Welcome to Inner City Press’ CRA Report.  Our other Reporters cover the financial services industry, human rights, the Federal Reserve, and other beats.  ICP has published a book about the CRA-relevant topic of predatory lending - click here for sample chapters, a map, and ordering information.  CBS MarketWatch of April 23, 2004, says the the novel has "some very funny moments," and that the non-fiction mixes "global statistics and first-person accounts."  The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters."  See also, "City Lit: Roman a Klepto [Review of 'Predatory Bender']," City Limits, Oct. 2004.  The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site  Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere.

Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere. Click here for a recent BBC piece on Inner City Press' reporting from the United Nations. New: BloggingHeads.tv 6/1/7  6/14/7   6/29/07  Reuters AlertNet 7/14/07 For or with more information, contact us.

May 5, 2008

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

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

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

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

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

April 28, 2008

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

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

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

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

April 21, 2008

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

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

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

April 14, 2008

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

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

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

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

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

April 7, 2008

            In the first study of the just-released 2007 mortgage lending data, Inner City Press / Fair Finance Watch has identified worsening disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. The findings call into question the use of JPMorgan Chase to bail-out Bear Stearns, and Bank of America's proposal to acquire Countrywide Financial. 2007 is the fourth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

            National City in 2007 confined African Americans to higher-cost loans above the rate spread 1.77 times more frequently than whites. National City's disparity to Latinos was 1.73. Fully 25,012 of National City's 246,138 mortgages in 2007, or 10.16%, were high cost loans over the rate spread. 

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

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

            U.S. Bancorp continued to make super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities.

            Regions Financial, in a new low, provided its data at the deadline but only in paper format, on over 2000 pages, so that it could not yet be computer-analyzed. Lehman Brothers provided only a PDF file of over 6000 pages, to avoid any analysis of disparities.

            Where the rubber will meet the road will be in how the Federal Reserve and other agencies act on specific disparities at specific lenders, including as these are formally raised to them in timely comments on merger applications, such as that of Bank of America to acquire Countrywide, and the needed review of JPM Chase - Bear Stearns.

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

March 31, 2008

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

                        March 30, 2008

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

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

Dear Chairman Bernanke and others in the FRS: 

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

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

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

ZiPPY Cheats & Tricks...

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

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

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

* First time homebuyers require a 720 credit score.  

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

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

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

* NO non-occupant co borrowers.

* Max LTV/CLTV is 100%

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

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

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

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

See also, 

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

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

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

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

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

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

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

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

March 24, 2008

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

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

    GE Money announced it has an agreement with tire manufacturer Michelin to provide consumer financing to buy the tires. GE Money will provide the financing through Car-CareOne, a private-label credit program managed by GE Money's sales finance unit. Car owners can choose from 90-day, six month or 12-month no-interest programs for buying Michelin products. Watch out for the balloon payments after that, if GE's other predatory lending is any guide (Michelin guide, in this case)...

    "HSBC being a global local bank, aims to become the main bank in Russia," said Stuart Lawson, acting chairman of the board in Russia of HSBC Bank, said on March 12. HSBC announced its intention to appoint Lawson chairman of HSBC in Russia after last year he resigned from Soyuz Bank. "The appointment of Stuart Lawson to the position of HSBC Russia Chairman of the Board will have a considerable effect on business development," Stephen Green, chairman of HSBC, was quoted as saying. The first three representative office of HSBC in Russian regions were opened in 2007 in St. Petersburg, Yekaterinburg, and Novosibirsk. According to Lawson, the bank will set up offices in two or three more regions, including Rostov. "It complies with HSBC intention to become a regional bank in all the business dimensions, including retail financial services," he said. Look out for HSBC's predatory lending...

March 17, 2008 WashPost - Guardian (UK)

            The day after news of the Federal Reserve's murky bailout of Bear Stearns through JPMorgan Chase, Inner City Press / Fair Finance Watch filed with the Federal Reserve Board in Washington, and the Federal Reserve Bank of New York, a petition, complaint and series of requests, portions of which are available by clicking here. ICP has now made a similar filing with the Securities and Exchange Commission.

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

From testimony on Capitol Hill on March 13 --

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

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

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

  Yep.

March 10, 2008

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

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

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

March 3, 2008

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

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

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

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

February 25, 2008

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

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

February 18, 2008

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

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

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

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

February 11, 2008

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

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

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

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

February 4, 2008

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

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

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

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

January 28, 2008

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

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

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

January 21, 2008

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

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

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

January 14, 2008

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

            GE has repaid some but not all of the corporate welfare it received in New York State. The Empire State Development Corp. has recovered only 60 percent of $800,000 it doled out to GE's WMC subprime mortgage unit to create jobs that never materialized. Now the WMC office at 1 Ramland Road in Orangeburg, NY is closed.  GE has said it would hire 300 workers within three years and keep them in place through 2010. The Rockland County Industrial Development Agency also provided WMC with a break on sales tax on the purchase of up to $3.5 million in equipment and related expenses, a benefit that was valued a $97,000 through the end of 2006. IDA Executive Director Ronald Hicks has said the agency will seek reimbursement plus penalties. Watch GE try to wriggle out of that one, too...

