunately, that money was never received by me or my bank. So I faxed my bank statements showing the payment being deducted from my account and a confirmation number showing it going to Wells Fargo.
I get 4 to 5 calls from collections everyday, unless I ask to be removed from the call pool. Then I only get calls every 5th day. They claim that I am behind. They are assessing $10 late fees all over the place and reporting my payment history to the credit bureaus. All because they cannot see that they made a simple mistake and correct it.
Do you think that anyone has actually taken the time to apologize for all of this? One person named Wayne was very apologetic...and I felt he was sincere. I have talked to approximately 100 people...and only one had the guts to say that Wells Fargo should not be taking this long to correct the issue.
I am getting ready to turn this over to the Better Business Bureau. Hopefully the can help me out. Because as we all know, Wells Fargo is not doing it. As others have stated, I will never again do business with Wells Fargo.

March 26, 2007 - In DC, Sen. Dodd Focuses on Brokers, HSBC Blames Its Victims, Citigroup Escapes, Complaints Lost

Executives from four embattled subprime mortgage lenders bobbed and weaved on March 22 at a Senate hearing which frequently mentioned, but mostly let off the hook, predatory lending. HSBC, for example, which purchased Household International and its $486 million settlement for abuse of consumers, sent executive Brendan McDonagh, who in essence blamed his company's victims, saying they need more "financial literacy." [March 27 it's-nice-to-be-nice update: It has been pointed out, and we in fairness run, that Mr. McDonagh also said that "we believe that uniform legislation could benefit the industry and consumers. There are numerous versions of Federal anti-predatory lending legislation that contain many of the key best practices our retail branch network has employed for several years. HSBC supports guidelines that put everyone in the industry on an even playing field."]

New Century, the shares of which have been delisted from the New York Stock Exchange, declined the invitation to testify from Senate Banking Committee chairman Chris Dodd, Democrat of Connecticut. Sen. Dodd did not summon, even as a fill-in for New Century, Citigroup, which is the fourth largest subprime lender and the only lender with predatory lending settlements with two separate federal agencies. WMC Mortgage, a company that few have heard of, despite being owned by General Electric, was present, as was First Franklin, whose ownership by Merrill Lynch was not noted on Senator Dodd's committee webpage.

Senator Dodd, who is running for the Democratic nomination for the presidency in 2008, began the hearing by saying that "the purpose is not to point fingers." Republican Senators Shelby and Crapo both said they would favor "market-based solutions." Idaho Senator Crapo went further, questioning whether the Community Reinvestment Act's encouragement to banks to lend in low- and moderate-income neighborhoods might have led to the current market turmoil. Republican Senator Bunning blamed the crisis on former Federal Reserve chairman Alan Greenspan.

The Federal Reserve sent regulator Roger T. Cole, who finally acknowledged that "we could have done more sooner," while making much of the less than a handful of actions the Fed has taken, including its $70 million fine of Citigroup in 2004. But again, why was Citigroup not invited by Senator Dodd? Why did North Carolina banking commissioner Joe Smith feel a need to say that "HSBC has been terrific"?

Senator Dodd returned again and again to speaking about a mortgage brokers' trade association web site's characterization of brokers as mentors. It seems this statement had already been taken down from the web site, but it allowed Sen. Dodd to ask Countrywide's representative if his company made such representations. Of course not, Countrywide said.

Apparently, while there are predatory practices, there are no predators, even among companies like HSBC and Citigroup which have paid hundreds of millions of dollars to settle charges of predatory lending. Those payments were only made in order to move forward, the companies said. And move forward they will: both are exporting the same predatory lending models to the developing world, and Citigroup recently scooped up an option to be a piece of another predatory lender settling company, ACC / Ameriquest. On Capitol Hill as elsewhere, Senator Dodd is focused on brokers, and the lenders blame their own victims. And so it goes.

In the process of seeking under the Freedom of Information Act copies of mortgage borrowers' companies, Inner City Press has seen many examples of the breakdown in regulation of subprime lenders. As far back as December 2003, Inner City Press asked the Kentucky Department of Financial Institutions for copies of complaints against Washington Mutual Finance, a WaMu subsidiary that Citigroup was buying. The Kentucky DFI wrote back:

"We have received numerous complaints against Washington Mutual, most concerning their failure to properly credit customers' accounts but, unfortunately, the Department does not have copies of those complaints. The lady who handles consumer complaints was under the mistaken impression that anything having to do with Washington Mutual was not to be handled by our Department but was to be forwarded to the Office of Thrift Supervision. She thought, since the banking business of Washington Mutual was federally regulated, that the consumer loan business of Washington Mutual was also federally regulated. She has no record of the number or content of such complaints registered over the past three years."

Subsequent request and appeal to the Office of Thrift Supervision under the Freedom of Information Act did not turn up the mis-forwarded complaints. The complaints were simply lost. Now we'll see where Thursday's hearing's testimony leads.

In the midst of the subprime meltdown, Inner City Press checked in with its most jocular mortgage broker source, who said that 2007 so far is his least lucrative year in the five that he's been in the independent game. In January he made only $5,000, on three loans. "I've had slow months before," he said, "but now even the fees are lower." He recounted the various failures, starting with OwnIt and then Mortgage Lenders Network. "Now New Century hasn't taken an application in a while," he said. "They used to pay great yield spread." Five years ago, New Century wouldn't go beyond 90% LTV. Toward the end, they did 100% even to low FICO scores. Of the three loans he made in January, none could be made now, two months later. "They'll be back," he said. Citigroup and HSBC are among the sleaziest, and they'll be back, for sure.

All of Ameriquest's retail lending division was shut down this past Thursday (the "New Business Model"), and there were additional mass layoffs across the remaining ACC business lines, including Argent, of which their NY Operations located in White Plains was closed that day as well.

The Orange County Register website has some information, but it’s pretty candy coated. Just talks about how relieved employees that they interviewed were that it's finally over. Also, the Register mentions their "severance packages," they did not receive severance packages, they are on the payroll for 60 days only so the company compliant with the Fed & State WARN Acts, beyond that, they just received the standard pay out of vacation & sick time accrued -- no severance.

The key line from the L.A. Times' story on the mass layoffs at ACC / Argent / Ameriquest: " By drastically cutting costs, the company could be making itself a more viable candidate for a sale." Our take? This way Citigroup gets the layoffs done before it acquires the company...