securities | FORECLOSURE FRAUD | by DinSFLA - Part 2

Tag Archive | "securities"

TRUSTEE FOR LIQUIDATION OF BERNARD L. MADOFF INVESTMENT SECURITIES CHARGES JPMORGAN CHASE, MADOFF’S PRIMARY BANKER, WITH “ENABLING” MASSIVE FRAUD

TRUSTEE FOR LIQUIDATION OF BERNARD L. MADOFF INVESTMENT SECURITIES CHARGES JPMORGAN CHASE, MADOFF’S PRIMARY BANKER, WITH “ENABLING” MASSIVE FRAUD


The complaint seeks to recover nearly $1 billion in fees and profits and an additional $5.4 billion in
damages for JPMC’s decades-long role as BLMIS’s primary banker, aiding and abetting Madoff’s
fraud. All recovered monies will be placed into the Customer Fund and distributed, pro rata, to
Madoff customers with valid claims, the rightful owners of those monies.

“JP Morgan was willfully blind to the fraud, even after learning about numerous red flags surrounding Madoff,” said David J. Sheehan, counsel for the Trustee and a partner at Baker & Hostetler LLP, the court-appointed counsel for the Trustee. “While many financial institutions enabled Madoff’s fraud, JPMC was at the very center of that fraud, and thoroughly complicit in it. JPMC was BLMIS’s primary banker for more than 20 years, and was responsible for knowing the business of its customers – in this case, a very large customer. Madoff would not have been able to commit this massive Ponzi scheme without this bank. JPMC should pay the price for its central role in enabling Madoff’s fraud.”

Continue below…to read TO BE FILED UNDER SEAL COMPLAINT

[ipaper docId=44698094 access_key=key-3g7zv06us0ymnp7afom height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

NYSC AGREES TO SUBPOENA OF CUSTODIAL RECORDS FOR PENDING CA CASE: MBIA INSURANCE CORPORATION v. INDYMAC ABS et al.

NYSC AGREES TO SUBPOENA OF CUSTODIAL RECORDS FOR PENDING CA CASE: MBIA INSURANCE CORPORATION v. INDYMAC ABS et al.


In the matter of:
The Application of Quinn Emanuel Urquhart
& Sullivan, LLP to subpoena documents
from CUSTODIAN OF RECORDS, THE
DEPOSITORY TRUST COMPANY
, under
a Commission issued in an action entitled
MBIA INSURANCE CORPORATION, a
New York corporation, Plaintiff v.
INDYMAC ABS, INC., a Delaware
corporation; HOME EQUITY MORTGAGE
2006-H4, a Delaware statutory trust; HOME
BACKED TRUST, SERIES INDS 2007-1, a
New York common law trust; HOME
BACKED TRUST, SERIES INDS 2007-2, a
New York common law trust; CREDIT
SUISSE SECURITIES (USA), L.L.C., a
Delaware limited liability Corporation; UBS
SECURITIES, LLC, a Delaware
corporation; JPMORGAN CHASE & CO., a
Delaware corporation; MICHAEL PERRY,
an individual; A. SCOTT KEYS, an
individual; JILL JACOBSON, an individual;
KEVIN CALLAN, an individual; and JOHN
and JANE DOES 1 – 100, Defendants,
pending in the Superior Court of California,
Los Angeles County, Central District, Case
No. BC422358.

ORDER DIRECTING
PRODUCTION OF BUSINESS
RECORDS FOR USE IN AN
ACTION PENDING
OUTSIDE NEW YORK STATE

[ipaper docId=44664574 access_key=key-1udstfmksoj49d885mbw height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

Countrywide, Bank Of America Agreement and Plan Merger 2008

Countrywide, Bank Of America Agreement and Plan Merger 2008


Note this is incomplete but the basics:

Table Of Contents:

  • Pg. 2. 2nd Supp. Note Deed Poll, Dated 11/072008, To The Note Deed Poll Dated 4/29/05
  • Pg. 10. Bank of America Corporation on 1st July 2008 – Effective date of merger
  • Pg. 15. Countrywide and Bank Of America Agreement And Plan Of Merger
  • Pg. 116. Bank of America Corporation on 7th November 2008 – Debt Assumption
  • Pg. 127. 6th Supp Trust Deed Dated 11/07/08, 11/07/08, Modifying The Prov. Of Trust Deed 5/01/98
  • Pg. 138 3rd Supp. Trust Deed 11/07/08, To The Trust Deed Dated 8/15/05
  • Pg. 148 UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
  • Pg. 163. Countrywide Financial Corporation on 30th June 2008 – Consolidated Balance Sheet for
  • Pg. 282. First Supplemental Deed Poll Guarantee and Indemnity

