Colleen M. Kelley, president of the National Treasury Employees Union, is opposed to the bill because it would “devastate important government services like food inspection, border protection and air safety,” she wrote in a letter to Cantor on Thursday.
Though she appreciates that he wants to quickly resolve the budget impasse, she has a “small problem” with his bill.
“It is my understanding that in order for a bill to become law it must be passed by the House and the Senate and signed by the President,” Kelley wrote. She suggested Cantor spend a few moments watching the clip above, a “Schoolhouse Rock” classic called, “How a Bill Becomes a Law.”
As “Bill the Bill” (“I’m just a bill”) explains to his young friend in the video, a bill begins in committee, moves to a full vote in the House of Representatives, and then “I go to the Senate and whole thing starts all over.”
Read on.
p.s. House passed the Government Shutdown Prevention Act includes a section under which the House spending plan would become law, without Obama's signature, if the Senate does not pass a budget deal.
Saturday, April 02, 2011
Woman files class action suit against Lubrizol stemming from the $9B sale to Buffett's investment firm
A Phoenix woman has filed a class-action lawsuit against Lubrizol Corp. stemming from the $9 billion sale of the Wickliffe company to Warren Buffett's investment firm.
Karen Spletter is claiming Lubrizol's board of directors unjustly enriched themselves at the expense of public shareholders. On March 14, Lubrizol announced that Berkshire Hathaway Inc. would acquire 100 percent of outstanding Lubrizol shares for $135 per share in an all-cash transaction.
Berkshire Hathaway and its subsidiaries deal in property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance and retailing.
The company expects the board-approved, $9.7 billion transaction to be completed during the third quarter of this year.
Once Lubrizol becomes a wholly-owned subsidiary of Berkshire Hathaway, Lubrizol common shares will no longer be listed on the New York Stock Exchange.
Read on.
Karen Spletter is claiming Lubrizol's board of directors unjustly enriched themselves at the expense of public shareholders. On March 14, Lubrizol announced that Berkshire Hathaway Inc. would acquire 100 percent of outstanding Lubrizol shares for $135 per share in an all-cash transaction.
Berkshire Hathaway and its subsidiaries deal in property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance and retailing.
The company expects the board-approved, $9.7 billion transaction to be completed during the third quarter of this year.
Once Lubrizol becomes a wholly-owned subsidiary of Berkshire Hathaway, Lubrizol common shares will no longer be listed on the New York Stock Exchange.
Read on.
Biloxi Buzz for Saturday
Fifth guilty plea in expansive mortgage fraud case The Wall Street Journal
JPMorgan must pay $4 million to get foreclosure docs from Ben-Ezra
JPMorgan must pay $4 million to get foreclosure docs from Ben-Ezra
You Saw This Coming: Fox News Announces ‘Mondays With Trump’ On Fox & Friends — Need to add some spice to your Monday morning? Fox & Friends has announced just the thing for the media nerd that simply can't get enough of the most attention-grabbing potential 2012 Republican presidential candidates yet …
Alabama judge denies securitization trustee standing to foreclose
On March 30, an Alabama judge issued a short, conclusory order that stopped foreclosure on the home of a beleaguered family, and also prevents the same bank in the case from trying to foreclose against that couple, ever again. This may not seem like big news — but upon review of the underlying documents, the extraordinarily important nature of the decision and the case becomes obvious.
No Securitization, No Foreclosure
The couple involved, the Horaces, took out a predatory mortgage with Encore Credit Corp in November, 2005. Apparently Encore sold their loan to EMC Mortgage Corp, who then tried to securitize it in a Bear Stearns deal. If the securitization had been done properly, in February 2006 the trust created to hold the loans would have acquired the Horace loan. Once the Horaces defaulted, as they did in 2007, the trustee would have been able to foreclose on the Horaces.
And that’s why this case is so big: the judge found the securitization of the Horace loan wasn’t done properly, so the trustee — LaSalle National Bank Association, now part of Bank of America (BAC) — couldn’t foreclose. In making that decision, the judge is the first to really address the issue, head-on: If a screwed-up securitization process meant a loan never got securitized, can a bank foreclose under the state versions of the Uniform Commercial Code anyway? This judge says no, finding that since the securitization was busted, the trust didn’t have the right to foreclose, period.
Since the judge’s order doesn’t explain, how should people understand his decision? Luckily, the underlying documents make the judge’s decision obvious.
Check out the rest of this nice little victory here…
No Securitization, No Foreclosure
The couple involved, the Horaces, took out a predatory mortgage with Encore Credit Corp in November, 2005. Apparently Encore sold their loan to EMC Mortgage Corp, who then tried to securitize it in a Bear Stearns deal. If the securitization had been done properly, in February 2006 the trust created to hold the loans would have acquired the Horace loan. Once the Horaces defaulted, as they did in 2007, the trustee would have been able to foreclose on the Horaces.
And that’s why this case is so big: the judge found the securitization of the Horace loan wasn’t done properly, so the trustee — LaSalle National Bank Association, now part of Bank of America (BAC) — couldn’t foreclose. In making that decision, the judge is the first to really address the issue, head-on: If a screwed-up securitization process meant a loan never got securitized, can a bank foreclose under the state versions of the Uniform Commercial Code anyway? This judge says no, finding that since the securitization was busted, the trust didn’t have the right to foreclose, period.
Since the judge’s order doesn’t explain, how should people understand his decision? Luckily, the underlying documents make the judge’s decision obvious.
Check out the rest of this nice little victory here…
Homeowner Wins Reprieve After ProPublica Story
Yesterday, we reported on the case of Pamela Jeter of Atlanta [1], who was facing foreclosure next week despite the fact she seemed to qualify for a mortgage modification and the investors who own her loan think she should be able to get one.
Well, Jeter received word this morning that her servicer, OneWest, will not be seizing her house next week.
The bank is postponing foreclosure for at least two months in the hope that the two sides could reach a solution in the meantime.
In our story, we reported that OneWest had been pursuing foreclosure despite suing in federal court to be able to provide a loan modification that would avoid foreclosure. HSBC, a middleman that Jeter hadn’t even known was involved with her loan, has blocked modifications from happening, so OneWest sued. You can read up on the saga here [1].
Rest here
http://www.propublica.org/article/homeowner-wins-reprieve-after-propublica-story
Well, Jeter received word this morning that her servicer, OneWest, will not be seizing her house next week.
The bank is postponing foreclosure for at least two months in the hope that the two sides could reach a solution in the meantime.
In our story, we reported that OneWest had been pursuing foreclosure despite suing in federal court to be able to provide a loan modification that would avoid foreclosure. HSBC, a middleman that Jeter hadn’t even known was involved with her loan, has blocked modifications from happening, so OneWest sued. You can read up on the saga here [1].
Rest here
http://www.propublica.org/article/homeowner-wins-reprieve-after-propublica-story
Friday, April 01, 2011
Libyan-owned bank borrowed 73 times at a loan rate of 0.25% from Fed
Questions are being raised in the United States after Federal Reserve data showed that a Libyan-owned bank borrowed 73 times from the Fed at the height of the financial crisis.
As The Globe and Mail’s New York correspondent Joanna Slater reports today, the U.S. central bank yesterday provided 25,000 pages of documents disclosing which banks borrowed what after the collapse of Lehman Bros. in mid-September of 2008 plunged the world into an economic tailspin.
Among those pages were documents showing that Arab Banking Corp., then part-owned by Libya’s central bank, had aggregate loans of $35-billion (U.S.) in the 18-month period following the failure of Lehman.
According to Bloomberg News today, the Libyan bank took several loans totaling more than $2-billion at the Fed’s discount window, the largest being $1.2-billion.
Libya is now subject to sanctions, of course, as violence rages amid popular uprisings in the Middle East and North Africa, and billions in assets have been frozen around the world.
In a letter to Fed chairman Ben Bernanke, Treasury Secretary Timothy Geithner and another official yesterday, independent Senator Bernard Sanders raised serious questions about the move.
“It is incomprehensible to me that while credit worthy small businesses in Vermont and throughout the country could not receive affordable loans, the Federal Reserve was providing tens of billions of dollars in credit to a bank that is substantially owned by the Central Bank of Libya,” he wrote.
“To make matters worse, our assistance to this Libyan-controlled bank did not end there,” he added in the letter released publicly. “On March 4, the Treasury Department exempted from economic sanctions the Arab Banking Corp. and any other bank that is owned or controlled by the Libyan government operating under the laws of a different country.”
And here’s one more issue for the senator:
“As a result of a provision I authored in the Wall Street Reform and Consumer Protection Act, we learned that from Dec. 20, 2007 through March 11, 2010, the Federal Reserve provided over 45 emergency loans to the Arab Banking Corp. with an interest rate as low as 0.25 per cent.
"All of these loans were backed by collateral in U.S. Treasury securities purchased by the Arab Banking Corp. In other words, at the same time that the Arab Banking Corp. was borrowing money from one arm of the U.S. government at near zero interest rates, it was also lending money to the U.S. Treasury and receiving a higher interest rate.”
Also, Senator Sanders asked this question in his letter:
The senator also questioned why the Bahrain-based Arab Banking Corp. is even allowed to operate branches inside United States. “Why would the U.S. government allow a bank that is predominantly owned by the Central Bank of Libya – an institution on which the U.S. has imposed strict economic sanctions –to operate two banking branches within our own borders?”
Good question...
A Berkshire Hathaway chairman's actions may trigger government probe
Yet that carefully cultivated image — the envy of nearly every top executive — risks being tarnished by a disclosure that he knew one of his right-hand executives had bought shares in a company before Buffett’s company announced a deal for it.
