January 18, 2012
By Kurt Nimmo
“The saying ‘politicians are all the same’ rings true here.” –KTRN
Like Obama, Mitt Romney is a wind-up doll for Wall Street and the bankers. There is virtually no difference between them despite all the fetid air from the GOP propaganda machine.
This is revealed by a quick look at Romney’s top contributors. An Open Secrets page on top Romney contributors reads like a Who’s Who of Wall Street and the financial cartel. The top contributor is Goldman Sachs, followed by Credit Suisse Group, Morgan Stanley, Bank of America, JP Morgan Chase, UBS, Citigroup, Wells Fargo and Barclays – major players in the Wall Street and City of London bankster constellation.
Bain Capital is also on the list. It is a “financial services” and investment firm co-founded by Romney. Bain owns the establishment media propaganda conglomerate Clear Channel, which explains why “conservative” talk show hosts like Limbaugh, Hannity and Levin are supporting Romney, especially with the strong showing of Ron Paul in the primaries. Both Savage (real name Weiner) and Levin have gone so far as to call Paul a threat to the country.
In December, Mitt refused to release the identity of his “bundlers,” or people who gather contributions from many individuals in an organization or community and give the cash to the campaign.
In other words, the above list is only the tip of the iceberg. Romney’s lack of transparency about his bundlers indicates he is getting money from sources that want their identity concealed.
In November, it was reported that Jimmy Lee, a veteran Wall Street investment banker, and three other top executives at JPMorgan Chase & Co hosted a $2,500-per-person reception for Romney.
“I am committed to doing all that I can to help his campaign because I also believe he is the strongest challenger to President Obama,” Lee told Reuters. Lee said he has known Romney for almost all of his Wall Street career and that he made one of the first loans to Romney at Bain Capital.
October 31, 2011
By Jesse Eisinger
Back when the Financial Crisis Inquiry Commission was doing its work, I would check in periodically with someone who worked there to find out how it was going.
“Good news!” my source would joke. “We got the guy who caused it.”
That is the way I felt last week when the Securities and Exchange Commission announced that it had, well, agreed to a measly $285 million settlement with Citigroup over the bank having misled its own customers in selling an investment it created out of mortgage securities as the housing market was beginning its collapse.
In addition, the S.E.C. accused one person — a low-level banker. Hooray, we finally got the guy who caused the financial crisis! The Occupy Wall Street protestors can now go home.
After years of lengthy investigations into collateralized debt obligations, the mortgage securities at the heart of the financial crisis, the S.E.C. has brought civil actions against only two small-time bankers. But compared with the Justice Department, the S.E.C. is the second coming of Eliot Ness. No major investment banker has been brought up on criminal charges stemming from the financial crisis.
To understand why that is so pathetic and — worse — corrupting, we need to briefly review what went on in C.D.O.’s in the years before the crisis. By 2006, legions of Wall Street bankers had turned C.D.O.’s into vehicles for their own personal enrichment, at the expense of their customers.
These bankers brought in savvy (and cynical) investors to buy pieces of the deals that they could not sell. These investors bet against the deals. Worse, they skewed the deals by exercising influence over what securities went into the C.D.O.’s, and they pushed for the worst possible stuff to be included.
The investment banks did not disclose any of this to the investors on the other side of the deals, or if they did, they slipped a vague, legalistic disclosure sentence into the middle of hundreds of pages of dense documentation. In the case brought last week, Citigroup was selling the deal, called Class V Funding III, while its own traders were filling it up with garbage and betting against it.
By the S.E.C.’s own investigations of and settlements with Goldman Sachs, JPMorgan Chase and Citigroup, and by reporting like my ProPublica work with Jake Bernstein and early stories by The Wall Street Journal, we know that these breaches were anything but isolated. This was the Wall Street business model. (Goldman, JPMorgan and Citigroup were all able to settle without admitting or denying anything, which, of course, is part of the problem.)