[ipaper docId=44612785 access_key=key-1r5gobfvmuza3pv9k102 height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

FL CLASS ACTION: Alleging Lender Processing Service “LPS” Violated Federal Securities Laws

FL CLASS ACTION: Alleging Lender Processing Service “LPS” Violated Federal Securities Laws


City of St. Clair Shores General Employees Retirement System

v

Lender Processing Services, Inc., Jeffrey S. Carbiener, Lee A. Kennedy, and Francis K. Chan

The complaint alleging violations of the federal securities laws by Lender Processing Services, Inc. and certain of its officers and/or directors. The class action was commenced in the United States District Court for the Middle District of Florida on behalf of purchasers of LPS securities between July 29, 2009 and October 4, 2010 (the “Class Period”) by Robbins Geller Rudman and Dowd LLP.

LPS CLASS

[ipaper docId=43794502 access_key=key-1wej89yk64l79dcp7srt height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (6)

FORM X-17F-1A MISSING/LOST/STOLEN/COUNTERFEIT SECURITIES REPORT

FORM X-17F-1A MISSING/LOST/STOLEN/COUNTERFEIT SECURITIES REPORT


General Rules and Regulations
promulgated
under the
Securities Exchange Act of 1934

Rule 17f-1 — Requirements for Reporting and Inquiry with Respect to Missing, Lost, Counterfeit or Stolen Securities


(a) Definitions. For purposes of this section:

(1) The term reporting institution shall include every national securities exchange, member thereof, registered securities association, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, registered transfer agent, registered clearing agency, participant therein, member of the Federal Reserve System and bank whose deposits are insured by the Federal Deposit Insurance Corporation;

(2) The term uncertificated security shall mean a security not represented by an instrument and the transfer of which is registered upon books maintained for that purpose by or on behalf of the issuer;

(3) The term global certificate securities issue shall mean a securities issue for which a single master certificate representing the entire issue is registered in the nominee name of a registered clearing agency and for which beneficial owners cannot receive negotiable securities certificates;

(4) The term customer shall mean any person with whom the reporting institution has entered into at least one prior securities-related transaction; and

(5) The term securities-related transaction shall mean a purpose, sale or pledge of investment securities, or a custodial arrangement for investment securities.

(6) The term securities certificate means any physical instrument that represents or purports to represent ownership in a security that was printed by or on behalf of the issuer thereof and shall include any such instrument that is or was:

(i) Printed but not issued;

(ii) Issued and outstanding, including treasury securities;

(iii) Cancelled, which for this purpose means either or both of the procedures set forth in Sec. 240.17Ad-19(a)(1); or

(iv) Counterfeit or reasonably believed to be counterfeit.

(7) The term issuer shall include an issuer’s:

(i) Transfer agent(s), paying agent(s), tender agent(s), and person(s) providing similar services; and

(ii) Corporate predecessor(s) and successor(s).

(8) The term missing shall include any securities certificate that:

(i) Cannot be located or accounted for, but is not believed to be lost or stolen; or

(ii) A transfer agent claims or believes was destroyed in any manner other than by the transfer agent’s own certificate destruction procedures as provided in Sec. 240.17Ad-19.

(b) Every reporting institution shall register with the Commission or its designee in accordance with instructions issued by the Commission except:

(1) A member of a national securities exchange who effects securities transactions through the trading facilities of the exchange and has not received or held customer securities within the last six months;

(2) A reporting institution that, within the last six months, limited its securities activities exclusively to uncertificated securities, global securities issues or any securities issue for which neither record nor beneficial owners can obtain a negotiable securities certificate; or

(3) A reporting institution whose business activities, within the last six months, did not involve the handling of securities certificates.

(c) Reporting requirements–

(1) Stolen securities.

(i) Every reporting institution shall report to the Commission or its designee, and to a registered transfer agent for the issue, the discovery of the theft or loss of any securities certificates where there is substantial basis for believing that criminal activity was involved. Such report shall be made within one business day of the discovery and, if the certificate numbers of the securities cannot be ascertained at that time, they shall be reported as soon thereafter as possible.

(ii) Every reporting institution shall promptly report to the Federal Bureau of Investigation upon the discovery of the theft or loss of any securities certificate where there is substantial basis for believing that criminal activity was involved.

(2) Missing or lost securities. Every reporting institution shall report to the Commission or its designee, and to a registered transfer agent for the issue, the discovery of the loss of any securities certificate where criminal actions are not suspected when the securities certificate has been missing or lost for a period of two business days. Such report shall be made within one business day of the end of such period except that:

(i) Securities certificates lost, missing, or stolen while in transit to customers, transfer agents, banks, brokers or dealers shall be reported by the delivering institution by the later of two business days after notice of non-receipt or as soon after such notice as the certificate numbers of the securities can be ascertained.