David Sokol's actions in a $9 billion acquisition by Berkshire Hathaway Inc. will trigger a government investigation, a former federal enforcer said Thursday, but are unlikely to result in sanctions against him.
Still, the ethical issues behind Sokol's trades in Lubrizol Inc. are magnified by the high-integrity reputation of his former boss, Omaha investor Warren Buffett. Thursday brought a firestorm of criticism that Sokol's stock purchases were improper and that Buffett should have reacted more strongly.
“It's anti-capitalism. It's anti-America. It's wrong,” said Tim Mazur, chief operating officer of the Ethics and Compliance Officer Association of Waltham, Mass., a national corporate ethics group. “It's just greed and self-interest.”
The Wall Street Journal, citing unnamed sources, said Thursday that the Securities and Exchange Commission is considering an investigation, and already had been investigating trading patterns of Lubrizol stock. It's not unusual for the SEC to look at trading that occurred before the announcement of a big deal.
“A senior executive in a company trading in an acquisition target and makes $3 million? The SEC's going to look at it. That's their job.” said Peter Henning, a law professor and former attorney with the SEC. “But I don't think they're going to make a case.”
Buffett is chairman and CEO of Omaha-based Berkshire, and Sokol was chairman of three of its operating companies. Buffett announced Sokol's surprise resignation Wednesday, saying he did not try to talk Sokol out of resigning as he had on two earlier occasions.
Read on.
And here is Berkshire Hathaway's ethics code. Click here.
David Sokol's actions in a $9 billion acquisition by Berkshire Hathaway Inc. will trigger a government investigation, a former federal enforcer said Thursday, but are unlikely to result in sanctions against him.
Still, the ethical issues behind Sokol's trades in Lubrizol Inc. are magnified by the high-integrity reputation of his former boss, Omaha investor Warren Buffett. Thursday brought a firestorm of criticism that Sokol's stock purchases were improper and that Buffett should have reacted more strongly.
“It's anti-capitalism. It's anti-America. It's wrong,” said Tim Mazur, chief operating officer of the Ethics and Compliance Officer Association of Waltham, Mass., a national corporate ethics group. “It's just greed and self-interest.”
The Wall Street Journal, citing unnamed sources, said Thursday that the Securities and Exchange Commission is considering an investigation, and already had been investigating trading patterns of Lubrizol stock. It's not unusual for the SEC to look at trading that occurred before the announcement of a big deal.
“A senior executive in a company trading in an acquisition target and makes $3 million? The SEC's going to look at it. That's their job.” said Peter Henning, a law professor and former attorney with the SEC. “But I don't think they're going to make a case.”
Buffett is chairman and CEO of Omaha-based Berkshire, and Sokol was chairman of three of its operating companies. Buffett announced Sokol's surprise resignation Wednesday, saying he did not try to talk Sokol out of resigning as he had on two earlier occasions.
Read on.
And here is Berkshire Hathaway's ethics code. Click here.
Revealed: The banksters proposed deal to the AGs and the big fear of the servicers
Matt Stoller a Fellow at the Roosevelt Institute and the former Senior Policy Advisor to former Congressman Alan Grayson.
Hat tip to Matt Stoller:
One of the most important elements from a homeowner’s perspective is that the servicers often don’t tell them what they owe. This draft addresses the problem, by requiring servicers to tell borrowers every month the “total amount due, allocation of payments, unpaid principal, listing of fees and charges, current escrow balances, and the reason for any payment changes”. That sounds good, right? Well, just read the very next part:
Monthly statements as described above are not required with respect to any fixed rate residential mortgage loan as to which the borrower is provided a coupon book.
That’s the basic template of their offer — the bankers lay out a bunch of reasonable requirements, and then give themselves an obvious loophole.
Here’s another part of the settlement.
Servicer shall implement processes reasonably designed to ensure that factual assertions made in pleadings, declarations, affidavits, or other sworn statements filed by or on behalf of the Servicer are accurate and complete; and that affidavits and declarations are based on personal knowledge or a review of Servicer’s books and records when the affidavit or declaration so states, or in accordance with the evidentiary requirements of applicable state law.
“Processes reasonably designed to ensure that factual assertions made in pleadings, declarations, affidavits, or other sworn statements…”? I’m pretty sure that sworn statements are supposed to be true. Not that there should be a “process designed to ensure that” blah blah blah bureaucracy babble. Sworn statements are just supposed to be truthful statements. Saying things that aren’t true in sworn documents and submitting them to the courts, even if you don’t do it very often, is problematic.
And finally, this is the big fear of the servicers.
Servicer shall implement processes reasonably designed to ensure that Servicer has properly documented an enforceable interest in the promissory note and mortgage (or deed of trust) under applicable state law, or is otherwise a proper party to the foreclosure action (as a result of agency or other similar status), including appropriate transfer and delivery of endorsed notes (which may be endorsed in blank) and assigned mortgages or deeds of trust at the formation of a residential mortgage-backed security, and lawful endorsement and assignment of the note and mortgage or deed of trust to reflect changes of ownership, all in accordance with applicable state law.
And here is the full text of banks' Proposed Deal to the state Attorneys General.
Hat tip to Matt Stoller:
One of the most important elements from a homeowner’s perspective is that the servicers often don’t tell them what they owe. This draft addresses the problem, by requiring servicers to tell borrowers every month the “total amount due, allocation of payments, unpaid principal, listing of fees and charges, current escrow balances, and the reason for any payment changes”. That sounds good, right? Well, just read the very next part:
Monthly statements as described above are not required with respect to any fixed rate residential mortgage loan as to which the borrower is provided a coupon book.
That’s the basic template of their offer — the bankers lay out a bunch of reasonable requirements, and then give themselves an obvious loophole.
Here’s another part of the settlement.
Servicer shall implement processes reasonably designed to ensure that factual assertions made in pleadings, declarations, affidavits, or other sworn statements filed by or on behalf of the Servicer are accurate and complete; and that affidavits and declarations are based on personal knowledge or a review of Servicer’s books and records when the affidavit or declaration so states, or in accordance with the evidentiary requirements of applicable state law.
“Processes reasonably designed to ensure that factual assertions made in pleadings, declarations, affidavits, or other sworn statements…”? I’m pretty sure that sworn statements are supposed to be true. Not that there should be a “process designed to ensure that” blah blah blah bureaucracy babble. Sworn statements are just supposed to be truthful statements. Saying things that aren’t true in sworn documents and submitting them to the courts, even if you don’t do it very often, is problematic.
And finally, this is the big fear of the servicers.
Servicer shall implement processes reasonably designed to ensure that Servicer has properly documented an enforceable interest in the promissory note and mortgage (or deed of trust) under applicable state law, or is otherwise a proper party to the foreclosure action (as a result of agency or other similar status), including appropriate transfer and delivery of endorsed notes (which may be endorsed in blank) and assigned mortgages or deeds of trust at the formation of a residential mortgage-backed security, and lawful endorsement and assignment of the note and mortgage or deed of trust to reflect changes of ownership, all in accordance with applicable state law.
And here is the full text of banks' Proposed Deal to the state Attorneys General.
Suit accuses Bank of America of fraud, racketeering
Bank of America Corp. and its Countrywide Home Loans unit are accused of fraud and racketeering in a lawsuit filed by a Marion County resident claiming that perjured affidavits were used to foreclose on her home.
The complaint, filed March 17, is similar to a suit filed in October, which a federal court judge dismissed due to a lack of jurisdiction.
Plaintiffs’ lawyers in the federal case re-filed the suit in Marion Superior Court.
“The battle is now being waged in state court,” said Richard Shevitz, a lawyer at Indianapolis law firm Cohen & Malad LLP.
Shevitz and partner Irwin Levin, who has a national reputation for representing individuals in class-action lawsuits, are representing Judy Canada.
Canada accuses the lenders of using “robo-signers,” people who sign affidavits attesting to facts underlying foreclosures without actual knowledge of those facts, to push through paperwork to take her home in Marion County.
Rest here
http://www.ibj.com/web-story-template/PARAMS/article/26266
The complaint, filed March 17, is similar to a suit filed in October, which a federal court judge dismissed due to a lack of jurisdiction.
Plaintiffs’ lawyers in the federal case re-filed the suit in Marion Superior Court.
“The battle is now being waged in state court,” said Richard Shevitz, a lawyer at Indianapolis law firm Cohen & Malad LLP.
Shevitz and partner Irwin Levin, who has a national reputation for representing individuals in class-action lawsuits, are representing Judy Canada.
Canada accuses the lenders of using “robo-signers,” people who sign affidavits attesting to facts underlying foreclosures without actual knowledge of those facts, to push through paperwork to take her home in Marion County.
Rest here
http://www.ibj.com/web-story-template/PARAMS/article/26266
Fed Releases Thousands Of Pages Of Secret Loan Docs from the Financial Crisis
The Federal Reserve released thousands of pages of secret loan documents under court order, almost three years after Bloomberg LP first requested details of the central bank’s unprecedented support to banks during the financial crisis.
The records — 894 files in PDF form that must be individually opened and read — reveal for the first time the names of financial institutions that borrowed directly from the central bank through the so-called discount window. The Fed provided the documents after the U.S. Supreme Court this month rejected a banking industry group’s attempt to shield them from public view.
“This is an enormous breakthrough in the public interest,” said Walker Todd, a former Cleveland Fed attorney who has written research on the Fed lending facility. “They have long wanted to keep the discount window confidential. They have always felt strongly about this. They don’t want to tell the public who they are lending to.”
