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IN RE: EXEC. COMPENSATION INVESTIGATION BANK OF AMERICA -MERRILL LYNCH DEPOSITION OF KEN L. LEWIS

IN RE: EXEC. COMPENSATION INVESTIGATION BANK OF AMERICA -MERRILL LYNCH DEPOSITION OF KEN L. LEWIS


EXCERPTS:

Q. At the point in time of this board
meeting, though, you were relating to the board
that you felt you had a commitment from the Fed and
the Treasury to make good on whatever harm is
caused by the increased losses at Merrill Lynch; is
that right?

A. I had verbal commitments from Ben
Bernanke and Hank Paulson that they were going to
see this through, to fill that hole, and have the
market perceive this as a good deal.

MR. CORNGOLD: Isn’t the only way to
fill that hole, though, to give you money,
not to give you money that you would have to
pay back at some interest rate with some
potential equity interest, too?

THE WITNESS: No. I think you have to
separate the fact that, yes, there is still
some short-term paying -it’s more
short-term paying now than we would have had
had all this not happened, but longer term we
still see a strategic benefit. So we saw it
as a short term versus a long term impact on
the company.

MR. CORNGOLD; When you entered into the
initial contract with Merrill Lynch did you
get a fairness opinion about the transaction?

THE WITNESS: Yes.

MR. CORNGOLD: From whom?

THE WITNESS; Chris Flowers something.

MR. CORNGOLD: And did you get a
fairness opinion from anyone about the
transaction that you entered into with the federal government and the Fed?

THE WITNESS: No. MR. CORNGOLD: Did you consider whether you had a legal obligation to do that? THE WITNESS: I would rely on the advice of the general counsel for that.

MR. CORNGOLD: But when you say that, does that mean that you asked and got advice, or that you didn’t ask but relied
THE WITNESS: I would rely on somebody bringing that question forth, and nobody did.

Q. Did you ask anyone to look into whether the oral, verbal commitments from the Fed and Treasury were enforceable?

A. No. I was going on the word of two very respected individuals high up in the American government.

Q. Wasn’t Mr. Paulson, by his instruction, really asking Bank of America shareholders to take a good part of the hit of the Merrill losses?

A. What he was doing was trying to stem a financial disaster in the financial markets, from his perspective.

Q. From your perspective, wasn’t that one
of the effects of what he was doing?

A. Over the short term, yes, but we still
thought we had an entity that filled two big
strategic holes for us and over long term would
still be an interest to the shareholders.

Q. What do you mean by “short term”?

A. Two to three years.

Q. So isn’t that something that any
shareholder at Bank of America who had less
than a three-year time horizon would want
to know?

A. The situation was that everyone felt
like the deal needed to be completed and to be able
to say that, or that they would impose a big risk
to the financial system if it would not.

MR. LAWSKY: When you say “everyone,”
what do you mean?

THE WITNESS: The people that I was
talking to, Bernanke and Paulson.

MR. LAWSKY: Had it been up to you would
you made the disclosure?

THE WITNESS: It wasn’t up to me.

MR. LAWSKY: Had it been up to you.

THE WITNESS: It wasn’t.

MR. CORNGOLD: Why do you say it wasn’t
up to you? Were you instructed not to tell
your shareholders what the transaction was
going to be?

THE WITNESS: I was instructed that “We
do not want a public disclosure.”

MR. CORNGOLD: Who said that to you?

THE WITNESS: Paulson.

MR. CORNGOLD: When did he say that to
you?

THE WITNESS; Sometime after I asked Ben
Bernanke for something in writing.

Q. When did that occur?

A. Which one?

Q. When did Mr. Paulson state that he did
not want a public disclosure?

A. It was sometime late in the year. I
think it’s actually in the minutes.

MR. LIMAN: If you have the next set of
minutes it might help the witness.

Q. What’s your best recollection of what

Mr. Paulson said to you on that point?

A. That was the conversation that I
mentioned that I went to Bernanke to ask the
question, and he didn’t call me back but Hank did.
The request was for a letter stating what they
would do, and he had those two elements in there.
But the thing that we’re talking about is that he
said “We do not want a public disclosure.”

Q. A public disclosure of what?

A. Of what they were going to be doing for us until it was completed.

[…]

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© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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They Keep Stealing – Why Keep Paying?

They Keep Stealing – Why Keep Paying?


Host of MSNBC’s “The Dylan Ratigan Show”
Posted: June 24, 2010 12:04 PM Huffington Post

The dire straits of the middle class of America has made it near impossible for our politicians to keep up the pretense that our current government truly works for the “people.” Between the multiple overt and secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.

When Senator Durbin said “The banks… frankly own this place,” you realize it was not in jest.

Couple this with recent protections handed by the Supreme Court to corporations to directly influence elections and it can make things seem hopeless for those not on Wall Street or their chosen politicians. Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.

And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.

