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A Call to Action| CALIFORNIA CLASS ACTION AGAINST MERS PREPARING

A Call to Action| CALIFORNIA CLASS ACTION AGAINST MERS PREPARING

A class action lawsuit is currently being prepared and we are in need of parties in California who are interested in pursuing these devils who have done so much to destroy everything this country stands for and is.

We are looking for the following:

  • The property is located in California
  • Have a Pay Option ARM which names MERS as nominee (highly likely in the event of an Option Arm);
  • Lender was Countrywide/BofA or broker associated with CW;
  • Issued Jumbo/100% financing
  • They are facing an increase via reset or recasting which will consume over 70% of the income which the same as when lender sold them the loan some time in 2010, 2011 or 2012;
  • They are committed to fighting the Bad guys;
  • They have their Note, HELOC Agreement, MERS disclosure

If you fit this description,  please contact this website at info@chinkinthearmor.net

Source: chinkinthearmor

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, class action, countrywide, foreclosure, foreclosure fraud, foreclosures, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.22 Comments

Groves woman claims Bank Of America mistake led to foreclosure

Groves woman claims Bank Of America mistake led to foreclosure

Starting to sound like a broken record with these bank “mistakes”!

6/28/2010 12:55 PM By Kelly Holleran

A Groves woman has filed suit against a bank that she says failed to automatically withdraw mortgage payments from her account, causing her to face foreclosure and eviction.

Charlenee Renee Hardee claims she first learned of the foreclosure on her house when she received an eviction notice posted on her door.

According to the complaint filed June 17 in Jefferson County District Court, Hardee had set up automatic withdrawals with defendant Bank of America in December that were supposed to go toward paying off her mortgage.

However, she alleges Bank of America had not been withdrawing payments as scheduled, which Hardee claims she was unaware of until she received the eviction notice, the suit states.

“At that time, Plaintiff checked her bank statement and discovered that no payments had been taken out of her account and that there was sufficient balance to pay the deficiency,” the complaint says. “Plaintiff went to Defendant, Bank of America National Association, and attempted to bring the note current but Defendant, Bank of America National Association, declined to accept her payment because the house had already been sold in foreclosure.”

On April 10, Bank of America executed an appointment of a substitute trustee, who then held a truste’s sale on May 4 and conveyed the property to defendant Estatepro, Hardee claims.

However, before the sale, Estatepro failed to supply Hardee with the required 30-day notice of default or with the notice of foreclosure sale, although it asserts that the required notices were sent, according to the complaint.

It was not until after the sale that Hardee received the notice of eviction, the suit state.s

Hardee alleges breach of contract against Bank of America for its failure to automatically transfer payments from her account. She also claims Estatepro’s deed of the property constitutes an impermissible cloud on Hardee’s premises.

In her complaint, Hardee is asking the court to declare the foreclosure, sale of her property and deed invalid. She is also asking the court to enter an order declaring her to be the rightful owner of the property. She is seeking actual damages, judgment for breach of contract, attorney’s fees, costs and other relief the court deems just.

Bruce Gregory of the Gregory Law Firm in Port Neches will be representing her.

The case has been assigned to Judge Donald Floyd, 172nd District Court.

Jefferson County District Court case number: E187-098.

Source: SeTexasRecord.com

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, Eviction, foreclosure fraud, mistake0 Comments

QUI TAM: MERS et al sued for FRAUD, Billions in Penalties

QUI TAM: MERS et al sued for FRAUD, Billions in Penalties

I am definitely confident on this one going far!

Mortgage registration firm sued for fraud, billions in penalties in Nevada, California

By Frank X. Mullen Jr. • June 25, 2010 RGJ.com

A Reno law firm has filed two lawsuits alleging fraud against a nationwide mortgage registration firm, and if those legal actions prevail, the firm and dozens of mortgage lenders could be liable to Nevada’s counties for billions of dollars in compensation and penalties.

Law partners Robert R. Hager and Treva J. Hearne, with Reno attorney Mark Mausert, have filed a case in Nevada and one in California against Mortgage Electronic Registration Systems, which operates an electronic registry of mortgage loans in the United States. MERS serves as the mortgagee of record for lenders, investors and loan servicers in county land records, but doesn’t own any mortgages.

By using the firm’s names on deeds and other paperwork, the lenders are able to avoid county recording fees, according to the firm. MERS has no financial interest in the loans, but is listed as actual owner or surrogate for the owner on millions of deeds of trust, even as individual mortgages are repeatedly traded and packaged inside of mortgage pools.

The lawsuits argue that listing the firm as the owner of mortgages in which it has no interest in order to avoid filing fees and taxes that are legally required constitutes fraud.

“We look forward to holding these financial institutions and foreclosure mills responsible for their actions that have deprived the states and counties of much-needed revenue,” said Hager.

Karmela Lejarde, communications manager, for the Reston, Va.-based firm, noted that the attorneys general of two states declined to take on the cases as false claims suits pressed by the government, instead leaving the plaintiffs to pursue the civil suits in the court systems.

“The lawsuits are completely without merit,” Lejarde said. “…The suits were filed by the same lawyers who have brought countless lawsuits against MERS, and every single one of them has failed. The most recent (fraud case) actions are just the latest in a line of baseless claims.”

Christopher Peterson, a law professor and associate dean of the University of Utah Law School, has written articles and lectured about MERS’s activities. He said the firm being listed as proxy owner of more than half the nation’s mortgages is contrary to 200 years of American legal precedent.

Continue here…

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Part II

http://www.scribd.com/full/33679187?access_key=key-795n4c7e7xreprv28yr

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Part III

http://www.scribd.com/full/33679319?access_key=key-16v5sbgda4zf6ka6eox5

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RELATED STORY:

MERS Good Information Foreclosure Subprime Mortgage Lending and MERS, VP MERS, AUTHORIZED SIGNATORY

Posted in bank of america, Christopher Peterson, citimortgage, CONTROL FRAUD, foreclosure, foreclosure fraud, jpmorgan chase, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., QUI TAM, wells fargo4 Comments

Bank to return woman’s home sold without notice

Bank to return woman’s home sold without notice

Julie Hayden FOX31 Investigative Reporter
June 25, 2010

WHEAT RIDGE, Colo – The Wheat Ridge woman who had the Bank of America sell her house out from under her could be getting her home back.

On Thursday FOX31 News first reported 61-year-old Stephanie Martin’s story. She’s lived in her home for 20 years and now takes care of her 84-year-old mother and 7-year-old granddaughter.

Martin never had any trouble making her house payments, until last June when her legs were crushed in a horrible accident at the Target store where she worked.

She applied for and was accepted into a Freddie Mac program that lowered her mortgage payments and stopped any foreclosure proceedings.

“She is the poster child for this type of program. Somebody who is doing everything they can but, hit some hard times and needed a little bit of help,” her lawyer, Darrell Damschen says.

But, even though her participation in the program was supposed to stop all foreclosure proceedings, Bank of America earlier this month sold her house at a foreclosure auction, to itself.

Martin says they never sent any warning or notification. And she found out about the foreclosure only after her lawyer coincidentally saw the public notice at the courthouse.

“I think this is a situation where the Bank of America made a mistake,” says Damschen. “They’re not communicating internally at all.”

“It’s clear the sale could have never been appropriate,” he adds.

For nearly a month, Martin unsuccessfully tried to get some answers or help from the Freddie Mac program and the bank.

After she contacted FOX31 News and KHOW Radio Talk Show host Peter Boyles, her case received attention.

She and her lawyer say the Bank of America called them Friday and said they are going to rescind the sale and give Martin her house back.

They indicated they will also work with her to keep the lower house payments.

Martin is relieved, but says after all she’s been through, she’ll believe it when she sees it.

“I hope this is true because I’ve been told so many things.”


© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in auction, bank of america, foreclosure, foreclosures, Freddie Mac, mortgage modification1 Comment

Notice of Appeal Filed – Stay of Court Order to Vacate Injunction Stopping Bank of America Foreclosures in Utah Requested

Notice of Appeal Filed – Stay of Court Order to Vacate Injunction Stopping Bank of America Foreclosures in Utah Requested

There is something not right here and I think the outcome might surprise us!

by Morgan Skinner, KCSG News

St. George, UT) – A Notice of Appeal to Federal Judge Clark Waddoups court order vacating an Injunction against Bank of America and its subsidiary ReconTrust Company halting all foreclosures in Utah was filed Friday, June 25, 2010 by St. George attorney John Christian Barlow.

Barlow told KCSG News he was “troubled by Court ruling but unrelenting in pursuit of redress for his client (Cox) and other homeowners who have become victims of mortgage lending gone mad.” Barlow said he has motioned the court to allow Cox’s complaint to include a “Class of Citizens” currently in foreclosure in Utah. Barlow contends his client’s rights to remedies were taken away from her by a faceless lender who continues to overwhelm homeowners and the judicial system with motions and petitions as a remedy instead of making a good-faith effort in face-to-face negotiations to help homeowners as the Utah legislature intended. The David and Goliath legal battle over federal versus states-citizens rights is headed to the 10th Circuit Court.

Judge Waddoups’ Memorandum of Explanation in support of vacating a statewide Preliminary Injunction halting all foreclosures by the Bank of America only served to raise more questions.