Rest of the report here…
Secret documents can be downloaded here…
The documents are very long and will comb through those documents. But here is one document.
The day Lehman Brothers filed for bankruptcy, on September 15, 2008, outstanding primary, secondary and other credit extensions to the banks from the Fed, appear to have looked like this:
JPMorgan Chase & Co. (JPM), the second- largest U.S. bank by assets, borrowed at least $5.9 billion from the Federal Reserve’s discount window over six months during the height of the financial crisis. Read on.
Goldman Sachs Group Inc. (GS) tapped the Federal Reserve’s discount window at least five times since September 2008, according to central bank data that contradict an executive’s testimony last year. Read on.
The records — 894 files in PDF form that must be individually opened and read — reveal for the first time the names of financial institutions that borrowed directly from the central bank through the so-called discount window. The Fed provided the documents after the U.S. Supreme Court this month rejected a banking industry group’s attempt to shield them from public view.
“This is an enormous breakthrough in the public interest,” said Walker Todd, a former Cleveland Fed attorney who has written research on the Fed lending facility. “They have long wanted to keep the discount window confidential. They have always felt strongly about this. They don’t want to tell the public who they are lending to.”
Rest of the report here…
Secret documents can be downloaded here…
The documents are very long and will comb through those documents. But here is one document.
The day Lehman Brothers filed for bankruptcy, on September 15, 2008, outstanding primary, secondary and other credit extensions to the banks from the Fed, appear to have looked like this:
Update:
JPMorgan Chase & Co. (JPM), the second- largest U.S. bank by assets, borrowed at least $5.9 billion from the Federal Reserve’s discount window over six months during the height of the financial crisis. Read on.
Goldman Sachs Group Inc. (GS) tapped the Federal Reserve’s discount window at least five times since September 2008, according to central bank data that contradict an executive’s testimony last year. Read on.
Biloxi Buzz for Friday
Missouri To Drop Extended Benefits For Unemployed
BREAKING: WI Teacher Charged With Sending Death Threats to GOP Lawmakers — A Wisconsin early childhood teacher was charged with sending death threats to state Republican lawmakers. — Her name is Katherine Windels and she is a Wisconsin teacher. — Here's the criminal complaint.
Banks Fight Mortgage Principal Reduction — At the end of a day-long negotiation session over the foreclosure paperwork mess at the Department of Justice, Iowa Attorney General Tom Miller and Associate Attorney General Thomas Perrelli came out for a brief chat with reporters. — They essentially said nothing.
Lawsuit Reveals How a Middleman is Blocking Mortgage Modifications for Homeowners
Pamela Jeter of Atlanta, Ga., has been trying to get a mortgage modification for more than two years. She seems like an ideal candidate. She has shown she can stay current with a reduction in her monthly mortgage payments. Everybody would seem to win. Even the investors who ultimately own her loan think she should be able to get one. So, why is Jeter facing foreclosure?
A bank that she didn’t even know is involved with her loan has thrown up a roadblock to modifications. At least tens of thousands of other homeowners have shared a similar plight. Jeter’s case is a window into a broken system where even though the actual investors, when asked, say they want to allow modifications, the bank that acts as their representative has refused to allow them.
Two big banks act as middlemen between the homeowners like Jeter who make payments and the mortgage-backed securities investors who ultimately receive them. The banks’ jobs were supposed to be relatively hands-off, devoted more than anything to processing homeowner payments. When the housing bubble burst, they faced new demands.
One of those middleman roles is well-known to homeowners: the mortgage servicer [1], responsible for collecting homeowner payments and evaluating requests for a modification.
But it’s another middleman that’s proven the real barrier for Jeter: the trustee, who is supposed to be the investors’ representative, making sure the servicer is maximizing investors’ returns and distributing checks to them. HSBC is the trustee for the pool of loans of which Jeter’s is a part — and it’s refused to approve any modifications for loans like hers, saying the contracts around the mortgages simply don’t allow it.
The good news for Jeter is that, in what seems an unprecedented step, her servicer OneWest has taken HSBC to court in order to allow modifications. It filed suit in June of last year [2].
But in a sign of just how convoluted the mortgage world has become, OneWest is also pushing to foreclose on her. A recent sale date was avoided only after her lawyer threatened to sue.
Read on.
A bank that she didn’t even know is involved with her loan has thrown up a roadblock to modifications. At least tens of thousands of other homeowners have shared a similar plight. Jeter’s case is a window into a broken system where even though the actual investors, when asked, say they want to allow modifications, the bank that acts as their representative has refused to allow them.
Two big banks act as middlemen between the homeowners like Jeter who make payments and the mortgage-backed securities investors who ultimately receive them. The banks’ jobs were supposed to be relatively hands-off, devoted more than anything to processing homeowner payments. When the housing bubble burst, they faced new demands.
One of those middleman roles is well-known to homeowners: the mortgage servicer [1], responsible for collecting homeowner payments and evaluating requests for a modification.
But it’s another middleman that’s proven the real barrier for Jeter: the trustee, who is supposed to be the investors’ representative, making sure the servicer is maximizing investors’ returns and distributing checks to them. HSBC is the trustee for the pool of loans of which Jeter’s is a part — and it’s refused to approve any modifications for loans like hers, saying the contracts around the mortgages simply don’t allow it.
The good news for Jeter is that, in what seems an unprecedented step, her servicer OneWest has taken HSBC to court in order to allow modifications. It filed suit in June of last year [2].
But in a sign of just how convoluted the mortgage world has become, OneWest is also pushing to foreclose on her. A recent sale date was avoided only after her lawyer threatened to sue.
Read on.
Shapiro & Burson no longer a Freddie Mac recommended foreclosure law firm
Firm is under investigation for alleged fraudulent signatures on deeds
Freddie Mac has instructed its mortgage servicers to stop referring foreclosure cases to Shapiro & Burson, the Virginia law firm accused of improper handling of more than 1,000 deeds for Maryland homes in foreclosure, the mortgage giant reported this week.
Prosecutors in Prince George’s County began investigating the firm in March after a paralegal formerly employed there filed a complaint alleging that deeds and foreclosure paperwork contained fraudulent signatures.
Freddie Mac, one of the two huge mortgage companies that buys loans and mortgage securities, removed Shapiro & Burson from its Maryland designated counsel list during an update this week. The law firm’s Virginia Beach location is still listed on Freddie Mac’s Virginia list, but the firm was suspended from taking on any new Virginia foreclosure cases after March 23, a Freddie Mac spokesman said.
The spokesman, Brad German, called the decision “mutual” and said he could not comment on whether the ongoing investigation by the Prince George’s County state’s attorney’s office played a role. But Jose Portillo, the former Shapiro & Burson paralegal who complained to state officials, said Freddie Mac contacted him in March to hear his allegations.
Shapiro & Burson was one of just two firms Freddie Mac had recommended in Maryland. This week, in addition to dropping Shapiro & Burson, the financier added three more firms to the list.
“We are working with the firm on the orderly recovery and transfer of open Maryland cases and files to other law firms,” German said in an email Thursday. “Servicers were also instructed to stop referring any new Freddie Mac foreclosure or bankruptcy cases to the firm.
Check out the rest here…
Freddie Mac has instructed its mortgage servicers to stop referring foreclosure cases to Shapiro & Burson, the Virginia law firm accused of improper handling of more than 1,000 deeds for Maryland homes in foreclosure, the mortgage giant reported this week.
Prosecutors in Prince George’s County began investigating the firm in March after a paralegal formerly employed there filed a complaint alleging that deeds and foreclosure paperwork contained fraudulent signatures.
Freddie Mac, one of the two huge mortgage companies that buys loans and mortgage securities, removed Shapiro & Burson from its Maryland designated counsel list during an update this week. The law firm’s Virginia Beach location is still listed on Freddie Mac’s Virginia list, but the firm was suspended from taking on any new Virginia foreclosure cases after March 23, a Freddie Mac spokesman said.
The spokesman, Brad German, called the decision “mutual” and said he could not comment on whether the ongoing investigation by the Prince George’s County state’s attorney’s office played a role. But Jose Portillo, the former Shapiro & Burson paralegal who complained to state officials, said Freddie Mac contacted him in March to hear his allegations.
Shapiro & Burson was one of just two firms Freddie Mac had recommended in Maryland. This week, in addition to dropping Shapiro & Burson, the financier added three more firms to the list.
“We are working with the firm on the orderly recovery and transfer of open Maryland cases and files to other law firms,” German said in an email Thursday. “Servicers were also instructed to stop referring any new Freddie Mac foreclosure or bankruptcy cases to the firm.
Check out the rest here…
The Fed Bailed Out A Libya-Owned Bank
More from Bloomberg:
The bank, then 29 percent-owned by the Libyan state, drew $1.1 billion from the Fed’s so-called discount window in October 2008, Including $450 million during the week when hundreds of financial firms drew a record amount of emergency funding from the U.S lending program, according to data released by the Fed today. Arab Banking Corp. also owed about $4 billion to the Fed under other bailout programs in the fall of 2009, data released in December show.
The U.S. government has since frozen assets linked to the regime of Libyan ruler Muammar Qaddafi and engaged in air strikes against his military forces as they battle a rebel uprising in the North African country. Arab Banking Corp. received an exemption that allows the firm to continue operating while prohibiting it from engaging in any transactions with the government of Libya, according to the Treasury Department.
Libya’s stake in Manama, Bahrain-based Arab Banking Corp. increased to 59 percent in December 2010, the company said on Dec. 2.