If you are one of them, chances are you didn’t do anything wrong. Almost all of you were not subprime borrowers or speculators, but merely people buying a house that they thought they could afford at the time. You were just unlucky in that you bought a house during a time when an outdated Wall Street and their complicit politicians decided to use housing to regain the income they lost due to the Schwabs and Etrades of the internet age.

You didn’t cause this mess. They did.

Now you are struggling to make the same payments on this mortgage on your now overpriced home even in light of a crashing economy and massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.

Well, it is becoming time to take matters into your own hands… I suggest that you call your lender and tell them if they don’t lower you mortgage by at least 20%, you are walking away. And if they don’t agree, you need to consider walking away.

It probably doesn’t feel right to you.

That is because you probably are a good person. But your mortgage is a business deal, and it is not immoral to walk away from a business deal unless you went in to the deal with the intention of defaulting.

But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and — get this — now even Fannie Mae execs want to keep you from exercising your rights.

But before you let them (or anyone commenting below) force you into paying that $500k mortgage on a $300k house, ask them if they’ll push Jerry Speyer into “honoring his obligation” by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?

Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mack about how “you’re supposed to meet your obligations, not run from them”? Maybe make him use some of his $50+ million for those buildings he bought in San Francisco?

And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping “teach the American people…not to run away” by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendors at Mervyn’s? After all, at least you aren’t single-handedly putting 1,100 employees out of work when you walk on your mortgage.

As part of the deal for your house, your mortgage holder gets interest payments from you and they also use the note to your house for their capital reserves. In return, they take the risk of a foreclosure. In many states, you paid extra to have a non-recourse loan where the lender just gets the house back if you stop paying — your interest rate would’ve been much lower if you were held personally liable like a student loan. But if you still feel bad, then donate the money saved to charity instead of to their bonuses. And when someone tries telling you why it is so wrong, here are some answers:

– Yes, it might seem selfish, but you are actually going to help fix our country the right way, through the use of pure capitalism. There are 3 parties involved in your mortgage — the mortgage holders, the servicing bank and you. You probably want to stay in your house. Most of the people who actually own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don’t care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves outrageously. The credible threat of you walking away from your mortgage en masse is the only market-based solution that will force these banks to work with the mortgage holders on your behalf.

– No, you will not “hurt” your neighbors — certainly not near the scale of the banksters. Chances are someone just as nice will you will move in and (unlike you) pay a fair, non-inflated price for the house. Encourage your neighbors to fight back against the banks and ask for their own mortgage reductions as well.

– Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn’t a bad thing.

– Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.

– No, the banks won’t necessarily pass the losses on to customers. They already make a lot of money. If costs are passed on to every consumer without banks competing on price, that’s a sign of illegal collusion or a monopoly. Let’s fix that instead of just letting banks ruin our lives. They might, however, not all make $145 billion in bonuses next year doing something fundamentally so easy that it is an unpaid job in Monopoly.

Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to “save” the economy without rewarding those most responsible for the damage.

Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.

But thankfully, in this country we still have the tools to fight back and regain our country. Our vote, our voice, our laws and what we choose to do with every penny we have that doesn’t go to taxes are the benefits of our hard-fought freedom, and in this battle we must use them all to fight back. It’s time for the citizens to once again own this place.

Follow Dylan Ratigan on Twitter: www.twitter.com/DylanRatigan


© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bogus, foreclosure, foreclosures, walk away, Wall StreetComments (0)

The Perks of Being a Goldman Kid: PAY RAISES

The Perks of Being a Goldman Kid: PAY RAISES


Investment Banking NYTIMES.com

The Perks of Being a Goldman Kid

March 22, 2010, 6:18 am

<!– — Updated: 3:02 pm –>

Perks Watch
Goldman

Working for Goldman Sachs remains a well-paid family affair.

Last month, the blogosphere was atwitter with reports that Jonathan Blankfein, the son of Goldman chief executive Lloyd C. Blankfein, would be joining the firm when he graduates from Harvard this spring and that older son, Alex, was working at the company in a “capacity that isn’t clear.”

Gawker said that its item was based on a tipster, but the preliminary proxy that Goldman filed on Friday afternoon seems to confirm the tip.

Under the section “Certain Relationships and Other Transactions,” the filing notes that “a child” of Mr. Blankfein — the filing does not give any other details, including the child’s name or a role at the company — was a nonexecutive employee last year who made $155,000.

According to the filing, two other Goldman executives, general counsel Esta E. Stecher and chief financial officer David A. Viniar, also have children who work at Goldman, though as with Mr. Blankfein, the filing did not give the children’s names or their roles at the company.

But the filing did note that Ms. Stecher’s son made $200,000 last year and that Mr. Viniar’s stepdaughter made $225,000 last year. That’s a substantial increase from 2008, when the two children made $124,000 and $150,000, respectively, according to Goldman’s 2009 proxy.