Some of the questions include:

1.) Why is the judge’s ruling at variance with his previous rulings this year as noted in a Letter to Judge Waddoups submitted to the court June 10th, 2010 by the Plaintiff’s counsel John Christian Barlow, Esq. and E. Craig Smay, Esq. and posted June 21, 2010 in the court docket, after the Ruling and Memorandum of Explanation.

2.) Why did Judge Waddoups essentially brush aside the Plaintiff’s pleading that included the Supreme Court decision Cuomo vs. Clearing House Association in which the Court said…“If a State chooses to pursue enforcement of its laws in court, its targets are protected by discovery and procedural rules” meaning a state has a right to enforce its own laws against national banks.

3.) Why hasn’t Judge Waddoups recused himself from all Bank of America or ReconTrust Company related cases since he was a senior partner in the law firm Parr, Waddoups, Brown, Gee & Loveless now Parr, Brown, Gee & Loveless that represented the Bank of America in Utah Fourth District Court, Case No. 070402786 before he took the bench. And, the law firm continues to represent the Bank of America and its subsidiaries. According to the Code of Conduct for US Judges, a judge should recuse himself when there may be a conflict of interest.

4.) Why shouldn’t Judge Waddoups recuse himself from any case in which his old law firm represents either the plaintiff or the defendant until he takes full distribution of his retirement fund with the law firm as disclosed in Judge Waddoups most recent Financial Disclosure Statement that shows he only took a partial distribution of his retirement from the firm’s 401K

“Bank of America acquired the bankrupt Countrywide Home Loan portfolio in a stock deal June 3, 2009. And, according to the ReconTrust website, the Bank of America has over 1113 Utah homeowners in foreclosure this month, and the numbers keep growing,” Barlow said.

The second part of the Plaintiff’s complaint has yet to be addressed. It alleges neither the lender, nor MERS*, nor Bank of America, nor any other Defendant, has any remaining interest in the mortgage promissory note. The note was bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. Barlow said he has begun a quiet title action and expects the court to adjudicate it according to the facts of evidence which will clearly demonstrate lenders bundling notes into securities and trading in the financial markets have created the underlying homeowner’s mortgage nightmare.

*MERS(Mortgage Electronic Registration System) is a process designed to simplify the way mortgage ownership and servicing rights are originated, sold and tracked created by the real estate finance industry. MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans as securities.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, bogus, breach of contract, foreclosure, foreclosure fraud, foreclosures, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Recontrust, STOP FORECLOSURE FRAUD2 Comments

Lawmakers slam top mortgage firms on loan mods

Lawmakers slam top mortgage firms on loan mods

(Updates with Treasury official Herb Allison’s comments)

By Corbett B. Daly

WASHINGTON June 24 (Reuters) – The four largest mortgage lenders in the United States were grilled on Capitol Hill on Thursday about the limited number of home loans they have modified for homeowners facing foreclosure.

“I just wonder how hard you are really trying?” Rep. Dennis Kucinich asked David Lowman, chief executive of home lending at JPMorgan Chase & Co (JPM.N).

Lowman said JP Morgan had been understaffed to handle the demand from struggling homeowners seeking to restructure payments, though they have added staff in recent months.

“Why are you denying loan modifications to my constituents?” Kucinich, an Ohio Democrat, asked Lowman, calling JP Morgan Chase uncooperative with borrowers.

Ohio has been one of the hardest-hit states in the U.S. home foreclosure crisis.

The House Oversight and Government Reform Committee also summoned chief executives of the home lending units of Bank of America Corp (BAC.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) to answer questions about their loan modification practices.

Also at the witness table was American Home Mortgage Servicing Inc, which collects loan payments but does not make or hold loans. AHMSI is known in the industry as a monoline servicer, while the other four firms both make and service loans.

In 2009, the Obama administration announced the $75 billion Home Affordable Modification Program, known as HAMP, which provides incentives to loan servicers to modify loans for troubled borrowers. HAMP has been widely criticized as ineffective. Less than $200 million has been spent to date.

The Treasury Department said on Monday more people had been kicked out of trial loan modifications than had received permanent modifications.

About 150,000 borrowers who could not prove their income or keep up with the new payments had their modifications canceled in May, bringing the total number of cancellations to about 430,000, or more than one-third of the 1.24 million trial modifications started since the program’s inception.

HAMP NOT THE ONLY SOLUTION

The number of borrowers who have received a permanent loan modification rose to 340,459 in May — about 11 percent of 3.2 million HAMP eligible loans.

“This is not just about HAMP,” the panel’s chairman, Edolphus Towns, said, referring to the modification program.

“I think the mortgage banking industry has got to recognize that HAMP cannot be the only solution to the mortgage foreclosure crisis,” the New York Democrat told the financial executives.

Herb Allison, assistant Treasury secretary for financial stability, noted that there was little precedent on how to design a large national program and the administration has now begun to put pressure on servicers to increase modifications by publicly releasing data on their performance.

“The HAMP program fundamentally changed the servicer industry from one based on collecting payments and processing foreclosures, to one that provides payment assistance to qualified homeowners,” Allison said in a prepared statement released after the hearing.

All of the executives said they have made more loan modifications than just HAMP modifications.

JP Morgan Chase said it has completed about 173,000 permanent modifications, including roughly 47,500 HAMP loans, since the beginning of 2009.

Bank of America said it has completed more than 630,000 loan modifications since January 2008, including roughly 70,000 HAMP loans.

Rep. Steve Driehaus, an Ohio Democrat, urged the executives to stop foreclosure proceedings while they negotiated new loan terms with borrowers.

“We are sending a very mixed message when we are proceeding with foreclosure while negotiating” a loan modification, Driehaus said.

Citi and Wells Fargo said they do stop foreclosure proceedings as soon as loan repayment talks begin. Bank of America, JP Morgan Chase and AHMSI said they continue to pursue foreclosures on a dual track strategy, though foreclosure remains an option of last resort. (Reporting by Corbett B. Daly; Editing by Jan Paschal and Jeffrey Benkoe)

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, citi, foreclosure, foreclosure fraud, foreclosures, jpmorgan chase, mortgage modification, wells fargo0 Comments

TKO KNockOUT Dismiss! Pro Se MORIN vs. BANK Of AMERICA

TKO KNockOUT Dismiss! Pro Se MORIN vs. BANK Of AMERICA

Title says it all. Like in the recent post about LISTENING TO CASSANDRA: ‘MERS’ By Carol A. Needham.

MERS has no authority to assign anything!

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© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, foreclosure, foreclosures, reversed court decision0 Comments

THANK YOU Attorney John Christian Barlow, ESQ. in Utah

THANK YOU Attorney John Christian Barlow, ESQ. in Utah

Dear Mr. Barlow,

I want to thank you for your excellent service. I cannot tell you how this ruling today saddens many in this situation.

We are witnessing indescribable horror in our judicial system that make us realize the following:

  1. One does not need to be Registered to do Business in a state.
  2. Promissory Notes are just as good as the paper my trash bag is made of.
  3. Anyone can conceal important “facts” from any debtor.
  4. Only when a party is in default the “shadow people” come to existence.
  5. All we need is a “straw man” to hide assets.

Each day we get closer and closer to exposing the truth.

WE WILL DEFEAT THEM! WE WILL NOT GIVE UP!

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, Recontrust, reversed court decision1 Comment

Bank of America Foreclosure Injunction Dissolved by Federal Judge: KCSG Television

Bank of America Foreclosure Injunction Dissolved by Federal Judge: KCSG Television

(Salt Lake City, UT) – Federal Judge Clark Waddoups issued the following court order just before noon Friday.

“The court held a hearing on this matter on June 10, 2010. For the reasons to be explained
in a memorandum decision that the court shall file shortly, the court ORDERS as follows:

Plaintiff’s motions to remand are DENIED;

Plaintiff’s motion to amend the complaint is GRANTED;

Defendants’ motion to vacate the Utah state court’s preliminary injunction order is GRANTED;

Defendants’ motion to expedite the hearing is moot; and consideration of Plaintiff’s motion for partial summary judgment is deferred.

The preliminary injunction of May 22, 2010 issued by the Utah state court is hereby DISSOLVED in its entirety.

John Christian Barlow, attorney for the plaintiff, Peni Cox likely is likely surprised by the court ruling that allows Utah law to be trumped by a nationally charter financial institution that can continue to operate faceless in Utah without registration or offices.

As one state lawmaker told KCSG news, this will only serve to get state lawmakers energized to put an end to homeowners (taxpayers) being victimized by mortgage lenders like the Bank of America who acquired Countrywide Home Loans in a stock deal worth billions and with taxpayer bailout money, he said. Barlow’s arguments fell on deaf ears in federal court allowing ReconTrust Company to continue their foreclosures.

Home owners continue to seek redress through the courts without success against lenders which have bundled the homeowner promissory note with others and sold them as securities through Mortgage Electronic Registration Systems (MERES).

Attorney Barlow was traveling and unavailable for comment to KCSG News as was the plaintiff Peni Cox.