(ii) Where a shipment of retired securities certificates is in transit between any transfer agents, banks, brokers, dealers, or other reporting institutions, with no affiliation existing between such entities, and the delivering institution fails to receive notice of receipt or non-receipt of the certificates, the delivering institution shall act to determine the facts. In the event of non-delivery where the certificates are not recovered by the delivering institution, the delivering institution shall report the certificates as lost, stolen, or missing to the Commission or its designee within a reasonable time under the circumstances but in any event within twenty business days from the date of shipment.

(iii) Securities certificates considered lost or missing as a result of securities counts or verifications required by rule, regulation or otherwise (e.g., dividend record date verification made as a result of firm policy or internal audit function report) shall be reported by the later of ten business days after completion of such securities count or verification or as soon after such count or verification as the certificate numbers of the securities can be ascertained.

(iv) Securities certificates not received during the completion of delivery, deposit or withdrawal shall be reported in the following manner:

(A) Where delivery of the securities certificates is through a clearing agency, the delivering institution shall supply to the receiving institution the certificate number of the security within two business days from the date of request from the receiving institution. The receiving institution shall report within one business day of notification of the certificate number;

(B) Where the delivery of securities certificates is in person and where the delivering institution has a receipt, the delivering institution shall supply the receiving institution the certificate numbers of the securities within two business days from the date of request from the receiving institution. The receiving institution shall report within one business day of notification of the certificate number;

(C) Where the delivery of securities certificates is in person and where the delivering institution has no receipt, the delivering institution shall report within two business days of notification of non-receipt by the receiving institution; or

(D) Where delivery of securities certificates is made by mail or via draft, if payment is not received within ten business days, the delivering institution shall confirm with the receiving institution the failure to receive such delivery; if confirmation shows non-receipt, the delivering institution shall report within two business days of such confirmation.

(3) Counterfeit securities. Every reporting institution shall report the discovery of any counterfeit securities certificate to the Commission or its designee, to a registered transfer agent for the issue, and to the Federal Bureau of Investigation within one business day of such discovery.

(4) Transfer agent reporting obligations. Every transfer agent shall make the reports required above only if it receives notification of the loss, theft or counterfeiting from a non-reporting institution or if it receives notification other than on a Form X-17F-1A or if the certificate was in its possession at the time of the loss.

(5) Recovery. Every reporting institution that originally reported a lost, missing or stolen securities certificate pursuant to this Section shall report recovery of that securities certificate to the Commission or its designee and to a registered transfer agent for the issue within one business day of such recovery or finding. Every reporting institution that originally made a report in which criminality was indicated also shall notify the Federal Bureau of Investigation that the securities certificate has been recovered.

(6) Information to be reported. All reports made pursuant to this Section shall include, if applicable or available, the following information with respect to each securities certificate:

(i) Issuer;

(ii) Type of security and series;

(iii) Date of issue;

(iv) Maturity date;

(v) Denomination;

(vi) Interest rate;

(vii) Certificate number, including alphabetical prefix or suffix;

(viii) Name in which registered;

(ix) Distinguishing characteristics, if counterfeit;

(x) Date of discovery of loss or recovery;

(xi) CUSIP number;

(xii) Financial Industry Numbering System (”FINS”) Number; and

(xiii) Type of loss.

(7) Forms. Reporting institutions shall make all reports to the Commission or its designee and to a registered transfer agent for the issue pursuant to this section on Form X-17F-1A. Reporting institutions shall make reports to the Federal Bureau of Investigation pursuant to this Section on Form X-17F-1A, unless the reporting institution is a member of the Federal Reserve System or a bank whose deposits are insured by the Federal Deposit Insurance Corporation, in which case reports may be made on the form required by the institution’s appropriate regulatory agency for reports to the Federal Bureau of Investigation.

(d) Required inquiries.

(1) Every reporting institution (except a reporting institution that, acting in its capacity as transfer agent, paying agent, exchange agent or tender agent for an equity issue, or registrar for a bond or other debt issue, compares all transactions against a shareholder or bondholder list and a current list of stop transfers) shall inquire of the Commission or its designee with respect to every securities certificate which comes into its possession or keeping, whether by pledge, transfer or otherwise, to ascertain whether such securities certificate has been reported as missing, lost, counterfeit or stolen, unless:

(i) The securities certificate is received directly from the issuer or issuing agent at issuance;

(ii) The securities certificate is received from another reporting institution or from a Federal Reserve Bank or Branch;

(iii) The securities certificate is received from a customer of the reporting institution; and

(A) Is registered in the name of such customer or its nominee; or

(B) Was previously sold to such customer, as verified by the internal records of the reporting institution;

(iv) The securities certificate is received as part of a transaction which has an aggregate face value of $10,000 or less in the case of bonds, or market value of $10,000 or less in the case of stocks; or

(v) The securities certificate is received directly from a drop which is affiliated with a reporting institution for the purposes of receiving or delivering certificates on behalf of the reporting institution.