Neither the Citigroup settlement nor any of the others come close to matching the profits and bonuses that these banks generated in making these deals. And low-level bankers did not, and could not, act alone. They were not rogues, hiding things from their bosses.
Last week’s S.E.C. complaint makes clear that the low-level Citigroup banker that it sued, Brian H. Stoker, had multiple conversations with his superiors about the details of Class V. At one point, Mr. Stoker’s boss pressed him to make sure that their group got “credit” for the profits on the short that was made by another group at the bank.
Pause, and think about that. The boss was looking for credit, but as far as the S.E.C. was concerned, he got no blame.
The S.E.C. did not respond to a request for comment, so we are left to wonder what explains its failure to reckon adequately with the pervasive problems. Contrary to expectations, the embattled and oft-assailed agency has done almost everything right with structured finance investigations, taking aim at abuses related to C.D.O.’s and other complex deals.
The S.E.C. has also devoted adequate resources to the issue. It put together a special task force on structured finance, sending the proper signal of the agency’s priorities both internally and externally. The task force is staffed by bright people, an invigorating mix of young go-getters and experienced hands. Those people have understood for years what was wrong with the C.D.O. business on Wall Street.
O.K., so what is it? Risk aversion.
Based on the major cases the S.E.C. has brought, a pattern has emerged. It is making one settlement per firm and concentrating on only the safest, most airtight cases. The agency’s yardstick seems to be, who wrote the stupidest e-mail? Mr. Stoker of Citigroup wrote an incriminating e-mail that recommended keeping one crucial participant in the dark. Goldman’s Fabrice Tourre, the other functionary the agency has sued, wrote dumb things to his girlfriend.
But the S.E.C is not the G-mail G-man. It is the securities police. Imprudent e-mailing is not the only way to commit securities fraud.
Maybe the agency hopes that private litigation will take up the slack. It cannot investigate and wring a prosecution or settlement out of every corrupt deal. Instead, it has long aimed to plant a flag and let private litigants take care of the rest.
But private litigation has failed. One problem is that the defrauded institutions often committed their own sins. In a monstrous daisy chain, C.D.O.’s bought pieces of other C.D.O.’s. These investments were run by management companies. They might have been the victim in one C.D.O., but complicit in the predations of another.
October 20, 2011
The Economic Collapse Blog
Most people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end. The word “derivatives” sounds complicated and technical, but understanding them is really not that hard. A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion. Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion. The danger to the global financial system posed by derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”. For now, the financial powers that be are trying to keep the casino rolling, but it is inevitable that at some point this entire mess is going to come crashing down. When it does, we are going to be facing a derivatives crisis that really could destroy the entire global financial system.
Most people don’t talk much about derivatives because they simply do not understand them.
Perhaps a couple of definitions would be helpful.
The following is how a recent Bloomberg article defined derivatives….
Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.
The key word there is “speculation”. Today the folks down on Wall Street are speculating on just about anything that you can imagine.
The following is how Investopedia defines derivatives….
A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
A derivative has no underlying value of its own. A derivative is essentially a side bet. Usually these side bets are highly leveraged.
At this point, making side bets has totally gotten out of control in the financial world. Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it. This system is almost entirely unregulated and it is totally dominated by the big international banks.
Over the past couple of decades, the derivatives market has multiplied in size. Everything is going to be fine as long as the system stays in balance. But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.
The amount of money that we are talking about is absolutely staggering. Graham Summers of Phoenix Capital Research estimates that the notional value of the global derivatives market is $1.4 quadrillion, and in an article for Seeking Alpha he tried to put that number into perspective….
If you add up the value of every stock on the planet, the entire market capitalization would be about $36 trillion. If you do the same process for bonds, you’d get a market capitalization of roughly $72 trillion.
The notional value of the derivative market is roughly $1.4 QUADRILLION.
I realize that number sounds like something out of Looney tunes, so I’ll try to put it into perspective.