David Siegel, treasurer of Arab Banking Corp.’s branch on Park Avenue in midtown Manhattan, declined to comment when contacted. The bank’s board is chaired by Mohammed Hussain Layas, chief executive officer of the Libyan Investment Authority. The CEO is Bahrain-based Hassan Ali Juma.
The bank, then 29 percent-owned by the Libyan state, drew $1.1 billion from the Fed’s so-called discount window in October 2008, Including $450 million during the week when hundreds of financial firms drew a record amount of emergency funding from the U.S lending program, according to data released by the Fed today. Arab Banking Corp. also owed about $4 billion to the Fed under other bailout programs in the fall of 2009, data released in December show.
The U.S. government has since frozen assets linked to the regime of Libyan ruler Muammar Qaddafi and engaged in air strikes against his military forces as they battle a rebel uprising in the North African country. Arab Banking Corp. received an exemption that allows the firm to continue operating while prohibiting it from engaging in any transactions with the government of Libya, according to the Treasury Department.
Libya’s stake in Manama, Bahrain-based Arab Banking Corp. increased to 59 percent in December 2010, the company said on Dec. 2.
David Siegel, treasurer of Arab Banking Corp.’s branch on Park Avenue in midtown Manhattan, declined to comment when contacted. The bank’s board is chaired by Mohammed Hussain Layas, chief executive officer of the Libyan Investment Authority. The CEO is Bahrain-based Hassan Ali Juma.
Thursday, March 31, 2011
HUD secretary focus on ending banks' dual track system and early foreclosure process
Shaun Donovan, secretary of Housing and Urban Development spoke with Darren Gersh of Nightly Business Report about the talks of the state Attorney Generals with the banks.
NBR:
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Those talks are taking place, the settlement talks are taking place just a few blocks from here. So first of all, just what do you expect from those talks today?
DONOVAN: Well, we`re - what I expect is that we`re going to be working closely with the state attorneys general to hold these servicers accountable. There is no question that there were serious mistakes made. We`ve seen that our efforts to keep people out of foreclosure have helped hundreds of thousands of families, but not as many as we would have liked and a lot of that is a result of poor servicing practices.
GERSH: One thing that`s at issue in these talks apparently is that when you go in and you say hey, I want to modify my mortgage, the lender says OK, we`ll work with you but we`re going to keep the clock ticking on the foreclosure. It`s called dual track. So if you don`t get a modification, your foreclosure is pretty close. Will the talks end this dual track system so if you go in the talks about a modification and it doesn`t work out, then the foreclosure clock --
DONOVAN: That is absolutely one of the issues that we`re focused on, not the only issue. We`ve seen many other practices, frankly, that are outrageous. And --
GERSH: Like what?
DONOVAN: We`ve seen not only examples of foreclosures happening without a signature, without the right documents, but what I`m particularly focused on is early on in the process when somebody gets behind by 30 or 60 days, but it`s somebody who may have lost a job temporarily, may have lost income, that`s somebody who can continue to be a successful homeowner. And yet not only did that person not get help, they think they`re going to get help, they submit paperwork, that paperwork is lost. Those kinds of steps hurt everyone. So we have to fix that process.
GERSH: In the talks, one of the issues is how you handle second loans, not the first mortgage, but a second mortgage, home equity loan. How will the talks address that?
DONOVAN: Well, we`re clearly looking at the ability to reduce some of those mortgages. Part of the problem with the second liens is that they stand in the way of being able to resolve the first mortgage as well. And we think that if we can reduce some of those, allow people to stay in their homes, allow resolution of their first mortgages, that will help significantly.
NBR:
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Those talks are taking place, the settlement talks are taking place just a few blocks from here. So first of all, just what do you expect from those talks today?
DONOVAN: Well, we`re - what I expect is that we`re going to be working closely with the state attorneys general to hold these servicers accountable. There is no question that there were serious mistakes made. We`ve seen that our efforts to keep people out of foreclosure have helped hundreds of thousands of families, but not as many as we would have liked and a lot of that is a result of poor servicing practices.
GERSH: One thing that`s at issue in these talks apparently is that when you go in and you say hey, I want to modify my mortgage, the lender says OK, we`ll work with you but we`re going to keep the clock ticking on the foreclosure. It`s called dual track. So if you don`t get a modification, your foreclosure is pretty close. Will the talks end this dual track system so if you go in the talks about a modification and it doesn`t work out, then the foreclosure clock --
DONOVAN: That is absolutely one of the issues that we`re focused on, not the only issue. We`ve seen many other practices, frankly, that are outrageous. And --
GERSH: Like what?
DONOVAN: We`ve seen not only examples of foreclosures happening without a signature, without the right documents, but what I`m particularly focused on is early on in the process when somebody gets behind by 30 or 60 days, but it`s somebody who may have lost a job temporarily, may have lost income, that`s somebody who can continue to be a successful homeowner. And yet not only did that person not get help, they think they`re going to get help, they submit paperwork, that paperwork is lost. Those kinds of steps hurt everyone. So we have to fix that process.
GERSH: In the talks, one of the issues is how you handle second loans, not the first mortgage, but a second mortgage, home equity loan. How will the talks address that?
DONOVAN: Well, we`re clearly looking at the ability to reduce some of those mortgages. Part of the problem with the second liens is that they stand in the way of being able to resolve the first mortgage as well. And we think that if we can reduce some of those, allow people to stay in their homes, allow resolution of their first mortgages, that will help significantly.
“Surrogate signers” signed countless foreclosure docs - with someone else’ name
Full Deposition of Tywanna Thomas’ Mother, Cheryl Denise Thomas of DOCX, LPS
Up to a 1,000 documents a day.
“Surrogate Signers”
Notary fraud.
You know, the usual…
Palm Beach Post
At Lender Processing Services workers who signed tens of thousands of sworn foreclosure affidavits with someone else’ name were called “surrogate signers”, according to Cheryl Denise Thomas, a former LPS worker who admitted to notarizing as many as 1,000 sworn affidavits daily - often without witnessing the signature.
Thomas said despite “raised eyebrows” her supervisors never used the word “forge” and repeatedly told workers the practice of signing someone else’ name on a sworn affidavit was legal. Thomas detailed the company’s foreclosure document processing practices during a deposition in an Orange county foreclosure case on March 23.
“They didn’t say forge the name. They just said this is legal,” Thomas said. “This person is going to be this person’s surrogate signer because this person has a lot to do.”
And....
She also said her daughter, Tywanna Thomas - whose name appears on thousands of sworn affidavits - also worked at LPS along with Thomas’ nephew.
p.33
Cheryl Thomas Depo
Up to a 1,000 documents a day.
“Surrogate Signers”
Notary fraud.
You know, the usual…
Palm Beach Post
At Lender Processing Services workers who signed tens of thousands of sworn foreclosure affidavits with someone else’ name were called “surrogate signers”, according to Cheryl Denise Thomas, a former LPS worker who admitted to notarizing as many as 1,000 sworn affidavits daily - often without witnessing the signature.
Thomas said despite “raised eyebrows” her supervisors never used the word “forge” and repeatedly told workers the practice of signing someone else’ name on a sworn affidavit was legal. Thomas detailed the company’s foreclosure document processing practices during a deposition in an Orange county foreclosure case on March 23.
“They didn’t say forge the name. They just said this is legal,” Thomas said. “This person is going to be this person’s surrogate signer because this person has a lot to do.”
And....
She also said her daughter, Tywanna Thomas - whose name appears on thousands of sworn affidavits - also worked at LPS along with Thomas’ nephew.
p.33
Cheryl Thomas Depo
Fed To Name Banks That Sought Emergency Lending
WASHINGTON (Dow Jones)--The Federal Reserve is set to release a new trove of documents detailing which banks came to it hat-in-hand during and in the aftermath of the financial crisis.
Fed officials have warned that naming the borrowers from its traditional discount window--which typically makes overnight loans to banks that are short of funds--could make firms more vulnerable in a crisis by making them reluctant to seek help when needed.
The agency resisted making the disclosures until federal courts demanded it, scheduling the document release only after the U.S. Supreme Court declined to intervene.
The Fed will on Thursday release about 25,000 emergency-lending documents spanning a period from Aug. 7, 2007 until March 1, 2010. The data includes details for the peak month of October 2008, a month after Lehman Brothers (LEHMQ) filed for bankruptcy during the depth of the crisis, when discount-window loans soared to $111 billion.
The disclosure, brought about by suits from the media, marks the government's latest step in providing more information about the Fed's rescue efforts during the crisis. In December, the central bank was forced by the Dodd-Frank financial law to lift the veil of secrecy on nearly all the $3.3 trillion worth of credit it funneled to different parts of the economy and the financial system during the crisis.
Just one category was excluded: the discount window, the oldest lending tool in the central bank's arsenal. When a bank can't borrow from other banks, which is what happened in the crisis, it can borrow from the Fed as a last resort at a slightly higher discount rate.
Read on.
Fed officials have warned that naming the borrowers from its traditional discount window--which typically makes overnight loans to banks that are short of funds--could make firms more vulnerable in a crisis by making them reluctant to seek help when needed.
The agency resisted making the disclosures until federal courts demanded it, scheduling the document release only after the U.S. Supreme Court declined to intervene.
The Fed will on Thursday release about 25,000 emergency-lending documents spanning a period from Aug. 7, 2007 until March 1, 2010. The data includes details for the peak month of October 2008, a month after Lehman Brothers (LEHMQ) filed for bankruptcy during the depth of the crisis, when discount-window loans soared to $111 billion.