Waddoups Order

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© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, case, foreclosure, foreclosure fraud, foreclosures0 Comments

BOMBSHELL – JUDGE ORDERS INJUNCTION STOPPING ALL FORECLOSURE PROCEEDINGS BY BANK OF AMERICA; RECONTRUST; HOME LOAN SERVICING; MERS ET AL

BOMBSHELL – JUDGE ORDERS INJUNCTION STOPPING ALL FORECLOSURE PROCEEDINGS BY BANK OF AMERICA; RECONTRUST; HOME LOAN SERVICING; MERS ET AL

Via: 4ClosureFraud

(St. George, UT) June 5, 2010 – A court order issued by Fifth District Court Judge James L. Shumate May 22, 2010 in St. George, Utah has stopped all foreclosure proceedings in the State of Utah by Bank of America Corporation, ;

Judge James L. Shumate

Recontrust Company, N.A; Home Loans Servicing, LP; Bank of America, FSB;www.envisionlawfirm.com. The Court Order if allowed to become permanent will force Bank of America and other mortgage companies with home loans in Utah to adhere to the Utah laws requiring lenders to register in the state and have offices where home owners can negotiate face-to-face with their lenders as the state lawmakers intended (Utah Code ‘ 57-1-21(1)(a)(i).). Telephone calls by KCSG News for comment to the law office of Bank of America counsel Sean D. Muntz and attorney Amir Shlesinger of Reed Smith, LLP, Los Angeles, CA and Richard Ensor, Esq. of Vantus Law Group, Salt Lake City, UT were not returned.

The lawsuit filed by John Christian Barlow, a former Weber State University student who graduated from Loyola University of Chicago and receive his law degree from one of the most distinguished private a law colleges in the nation, Willamette University founded in 1883 at Salem, Oregon has drawn the ire of the high brow B of A attorney and those on the case in the law firm of Reed Smith, LLP, the 15th largest law firm in the world.

Barlow said Bank of America claims because it’s a national chartered institution, state laws are trumped, or not applicable to the bank. That was before the case was brought before Judge Shumate who read the petition, supporting case history and the state statute asking for an injunctive relief hearing filed by Barlow. The Judge felt so strong about the case before him, he issued the preliminary injunction order without a hearing halting the foreclosure process. The attorney’s for Bank of America promptly filed to move the case to federal court to avoid having to deal with the Judge who is not unaccustomed to high profile cases and has a history of watching out for the “little people” and citizen’s rights.

The legal gamesmanship has begun with the case moved to federal court and Barlow’s motion filed to remand the case to Fifth District Court. Barlow said is only seems fair the Bank be required to play by the rules that every mortgage lender in Utah is required to adhere; Barlow said, “can you imagine the audacity of the Bank of America and other big mortgage lenders that took billions in bailout funds to help resolve the mortgage mess and the financial institutions now are profiting by kicking people out of them homes without due process under the law of the State of Utah.

Barlow said he believes his client’s rights to remedies were taken away from her by faceless lenders who continue to overwhelm home owners and the judicial system with motions and petitions as remedies instead of actually making a good-faith effort in face-to-face negotiations to help homeowners. “The law is clear in Utah,” said Barlow, “and Judge Shumate saw it clearly too. Mortgage lender are required by law to be registered and have offices in the State of Utah to do business, that is unless you’re the Bank of America or one of their subsidiary company’s who are above the law in Utah.”

Barlow said the Bank of America attorneys are working overtime filing motions to overwhelm him and the court. “They simply have no answer for violating the state statutes and they don’t want to incur the wrath of Judge Shumate because of the serious ramifications his finding could have on lenders in Utah and across the nation where Bank of America and other financial institutions, under the guise of a mortgage lender have trampled the rights of citizens,” he said.

“Bank of America took over the bankrupt Countrywide Home Loan portfolio June 3, 2009 in a stock deal that has over 1100 home owners in foreclosure in Utah this month alone, and the numbers keep growing,” Barlow said.

The second part of the motion, Barlow filed, claims that neither the lender, nor MERS*, nor Bank of America, nor any other Defendant, has any remaining interest in the mortgage Promissory Note. The note has been bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. When the note is split from the trust deed, “the note becomes, as a practical matter, unsecured.” Restatement (Third) of Property (Mortgages) § 5.4 cmt. a (1997). A person or entity only holding the trust deed suffers no default because only the Note holder is entitled to payment. Basically, “[t]he security is worthless in the hands of anyone except a person who has the right to enforce the obligation; it cannot be foreclosed or otherwise enforced.” Real Estate Finance Law (Fourth) § 5.27 (2002).

*MERS is a process that is designed to simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans. www.mersinc.org

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, foreclosure, foreclosure fraud, Recontrust0 Comments

POCKET CHANGE!! BofA’s Countrywide settles with FTC for $108 million

POCKET CHANGE!! BofA’s Countrywide settles with FTC for $108 million

(Reuters) – Bank of America Corp has agreed to pay $108 million to settle government charges that its Countrywide unit, the mortgage lender that became synonymous with risky lending practices, bilked borrowers with misleading and excessive fees.

Housing Market

The Federal Trade Commission said two Countrywide mortgage servicing units deceived cash-strapped homeowners by overcharging them by hundreds or thousands of dollars, sometimes when they were already in bankruptcy.

The alleged activity took place before Bank of America acquired the distressed lender in 2008.

The settlement is a small win for regulators trying to hold to account those who contributed to the deep financial crisis.

The agency called the $108 million settlement one of the largest in an FTC case and the largest in a mortgage servicing case. The FTC has no jurisdiction over banks but does have jurisdiction over deceptive practices by non-bank financial services and products firms.

Countrywide, which was once the nation’s top mortgage lender, “profited from making risky loans to homeowners during the boom years, and then profited again when the loans failed,” said FTC Chairman Jon Leibowitz, noting that some fees during the foreclosure process were marked up more than 400 percent.

Bank of America said in a statement that it agreed to the settlement to void the expense and distraction of litigating the case. There was no admission of wrongdoing.

The FTC said the $108 million, which represents the amount consumers were overcharged, would be used to repay borrowers but could take months to sort out.

“The record-keeping of Countrywide was abysmal,” said Leibowitz. “Most frat houses have better record-keeping than Countrywide.”

In May, Countrywide agreed to a $624 million settlement of a class action lawsuit accusing it of misleading investors about its lending practices. The case was led by several pension funds, including the New York State Common Retirement Fund, that state’s $129.4 billion public pension fund, and five New York City pension funds.

Once the largest U.S. mortgage lender, Countrywide and its long-time chief executive, Angelo Mozilo, became known for risky lending practices that helped fuel the U.S. housing boom and subsequent bust.

Countrywide nearly collapsed as credit markets tightened, before Bank of America agreed to buy it in January 2008 in a stock deal valued at about $4 billion.

Mozilo and two other former Countrywide executives remain defendants in a U.S. Securities and Exchange Commission civil fraud lawsuit.

The SEC alleges that Mozilo hid from investors the deteriorating prospects of Countrywide, and conducted insider trading by entering a systematic stock selling plan in late 2006, knowing that the mortgage lender’s prospects would worsen.

The SEC claimed Mozilo violated insider trading rules in generating a $139 million profit by exercising stock options in 2006 and 2007.

It said the exercises came after he admitted in an email to colleagues that Countrywide was “flying blind” as to the quality of its loans.

Sen. Charles Schumer, a New York Democrat and a member of the panel working out final wording on a comprehensive overhaul of Wall Street, called the FTC settlement “a major breakthrough that closes one of the ugliest chapters of the entire subprime mortgage crisis.”

“Anyone who believes the blame for the housing crisis rests with borrowers should read this settlement and learn just how shameless these lenders were during these years,” Schumer said.

(Additional reporting by Diane Bartz in Washington and by Joe Rauch in Charlotte; editing by John Wallace and Gerald E. McCormick)

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, breach of contract, coercion, concealment, foreclosure, foreclosure fraud, foreclosures0 Comments

BANK OF AMERICA channels BRITNEY SPEARS “OOPS I DID IT AGAIN”: Foreclosing AGAIN on a MORTGAGE FREE HOME!

BANK OF AMERICA channels BRITNEY SPEARS “OOPS I DID IT AGAIN”: Foreclosing AGAIN on a MORTGAGE FREE HOME!

ARE YOU NEXT?

Tuolumne Woman Owns Home Outright

POSTED: 3:58 pm PDT May 26, 2010
UPDATED: 5:53 pm PDT May 26, 2010

TUOLUMNE, Calif. — Nancy Willmes paid cash for her Tuolumne home in 2001. So she was quite surprised when Bank of America send her a notice of default on the property in February.

“I honestly felt like Bank of America was trying to steal my property,” Willmes said.

She contacted Bank of America to try to find out why the bank believed it could foreclose on property she had purchased outright.

Willmes has chain-of-ownership records, which show Bank of America had sold the property to Fannie Mae years earlier. Fannie Mae foreclosed on the previous owner, and Willmes purchased the property with cash from Fannie Mae.

But Willmes said Bank of America did not care about the documentation.

The bank proceeded with the foreclosure, placing ads in the local paper and nailing a foreclosure notice to her door.

“I called the title company, the title company called B of A, and they refused to rescind it,” Willmes said.
Fearful she would lose her home to the bank, Willmes called KCRA Call 3, and a Call 3 volunteer contacted Bank of America.

Willmes said that’s when Bank of America began returning her phone calls.

The bank rescinded the notice of trustee sale, stopping the foreclosure.