$1.4 Quadrillion is roughly:
-40 TIMES THE WORLD’S STOCK MARKET.
-10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET.
-23 TIMES WORLD GDP.
It is hard to fathom how much money a quadrillion is.
If you started counting right now at one dollar per second, it would take 32 million years to count to one quadrillion dollars.
Yes, the boys and girls down on Wall Street have gotten completely and totally out of control.
In an excellent article that he did on derivatives, Webster Tarpley described the pivotal role that derivatives now play in the global financial system….
Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.
Most people do not realize this, but derivatives were at the center of the financial crisis of 2008.
They will almost certainly be at the center of the next financial crisis as well.
For many, alarm bells went off the other day when it was revealed that Bank of America has moved a big chunk of derivatives from its failing Merrill Lynch investment banking unit to its depository arm.
So what does that mean?
An article posted on The Daily Bail the other day explained that it means that U.S. taxpayers could end up holding the bag….
This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input.
So did you hear about this on the news?
Today, the notional value of all the derivatives held by Bank of America comes to approximately $75 trillion.
JPMorgan Chase is holding derivatives with a notional value of about $79 trillion.
It is hard to even conceive of such figures.
Right now, the banks with the most exposure to derivatives are JPMorgan Chase, Bank of America, Goldman Sachs, Citigroup, Wells Fargo and HSBC Bank USA.
Morgan Stanley also has tremendous exposure to derivatives.
You may have noticed that these are some of the “too big to fail” banks.
The biggest U.S. banks continue to grow and they continue to get even more power.
Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets. Today, the top 10 U.S. banks control 77 percent of all U.S. banking assets.
These banks have gotten so big and so powerful that if they collapsed our entire financial system would implode.
You would have thought that we would have learned our lesson back in 2008 and would have done something about this, but instead we have allowed the “too big to bail” banks to become bigger than ever.
And they pretty much do whatever they want.
A while back, the New York Times published an article entitled “A Secretive Banking Elite Rules Trading in Derivatives”. That article exposed the steel-fisted control that the “too big to fail” banks exert over the trading of derivatives. Just consider the following excerpt from the article….
On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.
The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
So what institutions are represented at these meetings?
Well, according to the New York Times, the following banks are involved: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.
Why do those same five names seem to keep popping up time after time?
Sadly, these five banks keep pouring money into the campaigns of politicians that supported the bailouts in 2008 and that they know will bail them out again when the next financial crisis strikes.
Those that defend the wild derivatives trading that is going on today claim that Wall Street has accounted for all of the risks and they assume that the issuing banks will always be able to cover all of the derivative contracts that they write.
But that is a faulty assumption. Just look at AIG back in 2008. When the housing market collapsed AIG was on the wrong end of a massive number of derivative contracts and it would have gone “bust” without gigantic bailouts from the federal government. If the bailouts of AIG had not happened, Goldman Sachs and a whole lot of other people would have been left standing there with a whole bunch of worthless paper.
It is inevitable that the same thing is going to happen again. Except next time it may be on a much grander scale.
When “the house” goes “bust”, everybody loses. The governments of the world could step in and try to bail everyone out, but the reality is that when the derivatives market comes totally crashing down there won’t be any government on earth with enough money to put it back together again.
A horrible derivatives crisis is coming.
It is only a matter of time.
Stay alert for any mention of the word “derivatives” or the term “derivatives crisis” in the news. When the derivatives crisis arrives, things will start falling apart very rapidly.
August 11th, 2011
The Economic Collapse
How far does the stock market have to go down before we officially call it a crash? The Dow is now down more than 2,000 points in just the last 14 trading days. So can we now call this “The Stock Market Crash of 2011″? Today the Dow was down 519 points. Yesterday, an announcement by the Federal Reserve indicating that the Fed would keep interest rates near zero until mid-2013 helped the Dow surge more than 400 points, but all of those gains were wiped out today. It turns out that the Federal Reserve was only able to stabilize the financial markets for a single day. Fears about the European sovereign debt crisis and the crumbling U.S. economy continue to dominate the marketplace. With each passing day, things are looking more and more like 2008 all over again. So what is going to happen if “The Stock Market Crash of 2011″ pushes the U.S. economy into “The Recession of 2012″?