The disclosure, brought about by suits from the media, marks the government's latest step in providing more information about the Fed's rescue efforts during the crisis. In December, the central bank was forced by the Dodd-Frank financial law to lift the veil of secrecy on nearly all the $3.3 trillion worth of credit it funneled to different parts of the economy and the financial system during the crisis.
Just one category was excluded: the discount window, the oldest lending tool in the central bank's arsenal. When a bank can't borrow from other banks, which is what happened in the crisis, it can borrow from the Fed as a last resort at a slightly higher discount rate.
Read on.
Biloxi Buzz for Thursday
Glancy Binkow & Goldberg LLP Announces Class Action Lawsuit on Behalf of Customers of Bank of America Corporation, N.A. Improperly Charged for "Privacy Assist" – BAC
GOP Taps Once-Bankrupt Congressman As Face Of Fiscal Restraint
Retreat for Rebels; Libyan Foreign Minister Quits — BREGA, Libya — Forces loyal to Col. Muammar el-Qaddafi advanced rapidly on Wednesday, seizing towns they ceded just days ago after intense allied airstrikes and hounding rebel fighters into a chaotic retreat.
Arnold Schwarzenegger is back as ‘The Governator’ — EXCLUSIVE — He's been a famous body builder. He's been a killer cyborg from the future. He's been Governor of California. And now, in this week's exclusive cover scoop, Arnold Schwarzenegger reveals his plans for the next phase …
House passes Boehner's DC school voucher bill over Dem objections — Over fierce Democratic opposition, the House on Wednesday approved a bill to re-establish a school choice voucher system for Washington, D.C., residents. — The vote came a day after the White House said it opposed …
Give Troubled Homeowners A Break? JPMorgan Says No Way
The two sides met to discuss possible a possible resolution. One idea that had been thrown around by the attorneys general was to get banks to agree to principal reductions on home loans.
In other words, get the banks to help out troubled homeowners by reducing the amount they owe.
Well, that didn’t go over well.
JPM’s CEO Jamie Dimon struck that down pretty quickly telling reporters at the U.S. Chamber of Commerce, “Principal writedown for people who couldn’t pay their mortgages? Yeah, that’s off the table.”
Read on.
In other words, get the banks to help out troubled homeowners by reducing the amount they owe.
Well, that didn’t go over well.
JPM’s CEO Jamie Dimon struck that down pretty quickly telling reporters at the U.S. Chamber of Commerce, “Principal writedown for people who couldn’t pay their mortgages? Yeah, that’s off the table.”
Read on.
US INSPECTOR GENERAL: Banks Got Bailed Out, Consumers Got Screwed.
NY Times:
Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit. There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds. It was only in April of last year, in response to recommendations from our office, that Treasury asked banks to provide that information, well after the largest banks had already repaid their loans. It was therefore no surprise that lending did not increase but rather continued to decline well into the recovery. (In my job as special inspector general I could not bring about the changes I thought were needed — I could only make recommendations to the Treasury Department.)
Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit. There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds. It was only in April of last year, in response to recommendations from our office, that Treasury asked banks to provide that information, well after the largest banks had already repaid their loans. It was therefore no surprise that lending did not increase but rather continued to decline well into the recovery. (In my job as special inspector general I could not bring about the changes I thought were needed — I could only make recommendations to the Treasury Department.)
Wednesday, March 30, 2011
Wells Fargo the largest subprime originator in 2007: FCIC transcript interview
Report by Josh Zachariah from Gurufocus website:
Listening to David Einhorn's testimony on the Financial Crisis Inquiry Commission, I was shocked to hear a statement Einhorn made about Wells Fargo. While he was discussing his short position in MBIA Einhorn, he listed the major subprime players in 2006, and the largest originator was Wells Fargo. Even the interviewer had to have him repeat that vexing statement. Wells Fargo has generally been considered the shining spot in the mortgage business during the housing boom. I previously wrote an article describing Wells and its disciplined lending. Wells was indeed listed as the top subprime originator by Insider Mortgage Finance in February, 2007. Just one month later the company fell to 9th place on the list.
It turns out Wells was using a different method to gauge its subprime presence. Wells generates revenue from originating mortgage loans, but they also make money servicing them by collecting fees. The company may hold the loan and service it, or the loan may be held by other investors and Wells just services it by collecting monthly payments and performing other duties on behalf of the investor. This was the case in their subprime exposure.
Wells apparently included these servicing rights for subprime loans in late 2005 to February 2007. They didn’t hold the actual loan and thus would not be exposed to any write-downs should the mortgagor default on the loan. At worst, this stream of revenue would evaporate if the home went into foreclosure. As I wrote earlier, Wells claimed to have left the subprime market in 2003, but that appears to be tongue-in-cheek.
In an interview with John Stumpf in 2007, the CEO acknowledged the subprime portfolio making up 10% of its $1.4 trillion portfolio. He would also admit to various teaser loans where low introductory rates were followed by high long-term rates. Again these types of subprime loans were just over 1.5% of its total portfolio. It was not a significant exposure, but Wells may deserve a slightly less flattering image than they’ve been receiving.
You can listen to the interview here: David Einhorn, Greenlight Capital • MP3
Here is a partial transcript with the interview with David Einhorn:
Interviewer:
And generally, do you recall whatcompanies you found to be most vulnerable? Of course we all knowabout Lehman.
David Einhorn:
Yeah, I think the ultimate list wouldbe something close to Lehman, Bear,MBIA, Ambac, Moody’s, Wells Fargo,HSBC.
Interviewer:
So the one to me anyway that sort of sounds curious out of that list is Wells. How come, do you recall why they were on the list? I didn’t know that they had a big subprime or real estate mortgage exposure.
David Einhorn:
Wells is actually the number one originator of subprime mortgages in 2006, according to the industry statistics. Now they subsequently denied that they ever originated asingle subprime mortgage, which is interesting. It’s inconsistent with what happened in 2006.
Interviewer:
Right, okay.
David Einhorn:
I knew this when I was on the board of New Century. I mean Wells was right there as a top competitor.
Interviewer:
You know I know I have this but I just don’t know off the top of my head, howlong were you on the board of NewCentury? Do you remember when you joined it and when you left?
David Einhorn:
Yeah, it was less than a year
Einhorn left New Century board. He resigned in 2007. Click here to read more. Here is the entire transcript of the interview:
Transcription of David Einhorn's Interview with the Financial Crisis Inquiry Commission
Biloxi Buzz for Wednesday
Judge again blocks GOP collective-bargaining plan — But Van Hollen assistant says law is in effect — By Patrick Marley, Bill Glauber and Jason Stein of the Journal Sentinel — Madison - For the second time in less than two weeks, a Dane County judge Tuesday issued an order blocking …
House votes to end HAMP — The House Tuesday voted to eliminate the last of four Obama administration housing programs, in an effectively symbolic vote to end the controversial Home Affordable Modification Program 218 to 109. — The loan program launched at the beginning …
Democrats sent a letter to Treasury Secretary Timothy Geithner Monday night, detailing their plans for improving the Home Affordable Modification Program. The letter, signed by 50 Democrats, came one day before the House of Representatives is set to vote to terminate...
Analyst Claims Fannie Mae Lied to Senate About Executives’ Pay | Timothy Skrynnikov v. Federal National Mortgage Assoc.
WASHINGTON (CN) – A senior financial analyst says the Federal National Mortgage Association fired him to retaliate for his alerting the U.S. Senate Committee on Finance that Fannie Mae had lied to it by underreporting its executives’ pay and bonuses by $271 million.
Timothy Skrynnikov says that after he told his supervisor about the discrepancy between the numbers Fannie Mae sent to Congress in 2009 and the numbers on an incentive plan spreadsheet, he was removed from his position “overseeing the executive incentive bonus compensation report.”
Senator Charles Grassley in 2009 requested information on Fannie Mae’s employee retention plans and bonus arrangements, but the agency grossly understated its executive bonuses, Skrynnikov says in his federal complaint.
“The information FHFA [Federal Housing Finance Agency] on behalf of Fannie Mae provided to Senator Grassley was at a great variance from the incentive compensation list that plaintiff maintained at Fannie Mae,” Skrynnikov says. “For example, Fannie Mae was asked to provide the names of all executives who received or were eligible to receive annual bonuses of $100,000 or more. Fannie Mae responded by stating that it had 92 executives scheduled to receive such bonuses in 2009, but plaintiff knew that there were more than 700 such executives at Fannie Mae eligible for such bonus amounts according to the bonus targets recorded in the monthly Employee Incentive Compensation Expense Reconciliation plaintiff received each month from the payroll department.
“FHFA … also reported to Senator Grassley that the only incentive program that existed after Fannie Mae went into conservatorship was the retention bonus program for which a total of $71.9 million was budged in 2009. In fact, though, plaintiff knew from the Employee Incentive Compensation Expense Reconciliation report he received monthly from the payroll department that Fannie Mae had budgeted a total of $351 million for executive incentive compensation in 2009.”
Skrynnikov says he was “concerned over Fannie Mae’s apparent misrepresentation of executive incentive compensation” and sent a letter to Grassley that detailed the disparity between his spreadsheet and the information given to the Senate committee.
A few months later he was stripped of the responsibility to oversee executive incentive bonuses.
He adds that he complained to a coworker about “sexual and other harassment that he had experienced in his workplace,” while his boss “accused plaintiff of not contributing the value she expected for a person in his position and with his experience.”
Skrynnikov says he developed debilitating depression and suffered a rib injury that forced him to take time off work, and his position was eliminated before he could return.
