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Tag: bank

Banks Manage their own Penalty

Banks Manage their own Penalty

Mortgage Settlement Report Finds Banks Reluctant To Reduce Principal, Despite Promises

The largest mortgage settlement in U.S. history was pitched by its creators as a deal that would offer quick aid to 1 million people in danger of losing their homes to foreclosure. But according to a report released Thursday by the court-appointed monitor of the settlement, in the first nine months after the $25 billion deal was struck, fewer than 50,000 people received the most coveted form of relief: reduction of principal owed on a first mortgage.

Meanwhile, more than three times as many borrowers — 169,000 — agreed to a short sale, which requires they leave the property, according to the report.

Banks still have time to meet their obligations under the settlement, which requires that 30 percent of total relief come in the form of first mortgage principal reduction. But housing advocates say the limited progress so far — just 14 percent of aid has gone to write down loan balances — suggests that banks are avoiding, or at least delaying, their obligation to provide meaningful relief as they promised under the deal.

Mortgage Settlement Report Finds Banks Reluctant To Reduce Principal, Despite Promises

What did the federal government think would happen when their vaunted, over-hyped 25 billion dollar settlement wound up in the hands of the banks themselves? A child could have made an accurate prediction. You reward criminality by avoiding any real penalties. You chock it up as an enormous victory for the government while the banks and people like me hold you in contempt for your incompetence and servile stance to corporate crime. The banks have to pay back some money to the people they stole from. Great. Except that they decide who gets the money and they have decided that most of the money will go to short sales. Isn’t that special. They’re maximizing their profit. Who would’ve thought?

James Pilant

 

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Banks Need to be Protected from Themselves

 

Waiting for a bank loan.

Banks Will Always Suck At Trading, Badly Need A Volcker-Like Rule: Study

A new study by economists Arnoud Boot at the University of Amsterdam and Lev Ratnovski at the International Monetary Fund finds that recent blow-ups in the banking sector — JPMorgan Chase’s $6.8 billion “London Whale” losses and that whole financial-crisis thingy, to name two — are not isolated events, but “a sign of deeper structural problems in the financial system.”

The only prescription? Less trading by big dumb banks.

“Without policy action, crises associated with trading by banks are bound to recur,” Boot and Ratnovski write in a blog post about the paper. “Even strong supervision will not be able to prevent them. Consequently, it appears necessary to restrict trading by banks.”

Banks Will Always Suck At Trading, Badly Need A Volcker-Like Rule: Study

If you read the fuller article, and I recommend you do, you will find that banks have incentives to do what is essentially speculative trading. Right now with interest rates low, there is a terrible temptation to take their money and gamble with it since there is little profit in traditional investments. And, of course, why do legitimate investments in business, industry and homes, when you can make so much more money speculating?

The banks have to be regulated to perform their traditional functions of lending to build a strong economy. We protect banks from collapse and insure their deposits with taxpayer money because when they loan money that develops the economy and creates opportunities. What we are getting now is a lot less useful investing and a lot more gambling at the public’s expense.

James Pilant

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The True Cost of the 2008 Financial Crisis–$12.8 Trillion

Mark Gongloff: Financial Crisis Cost U.S. $12.8 Trillion Or More: Study

The 2008 financial crisis cost the U.S. economy at least $12.8 trillion, a new study found — and that’s a “very conservative number,” according to the authors.

The study, timed to coincide with the fourth anniversary of the Lehman Brothers bankruptcy, is a direct counter to the banking industry’s relentless warnings of the potential costs of new financial regulations.

The cost of letting the banks wreck the global economy again is far, far higher.

The crisis-cost estimate, generated by Better Markets, a non-profit group lobbying for financial reform, is only a measure of actual and potential lost economic growth due to the crisis. It does not include many other costs, including the costs of extraordinary government steps taken to avoid “a second Great Depression.” It does not include unquantifiable costs like the “human suffering that accompanies unemployment, foreclosure, homelessness and related damage,” the authors noted.

Mark Gongloff: Financial Crisis Cost U.S. $12.8 Trillion Or More: Study

 

Most people believe that TARP costs 700 billion and that’s what the crisis cost Americans. Wrong. It is 12.8 trillion dollars. That’s a little bit more. We all took a hit.

I’m not going to do an ethics analysis. If you can’t see an ethics problem here, I don’t know what I can do for your thinking.