Just like in 2008, bank stocks are being hit the hardest. That was true once again today. Bank of America was down more than 10 percent, Citigroup was down more than 10 percent, Morgan Stanley was down more than 9 percent and JPMorgan Chase was down more than 5 percent.
Bank of America stock is down almost 50 percent so far this year. Overall, the S&P financial sector is down more than 23 percent in 2011 so far.
How soon will it be before we start hearing of the need for more bailouts? After all, the “too big to fail” banks are even bigger now than they were in 2008.
All of this panic is causing the price of gold to reach unprecedented heights. Today, gold was over $1800 at one point. If the current panic continues for an extended period of time, there is no telling how high the price of gold may go.
In the United States, much of the focus has been on the fact that the U.S. government has lost its AAA credit rating, but the truth is that the European sovereign debt crisis is probably the biggest cause of the instability in world financial markets right now.
The European Central Bank has decided to start purchasing Italian and Spanish debt, and there have been rumors that French debt could be hit with a downgrade. Europe is a total financial basket case right now and unless dramatic action is taken things are going to get progressively worse.
Of course the U.S. is also certainly contributing greatly to this crisis. The federal government is on track to have a budget deficit that is over a trillion dollars for the third year in a row. The U.S national debt is a horrific nightmare, but our politicians keep putting off budget cuts.
The debt ceiling deal that was just reached basically does next to nothing to cut the budget before the next election. Unless the “Super Congress” does something dramatic, the only “budget cuts” we will see before the 2012 election will be 25 billion dollars in “savings” from spending increases that will be cancelled.
The modest spending cuts scheduled to go into effect beginning in 2013 will probably never materialize. Whenever the time comes to actually significantly cut the budget, our politicians always want to put it off for another time.
But in the end, debt is always going to have its day. Our politicians can try to kick the can down the road all they want, but eventually a day of reckoning is going to come.
In fact, if the U.S. and Europe had not piled up so much debt, we would not be facing all of the problems we are dealing with now.
Things could have been so much different.
But here we are.
The truth is that this debt crisis is just beginning. There is no magic potion that is going to make all of this debt suddenly disappear.
Most Americans have no idea how much financial pain is coming. We have been living way beyond our means for decades, and now we are going to start paying for it.
Now that long-term U.S. government debt has been downgraded, huge numbers of other securities are also going to be affected. In fact, according to a recent Bloomberg article, S&P has already been very busy slashing the ratings on hordes of municipal bonds….
April 27th, 2011
AOL Real Estate
By: Sheree R. Curry
JPMorgan Chase says it is willing to pay a whopping $56 million to settle the class-action lawsuit brought by 6,000 members of the military who accused it of overcharging them on their mortgages and violating the Servicemembers Civil Relief Act. A judge still has to approve the offer.
The case was initially brought by Capt. Jonathon Rowles, who says he was overcharged about $900 per month by Chase, which had him to verify his active duty status every 90 days and to reapply for SCRA status at least once per quarter between December 2007 and March 2010, according to the lawsuit.
The SCRA, signed into law by President George Bush in 2003 to replace a similar 1942 law, helps servicemen and servicewomen with certain financial obligations at home, such as rent or mortgage payments, when they are activated for military duty. For example, there is a 6 percent cap on interest rates, they cannot be evicted or have their lease terminated, and they can receive mortgage relief from their lender.