Skrynnikov seeks $4 million in damages from Fannie Mae and James Lockhart of the FHFA, alleging retaliation and violations of the False Claims Act. He is represented by Micah Salb with Lippman Semsker, of Bethesda, Md.
Full complaint below…
Timothy Skrynnikov v. Federal National Mortgage Assoc. (Fannie Mae)
Timothy Skrynnikov says that after he told his supervisor about the discrepancy between the numbers Fannie Mae sent to Congress in 2009 and the numbers on an incentive plan spreadsheet, he was removed from his position “overseeing the executive incentive bonus compensation report.”
Senator Charles Grassley in 2009 requested information on Fannie Mae’s employee retention plans and bonus arrangements, but the agency grossly understated its executive bonuses, Skrynnikov says in his federal complaint.
“The information FHFA [Federal Housing Finance Agency] on behalf of Fannie Mae provided to Senator Grassley was at a great variance from the incentive compensation list that plaintiff maintained at Fannie Mae,” Skrynnikov says. “For example, Fannie Mae was asked to provide the names of all executives who received or were eligible to receive annual bonuses of $100,000 or more. Fannie Mae responded by stating that it had 92 executives scheduled to receive such bonuses in 2009, but plaintiff knew that there were more than 700 such executives at Fannie Mae eligible for such bonus amounts according to the bonus targets recorded in the monthly Employee Incentive Compensation Expense Reconciliation plaintiff received each month from the payroll department.
“FHFA … also reported to Senator Grassley that the only incentive program that existed after Fannie Mae went into conservatorship was the retention bonus program for which a total of $71.9 million was budged in 2009. In fact, though, plaintiff knew from the Employee Incentive Compensation Expense Reconciliation report he received monthly from the payroll department that Fannie Mae had budgeted a total of $351 million for executive incentive compensation in 2009.”
Skrynnikov says he was “concerned over Fannie Mae’s apparent misrepresentation of executive incentive compensation” and sent a letter to Grassley that detailed the disparity between his spreadsheet and the information given to the Senate committee.
A few months later he was stripped of the responsibility to oversee executive incentive bonuses.
He adds that he complained to a coworker about “sexual and other harassment that he had experienced in his workplace,” while his boss “accused plaintiff of not contributing the value she expected for a person in his position and with his experience.”
Skrynnikov says he developed debilitating depression and suffered a rib injury that forced him to take time off work, and his position was eliminated before he could return.
Skrynnikov seeks $4 million in damages from Fannie Mae and James Lockhart of the FHFA, alleging retaliation and violations of the False Claims Act. He is represented by Micah Salb with Lippman Semsker, of Bethesda, Md.
Full complaint below…
Timothy Skrynnikov v. Federal National Mortgage Assoc. (Fannie Mae)
Draft Alternative Uniform Servicing Standards | Banks Offer Own Mortgage-Servicing Plan
Five of the nation’s largest banks sent government officials a proposal Monday that outlines a set of mortgage-servicing standards they would abide by as part of a settlement of abuses in the industry.
The document, reviewed by The Wall Street Journal, is a response to a 27-page term sheet banks received earlier this month from state attorneys general that would require the servicers to consider reducing principal for troubled borrowers. The 15-page bank proposal, dubbed the Draft Alternative Uniform Servicing Standards, includes time lines for processing modifications, a third-party review of foreclosures and a single point of contact for financially troubled borrowers. It also outlines a so-called “borrower portal” that would allow customers to check the status of their loan modifications online.
But the document doesn’t include any discussion of principal reductions. Nor does it include a potential amount banks could pay for borrower relief or penalties. Government officials have discussed a settlement sum of more than $20 billion.
Check out the rest here…
The document, reviewed by The Wall Street Journal, is a response to a 27-page term sheet banks received earlier this month from state attorneys general that would require the servicers to consider reducing principal for troubled borrowers. The 15-page bank proposal, dubbed the Draft Alternative Uniform Servicing Standards, includes time lines for processing modifications, a third-party review of foreclosures and a single point of contact for financially troubled borrowers. It also outlines a so-called “borrower portal” that would allow customers to check the status of their loan modifications online.
But the document doesn’t include any discussion of principal reductions. Nor does it include a potential amount banks could pay for borrower relief or penalties. Government officials have discussed a settlement sum of more than $20 billion.
Check out the rest here…
Tuesday, March 29, 2011
Keller Rohrback L.L.P. announces investigation of BofA and JPMorgan Chase regarding force-placed insurance
Bank of America and Chase should worry. This is bad. And I guess this law firm paid attention to OperationLeakS' information from a whistleblower and former Balboa Insurance employee about BofA force-placed insurance scam. Keep in mind that Keller Rohrback has always filed a class action lawsuit against Chase and other banks for bank abuses and illegal practices in homeowners that seeked HAMP loan modification and other loan modifications.
From the law firm website:
Attorney Advertising. Keller Rohrback L.L.P. (www.krclassaction.com) is currently investigating Bank of America Corp. (NYSE: BAC) and BAC Home Loans Servicing, LP, as well as JPMorgan Chase & Co. (NYSE: JPM) and Chase Home Finance LLC regarding alleged abuses related to force-placed insurance. Force-placed insurance (also known as lender-placed insurance) is hazard or homeowner’s insurance taken out by the bank, lender, or mortgage loan servicer on behalf of the borrower to cover the mortgaged property. This type of insurance is generally taken out by the mortgage servicer when the insurance coverage selected by the borrower lapses in coverage. A lapse in coverage can occur for a variety of reasons, including the failure of mortgage servicers to pay for homeowner’s insurance out of escrow funds. This inaction can result in the servicer imposing whatever insurance it wants and the new insurance can cost the homeowner up to 10 times (or more) the cost of the prior insurance. The increased cost also adds to the homeowner’s debt obligation and can result in increased monthly payments. For homeowners that are already struggling with their mortgage payments, this practice can be the final straw and lead to foreclosure. Mortgagors who pay their own hazard or homeowner’s insurance directly can also be subject to force-placed insurance if they get behind on their insurance payments and the coverage lapses, triggering the servicer’s imposition of force-placed insurance on the property.
Keller Rohrback’s investigation focuses on alleged abuses by Bank of America and JPMorgan Chase, among others, such as: failing to pay for hazard insurance out of the borrower’s escrow funds, charging homeowners for unnecessary insurance, backdating policies providing coverage retroactively, utilizing their own subsidiaries to provide the hazard insurance, and purchasing policies from companies who share fees or profits with the servicers—often without disclosing this information to the borrower. Keller Rohrback is also investigating the force-placed insurance practices of the following mortgage loan servicers:
Aurora Loan Services IndyMac Mortgage Services
Downey Savings & Loan Litton Loan Servicing LP
EMC Mortgage Corp. Nationstar Mortgage LLC
Financial Freedom PennyMac
GMAC Mortgage, Inc. Saxon
HSBC SunTrust Mortgage, Inc.
If you were subjected to force-placed insurance by Bank of America, JPMorgan Chase, or any of the above-listed servicers, or your house was sold in a foreclosure sale after you paid for force-placed insurance, or you have information about these servicers’ force-placed insurance practices, please contact paralegal Nick Wallace or attorneys Gretchen Obrist or Lynn Sarko at 800.776.6044 or via email at info@kellerrohrback.com.
From the law firm website:
Attorney Advertising. Keller Rohrback L.L.P. (www.krclassaction.com) is currently investigating Bank of America Corp. (NYSE: BAC) and BAC Home Loans Servicing, LP, as well as JPMorgan Chase & Co. (NYSE: JPM) and Chase Home Finance LLC regarding alleged abuses related to force-placed insurance. Force-placed insurance (also known as lender-placed insurance) is hazard or homeowner’s insurance taken out by the bank, lender, or mortgage loan servicer on behalf of the borrower to cover the mortgaged property. This type of insurance is generally taken out by the mortgage servicer when the insurance coverage selected by the borrower lapses in coverage. A lapse in coverage can occur for a variety of reasons, including the failure of mortgage servicers to pay for homeowner’s insurance out of escrow funds. This inaction can result in the servicer imposing whatever insurance it wants and the new insurance can cost the homeowner up to 10 times (or more) the cost of the prior insurance. The increased cost also adds to the homeowner’s debt obligation and can result in increased monthly payments. For homeowners that are already struggling with their mortgage payments, this practice can be the final straw and lead to foreclosure. Mortgagors who pay their own hazard or homeowner’s insurance directly can also be subject to force-placed insurance if they get behind on their insurance payments and the coverage lapses, triggering the servicer’s imposition of force-placed insurance on the property.
Keller Rohrback’s investigation focuses on alleged abuses by Bank of America and JPMorgan Chase, among others, such as: failing to pay for hazard insurance out of the borrower’s escrow funds, charging homeowners for unnecessary insurance, backdating policies providing coverage retroactively, utilizing their own subsidiaries to provide the hazard insurance, and purchasing policies from companies who share fees or profits with the servicers—often without disclosing this information to the borrower. Keller Rohrback is also investigating the force-placed insurance practices of the following mortgage loan servicers:
Aurora Loan Services IndyMac Mortgage Services
Downey Savings & Loan Litton Loan Servicing LP
EMC Mortgage Corp. Nationstar Mortgage LLC
Financial Freedom PennyMac
GMAC Mortgage, Inc. Saxon
HSBC SunTrust Mortgage, Inc.