In a statement to KCRA 3, Bank of America said the problem was a system error. It said it updated its records and canceled the sale.

“This is my whole life. This is my future,” Willmes said. “I’ve got to thank you guys for basically giving me back my home. That is a big relief.”

Copyright 2010 by KCRA.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Posted in bank of america, foreclosure, foreclosure fraud, foreclosures, reversed court decision, STOP FORECLOSURE FRAUD0 Comments

SEC KNEW ABOUT SUBPRIME ACCOUNTING FRAUD A DECADE AGO

SEC KNEW ABOUT SUBPRIME ACCOUNTING FRAUD A DECADE AGO

by Elizabeth MacDonald FoxBusiness

The Securities and Exchange  Commission is missing a bigger fraud while it chases the banks. Even though it knew about this massive, plain old fashioned accounting fraud back in 1998.
Instead, the market cops are probing simpler disclosure cases that could charge bank and Wall Street with not telling investors about their conflicts of interest in selling securities they knew were damaged while making bets against those same securities behind the scenes, via credit default swaps.
Those probes have gotten headlines, but there aren’t too many signs that this will lead to anything close to massive settlements or fines.

For instance, the SEC doesn’t appear to be investigating how banks frontloaded their profits via channel stuffing — securitizing loans and shoving paper securitizations onto investors, while booking those revenues immediately, even though the mortgage payments underlying those paper daisy chains were coming in the door years, even decades, later. Those moves helped lead to $2.4 trillion in writedowns worldwide.
The agency said it  believed banks were committing subprime securitization accounting frauds back in 1998 and claimed to be ‘probing’ them.
I had written about these SEC probes into potential frauds while covering corporate accounting abuses at The Wall Street Journal. The rules essentially let banks frontload into their revenue the sale of subprime mortgages or other loans that they then packaged and sold off as securities, even though the payments on those underlying loans were coming in the door over the next seven, 10, 20, or 30 years.
Estimating those revenues based on the value of future mortgage payments involved plenty of guesswork.

Securitization: Free Market Became a Free For All
The total amount of overall mortgage-backed securities generated by Wall Street virtually tripled between 1996 and 2007, to $7.3 trillion. Subprime mortgage securitizations increased from 54% in 2001, to 75% in 2006. Back in 1998, the SEC had warned a dozen top accounting firms that they must do a  better job policing how subprime lenders book profits from loans that are repackaged as securities and sold on the secondary market. The SEC “is becoming increasingly concerned” over the way lenders use what are called “gain on sale” accounting rules when they securitize these loans, Jane B. Adams, the SEC’s deputy chief accountant, said in a letter sent to the Financial Accounting Standards Board, the nation’s chief accounting rule makers.
At that time, subprime lenders had come under fire from consumer groups and Congress, who said banks were using aggressive accounting to frontload profits from securitizing subprime loans. Subprime auto lender Mercury Finance collapsed after a spectacular accounting fraud and shareholder suits, New Century Financial was tanking as well for the same reason.

SEC Knew About Subprime Fraud More than a Decade Ago
The SEC more than a decade ago believed that subprime lenders were abusing the accounting rules.
When lenders repackage consumer loans as asset-backed securities, they must book the fair value of profits or losses from the deals. But regulators said lenders were overvaluing the loan assets they kept on their books in order to inflate current profits. Others delayed booking assets in order to increase future earnings. Lenders were also using poor default and prepayment rate assumptions to overestimate the fair value of their securitizations.
Counting future revenue was perfectly legal under too lax rules.
But without it many lenders that are in an objective sense doing quite well would look as if they were headed for bankruptcy.
At that time, the SEC’s eyebrows were raised when Dan Phillips, chief executive officer of FirstPlus Financial Group, a Dallas subprime home equity lenders, had said the poor accounting actually levitated profits at lenders.
“The reality is that companies like us wouldn’t be here without gain on sale,” he said, adding, “a lot of people abuse it.”
But this much larger accounting trick, one that has exacerbated the ties that blind between company and auditor, is more difficult to nail down because it involves wading through a lot of math, a calculus that Wall Street stretched it until it snapped.

Impenetrably Absurd Accounting
These were the most idiotic accounting rules known to man, rules manufactured by a quiescent Financial Accounting Standards Board [FASB] that let bank executives make up profits out of thin air.
It resulted in a folie à deux between Wall Street and complicit accounting firms that swallowed whole guesstimates pulled out of the atmosphere.
Their accounting gamesmanship set alight the most massive off-balance sheet bubble of all, a rule that helped tear the stock market off its moorings.
The rules helped five Wall Street firms – Bear Stearns, Lehman Bros., Morgan Stanley, Goldman Sachs and Merrill Lynch – earn an estimated $312 billion based on fictitious profits during the bubble years.

Who Used the Rule?
Banks and investment firms including Citigroup, Bank of America and Merrill all used this “legit” rule.
Countrywide Financial made widespread use of this accounting chicanery (see below). So did Washington Mutual. So did IndyMac Bancorp. So did FirstPlus Financial Group, and as noted Mercury Finance Co. and New Century Financial Corp.
Brought to the cliff’s edge, these banks were either bailed out, taken over or went through bankruptcies.
Many banks sold those securitized loans to Enron-style off-balance sheet trusts, otherwise called “structured investment vehicles” (SIVs), again booking profits immediately (Citigroup invented the SIV in 1988).
So, presto-change-o, banks got to dump loans off their books, making their leverage ratios look a whole lot nicer, so in turn they could borrow more.
At the same time, the banks got to record immediate profits, even though those no-income, no-doc loans supporting those paper securities and paper gains were bellyflopping right and left.
The writedowns were then buried in obscure line items called “impairment charges,” and were then masked by new profits from issuing new loans or by refinancings.

Rulemakers Fight Back
The FASB has been fighting to restrict this and other types of accounting games, but the banks have been battling back with an army of lobbyists.
The FASB, which sets the rules for publicly traded companies, is still trying to hang tough and is trying to force all sorts of off-balance sheet borrowings back onto bank balance sheets.
But these “gain on sale” rules, along with the “fair value” or what are called “marked to market” rules, have either been watered down or have enough loopholes in them, escape hatches that were written into the rules by the accountants themselves, so that auditors can make a clean get away.
As the market turned down, banks got the FASB to back down on mark-to-market accounting, which had forced them to more immediately value these assets and take quarterly profit hits if those assets soured – even though they were booking immediate profits from this “gain on sale” rule on the way up.
Also, the FASB has clung fast to the Puritanism of their rulemaking by arguing a sale is a sale is a sale, so companies can immediately book the entire value of a sale of a loan turned into a bond, even though the cash from the underlying mortgage has yet to come in the door.

Old-Fashioned ‘Channel Stuffing’
This sanctioned “gain on sale” accounting is really old-fashioned “channel stuffing.”
The move lets companies pad their revenue and profit numbers by stuffing lots of goods and inventory (mortgages and subprime securities) into the system without actually getting the money in the door, and booking those channel-stuffed goods as actual sales in order to cook ever higher their earnings.
Sort of like what Sunbeam did with its barbecue grills in the ’90s.

Intergalactic Bank Justice League
Cleaning up the accounting rules is an easier fix instead of a new, belabored, top-heavy “Systemic Risk Council” of the heads of federal financial regulatory agencies, as Sen. Chris Dodd (D-Conn) envisions in financial regulatory reform.
An intergalactic Marvel Justice League of bank regulators can do nothing in the face of chicanery allowed in the rules.

Planes on a Tarmac
What happened was, banks and investment firms like Citigroup and Merrill Lynch who couldn’t sell these subprime bonds, or “collateralized debt obligations,” as well as other loan assets into these SIVs got caught out when the markets turned, stuck with this junk on their balance sheets like planes on a tarmac in a blizzard.
Bank of America saw its fourth-quarter 2007 profits plunge 95% largely due to SIV investments. SunTrust Banks’ earnings were nearly wiped out, a 98% drop in the same quarter, because of its SIVs.
Great Britain’s Northern Rock ran into huge problems in 2007 stemming from SIVs, and was later nationalized by the British government in February 2008.
Even the mortgage lending arm of tax preparer H&R Block used the move. Block sold its loans to off-balance-sheet vehicles so it could book gains about a month earlier than it otherwise would. Weee!
The company had $75 million of these items on its books at the end of its fiscal 2003 year. All totally within the rules.

Leverage Culture
The rampant fakery helped fuel a leverage culture that got a lot of homes put in hock.
Banks, for instance, started advertising home equity loans as “equity access,” or ways to “Live Richly” or as Fleet Bank once touted, “The smartest place to borrow? Your place.”
In fact, Washington Mutual and IndyMac got so excited by the gain on sale rules, they went so far as to count in profits futuristic gains even if they had only an “interest rate” commitment from a borrower, and not a final mortgage loan.
Talk about counting chickens before they hatch.

Closer Look at Wamu
Look at Wamu’s profits in just one year during the runup to the bubble. Such gains more than tripled in 2001 at Wamu, to just shy of $1 billion, or 22% of its pretax earnings before extraordinary items, up from $262 million, or 9%, in 2000.
But in 2001, Washington Mutual took $1.7 billion in charges, $1.1 billion of it in the final, fourth quarter, to reflect bleaker prospects for the revenue stream of all those servicing rights.
It papered over the hit with a nearly identical $1.8 billion gain on securitizations and portfolio sales.