Michelle Leder

Go to Goldman Sachs Filing with the S.E.C. »

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AP IMPACT: Gov't bank auditors got big bonuses: Just like the Banksters

AP IMPACT: Gov't bank auditors got big bonuses: Just like the Banksters


Last updated March 18, 2010 5:38 a.m. PT

AP IMPACT: Gov’t bank auditors got big bonuses

By MATT APUZZO
ASSOCIATED PRESS WRITER 

WASHINGTON — Banks weren’t the only ones giving big bonuses in the boom years before the worst financial crisis in generations. The government also was handing out millions of dollars to bank regulators, rewarding “superior” work even as an avalanche of risky mortgages helped create the meltdown.

The payments, detailed in payroll data released to The Associated Press under the Freedom of Information Act, are photothe latest evidence of the government’s false sense of security during the go-go days of the financial boom. Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses despite missing or ignoring signs that the system was on the verge of a meltdown.

The bonuses were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.

During the 2003-06 boom, the three agencies that supervise most U.S. banks – the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency – gave out at least $19 million in bonuses, records show.

Nearly all that money was spent recognizing “superior” performance. The largest share, more than $8.4 million, went to financial examiners, those employees and managers who scrutinize internal bank documents and sound the first alarms. Analysts, auditors, economists and criminal investigators also got awards.

After the meltdown, the government’s internal investigators surveyed the wreckage of nearly 200 failed banks and repeatedly found that those regulators had not done enough:

-“OTS did not react in a timely and forceful manner to certain repeated indications of problems,” the Treasury Department’s inspector general said of the thrift supervision office following the $2.5 billion collapse of NetBank, the first major bank failure of the economic crisis.

-“OCC did not issue a formal enforcement action in a timely manner and was not aggressive enough in the supervision of ANB in light of the bank’s rapid growth,” the inspector general said of the currency comptroller after the $2.1 billion failure of ANB Financial National Association

-“In retrospect, a stronger supervisory response at earlier examinations may have been prudent,” FDIC’s inspector general concluded following the $1.8 billion collapse of New Frontier Bank.

-“OTS examiners did not identify or sufficiently address the core weaknesses that ultimately caused the thrift to fail until it was too late,” Treasury’s inspector general said regarding IndyMac, which in 2008 became one of the largest bank failures in history. “They believed their supervision was adequate. We disagree.”

-“OCC’s supervision of Omni National Bank was inadequate,” Treasury investigators concluded following Omni’s $956 million failure.

Because most bank inspection records are not public and the government blacked out many of the employee names before releasing the bonus data, it’s impossible to determine how many auditors got bonuses despite working on major banks that failed.

Regulators says it’s unfair to use those missteps, seen with the benefit of hindsight, to suggest any of the bonuses was improper.

“These are meant to motivate employees, have them work hard,” thrift office spokesman William Ruberry said. “The economy has taken a downturn in recent years. I’m not sure that negates the hard work or good ideas of our employees.”

At the OCC, spokesman Kevin Mukri noted that the national banks his agencies regulate generally fared better than others during the financial crisis.

“In making compensation decisions, the OCC is mindful of the need to recruit and retain the very best people, and our merit system is aimed at accomplishing that,” Mukri said. “We also believe it is important to reward those who worked so hard and showed such great professionalism throughout the crisis.”

David Barr, a spokesman for the FDIC, which handed out two-thirds of the bonuses during the boom, had no comment.

In government, as on Wall Street, bonuses are part of the culture. Federal employees can get extra pay for innovative ideas, recruiting new talent or performing exceptional work. Candidates being considered for hard-to-fill jobs may be offered student loan reimbursement or cash bonuses to get them in the door and keep them from leaving.

The bonus data released to the AP does not say specifically why each person received a bonus. For instance, one person in the OCC’s financial examining division got a $41,000 recruitment bonus on top of a $179,000 salary in 2005. In 2006, the last boom year for banks buying risky mortgages, the FDIC gave out more than 2,000 bonuses to financial examiners.

In 2008, the year the market collapsed, OTS gave 96 financial examiners bonuses of up to $3,000 for exceptional work.

At the three regulatory agencies, the value of the bonuses stayed roughly constant from before the banking boom, through the good times and into the collapse. While the total pales in comparison with the billions spent on Wall Street perks, the justification was similar.

“Bonuses were determined based upon the performance and the retention of the people,” said John Thain, the former CEO of Merrill Lynch, the troubled brokerage firm that paid out $3.6 billion in bonuses just before selling itself to Bank of America. “And there is nothing that happened in the world or the economy that would make you say that those were not the right thing to do for the retention and the reward of the people who were performing.”

To be sure, Washington policymakers eased regulations and encouraged banks to write risky loans. Families bought homes they couldn’t afford. Brokers found them mortgages. Bankers quickly snatched them up, never asking whether they could be repaid. And rating agencies certified it all as safe.

But regulators were part of the problem, and the bonuses were a symptom, said Ellen Seidman, a research fellow at the New America Foundation think tank and the former head of OTS from 1997 to 2001.

“Is it probably the case that the standards for evaluating how well people in the regulatory system were doing were not as high as they should have been? Probably,” Seidman said.

But the bigger question, she said, is why government regulators thought they were doing so well: “Why did the system fool itself?”

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