If you were subjected to force-placed insurance by Bank of America, JPMorgan Chase, or any of the above-listed servicers, or your house was sold in a foreclosure sale after you paid for force-placed insurance, or you have information about these servicers’ force-placed insurance practices, please contact paralegal Nick Wallace or attorneys Gretchen Obrist or Lynn Sarko at 800.776.6044 or via email at info@kellerrohrback.com.
Big Banks Save Billions As Homeowners Suffer, Internal Federal Report By CFPB Finds
NEW YORK -- The nation's five largest mortgage firms have saved more than $20 billion since the housing crisis began in 2007 by taking shortcuts in processing troubled borrowers' home loans, according to a confidential presentation prepared for state attorneys general by the nascent consumer bureau inside the Treasury Department.
That estimate suggests large banks have reaped tremendous benefits from under-serving distressed homeowners, a complaint frequent enough among borrowers that federal regulators have begun to acknowledge the industry's fundamental shortcomings.
The dollar figure also provides a basis for regulators' internal discussions regarding how best to penalize Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial in a settlement of wide-ranging allegations of wrongful and occasionally illegal foreclosures. People involved in the talks say some regulators want to levy a $5 billion penalty on the five firms, while others seek as much as $30 billion, with most of the money going toward reducing troubled homeowners' mortgage payments and lowering loan balances for underwater borrowers, those who owe more on their home than it's worth.
Even the highest of those figures, however, pales in comparison to the likely cost of reducing mortgage principal for the three million homeowners some federal agencies hope to reach. Lowering loan balances for that many underwater borrowers who owe less than $1.15 for every dollar their home is worth would cost as much as $135 billion, according to the internal presentation, dated Feb. 14, obtained by The Huffington Post.
Read on.
Confidential CFPB Presentation For State Attorneys General -
That estimate suggests large banks have reaped tremendous benefits from under-serving distressed homeowners, a complaint frequent enough among borrowers that federal regulators have begun to acknowledge the industry's fundamental shortcomings.
The dollar figure also provides a basis for regulators' internal discussions regarding how best to penalize Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial in a settlement of wide-ranging allegations of wrongful and occasionally illegal foreclosures. People involved in the talks say some regulators want to levy a $5 billion penalty on the five firms, while others seek as much as $30 billion, with most of the money going toward reducing troubled homeowners' mortgage payments and lowering loan balances for underwater borrowers, those who owe more on their home than it's worth.
Even the highest of those figures, however, pales in comparison to the likely cost of reducing mortgage principal for the three million homeowners some federal agencies hope to reach. Lowering loan balances for that many underwater borrowers who owe less than $1.15 for every dollar their home is worth would cost as much as $135 billion, according to the internal presentation, dated Feb. 14, obtained by The Huffington Post.
Read on.
Confidential CFPB Presentation For State Attorneys General -
BofA Board Sued by Shareholders Over Mortgage Recording Paperwork
Bank of America Corp. (BAC)’s board and some officers were sued by shareholders claiming they were hurt by false and misleading statements that hid defects in mortgage recording and foreclosure paperwork.
Bank of America “did not properly record many of its mortgages when originated or acquired, which severely complicated the foreclosure process when it became necessary,” according to the complaint filed today in New York state Supreme Court in Manhattan. The bank also concealed that it didn’t have adequate personnel to process the large numbers of foreclosed loans in its portfolio, the shareholders said.
The bank’s stock traded at inflated prices, reaching a high of $19.48 on April 15, 2010, and fell almost 42 percent after the problems were disclosed, according to the complaint.
The directors and officers also hid the bank’s involvement in “dollar rolling,” omitting billions of dollars in debt from its balance sheet, according to the complaint. Bank of America later admitted it wrongly classified the transactions as sales when they were secured borrowing, according to the complaint.
Read on.
Bank of America “did not properly record many of its mortgages when originated or acquired, which severely complicated the foreclosure process when it became necessary,” according to the complaint filed today in New York state Supreme Court in Manhattan. The bank also concealed that it didn’t have adequate personnel to process the large numbers of foreclosed loans in its portfolio, the shareholders said.
The bank’s stock traded at inflated prices, reaching a high of $19.48 on April 15, 2010, and fell almost 42 percent after the problems were disclosed, according to the complaint.
The directors and officers also hid the bank’s involvement in “dollar rolling,” omitting billions of dollars in debt from its balance sheet, according to the complaint. Bank of America later admitted it wrongly classified the transactions as sales when they were secured borrowing, according to the complaint.
Read on.
Chase Demands Ben-Ezra & Katz Turn Over Foreclosure Files
Chase Home Finance has filed a federal lawsuit against its former legal counsel, Ben-Ezra & Katz, accusing the firm of refusing to hand over foreclosure case files that contain over $400 million worth of original notes and mortgages “without which Chase will be unable to proceed with any of the pending cases.”
In the 11-page lawsuit filed Friday in federal court in Fort Lauderdale, Chase asked for a temporary restraining order and permanent injunction ordering the firm to return the files and pay Chase an unspecified amount of damages.
During its two-year contract with Chase, the law firm handled thousands of foreclosures throughout the state. According to the lawsuit, the contract requires the firm to immediately transfer case files when the contract ends. Chase has made “repeated demands” for its files but “Ben-Ezra has not returned or released any of the Chase files.”
“Ben-Ezra refuses to release the Chase Files because it claims that it is owed over $5 million in fees and costs,” according to the lawsuit. Although Chase disputes the amount it owes the firm, it has offered to post a $2.8 million bond as security.
“Without the Chase files, especially the original executed promissory notes and mortgages, Chase cannot proceed with, transfer, or conclude any of the cases,” according to the lawsuit. “Moreover, the original, executed promissory notes and mortgages securing Chase’s interests cannot be reproduced.”
Rest of the report here…
Maybe Chase should call up the Florida Default Law Group (again). They were able to reproduce original promissory notes in another case that Chase was the plaintiff in. Just need a color printer and some fresh paper. You can see their handy work here... http://wp.me/pFWnq-11d
In the 11-page lawsuit filed Friday in federal court in Fort Lauderdale, Chase asked for a temporary restraining order and permanent injunction ordering the firm to return the files and pay Chase an unspecified amount of damages.
During its two-year contract with Chase, the law firm handled thousands of foreclosures throughout the state. According to the lawsuit, the contract requires the firm to immediately transfer case files when the contract ends. Chase has made “repeated demands” for its files but “Ben-Ezra has not returned or released any of the Chase files.”
“Ben-Ezra refuses to release the Chase Files because it claims that it is owed over $5 million in fees and costs,” according to the lawsuit. Although Chase disputes the amount it owes the firm, it has offered to post a $2.8 million bond as security.
“Without the Chase files, especially the original executed promissory notes and mortgages, Chase cannot proceed with, transfer, or conclude any of the cases,” according to the lawsuit. “Moreover, the original, executed promissory notes and mortgages securing Chase’s interests cannot be reproduced.”
Rest of the report here…
Maybe Chase should call up the Florida Default Law Group (again). They were able to reproduce original promissory notes in another case that Chase was the plaintiff in. Just need a color printer and some fresh paper. You can see their handy work here... http://wp.me/pFWnq-11d
Why Your Bank May Be Wrong About What You Owe on Your Mortgage
Attention homeowners with mortgages, whether you're current or in default: Double-check your mortgage bank's math. There's a significant chance that the bank is wrong about how much you owe them, particularly if you're behind on your payments.
The revelation that mortgage servicers have been incorrectly applying payments and otherwise messing up their records isn't new. Professor Kurt Eggert of Chapman University documented the problem as early as 2004, and in his recent testimony before Congress, he underscored that nothing had changed. What is new, however, is testimony in New Jersey that gives real insight into how the mistakes are happening.
Late last week, Adrian G. Lofton gave the New Jersey court that is investigating mortgage fraud in New Jersey a sworn statement that details how mortgage servicer records are altered by employees of Lender Processing Services. Although the LPS employees are given logins and passwords to access the banks' own records for the purpose of correcting and reconciling the files, Lofton, a former LPS employee, explained how they instead destroyed the integrity of the banks' business records.
How It Works -- and Why It Fails
When an LPS client has a mortgage that goes into default, Lofton explains, LPS starts managing the loan. In order to do that, the appropriate LPS employees are given login information for the bank's database. As a security measure, each login is unique. That login grants access to the bank's entire database of current and defaulted loans, so that the employee can address whatever problem exists. For example, if a payment that should have been applied to a defaulted mortgage was accidentally credited to a current mortgage, the LPS employee needs access to the current mortgage to fix the error.
When an employee can't fix or reconcile data in an account, she is supposed to enlist the help of her supervisor, and if needed, her supervisor's supervisor. Each manager also has unique login information, and each bank apparently has additional security protocols that LPS employees are supposed to follow. If the employees and supervisors were following the rules, all would be relatively well. But according to Lofton, they were not:
"...109. ...most of the [LPS] Associate Team members had gained unauthorized access to the logins and passwords of their team associates and supervisors for all of the bank servicers' computers.
110. With this unauthorized access to the Bank's computers, the [LPS] associates could go into the banks computer files and manipulate the data....
112. I was particularly concerned that during "crunch" times ...Team Associates were cutting corners....
116. When an employee cut corners, the employee left out one or more steps that should have been performed and had to make something up.
117. The problem caused by cutting corners might not come to light until six months down the road when an attorney asks questions about the billing record."
Although Lofton doesn't say it, it's clear that some of those problems caused by cutting corners might never come to light.