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

There's a hole in Citigroup's January 8 memo announcing a consolidated "end-to-end U.S. residential mortgage business" including origination, servicing, and securitization operations, with Bill Beckmann reporting  to Carl Levinson and Jamie Forese --  CitiFinancial, Citibank, and Smith Barney would continue to originate mortgages separately. CitiFinancial is a subprime unit, one with most risk, for some reason not included. Meanwhile, the consolidated unit will, according to Citi's Jeff Perlowitz, "be a nonconforming shop." Great...

January 7, 2008

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

   Meanwhile, even the stock analysts are now saying National City (and Fifth Third and KeyCorp) erred in rushing to snap up banks in the south, now hit by real estate lending losses. So what about Royal Bank of Canada's push for Alabama National BanCorporation? And what about irregularities in trading of the latter's stock? More to follow, for now see "Consumer group protests RBC Centura Bank's pending buyout of Alabama National Bancorporation," Orlando Sentinel, Jan. 3, 2008

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

December 31, 2007

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

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

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

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

MAINE SECRETARY OF STATE, UCC RECORD

Debtors: LEWISTON PAWN SHOP, INC.

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

Secured Parties: TD BANKNORTH, N.A.

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

Filing Type: INITIAL FILING

Filing Date: 10/4/2007

Expiration Date: 10/4/2012

Filing Number: 2070001882881

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

December 24, 2007

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

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

December 17, 2007

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

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

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

December 10, 2007

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

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

December 3, 2007

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

November 26, 2007

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

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

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

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

November 18, 2007

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

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

November 12, 2007

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

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

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

November 5, 2007

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

  There are other problems to be fixed. BizWeek says Troy Norton, 84, a retired prison guard who lives in Bismarck, Ark., claims in a lawsuit filed in June in U.S. Bankruptcy Court in Hot Springs that he was a victim of improper collection attempts by Bank of America Corp. and two collection agencies. He obtained a discharge of certain debts in June, 2006, after medical bills prompted him to seek Chapter 7 protection. Court documents show that he received eight collection letters from the bank on credit-card debt of $4,218 that a judge had canceled...

    Rita Childers, 76, thought she had left behind an $855 bill owed to GE Money Bank, when the account was discharged in a Chapter 7 bankruptcy she filed in 2005. The former real estate agent in Klamath Falls, Ore., had quit her $30,000-a-year job to care for her husband, who suffers from Alzheimer's. Social Security and his veteran's pension didn't cover their bills. After the Chapter 7 case, Childers fell behind again and filed under Chapter 13, which allows debtors to repay creditors over time. GE Money had transferred the account to a debt collector that filed new claims in the Chapter 13 to recoup the canceled $855 debt. In April, Childers sued GE Money, which then withdrew the claim, citing a paperwork mistake. In an e-mail, GE Money said it tries "to avoid these errors and fixes them if they occur."

            Meanwhile at Citigroup Chuck Prince, who defended Sandy Weill's purchase of Associates First Capital Corporation and lastly engineered Citigroup's takeover of Ameriquest's Argent, is slated to resign, subprime fallout...

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

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

            Yeah -- more than three years late!

October 29, 2007

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

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

October 22, 2007

  What is the purpose of the Master Liquidity Enhancement Conduit being set up by Citigroup, Bank of America, JPM Chase and a few other banks? Not to help consumers, that's for sure. Rather, it's a way to cook their own books, and avoid reporting losses. That non-banks like PIMCO are not participating, despite the U.S. Treasury Department's Paulson's closed-door claims to the contrary to Italian central banker Mario Draghi, is telling. This is all about banks helping themselves. And taking advantage of each other: Inner City Press has learned that JPM Chase's Jaime Dimon has called the conduit an opportunity to make money from his old nemesis Citigroup. "Make it worthwhile," Dimon told Paulson. "Gouge them," Dimon in essence ordered his staff. Just as these banks said of consumers...

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

October 15, 2007

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

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

October 8, 2007

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

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

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

October 1, 2007

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

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

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

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

September 24, 2007

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

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

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

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

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

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

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

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

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

Subj: CitiMortgage Realignment May Reduce Oversight for Predatory Lending 

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

Dear Mr. Lee,

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

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

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

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

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

            Developing...

September 9, 2007

   As the chickens come up to roost at Countrywide for its disparate lending, the company says it is laying off 12,000 workers and shifting most of its lending to its bank unit. Why would the banking regulators allow this toxin into the world of FDIC insurance? Meanwhile, Bank of America steps in to buck Countrywide up, to the tune of $2 billion. Is this foray back into subprime lending relevant to BofA's proposal to acquire LaSalle? You bet it is...

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

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

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

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

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

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

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

            2006 was the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. Citigroup in 2006, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread 4.41 times more frequently than whites, according to Fair Finance Watch. Citi's disparity to Latinos was 2.38. Meanwhile Citigroup is now buying a unit of Ameriquest, 91.65% of whose loans in 2006 were subprime.

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

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

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

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

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

August 27, 2007

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

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

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

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

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

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

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

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

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

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

            In non-U.S. predatory lending news, GE is considering leaving Japan now that consumer protections are in place, cutting interest rates from 29 to 20 percent. Among the reported potential bidders are UBS and Deutsche Bank -- advised by Alan Greenspan...

August 20, 2007

  While it's good to see the American Banker describe Chris Dodd as "in