JPMorgan Chase has now offered to cut the interest rates for those military homeowners who did not see a correct cut initially, and it will give back homes to those who were wrongfully foreclosed upon, as well as forgive their mortgage debt. The lender also will pay $27 million in cash to the 6,000 military personnel who were overcharged on their mortgages while they were on active duty. That comes to about $4,500 per family.
JPMorgan already handed out about $6 million to those overcharged with higher interest rates. Of course, if a military member’s home was already under 6 percent and wasn’t due to increase on an ARM, they didn’t get caught in some of this mess, unless they missed a payment and were being pursued for being delinquent.
JPMorgan officials said three months ago that one of the bank’s units had made errors in the handling of mortgages covered by the Servicemembers Civil Relief Act. The lender will also contribute $15 million to a fund to go toward additional damages.
March 14th, 2011
By: Alex Veiga
The number of U.S. homes receiving a foreclosure-related notice fell to a 36-month low last month, as lenders delayed taking action against homeowners amid heightened scrutiny over banks’ handling of home repossessions.
Some 255,101 properties received at least one of the notices in February, down 14 percent from January and 27 percent versus the same month last year, foreclosure listing firm RealtyTrac Inc. said Thursday.
The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.
While severe winter weather was likely a contributing factor, the sharp drop-off was primarily due to lenders taking a more measured approach to their foreclosure processes since the industry came under fire last year.
State and federal officials launched investigations last fall into foreclosure procedures used by mortgage servicers and lenders after evidence surfaced that some major banks pushed through hundreds of foreclosures a day without giving many borrowers a fair shot at keeping their homes.
Several large banks, including Bank of America, Citigroup and JPMorgan Chase, have been in talks to settle a probe launched by 50 state attorneys general over their handling of foreclosures.
Many lenders temporarily froze foreclosures last October while they reviewed and, in some cases, re-filed foreclosure documents. That process has continued this year, but in less-than-speedy fashion due to backed-up court dockets and other procedural road bumps.
Initial default notices fell 16 percent from January and 41 percent from a year ago, while scheduled foreclosure auctions declined 10 percent versus last month and 21 percent from February last year, RealtyTrac said.
Meanwhile, lenders repossessed 64,643 homes last month, down 17 percent from January and 18 percent from the same month last year. Repossessions declined 35 percent in states where courts play a role in the foreclosures process.
The decline in foreclosure notices has slowed not only the pace of homes lost to foreclosure, but also stemmed the tide of additional properties potentially at risk for repossession.
That’s good news for homeowners in trouble, but it’s unlikely to portend fewer foreclosures in the long-run.
“The issue isn’t whether we’ll see the repossessions — it’s when,” says Rick Sharga, a senior vice president at RealtyTrac.
Should the foreclosure process slowdown continue for several months, it’s likely foreclosure notices and bank repossessions will remain artificially low, Sharga says.
That could help stem home price declines and the number of homes taken back by banks, which hit a high of more than 1 million last year.
Such a reprieve would only be temporary, however.
“Even though foreclosure activity would look better, it would take the housing market and the economy longer to recover,” Sharga said. “We might not see the market come back until 2014 or 2015.”
However, if banks’ foreclosure paperwork issues get resolved sooner, rather than later, foreclosure activity is likely to spike again, Sharga added.
Around 5 million borrowers are at least two months behind on their mortgages, and experts say more people will miss payments because of job losses and loans that exceed the value of the homes they are living in.
RealtyTrac’s data captures new foreclosure-related filings on a given property, not repeat filings. As a result, some 70,000 notices that mortgage servicers re-filed on properties in some stage of foreclosure were excluded from February’s data.
Factor in those re-filed notices, and the month’s foreclosure activity comes closer to the monthly rate seen last year before the banks’ foreclosure documentation problems came to light.
At a state level, Nevada posted the nation’s highest foreclosure rate for the 50th consecutive month in February, with one in every 119 households receiving a foreclosure notice.
Arizona had the No. 2 spot, while California held the third-highest rate of foreclosure.