See full article from DailyFinance: http://srph.it/i3iODu
Adrian Lofton Cert
The revelation that mortgage servicers have been incorrectly applying payments and otherwise messing up their records isn't new. Professor Kurt Eggert of Chapman University documented the problem as early as 2004, and in his recent testimony before Congress, he underscored that nothing had changed. What is new, however, is testimony in New Jersey that gives real insight into how the mistakes are happening.
Late last week, Adrian G. Lofton gave the New Jersey court that is investigating mortgage fraud in New Jersey a sworn statement that details how mortgage servicer records are altered by employees of Lender Processing Services. Although the LPS employees are given logins and passwords to access the banks' own records for the purpose of correcting and reconciling the files, Lofton, a former LPS employee, explained how they instead destroyed the integrity of the banks' business records.
How It Works -- and Why It Fails
When an LPS client has a mortgage that goes into default, Lofton explains, LPS starts managing the loan. In order to do that, the appropriate LPS employees are given login information for the bank's database. As a security measure, each login is unique. That login grants access to the bank's entire database of current and defaulted loans, so that the employee can address whatever problem exists. For example, if a payment that should have been applied to a defaulted mortgage was accidentally credited to a current mortgage, the LPS employee needs access to the current mortgage to fix the error.
When an employee can't fix or reconcile data in an account, she is supposed to enlist the help of her supervisor, and if needed, her supervisor's supervisor. Each manager also has unique login information, and each bank apparently has additional security protocols that LPS employees are supposed to follow. If the employees and supervisors were following the rules, all would be relatively well. But according to Lofton, they were not:
"...109. ...most of the [LPS] Associate Team members had gained unauthorized access to the logins and passwords of their team associates and supervisors for all of the bank servicers' computers.
110. With this unauthorized access to the Bank's computers, the [LPS] associates could go into the banks computer files and manipulate the data....
112. I was particularly concerned that during "crunch" times ...Team Associates were cutting corners....
116. When an employee cut corners, the employee left out one or more steps that should have been performed and had to make something up.
117. The problem caused by cutting corners might not come to light until six months down the road when an attorney asks questions about the billing record."
Although Lofton doesn't say it, it's clear that some of those problems caused by cutting corners might never come to light.
See full article from DailyFinance: http://srph.it/i3iODu
Adrian Lofton Cert
Biloxi Buzz for Tuesday
Massey Mines Hit With 80 Citations For Safety Violations
Minnesota goes after giant debt collector over robo-signing
13% of all U.S. homes are vacant
Herman Cain assailed as ‘bigoted’ over Muslim remarks
Republicans Prepare To Reject Final White House Budget Offer — It's been almost a week since House Republicans, Senate Democrats and the White House last sat down to hammer out a budget agreement, and the schedule's still blank. Accusations of bad faith are now flying from both sides.
Michigan Becomes First State To Curtail Jobless Aid
WASHINGTON -- Gov. Rick Snyder signed controversial legislation on Monday, making Michigan the first state in the country to reduce unemployment insurance for those who lose their jobs through no fault of their own. Starting in January, laid-off Michiganders will be eligible for 20 weeks of jobless aid, instead of the standard 26 weeks.
Snyder, a Republican, said the change was necessary to win political support in the Michigan legislature for maintaining the state's eligibility for the federal Extended Benefits program, which provides 20 weeks of benefits for the long-term unemployed. Without the bill, an estimated 35,000 Michiganders would not have received their EB checks in April.
"These benefits are a lifeline for many Michigan families who are struggling in this challenging economy," Snyder said in a statement. "Cutting them off so abruptly would have jeopardized the well-being of those who are trying hard to find work."
EB kicks in for people who exhaust 53 weeks of federal Emergency Unemployment Compensation and 26 weeks of state benefits. Opponents of the bill say the EB measure was not worth reducing the state benefits. Advocates of unemployment insurance fear other states will follow Michigan's lead.
Michigan Democrats in the U.S. Senate and House of Representatives asked Snyder in a letter on Monday to veto the bill, saying the change would "turn back the clock on 50 years of needed protections for the unemployed in Michigan."
Read on.
(Read the bill HERE)
Snyder, a Republican, said the change was necessary to win political support in the Michigan legislature for maintaining the state's eligibility for the federal Extended Benefits program, which provides 20 weeks of benefits for the long-term unemployed. Without the bill, an estimated 35,000 Michiganders would not have received their EB checks in April.
"These benefits are a lifeline for many Michigan families who are struggling in this challenging economy," Snyder said in a statement. "Cutting them off so abruptly would have jeopardized the well-being of those who are trying hard to find work."
EB kicks in for people who exhaust 53 weeks of federal Emergency Unemployment Compensation and 26 weeks of state benefits. Opponents of the bill say the EB measure was not worth reducing the state benefits. Advocates of unemployment insurance fear other states will follow Michigan's lead.
Michigan Democrats in the U.S. Senate and House of Representatives asked Snyder in a letter on Monday to veto the bill, saying the change would "turn back the clock on 50 years of needed protections for the unemployed in Michigan."
Read on.
(Read the bill HERE)
Monday, March 28, 2011
OMG! FYI, the OED is like all TMI. Can we still be BFF? LOL.; Open thread
The venerable Oxford English Dictionary has entered the age of Internet memes.
In an statement posted on Friday, which begins by rhapsodizing about significant revisions to words in the "R" range -- including rotund, rude, rumble, and ruthless -- the editors go on to note that they have also made room for two interesting additions, OMG and LOL.
"For the March 2011 release of OED Online," they state primly, "we have selected for publication a number of noteworthy initialisms—abbreviations consisting of the initial letters of a name or expression. Some of these—such as OMG [OMG int. (and n.) and adj.]: ‘Oh my God’ (or sometimes ‘gosh’, ‘goodness’, etc.) and LOL [LOL int. and n./2]: ‘laughing out loud’—are strongly associated with the language of electronic communications (email, texting, social networks, blogs, and so on). They join other entries of this sort: IMHO (‘in my humble opinion’) [IMHO at I n./1], TMI (‘too much information’) [TMI at T n.], and BFF (‘best friends forever’) [BFF at B n.], among others."
Morgan Stanley received $3.5bn bailout from Fed 3 days after becoming a bank holding company in September 2008
Morgan Stanley's 'deep secret' has been let out. Financial Crisis Inquiry Commission released a document madr public. It was revealed that the firm went to the Fed's discount window just 3 days after becoming a bank holding company in September 2008, borrowing some $3.5billion. Interesting enough Morgan Stanley and Goldman Sachs were allowed to be bank holding companies yet Lehman Brothers was rejected.
The discount window functions as a lifesaver through which qualifying borrowers can secure emergency liquidity during times of severe stress. Historically the Fed had kept the names of borrowers confidential on the grounds that disclosure could stigmatize them in the public’s eyes, even though it was the public’s money the Fed was lending.
As it turns out, the information about Morgan Stanley (MS)’s $3.5 billion discount-window loan has been sitting on the Financial Crisis Inquiry Commission’s website since last month. The panel didn’t mention it in its final report. And nobody had written a story about it before. So there: Now it can be told.
You can see the raw data by clicking here. The link takes you to a Morgan Stanley spreadsheet showing the company’s day- to-day liquidity changes during a two-week period in September 2008 when the New York-based bank was fighting for survival. (You may need to magnify the pages 400 percent to see all the numbers.)
‘Confidential’
The loan came three days after Morgan Stanley said it had received Fed approval to become a bank holding company, giving it access to the discount window for the first time.
A Morgan Stanley spokesman, Mark Lake, confirmed that my reading of the spreadsheet is correct. The bank had stamped the document “confidential treatment requested” when it handed it over to the crisis commission. The panel released it anyway, apparently seeing no harm.
The Fed’s arguments for keeping this sort of data secret were transparently bogus. One Fed economist, Brian Madigan, said in an affidavit that disclosing discount-window borrowers’ names “can quickly place an institution in a weakened condition vis- a-vis its competitors by causing a loss of public confidence in the institution, a sudden outflow of deposits (a ‘run’), a loss of confidence by market analysts, a drop in the institution’s stock price, and a withdrawal of market sources of liquidity.”
The discount window functions as a lifesaver through which qualifying borrowers can secure emergency liquidity during times of severe stress. Historically the Fed had kept the names of borrowers confidential on the grounds that disclosure could stigmatize them in the public’s eyes, even though it was the public’s money the Fed was lending.
As it turns out, the information about Morgan Stanley (MS)’s $3.5 billion discount-window loan has been sitting on the Financial Crisis Inquiry Commission’s website since last month. The panel didn’t mention it in its final report. And nobody had written a story about it before. So there: Now it can be told.
You can see the raw data by clicking here. The link takes you to a Morgan Stanley spreadsheet showing the company’s day- to-day liquidity changes during a two-week period in September 2008 when the New York-based bank was fighting for survival. (You may need to magnify the pages 400 percent to see all the numbers.)
‘Confidential’
The loan came three days after Morgan Stanley said it had received Fed approval to become a bank holding company, giving it access to the discount window for the first time.
A Morgan Stanley spokesman, Mark Lake, confirmed that my reading of the spreadsheet is correct. The bank had stamped the document “confidential treatment requested” when it handed it over to the crisis commission. The panel released it anyway, apparently seeing no harm.
The Fed’s arguments for keeping this sort of data secret were transparently bogus. One Fed economist, Brian Madigan, said in an affidavit that disclosing discount-window borrowers’ names “can quickly place an institution in a weakened condition vis- a-vis its competitors by causing a loss of public confidence in the institution, a sudden outflow of deposits (a ‘run’), a loss of confidence by market analysts, a drop in the institution’s stock price, and a withdrawal of market sources of liquidity.”
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