James Pilant

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Another White House Sell Out on the Big Banks

Another White House Sell Out on the Big Banks

Shouldn’t bankers be held to the same laws the rest of Americans have to obey? This is a no-brainer except in the Washington beltway where banks are considered the basis of the Republic rather than the modern equivalent of train robbing Western desperados. I don’t understand. Why is no one being prosecuted? I once lied to a judge. I didn’t know it was a lie until later. When I found out, I called him up (I was working for the state and dealt with the judge regularly) and explained and apologized. He reminded me that I could have gone to jail for that. I told I was well aware of it. And yet here, banks who lied to the judge, to the courts of the United States, are simply walking away. Unlike me, they knew they weren’t telling truth and unlike me, they were making enormous sums of money by lying, and they are not apologizing. Do you see anywhere in the agreement that they have to say, “I’m sorry.” I don’t see it.

There is a dual system of justice in this country, one for me and you, and one for the 1%. It’s very sad. We have been told that we live in a nation of laws, not of men. But the fact is we live in a nation of men, where one class is better than another in the eyes of the law.

James Pilant

Robo-Signing Bank Settlement is a Criminal Sell Out | Better Markets

“Let me help a few victims I created by ripping them off and illegally throwing them out of their homes by false court filings that I swore were true.”  That’s what the so-called mortgage settlement talks are really all about:  fraud, perjury and crimes.  That’s what these banks did and that’s what they are trying to buy their way out of.

The settlement discussions are the same: eliminate all or almost all liability for the bank and, most importantly, all bank officers and employees in exchange for a loan forgiveness or modification program.  Think about this:  the banks engaged in a years-long pattern and practice of what can only be described as fraudulent if not criminal conduct that would put anyone else in prison for years if not decades, yet banks get to buy off the cops with some money to help the victims they created.

Robo-Signing Bank Settlement is a Criminal Sell Out | Better Markets

Mortgage Settlement Is Great – For Big Banks

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The Banking Industry Gives Obama the Squeeze

President Barack Obama addresses reporters abo...

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Big banks have picked their candidate, and it’s Romney – from McClatchy

“We’ve seen a massive shift from Obama to the Republican candidates on the part of the financial industry,” said Carmen Balber of Consumer Watchdog, a California nonprofit that advocates for taxpayers and consumers. “Obviously, part of that has to do with a competitive primary. But we’ve definitely seen the financial services industry publicly chastise the president for going after financial reform.”

Big banks have picked their candidate, and it’s Romney | McClatchy

Isn’t this sweet? Barack Obama bails out the banks, protects them from prosecution for their crimes, installs banking industry figures in virtually every possible position in the government, pretended that the mortgage crisis wasn’t happening and was careful to give only the most measured criticism of the financial industry and the 1% – and his reward is massive contributions to this likely opponent.

For all of his compromise, for all of his favoritism, for all of his abandonment of the goals of justice and accountability, the President got less than nothing.

This was hardly unpredictable. The dramatic reactions of the wealthy investment to class to Obama’s mile criticism, the weak legislation of Dodd-Frank financial reform law, and the Occupy Wall Street movement demonstrated that Wall Street’s sense of entitlement and worthiness is fragile at the very least.

Only the most slavish devotion, only agreement on every point and only an acceptance of the financial industry as worthy, doing God’s Work, is adequate for the malefactors of great wealth.

The President should have realized this.

James Pilant

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Obama Administration Continues to Protect Banks, Ignores Consumers

It seems that I can never get free of this subject. Obama never met  banker he didn’t like and whose interest he didn’t place ahead of everyone else. One of the things that average Americans resent is the lack of prosecution of these rogue banks. Just what did the banks do that makes me so angry? They lied directly in court claiming ownership of properties they did not own. The filed false affidavits lying about their ownership. They defrauded many customers by lying about the terms of the mortgage agreement. The lured investors into securities backed my mortgages that they knew would fail as investments and then bid against those investments with derivatives to make ever more money. To add one further insult, these heartless financial wizards foreclosed on serving veterans’ homes contrary to federal law.

Now get this. These arrogant people created their own system of ownership. Under the law of each State enshrined in American law, ownership of real property is proven by a careful record’s trail kept in most states in each county court house. To evade fees and speed the process, the mortgage machine created a computer system called MERS. They would make a single transaction using the county system then they traded the properties much like the homes in the monopoly board game. Instead of careful record keeping, we have a system where in many cases, no one knows who owns the property. In case you missed it, by using their own private system of property ownership, they never paid a dime of taxes on the transfers defrauding the states out of millions of dollars of taxes.

For more than 200 years, owning property has been the goal of Americans. To be a landowner was a mark of prestige, of achievement and security. But keeping property lines straight, land fraud and busted titles have bedeviled citizens. To curb these abuses laws were established to make as certain as possible land ownership, to protect the right to property. The right to own property is not sacred but it is as close to sacred as laws can make it.

These men, these arrogant men created their own separate legal system ignoring the laws of the government and the rights of citizens. They then used it to evade taxes and speculate like Riverboat gamblers playing with chips.