Rounding out the top 10 states with the highest foreclosure rate in February were: Utah, Idaho, Georgia, Michigan, Florida, Colorado and Hawaii.
March 1st, 2011
Wall Street swindler Bernard Madoff said in a magazine interview published Sunday that new regulatory reform enacted after the recent national financial crisis is laughable and that the federal government is a Ponzi scheme.
“The whole new regulatory reform is a joke,” Madoff said during a telephone interview with New York magazine in which he discussed his disdain for the financial industry and for its regulators.
The interview was published on the magazine’s website Sunday night.
Madoff did an earlier New York Times interview in which he accused banks and hedge funds of being “complicit” in his Ponzi scheme to fleece people out of billions of dollars. He said they failed to scrutinize the discrepancies between his regulatory filings and other information.
He said in the New York magazine interview the Securities and Exchange Commission “looks terrible in this thing,” and he said the “whole government is a Ponzi scheme.”
A Ponzi, or pyramid, scheme is a scam in which people are persuaded to invest through promises of unusually high returns, with early investors paid their returns out of money put in by later investors.
A court-appointed trustee seeking to recover money on behalf of the victims of Madoff’s massive Ponzi scheme has filed a lawsuit against his primary banker, JPMorgan Chase, alleging the bank had suspected something wrong in his operation for years. The bank has denied any wrongdoing.
Madoff is serving a 150-year prison sentence in Butner, N.C., after pleading guilty in 2009 to fraud charges.
In the New York magazine interview, Madoff, 72, also said he was devastated by his son Mark Madoff’s death and laments the pain he wrought on his family, especially his wife.
“She’s angry at me,” Madoff said. “I mean, you know, I destroyed our family.”
Mark Madoff, 46, hanged himself with a dog leash in his Manhattan apartment on the second anniversary of his father’s arrest. He left behind a wife and four children, ages 2 to 18.
At the time of his suicide, federal investigators had been trying to determine if he, his brother and an uncle participated in or knew about the fraud. The relatives, who held management positions at the family investment firm, denied any wrongdoing.
Bernard Madoff has maintained that his family didn’t know about his Ponzi scheme.
January 19th, 2011
By: Abigail Field
When New Jersey tightened its rules for foreclosures in response to the crisis over false loan documents, it took the unprecedented step of ordering the six largest servicers — Ally Bank/GMAC, Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), Wells Fargo (WFC) and OneWest — to explain why they should be allowed to continue with their foreclosures. If any of them couldn’t adequately justify itself, New Jersey would suspend all the foreclosure actions by that bank in the state and appoint a special master to investigate its past and proposed processes.
On Jan. 5, the banks responded, and in essence each said: Look judge, we’re good guys committed to keeping people in their homes whenever possible, and while we admit that in the past we had problems — teeny-tiny problems — we’ve fixed them already.
Most of the banks’ briefs then argued, with varying degrees of aggressiveness, that the court doesn’t have the power to impose a foreclosure moratorium or appoint a special master because that would break court rules, violate New Jersey’s Constitution and the U.S. Constitution — including the banks’ due process rights — and overstep the judiciary’s role. They also claimed it was generally wrong because the banks were regulated federally. Only Chase declined to challenge the court’s authority to impose the moratorium or appoint a special master.
However strong these challenges to a potential moratorium and special master may be, the irony of banks arguing that halting foreclosures would break court rules and violate their due process rights is richer than New York cheesecake. After all, the banks’ actions in the foreclosure process have systematically involved documents that break court rules and violate homeowners’ due process rights, which is what led New Jersey to act in the first place. Irony aside, the banks are essentially saying: If you suspend our foreclosures or appoint a special master to investigate us, we’ll sue to stop you.
Although the banks vigorously assert that their document problems never led them to foreclose wrongly and that their records are in impeccable shape, they do admit to errors in their documents, at least to some degree.