Closer Look at Countrywide
The accounting fakery let Countrywide Financial Corp., the mortgage issuer now owned by Bank of America, triple its profit in 2003 to $2.4 billion on $8.5 billion in revenue.
At the height of the bubble, Countrywide booked $6.1 billion in gains from the sale of loans and securities. But this wasn’t cold, hard cash. No, this was potential future profits from servicing mortgage portfolios, meaning collecting monthly payments and late penalties.

Posted in bank of america, cdo, concealment, conspiracy, corruption, countrywide, foreclosure, foreclosure fraud, S.E.C., scam, securitization, washington mutual0 Comments

Bank Investigations Cheat Sheet: ProPublica

Bank Investigations Cheat Sheet: ProPublica

by Marian Wang, ProPublica – May 13, 2010

Here’s our attempt to lay out exactly what’s known about which banks are being investigated by whom and for what. We’re going to keep updating this page, so please send usstories or details we’ve missed. Related: Covering the Bank Investigations: A Cautionary Tale

  What has been reported What the bank has said
 
Citigroup
Citing “a person familiar with the matter,” The Wall Street Journal has reported that Citigroup is under “early-stage criminal scrutiny” by the Department of Justice. Also citing unnamed sources, Fox Business reported on May 12 that the SEC has an active civil investigation into Citigroup and has subpoenaed the firm, but has not issued any Wells notices. A report on May 12th by the Journal cited unnamed sources saying that the Department of Justice is scrutinizing a few CDO deals that Morgan Stanley bet against–but which were underwritten by Citigroup and UBS. Neither the SEC nor the Justice Department have confirmed these reports.

Citing two anonymous sources, The New York Times has reported that New York Attorney General Andrew Cuomo is investigating eight banks to determine whether they misled rating agencies in order to get higher ratings for their mortgage-related products; Citigroup has been named as one of the banks. Subpoenas were issued on May 12, according to the Times and the Dow Jones Newswires, both of which relied on anonymous sourcing for their reports.

Citigroup has declined to comment to us and other outlets.

Credit Agricole
Credit Agricole has also been named as one of the banks that New York Attorney General Andrew Cuomo is investigating separately. Credit Agricole did not immediately respond to the Times’ request for comment and has not yet responded to ours.

Credit Suisse
Credit Suisse has also been named as one of the banks that New York Attorney General Andrew Cuomo is investigating. Credit Suisse declined to comment to the Times about the New York attorney general’s investigation.

Deutsche Bank
Citing “a person familiar with the matter,” The Wall Street Journal has reported that Deutsche Bank is under “early-stage criminal scrutiny” by the Department of Justice. Also citing unnamed sources, Fox Business reported on May 12 that the SEC has an active civil investigation into Deutsche and has subpoenaed the firm, but has not issued any Wells notices. Neither agency has confirmed these reports.

Deutsche Bank has also been named as one of the banks that New York Attorney General Andrew Cuomo is investigating separately.

Deutsche Bank declined to comment to Fox, the Journal, and the Times about possible investigations.

Goldman Sachs
The SEC has brought a civil fraud lawsuit against Goldman, alleging that the investment bank made “materially misleading statements and omissions” when it allowed a hedge fund to help create and bet against a CDO, called Abacus, without disclosing the hedge fund’s role to investors.

The Wall Street Journal, citing “people familiar with the probe,” reported in April that the Justice Department has been conducting a criminal investigation into Goldman’s CDO dealings following a referral from the SEC. Neither agency has confirmed this, but the AP, citing another unnamed source, has reported the same thing. Since then, many news organizations–including the The New York TimesABC News and the Washington Post–have also reported on the criminal probe, citing unnamed sources. No charges have been brought.

Goldman Sachs has also been named as one of the banks that New York Attorney General Andrew Cuomo is investigating separately.

Goldman called the SEC’s accusations “unfounded in law and fact.

After the reports of a criminal investigation, a Goldman Sachs spokesman declined to confirm that the bank had been contacted by the DOJ but also told several news outlets that “given the recent focus on the firm, we’re not surprised by the report of an inquiry. We would cooperate fully with any request for information.”

The bank has declined to comment to us on the New York attorney general’s investigation.

 
JP Morgan Chase
Citing “a person familiar with the matter,” The Wall Street Journal has also reported that JPMorgan Chase has received civil subpoenas from the SEC and is under “early-stage criminal scrutiny” by the Department of Justice. Neither the SEC nor the Justice Department has confirmed these reports. A JPMorgan spokesman told the Journal that the bank “hasn’t been contacted” by federal prosecutors and isn’t aware of a criminal investigation.

Merrill Lynch (now part of Bank of America)
Merrill has not been named in any SEC investigations. But as we pointed out, a lawsuit brought by a Dutch bank asserts that Merrill Lynch did a CDO deal that was “precisely” like Goldman’s. The SEC has declined to comment on whether it is investigating the deal.

Merrill Lynch has also been named as one of the banks that New York Attorney General Andrew Cuomo is investigating.

Merrill has said its CDO deal was not like Goldman’s, calling Goldman’s Abacus deal an “entirely different transaction.”

The bank did not immediately return the Times’ request for comment about the investigation by Coumo, but when we called and asked, a spokesman from Bank of America, which merged with Merrill, said, “We are cooperating with the attorney general’s office on this matter.”


Morgan Stanley
Citing “people familiar with the matter,” The Wall Street Journal reported on May 12 that the Justice Department has been conducting a criminal investigation into Morgan Stanley’s CDO dealings, including its role in helping design and betting against two sets of CDOs from 2006 known as Jackson and Buchanan. The Justice Department declined to comment. No charges have been brought, and according to the Journal, the probe is “at a preliminary stage.” A Morgan Stanley spokeswoman said the bank had “no knowledge of a Justice Department investigation into these transactions.” The Journal reported that the SEC has subpoenaed Morgan Stanley on several occasions, but the bank says it has received no Wells notices, which would indicate pending SEC charges.

Morgan Stanley has also been named as one of the banks that New York Attorney General Andrew Cuomo is investigating.

A Morgan Stanley spokeswoman said on May 12that the firm has “not been contacted by the Justice Department about the transactions being raised by The Wall Street Journal, and we have no knowledge of a Justice Department investigation into these transactions.”

The investment bank declined to comment to the Times about the Coumo’s investigation.


UBS
Citing “a person familiar with the matter,” The Wall Street Journal reported that UBS has received civil subpoenas from the SEC and is under “early-stage criminal scrutiny” by the Department of Justice. In a report on May 12, the Journal reported that the Justice Department is scrutinizing a few CDO deals that Morgan Stanley helped design and bet against–but which were marketed by Citigroup and UBS. Neither the SEC nor the Justice Department has confirmed these reports. The firm has not disclosed that it has gotten any Wells notices.

UBS has also been named as one of the banks New York Attorney General Andrew Cuomo is investigating.

A UBS spokesman has declined to comment on any of the investigations.

Posted in bank of america, citi, CitiGroup, concealment, conspiracy, corruption, Credit Suisse, FED FRAUD, federal reserve board, foreclosure fraud, goldman sachs, investigation, Merrill Lynch, Morgan Stanley, S.E.C., scam, securitization0 Comments

Moooove Over SLACKERS!! NY AG CUOMO probing 8 banks over securities

Moooove Over SLACKERS!! NY AG CUOMO probing 8 banks over securities

AP Source: NY AG probing 8 banks over securities

NEW YORK — The New York attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities, according to a person familiar with the investigation.

Attorney General Andrew Cuomo is trying to figure out if banks provided the agencies with false information in order to get better ratings on the risky securities, said the person, who spoke on condition of anonymity because the investigation has not been made public.

Cuomo’s office is investigating Goldman Sachs Group Inc., Morgan Stanley, UBS AG, Citigroup Inc., Credit Suisse, Deutsche Bank, Credit Agricole and Merrill Lynch, which is now part of Bank of America Corp.

Continue reading HERE

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, cdo, citi, concealment, FED FRAUD, federal reserve board, foreclosure fraud, goldman sachs, S.E.C.0 Comments

IN RE BURKS v. COUNTRYWIDE HOME LOANS SERVICING, LP 4/12/2010

IN RE BURKS v. COUNTRYWIDE HOME LOANS SERVICING, LP 4/12/2010

In re: JAMES L. BURKS, JR.
JAMES L. BURKS, JR., Plaintiff,
v.
COUNTRYWIDE HOME LOANS SERVICING, LP, AND UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendants.

Case No. 09-10170-DWH, Adv. Proc. No. 09-1064-DWH.

United States Bankruptcy Court, N.D. Mississippi.

April 12, 2010.

OPINION

DAVID W. HOUSTON III, Bankruptcy Judge

On consideration before the court is a motion for partial summary judgment filed by the defendant, Countrywide Home Loans Servicing, LP, (“Countrywide”), now known as BAC Home Loans Servicing, LP, (“BAC”); a response to said motion having been filed by the plaintiff, James L. Burks, Jr., (“debtor”); and the court, having heard and considered same, hereby finds as follows, to-wit:

I.