The law provides penalties so that justice may be served. Those who fail to obey the law are punished. Those are hardly radical thoughts. They are the basis of a system that treat both the small and the great equally. The administration is pushing an agreement which will free the mortgage banks from responsibility for their crimes.

What kind of nation do we live in where a petty shoplifter faces jail time and fines and bankers are freely given immunity without any assurance that I find credible that they will behave better in the future. I mean after engaging in a crime spree that makes organized crime look like a child stealing candy, they walk free. Doesn’t that give then the impression that they are above the law. It gives me that impression.

Can’t we have justice? What did I do? What did my fellow citizens do? Are we some of lesser creation that we must watch in awe and envy while those who evade over and over not just the law but evade their responsibilities of citizens to pay taxes and to act for the common good?

What kind of country are we becoming?

James Pilant

The Obama Administration’s ‘New’ Bank Fraud Deal: Still Unfair, Still Unjust, Still Unbalanced

The Obama White House continues to push for a settlement that would let bankers avoid being punished – or even investigated – for a wave of mortgage-related crimes that includes perjury, tax evasion, and several types of fraud.

Despite the President’s new-found populism – rhetorically, anyway – officials in his Administration continue to push an unfair deal designed to conceal the financial Crime of the Century.

The Financial Times reported on new details of the proposed settlement, whose stated purpose is to punish banks and reduce the amount of money owed by underwater homeowners. But it’s increasingly clear that the deal wouldn’t help homeowners very much and wouldn’t punish bankers at all.

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Banks can work with borrowers, help them avoid foreclosure and remain profitable!

The title above is actually a sentence from a post on another website. The following section of the post is from Bankrate.com – please read.

That’s a lesson large lenders should learn from Webster Financial Corp., a  regional bank based in Waterbury, Conn. The bank, which services $8 billion in mortgages and home-equity  loans, has been able to prevent foreclosures, for the most part, by helping  borrowers and providing them with good customer service.

According to a story published in The Wall Street Journal this week, the  lender has taken a proactive approach to loan modifications and has profited  from doing so.

The lender offers struggling borrowers a chance to extend loan terms and  reduce interest on mortgages that are owned by the bank, the article reports.  While restructuring the loan, the bank waives late fees, penalties and unpaid  interest. Most servicers simply add those costs to the balance of the loan.  About 80 percent of the modifications started by Webster are approved. Big banks  have long been criticized for putting borrowers on trial modification plans,  requiring them to make payments for several months and later telling the  borrowers they don’t qualify for a permanent modification.

Read more: A bank against foreclosures | Bankrate.com http://www.bankrate.com/financing/mortgages/a-bank-against-foreclosures/#ixzz1XVCsza1F

The post goes on to talk about how the bank is doing this successfully. It’s very strange, isn’t it? Here you are reading about a bank doing what banks normally did for most of the last century.

They made money by loaning money and collecting interests, and when those loans had problems they didn’t casually foreclose, they attempted to work something out to the benefit of all. They helped people, their clients avoid foreclosure and acted as responsible members of the community.

That’s not how business is done anymore. Banks make money from default not renegotiation. They charge fees for late payments. Once a homeowner is in difficulty they stall when asked for help, compromise or renegotiation knowing that more late payments generate more income for the bank. Banks have told their clients to stop paying for three months so that they would qualify for the federal HAMP program. Then the bank denied them admission to the program and foreclosed. That’s how business is done now.

But you can see that it doesn’t have to be this way.

James Pilant

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Bulldoze: The New Way To Foreclose (via Time Magazine)

Bulldozer ChTZ B10M.jpg.

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Let me try and understand this. The banking industry seized these homes, these precious homes, often the most valuable single thing that a family had, and having seized the home and cast away the occupants like so much chaff, they bulldoze it?

The banks do the deals because once the properties are donated they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write off for the donation. That appears to be a better deal than trying to repair some of these homes, which according to a BofA spokesperson are more economical to demolish than fix up. The local governments like these deals because they get free land to develop or use for open space. Cleveland-based Cuyahoga County Land Reuntilization Corp., which inked the deal with BofA, has been one of the most aggressive local government organizations in striking these deals. Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been once of the big problems plaguing real estate. At the end of June, it would take nine and a half months for the current number of homes on the market to sell. The housing market is considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag.

Thank God, Time Magazine is on the story. They’ll give these banks a talking to. They’ll call down the righteous ire of the oppressed down upon these home destroyers.  But wait … !!! –

The question is whether the banks will ever put up enough housing for demolition to make a difference. The Obama administration says it is working on its own plan to revamp its loan modification program in order to help keep more people in foreclosure in their homes, reducing the number of foreclosed properties on the market. Some areas of the country are looking at how to speed up foreclosures in an effort to return some normality to the market. It’s not clear that any of this will work. Certainly, the idea that we are at the point where banks would be better off knocking down houses that reselling them shows there is still something very wrong with the housing market. But what is clear is that banks and others are at the point where they are ready to try something new to boost the housing market. And that is a good sign for the future.