December 22nd, 2010
By: Abigail Field
Linda Almonte, a former employee of JPMorgan Chase (JPM) who is suing the bank for wrongful termination, has just upped the ante: She has now also filed a whistleblower complaint with the Securities and Exchange Commission. The core allegations add context to her lawsuit, and they charge Chase with grotesque and illegal practices involving its credit card debt processes, including robo-signing. Chase denies her claims.
Almonte’s allegations are detailed in the Nov. 30 letter sent to the SEC. In the letter, she says:
1. Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts. . .when in fact Chase Bank executives knew that many of those accounts had incorrect and overstated balances.
3. Chase Bank executives routinely destroyed information and communications from consumers rather than incorporate that information into the consumer’s credit card file, including bankruptcy notices, powers of attorney, notice of cancellation of auto-pay, proof of payments and letters from debt settlement companies.
4. Chase Bank executives mass-executed thousands of affidavits in support of Chase Banks collection efforts and those Chase Bank executives did not have personal knowledge of the facts set forth in the affidavits.
5. When senior Chase Bank executives were made aware of these systemic problems, senior Chase Bank executives — rather than remedy the problems — immediately fired the whistleblower and attempted to cover up these problems.
When I reached Almonte’s lawyer, George Pressly, for comment, he was shocked that I had the letter because it was supposed to be confidential. While Pressly was willing to confirm Almonte was a client, beyond that he had no comment. Pressly, who was clearly trying to figure out how to handle the letter’s disclosure, said he was suddenly getting a “firestorm” of calls and seemed unprepared for the onslaught. While he has filed many SEC complaints before — he operates the website http://www.secwhistleblowerprogram.org/, which is how Almonte found him — her letter is the first one he’s filed that went public.
The bank, through spokesman Paul Harwick, says “Chase is aggressively defending itself against the allegations made by this former employee. We have thoroughly researched these allegations and are confident that the sales of these loans were handled properly. We have strong internal controls and processes for managing credit card debt-sales transactions.”
The SEC says it never comments on such letters.
In the letter, Almonte’s lawyer explains the reason she contacted the SEC: “Her disclosures may bring into question Chase Bank’s representations regarding Chase Bank’s own securities but may also bear on certain asset-backed securities where the underlying assets are Chase Bank credit card accounts.”
To support her claims, Almonte says she has “a large volume of documents in her possession available for review by the SEC” and offers her first-hand observations as well.
Those direct observations allegedly include witnessing the head of Chase’s pre-litigation group “shred” material communications from borrowers, such as “bankruptcy notices, settlement communications, and debt settlement company communications” rather than entering the information into Chase’s database. She also claims that senior Chase Bank executives instructed Chase Bank employees remove important information and data from Litigation Accounts because the retention of the information would have resulted in increased computer hardware costs. Both types of record destruction rendered the accounts inaccurate, she says.
Concerning robo-signing, Pressly wrote:
“On numerous occasions, Ms. Almonte witnessed these Affidavit Signers work through at times 3-feet tall stacks of Judgment Affidavits at once during weekly multi-hour long, non-related company meetings. The notaries were not present at these meetings. The Affidavit Signers simply relied on hourly workers to reconcile amounts owed and then treated the actual execution of the affidavits as busy work to be performed while the Affidavit Signers could focus on other matters.”
According to Almonte, determining the amounts owed wasn’t easy: Chase had a number of “legacy” databases from its various acquisitions that were not well integrated. So, perhaps the executives should have looked more closely at the documents. “Indeed, Ms. Almonte determined that as many as 20% of the Judgment Accounts to be sold failed an internal test to check for accuracy.”
Who Is Linda Almonte?
During her time at Chase, Almonte was a “mid-level executive” who “supervised employees across the litigation and post-judgment functions” of the credit card litigation department.