The court has jurisdiction of the subject matter of and the parties to this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. This is a core adversary proceeding as defined in 28 U.S.C. § 157(b)(2)(A), (B), and (O).

II.

The debtor filed a voluntary petition for relief pursuant to Chapter 13 of the Bankruptcy Code on January 15, 2009. He filed the subject complaint on April 16, 2009, against Countrywide, now known as BAC, and the United States Department of Housing and Urban Development, (“HUD”).

The debtor executed a primary promissary note and a deed of trust to purchase his residence on August 31, 2002. The original beneficiary in the deed of trust was Mortgage Electronic Registration Systems, Inc. The underlying loan is currently being serviced by BAC, as the successor to Countrywide, and the amount of the indebtedness set forth in BAC’s proof of claim is $109,112.21.

The primary note and deed of trust were insured by HUD. When the debtor fell behind in his payments on the primary note, HUD paid $8,878.77 to Countrywide on debtor’s behalf under HUD’s Partial Claim Program. To provide security for this disbursement, on June 13, 2006, the debtor executed a subordinate note and deed of trust in favor of HUD encumbering his residence.

The debtor alleged in Count 1 of his complaint that none of the documents pertaining to either of the above described loans were signed by his wife, Shawna Yvette Dawson-Burks. Consequently, he contended, pursuant to Miss. Code Ann. §89-1-29, that neither of the deeds of trust were valid as liens against his and his wife’s homestead due to the lack of his spouse’s signature.

Motions for partial summary judgment as to Count 1 of the complaint were filed by the debtor, BAC, and HUD. The court concluded that there were no genuine issues of material fact remaining in dispute as to the debtor’s Count 1 claim against BAC and granted BAC’s motion for partial summary judgment. HUD’s joinder in BAC’s motion for partial summary judgment was denied. The debtor’s motion for partial summary judgment as to the invalidity of HUD’s unsecured non-purchase money deed of trust was sustained. (See the court’s opinion and order, both dated December 21, 2009.)

BAC has now filed this second motion for partial summary judgment asserting that it is entitled to a judgment as a matter of law as to the remaining counts of the debtor’s complaint. The debtor has alleged that BAC and its predecessor, Countrywide, charged improper and unauthorized fees in violation of § 506 of the Bankruptcy Code and Rule 2016, Federal Rules of Bankruptcy Procedure. The debtor objected to BAC’s proof of claim and additionally asserted that BAC and/or Countrywide committed violations of the automatic stay.

III.

Summary judgment is properly granted when pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Bankruptcy Rule 7056; Uniform Local Bankruptcy Rule 18. The court must examine each issue in a light most favorable to the nonmoving party. Anderson v. Liberty Lobby, 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Phillips v. OKC Corp., 812 F.2d 265 (5th Cir. 1987); Putman v. Insurance Co. of North America, 673 F.Supp. 171 (N.D. Miss. 1987). The moving party must demonstrate to the court the basis on which it believes that summary judgment is justified. The nonmoving party must then show that a genuine issue of material fact arises as to that issue. Celotex Corporation v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.29 265 (1986); Leonard v. Dixie Well Service & Supply, Inc., 828 F.2d 291 (5th Cir. 1987), Putman v. Insurance Co. of North America, 673 F.Supp. 171 (N.D. Miss. 1987). An issue is genuine if “there is sufficient evidence favoring the nonmoving party for a fact finder to find for that party.” Phillips, 812 F.2d at 273. A fact is material if it would “affect the outcome of the lawsuit under the governing substantive law.” Phillips, 812 F.2d at 272.

The court notes that it has the discretion to deny motions for summary judgment and allow parties to proceed to trial so that the record might be more fully developed for the trier of fact. Kunin v. Feofanov, 69 F.3d 59, 61 (5th Cir. 1995); Black v. J.I. Case Co., 22 F.3d 568, 572 (5th Cir. 1994); Veillon v. Exploration Services, Inc., 876 F.2d 1197, 1200 (5th Cir. 1989).

IV.

This court is of the opinion that this adversary proceeding has numerous material factual issues remaining in dispute. The debtor’s payment history and the methodology employed by BAC/Countrywide in the application of the debtor’s payments must be developed through an evidentiary hearing. The parties opposing views regarding the significance of the financial records have been made evident in telephonic conferences conducted by the court.

In summary, because of the aforesaid factual disputes, the court determines that BAC’s motion for partial summary judgment is not well taken.

A separate order will be entered consistent with this opinion.

Posted in bank of america1 Comment

HOLY SMOKES BAC Pitching for #4 I think!!! Bank of America (NYSE: BAC) Forecloses On and Sells Home on Homeowner Who was Current on Mortgage

HOLY SMOKES BAC Pitching for #4 I think!!! Bank of America (NYSE: BAC) Forecloses On and Sells Home on Homeowner Who was Current on Mortgage

I’d like to see the paper work…If anyone has the address I’d like to investigate how this made it to where it was…Something much deeper than this story!!!

Posted: 10 Apr 2010 07:29 AM PDT

Bank of America (NYSE: BAC) has inadvertently foreclosed on and sold a  home in Jackson County, Georgia, where the two homeowners were up-to-date on their mortgage payment, according to a report from Fox’s Atlanta Affiliate.

“On Tuesday, my husband was working on his truck. A guy came over to him, I think, and shook his hand and said, ‘Hi, I just bought this house.’ [My husband was] thinking to himself, ‘Yeah right, you’re joking,’” said Rani Achaibar, the homeowner whose house was auctioned off.

Without the knowledge of the Achaibars, Bank of America auctioned off their home at the Jackson County courthouse. The family said that their house, worth $500,000 somehow made it onto a foreclosure list.

“He had the paperwork in his hand and I said, ‘Oh my gosh!’ So sat down, got Bank of America on the phone right away, verified, not delinquent, but didn’t say there was a mistake,” recalled Achaibar.

The Achaibars’ mortgage statements showed that their monthly payments had been maid on time, but the Achaibars have said that they have had a difficult time getting answers from the bank.

“They sold my house overnight and they need to fix this fast,” said Achaibar.

A representative for Bank of America said, “It appears that a mistake has been made in this case. We are working diligently to research and rectify the situation as quickly as possible. We apologize to the Achaibar family for this unfortunate mistake.”

“Thank God it was a nice person who bought our house or he probably would have put us out,” said Achaibar.

Here’s the video from MyFox Atlanta:

This article (Bank of America (NYSE: BAC) Forecloses On and Sells Home on Homeowner Who was Current on Mortgage) was originally developed by and is property of American Banking News.

Posted in bank of america0 Comments

How Bank of America’s Mortgage Write-Down Program Works: WSJ

How Bank of America’s Mortgage Write-Down Program Works: WSJ

March 24, 2010, 10:56 PM ET

By Nick Timiraos WSJ Blogs

Don’t call us, we’ll call you—that was the message on Wednesday from Bank of America executives who announced the bank’s new effort to modify mortgages by cutting loan balances.

Under the program, Bank of America will reduce certain loans by up to 30% in order to lower monthly payments for borrowers facing foreclosure. While banks have selectively used principal write-downs to modify loans that they own, Bank of America’s approach could represent the beginning of broader efforts by banks to add write-downs as a more common tool in their loan-modification arsenal.

Here’s how it works: only borrowers who had loans from Countrywide Financial, which Bank of America acquired in mid-2008, will be eligible. And only the riskiest loans will qualify: subprime loans, “option adjustable-rate” mortgages that have low initial monthly payments but that can adjust sharply higher, and certain prime loans that have a fixed interest rate for the first two years before starting to adjust annually.

The program is also limited to customers who have missed at least two consecutive payments, who can demonstrate that a financial hardship prevents them from making payments at the current level, and whose loan balance is at least 120% of the estimated home value.

Bank of America will go through its loan book to see which loans might qualify for reductions (while checking property values to see which ones are far enough under water), and then the bank will reach out to those who may be eligible. “Our customers do not need to take any actions at this time,” said Jack Schakett, a credit-loss mitigation executive.

Why all the qualification restrictions?  For starters, banks and policy makers have long worried that they could up end the housing market if they offer principal write-downs too widely. Borrowers who are current but who owe more than their homes are worth, known as being “under water,” might stop paying to get a better deal. So it makes sense to start with a narrow pool of borrowers, particularly one that already has sky-high default rates.

Another reason: Bank of America is offering these modifications as part of a settlement reached Wednesday with the commonwealth of Massachusetts. The settlement is fairly detailed in prescribing what kinds of modifications Bank of America has to take with its Countrywide loans. (In an interview, Massachusetts Attorney General Martha Coakley said she pushed for principal reductions in the settlement because she didn’t want any bank to be “modifying a loan for the sake of modifying it, and finding two months, or six months, or a year later that it’s still going to be foreclosed on without getting to the root of the problem.”)

Bank of America says that around 45,000 borrowers could see their loan balances reduced with an average reduction of more than $62,000.

Bank of America’s approach has an interesting design feature in an attempt to prevent homeowners who are still paying their loans from defaulting and becoming eligible for the program. Loan balances aren’t reduced in one clean strike. Instead, Bank of America is offering what’s called “earned forgiveness.”