Time Magazine says we’re not bulldozing enough homes. That’s right. We live in a nation where the weekly press has discovered that if only the banks had the guts to bulldoze a lot more homes, things would be better.

This is the wisdom of the beltway, a never never land generally located near Washington but often and more simply a state of mind. In the beltway, the concerns of people for jobs, homes and economic security are the cries of the weak and whiny. Really important people are concerned about “who is winning” in Washington. Really important people constantly read articles about where it’s most profitable to live, where the taxes are lowest and where to invest their money. Really important people sit up and take notice of every move on the stock market and if a man has made a fortune his lack of gentlemanly qualities, overt greed, and often actual crimes means he is quoted as an authority.

Go read the magazine if you can stomach it. They simply don’t live in a middle class world. And they don’t care.

James Pilant

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Banks Investigated For Fraud!

I’m not holding my breath.

From the Associated Press

The federal government has opened criminal investigations into approximately 50 executives and directors of U.S. banks that have collapsed during the financial crisis.

Deputy Inspector General Fred Gibson said Wednesday the inspector general’s office at the Federal Deposit Insurance Corp. has been probing the role of the executives in bank failures around the country.

The criminal investigations are separate from civil lawsuits approved by the FDIC’s board against some 80 bank executives, employees and directors. The FDIC is seeking to recoup about $2 billion in bank losses that the regulator says were the result of negligence or misconduct by executives or directors.

The FDIC has shut down or seized 311 banks since January 2008 at a cost of around $77 billion. The criminal probes were reported earlier by The Wall Street Journal.

2008!! What was the hurry? They waited two full years and suddenly woke up morning and thought, “Hey, these banks collapsed. I wonder if something could be wrong?”

Whenever a bank collapses, some alarm bells should go off.

Let me give them some advice, when 100 banks fail, criminality is likely. No, that number is not 311, it’s 100. If you wait until the number is 311, you might appear to be foolish or unwilling to prosecute bank fraud.

James Pilant

eBanks Seek to Derail Bills to Curb Overdraft Fees

"I warn you, Sir! The discourtesy of this...

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eBanks Seek to Derail Bills to Curb Overdraft Fees

This article is good reading. The banks are working to stop the reform of this notorious practice. I’ve never thought much of overdraft fees. When I was a young man banks made money by investing the savings of its customers. But now they banks make their money on fees, a lot of fees. I have read that only two-thirds of the banks can provide a fee schedule or understand their own fee structure. I think we ought to rein this practice. I paid 28 dollars once for a 1.25 overdraft when I bought a soda at a convenience store. I didn’t think and I don’t think now that the banks suffered 25 dollars of harm from my mistake.

I think good business ethics should have some basis in fairness. The fee should be proportional to the harm. It seems to me okay to charge more than what was charged but frankly it doesn’t make a lot of sense to charge the same amount per check as opposed to how much. A system based on banking losses makes more sense than an almost random attack on people’s money.

I commented on the article:

There is little doubt that Ms. Feddis and most other banking officials went to the best business schools and all of them had Business Ethics as a required course. What effect did it have when they can set a money trap like this? There is no doubt that banks deserve a fee for an overdraft but this is not a fee, it is a harvest of money from the unwary. When did ethics become optional? And more importantly, how can anyone say this is a legitimate means of business profit with a straight face. jp

This is the article’s address, below.

http://industry.bnet.com/financial-services/10004616/banks-seek-to-derail-bills-to-curb-overdraft-fees/#comments

I received a comment from the author of the article. This is it:

Alain Sherter

11/03/09 |

RE: Banks Seek to Derail Bills to Curb Overdraft Fees

 

Southwerk–I’ve posed that very question to lots of
people who know more about the banking industry
than I’ll ever know. The answer about precisely
when ethics flew out the window may differ, but
one thing is consistent–it wasn’t always thus.

But somewhere along the line (the ’70s, by my
rough estimation) banks started to change. Certain
ideas started to sprout that changed the business.
The prime directive became profit, not prudence.
And enormous forces were brought to bear on bank
executives to pursue profit no matter the cost–to
consumers, communities and even the banks
themselves.

To be clear, this isn’t to denigrate the profit motive.
It’s only to recognize that certain core values and
ideals shape how businesses operate. And when
those change, mountains move.

If there’s a silver lining, it’s the fact that things were
different once. That suggests the financial industry
can change once more.

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