In March, she sued the bank, claiming that she was fired for refusing to participate in the sale of 23,000 credit card accounts Chase had packaged for sale. Almonte says 5,000 of the accounts listed the wrong amount owed, and thousands more had other problems. By going forward with the sale after being informed of the problems, Almonte says, Chase was breaking the law.
Almonte’s whistleblower complaint provides big-picture context for the sale she refused to participate in, providing background on how so many credit card accounts could contain flawed data.
Robo-signing and other problems with credit card debt collection aren’t new, as David Segal’s October article for The New York Times detailed. What is new is that someone in Almonte’s position is willing to make such charges publicly.
December 20th, 2010
Trends Research Institute
By: Gerald Celente
We warned it would happen and it happened as we warned. “Off with their heads! Off with their heads!” chanted the angry mob as they attacked the Royal Rolls Royce carrying Prince Charles and his wife Camilla.
“Off With Their Heads 2.0” read the headline of our Autumn Trends Journal (10 October 2010) predicting the outpouring of outrage that would accompany the harsh austerity measures inflicted upon the general public, while governments doled out generous bailouts and rescue packages for bankers and financiers.
“Since the onset of the Greatest Recession, I’ve been informing readers to expect uncontrolled unrest that would roil markets and destabilize governments,” said Gerald Celente, publisher of the Trends Journal. “When people lose everything and they have nothing left to lose, they lose it.”
According to Celente, the spontaneous attack on the Royal couple was the first salvo in what promises to be a long war between the people and the ruling classes. “Anyone questioning the intensity of the people’s seething anger is either out of touch or in denial,” said Celente, noting that this was the worst show of violence directed towards the Royals since the days of Irish/English hostilities.
In this case, the Royals offered a convenient symbolic target for the young protestors, a new generation that has come face-to-face with a future of downward mobility. It wasn’t only that they would have to pay three times the tuition for a degree that no longer guaranteed them a decent job, it was rage against the machine – a rigged system that paved the way for the privileged and punished the prols.
Celente has also predicted that all the Kings and Queens of Commerce – along with Presidents, Prime Ministers, top level bureaucrats and elected officials – will soon be hearing the same chant of “Off with their heads!”
While the public was being punished with austerity measures, the “too big to fail” bankers, hedge fund hustlers and Wall Street high rollers, blamed for creating conditions necessitating austerity by making the biggest, most crooked and worst of financial gambles – were rewarded with a king’s ransom:
Wall Street Sees Record Revenue in ’09-10 Recovery From Bailout
Dec. 13 (Bloomberg) – Wall Street’s biggest banks, rebounding after a government bailout, are set to complete their best two years in investment banking and trading, buoyed by 2010 results likely to be the second-highest ever.
This profit surge comes after the five largest investment banks – Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley – took a combined $135 billion in TARP money and borrowed billions more from the Federal Reserve’s emergency-lending facilities, while also benefiting from low interest rates and the Fed’s purchases of fixed-income securities.
Trend Forecast: The media has not connected the dots: a new class warfare has begun. The attack upon the Royals exemplified the pent-up hatred building among a population that can no longer be cajoled into believing sacrifices to further enrich the über-rich are in the best interest of their nation.
At the onset of the Great Recession, many bought the argument that if the biggest banks and businesses were not bailed out, the entire financial system would collapse. Now faced with the irrefutable evidence of record corporate profits, billions in bonuses and bailout windfalls, the people will no longer grin and bear it.
As economic conditions continue to deteriorate in Europe and the U.S., the uprisings will grow larger, more frequent, more organized and more ferocious. In response, government crackdowns will be harsher and more violent. As the New Year unfolds, the stage is set for incendiary acts that will be committed by one side or the other, escalating the conflict into prolonged battles.
Governments will declare that hooligans, anarchists, militants and foreign agents are responsible for the unrest, and the press will swear to it. What will be painted as assaults on capitalism and the free enterprise system could more accurately be described as acts of self defense; a battle between the growing number of “have nots” vs. the “haves” that keep taking even more than they had before.