The program works like this: for a borrower who owes $300,000 on a home worth $200,000, the bank would reduce up to $100,000 in principal and place it in an interest-free account. For each of five years, the bank would forgive another $20,000 as long as the borrower continued to make payments and until the borrower was returned to a 100% loan-to-value ratio. If home prices have recovered by the fourth or fifth year to meet the amount owed, Bank of America would stop forgiving money in the interest-free account, which would have to be paid off when the home is sold or the loan is refinanced.

To be sure, there are drawbacks. One big challenge in modifying loans has been the presence of second mortgages. Bank of America said it will modify first mortgages that have seconds behind them only when Bank of America owns the first mortgage in its portfolio. The government’s modification program, Home Affordable Modification Program, has faced challenges because borrowers haven’t been able to document their incomes, and those requirements don’t go away in this effort.

But it does offer an interesting test case to see if, for the riskiest and worst performing loans, borrowers will stick with a better payment program.

 

Posted in bank of america0 Comments

Bank of America, Wells Fargo probably won't pay income tax for 2009: THANKS TO TRAP…I MEAN TARP!

Bank of America, Wells Fargo probably won't pay income tax for 2009: THANKS TO TRAP…I MEAN TARP!

Bank of America, Wells Fargo probably won’t pay income tax for 2009

Annual reports suggest BofA and Wells Fargo won’t have to pay federal income taxes for 2009.
By Christina Rexrode
crexrode@charlotteobserver.com
Posted: Friday, Mar. 26, 2010

This tax season will be kind to Bank of America and Wells Fargo: It appears that neither bank will have to pay federal income taxes for 2009.

Bank of America probably won’t pay federal taxes because it lost money in the U.S. for the year. Wells Fargo was profitable, but can write down its tax bill because of losses at Wachovia, which it rescued from a near collapse.

The idea of the country’s No. 1 and No. 4 banks not paying federal income taxes may be anathema to millions of Americans who are grumbling as they fill out their own tax forms this month. But tax experts say the banks’ situation is hardly unique.

“Oh, yeah, this happens all the time,” said Robert Willens, an expert on tax accounting who runs a New York firm with the same name. “Especially now, with companies suffering such severe losses.”

Bob McIntyre, at Citizens for Tax Justice, said he opposes the government giving corporations such a break.

“If you go out and try to make money and you don’t do it, why should the government pay you for your losses?” McIntyre said. “It’s as simple as that.”

For 2009, Bank of America netted a $2.3 billion benefit related to income taxes, according to its annual report: It had a benefit of $3.6 billion from the federal government, and an expense of $1.3 billion that it paid to different state and foreign governments.

It’s not unusual for a company’s debt to the federal government to vary widely from its debt to state governments, as appears to be the case with Bank of America, said Douglas Shackelford, a tax professor at UNC Chapel Hill.

The federal government often offers more tax deductions than the states; for example, Bank of America wrote down its federal taxable income with credits from low-income housing and losses on foreign subsidiary stock.

Company tax returns aren’t public, so it’s difficult to say for certain how much a company pays to, or receives from, tax coffers in any year .

The bank’s $3.6 billion current federal tax benefit for 2009 came in a year when it lost $1 billion in the U.S., according to its latest annual report. For the previous year, when the bank had profits of $3.3 billion in the U.S., it listed a current federal tax expense of $5.1 billion.

Wells Fargo was profitable in 2009, with $8 billion in earnings applicable to common shareholders. But its tax payments were reduced because of Wachovia’s losses.

Wells netted an overall tax benefit of $4.1 billion in 2009. It got a benefit worth nearly $4 billion from the federal government, and another worth $334 million from state governments. It had an expense of $164 million in foreign taxes. Wells did record an overall income tax expense of $5.3 billion, but that was offset by the tax benefits of the Wachovia losses.

Tax breaks and stimulus

The topic of corporate tax breaks has gained buzz recently because of a provision in the 2009 stimulus bill, which allows companies to “carry back” their losses for 2008 and 2009 to the previous five years, instead of just the previous two years. Homebuilders and other industries that suffered big losses in 2008 and 2009, but made a lot of money in the years before that, stand to gain billions in refunds. However, the stimulus bill provision does not apply for Bank of America and Wells Fargo, because companies that received TARP loans are ineligible.

UNC’s Shackelford said the argument for carrybacks stems from the belief that it’s “arbitrary” that taxes are collected on an annual basis.

“There’s no reason we couldn’t collect them on a monthly basis or a two-year basis. Then your losses and gains would be offset over the period,” he said. “The carryback enables you to not be penalized because your losses got bunched in a different year from your gains.”

The stimulus bill provision, he said, was helped by business lobbying. “There’s an awful lot of companies that paid a lot of taxes in the 2004 period, then they lost a lot of money, and they went to their legislators and said, ‘Please help us,'” Shackelford said.

McIntyre, at Citizens for Tax Justice, co-authored a report in 2004 related to carrybacks, after the Bush administration expanded many corporate tax breaks. The report examined 275 of the country’s largest companies and found that nearly one-third paid no federal income taxes in at least one year from 2001 to 2003. The companies overall were profitable in those years, but took advantage of tax breaks.

“If you or I lose money in the stock market, we don’t get to carry back our losses to any significant degree,” said McIntyre. His group works on closing tax breaks for corporations.

“Getting a refund from the past, that’s just weird,” he added.

Read more: www.charlotteobserver.com/2010/03/26/1337021/billions-in-tax-benefits-for-banks.html#ixzz0jUTUfF0A

Posted in bank of america, wells fargo0 Comments

Too BIG to Fail, Too BIG for Jail? Bid-Rigging Conspiracy

Too BIG to Fail, Too BIG for Jail? Bid-Rigging Conspiracy

March 26 (Bloomberg) — JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.

A government list of previously unidentified “co- conspirators” contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.’s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24.

The papers were filed by attorneys for a former employee of CDR Financial Products Inc., an advisory firm indicted in October. The attorneys, as part of their legal filing, identified the roster as being provided by the government. The document is labeled “list of co-conspirators.”

None of the firms or individuals named on the list has been charged with wrongdoing. The court records mark the first time these companies have been identified as co-conspirators. They provide the broadest look yet at alleged collusion in the $2.8 trillion municipal securities market that the government says delivered profits to Wall Street at taxpayers’ expense.

‘Sufficient Evidence’

“If the government is saying they are co-conspirators, the government believes they have sufficient evidence that they can show they were part of the conspiracy,” said Richard Donovan, a partner at New York-based law firm Kelley Drye & Warren LLP and co-chair of its antitrust practice. Donovan isn’t involved in the case.

The government’s case centers on investments known as guaranteed investment contracts that cities, states and school districts buy with the money they receive through municipal bond sales. Some $400 billion of municipal bonds are issued each year, and localities use the contracts to earn a return on some of the money until they need it for construction or other projects.

The Internal Revenue Service sometimes collects earnings on those investments and requires that they be awarded by competitive bidding to ensure that governments receive a fair return. The government charges that CDR ran sham auctions that allowed the banks to pay below-market interest rates to local governments.

CDR Fights Case

CDR, a Los Angeles-based local-government adviser, was indicted in October along with David Rubin, Zevi Wolmark and Evan Zarefsky, three current or former executives. The company and the three men have denied wrongdoing. Since last month, three former CDR employees who weren’t charged in the initial indictment have pleaded guilty and agreed to cooperate with the Justice Department.

More than a dozen financial firms are also facing civil suits filed by municipalities over the alleged conspiracy. Yesterday, U.S. District Judge Victor Marrero in Manhattan refused to toss out a lawsuit brought by Mississippi and other bond issuers.

Brian Marchiony, a spokesman for JPMorgan in New York; Doug Morris, a spokesman for UBS in New York; and Danielle Romero- Apsilos, a spokeswoman for Citigroup in New York, all declined to comment. A Societe Generale spokesman, Jim Galvin; Lehman spokeswoman Kimberly MacLeod, and GE Capital spokesman Ned Reynolds in Stamford, Connecticut, also declined to comment. Bank of America spokeswoman Shirley Norton in San Francisco declined to comment. Bear Stearns was bought by JPMorgan in 2008, the same year Lehman Brothers collapsed.

‘Absolute Disaster’

Laura Sweeney, a Justice Department spokeswoman in Washington, declined to comment.

Banks may choose to cooperate with prosecutors because in light of the government bailout funds they’ve received “a guilty plea would just be an absolute disaster for some of these companies,” said Nathan Muyskens, a partner at Shook, Hardy & Bacon in Washington and former trial attorney with the Federal Trade Commission’s Bureau of Competition.

“There have been antitrust investigations where there have been companies involved that were just never indicted,” he said in a phone interview.

At the same time, the government will probably focus on seeking to convict individual bankers, he said.

“When someone goes to jail for five years, that resonates,” he said. “When a company pays $200 million, it’s simply a balance sheet issue. Jail time is what captures corporate America’s attention.”

Lawyers’ Filing

In a court filing yesterday, defense lawyers said they “inadvertently” included the names of individual and company co-conspirators in a motion asking the court to compel the government to provide more specific evidence of the alleged misconduct. They asked the court to strike the entire exhibit in which the list appears. Judge Marrero granted the request.

The government’s probe became public in 2006 when federal investigators raided CDR and two competitors and issued subpoenas to more than a dozen firms. The “co-conspirators” on the list released in court this week also included Wachovia Corp., which was purchased by San Francisco-based Wells Fargo & Co. in 2008. Elise Wilkinson, a Wells Fargo spokeswoman in Charlotte, North Carolina, didn’t return a call today seeking comment.

October Indictments

The indictments released in October didn’t identify any of the sellers of the investment contracts involved in the alleged conspiracy. They were identified only as Provider A and Provider B. They paid kickbacks to CDR after winning investment deals brokered by the firm, according to the indictments.

The firms did this by paying sham fees tied to financial transactions entered into with other companies, prosecutors said. Kickbacks were paid from 2001 to 2005, ranging from $4,500 to $475,000 each, according to the Justice Department.

According to the list contained in the court filing this week, the investment contracts involved were created by units of GE and divisions of Financial Security Assurance Holdings Ltd., a bond insurer formerly part of Brussels-based lender Dexia SA.

The kickbacks were paid out of fees generated by transactions entered into with two financial institutions that weren’t identified in the October court filing. The March 24 list filed by the defense named the two firms as UBS and Royal Bank of Canada.

Dexia Sale

Dexia completed the sale of FSA’s bond-insurance business in July to Assured Guaranty Ltd. of Hamilton, Bermuda, while retaining its outstanding investment contracts.

Thierry Martiny, a spokesman for Dexia in Brussels, declined to comment. FSA, based in New York, was the biggest insurer of U.S. municipal bonds in 2007 and 2008.

“We have no comment,” said Betsy Castenir, a spokeswoman for Assured Guaranty in New York, in an e-mail response. “Dexia has responsibility for the liabilities of the Financial Products business.”

Royal Bank of Canada “has been fully cooperating with the government,” Kevin Foster, a spokesman for the bank in New York, said in an e-mailed statement. “We have no knowledge or evidence of wrongdoing by any of our employees.”

The case is U.S. v. Rubin/Chambers, Dunhill Insurance Services Inc., 09-CR-01058, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: William Selway in San Francisco at wselway@bloomberg.net; Martin Z. Braun in New York at mbraun6@bloomberg.net

Last Updated: March 26, 2010 13:09 EDT

Posted in bank of america, bloomberg, chase, citi, concealment, conspiracy, corruption, jpmorgan chase, wachovia0 Comments

BofA to start reducing mortgage principal – sources

BofA to start reducing mortgage principal – sources

Wed Mar 24, 2010 1:09pm IST
By David Lawder

WASHINGTON (Reuters) – Bank of America will on Wednesday announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home’s value or are battling ever-expanding “negative amortization” loans.

According to a summary of the program obtained by Reuters, Bank of America pledged to offer an “earned principal forgiveness” of up to 30 percent in two stages. The lender will first offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years, provided they stay current on their payments.

The forgiveness can allow a homeowner to bring the loan value back down to 100 percent of the home’s value over five years, according to the plan, confirmed by sources close to the matter.

The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal to tackle the thorny issue of preventing foreclosures when home values drop well below the amount owed.

A Bank of America spokesman declined comment.

Announcement of the program in Washington comes as U.S. lawmakers and housing advocates are becoming increasingly vocal about the need for principal writedowns in order to save homes on a large scale. Amid stubbornly high unemployment, homeowners are seen as more likely to simply abandon an unaffordable mortgage when they have no equity or are deep “underwater” on the loan.

The U.S. Treasury’s mortgage modification program has largely relied on reducing interest rates, and has been criticized for failing to address a steep and painful reduction in home values.

The announcement also will come two days after two Washington state residents sued Bank of America for allegedly reneging on a promise it made to modify troubled mortgages when it took $25 billion in taxpayer bailout money.

The lawsuit alleged that the lender has “seriously strung out, delayed and otherwised hindered” modifications because it had financial incentives to do so.

NEGATIVE AMORTIZATION LOANS TARGETED

Under the plan, Bank of America also will slash the principal balance on the worst of the high-risk mortgages written during the height of the housing boom, the so-called “payment option” adjustable rate mortgages that had a negative amortization feature that allowed the principal balance to grow.

On such loans that are delinquent and in danger of imminent default, the lender will announce that it will cut principal to as low as a 95 percent of the property’s value.

Bank of America lender also will expand its modification program to consider payment reductions on prime hybrid adjustable rate mortgages that have floating interest rates after two years and will extend its National Homeowner Retention Plan by six months until the end of 2012.

The bank expects to be operationally ready to start the earned principal reduction plan in May. It plans to identify mortgages that may be eligible for these programs and proactively contact homeowners to request documents to verify eligibility.

(Additional reporting by Joe Rauch in Charlotte; Editing by Lincoln Feast)

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13 BANKERS: MIT’s Johnson Says Too-Big-to-Fail Banks Will Spark New Crisis

13 BANKERS: MIT’s Johnson Says Too-Big-to-Fail Banks Will Spark New Crisis

Review by James Pressley :BLOOMBERG REVIEWS

March 22 (Bloomberg) — Alan Greenspan, the master of monetary mumbo jumbo, leaned back in his chair and grew uncharacteristically forthright.

“If they’re too big to fail, they’re too big,” the former Federal Reserve chairman said when asked about the dangers of outsized financial institutions.

It was October 2009, and the man who helped make megabanks possible was sounding more like Teddy Roosevelt than the Maestro as he entertained what he called a radical solution.

“You know, break them up,” he told an audience at the Council on Foreign Relations in New York. “In 1911, we broke up Standard Oil. So what happened? The individual parts became more valuable than the whole.”

Greenspan the bank buster crops up near the end of “13 Bankers,” Simon Johnson and James Kwak’s reasoned look at how Wall Street became what they call “the American oligarchy,” a group of megabanks whose economic power has given them political power. Unless these too-big-to-fail banks are broken up, they will trigger a second meltdown, the authors write.

“And when that crisis comes,” they say, “the government will face the same choice it faced in 2008: to bail out a banking system that has grown even larger and more concentrated, or to let it collapse and risk an economic disaster.”

The banks in their sights include Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. Though Wall Street may not like “13 Bankers,” the authors can’t be dismissed as populist rabble-rousers.

Cash for Favors

Johnson is an ex-chief economist for the International Monetary Fund who teaches at the Massachusetts Institute of Technology. Kwak is a former McKinsey & Co. consultant. In September 2008, they started the Baseline Scenario, a blog that became essential reading on the crisis. When they call Wall Street an oligarchy, they’re not speaking lightly.

Drawing parallels to the U.S. industrial trusts of the late 19th century and Russian businessmen who rose to economic dominance in the 1990s, the authors apply the term to any country where “well-connected business leaders trade cash and political support for favors from the government.”

Oligarchies weaken democracy and distort competition. The Wall Street bailouts boosted the clout of the survivors, making them bigger and enlarging their market shares in derivatives, new mortgages and new credit cards, the authors say.

Suicidal Risk-Taking

These megabanks emerged from the meltdown more opposed to regulation than ever, the authors say. If they get their way — and they will, judging from current congressional maneuvering over President Barack Obama’s proposed regulatory overhaul — Wall Street will retain its license to gamble with the taxpayer’s money. This isn’t good for anyone, including the banks themselves, which often feel compelled by competitive pressure to take suicidal risks.

“There is another choice,” they write: “the choice to finish the job that Roosevelt began a century ago, and to take a stand against concentrated financial power just as he took a stand against concentrated industrial power.”

Obama finds himself in the middle of a struggle that has coursed throughout U.S. history — the struggle between democracy and powerful banking interests. The book’s title alludes to one Friday last March when 13 of the nation’s most powerful bankers met with Obama at the White House amid a public furor over bailouts and bonuses.

The material that sets this book apart can be found at the beginning and end. Chapters three through six present an all- too-familiar, though meticulously researched, primer on how the economy became “financialized” over the past 30 years.

Regulatory Arbitrage

Crisis buffs won’t miss much if they skip ahead to the last chapter, where the authors debunk arguments that curbing the size of banks is too simplistic. A more complex approach, they say, would invite “regulatory arbitrage, such as reshuffling where assets are parked.”

They propose that no financial institution should be allowed to control or have an ownership interest in assets worth more than 4 percent of U.S. gross domestic product, or roughly $570 billion in assets today. A lower limit should be imposed on investment banks — effectively 2 percent of GDP, or roughly $285 billion, they say.

If hard caps sound unreasonable, consider this: These ceilings would affect only six banks, the authors say: Bank of America, JPMorgan Chase, Citigroup Inc., Wells Fargo & Co., Goldman Sachs and Morgan Stanley.

“Saying that we cannot break up our largest banks is saying that our economic futures depend on these six companies,” they say. “That thought should frighten us into action.”

Though Jamie Dimon won’t like this (any more than John D. Rockefeller did), incremental regulatory changes and populist rhetoric about “banksters” are getting us nowhere. It’s time for practical solutions. This might be a place to start.

“13 Bankers: The Wall Street Takeover and the Next Financial Meltdown” is from Pantheon (304 pages, $26.95). To buy this book in North America, click here.

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer on the story: James Pressley in Brussels at jpressley@bloomberg.net.

Last Updated: March 21, 2010 20:00 EDT

By: Simon Johnson
The Baseline Scenario

Posted in bank of america, bernanke, bloomberg, citi, Dick Fuld, federal reserve board, geithner, jpmorgan chase0 Comments

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