(2) Form of inquiry. Inquiries shall be made in such manner as prescribed by the Commission or its designee.

(3) A reporting institution shall make required inquiries by the end of the fifth business day after a securities certificate comes into its possession or keeping, provided that such inquiries shall be made before the certificate is sold, used as collateral, or sent to another reporting institution.

(e) Permissive reports and inquiries. Every reporting insitution may report to or inquire of the Commission or its designee with respect to any securities certificate not otherwise required by this section to be the subject of a report or inquiry. The Commission on written request or upon its own motion may permit reports to and inquiries of the system by any other person or entity upon such terms and conditions as it deems appropriate and necessary in the public interest and for the protection of investors.

(f) Exemptions. The following types of securities are not subject to paragraphs (c) and (d) of this section:

(1) Security issues not assigned CUSIP numbers;

(2) Bond coupons;

(3) Uncertificated securities;

(4) Global securities issues; and

(5) Any securities issue for which neither record nor beneficial owners can obtain a negotiable securities certificates.

(g) Recordkeeping. Every reporting institution shall maintain and preserve in an easily accessible place for three years copies of all Forms X-17F-1A filed pursuant to this section, all agreements between reporting institutions regarding registration or other aspects of this section, and all confirmations or other information received from the Commission or its designee as a result of inquiry.


FORM X-17F-1A MISSING.LOST.STOLEN.COUNTERFEIT

[ipaper docId=43548756 access_key=key-1qi1zzc20m0t0fpvpzes height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

[VIDEO] SECURITIZATION INDUSTRY FIGHTS BACK!

[VIDEO] SECURITIZATION INDUSTRY FIGHTS BACK!


Airtime: Tues. Nov. 16 2010 | 10:57 AM ET

One group is out with a “white paper” defending the mortgage securitization process, with Tom Deutsch, American Securitization Forum, and CNBC’s Diana Olick.

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Mortgage Transfers Are Valid, Group Argues as Congressional Hearings Begin

Mortgage Transfers Are Valid, Group Argues as Congressional Hearings Begin


By Jody Shenn and Prashant Gopal – Nov 16, 2010 11:14 AM ET

A trade group for companies that help package loans and leases into securities rejected claims that mortgage-bond trusts can’t prove ownership of debt they hold as Congress began hearings on the foreclosure crisis.

The standard practices of the industry result “if followed, in a valid and enforceable transfer of mortgage notes and the underlying mortgages,” Tom Deutsch, executive director of the New York-based American Securitization Forum, said in a study released today. Lawmakers in Washington ordered hearings on mortgage practices after loan servicers including Ally Financial Inc. and JPMorgan Chase & Co. halted foreclosure proceedings following revelations of so-called robo-signing.

The trade group focused on whether industry practices resulted in securitization trusts taking ownership of loans, though not whether all the paperwork needed for foreclosures is in order. Without taking ownership of mortgages within a set period after their creation, often 90 days, the trusts may be unable to later assemble the documents needed for foreclosures because of contractual requirements or tax rules.

“The law is somewhat unsettled on what actually must be done via a securitization to complete the transfers correctly,” visiting Harvard Law professor Katherine Porter told a Congressional Oversight Panel Oct. 27. Porter has said “there is disagreement on whether the transfer of the notes needed to have occurred individually,” or potentially with a specific endorsement to the new holder or a physical transfer.

Legal Challenges

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



Posted in STOP FORECLOSURE FRAUDComments (4)

Loan recording mess in Va. allows homeowners who don’t qualify to get tax break

Loan recording mess in Va. allows homeowners who don’t qualify to get tax break


“It’s almost impossible to know who the actual noteholder is in this day and age,” said Frey, the Fairfax County Circuit Court clerk.

Washington Post Staff Writer
Wednesday, November 3, 2010; 9:01 PM

Countless homeowners in Virginia are getting a tax break for which they don’t really qualify because a mortgage documentation mess makes it hard to determine who qualifies, officials say.

The loss of tax revenue for local governments and the state is another result of the lending industry growing so fast and becoming so complex during its go-go years that it outstripped its paper trail.

Because the problem involves blind spots in official records, no one can say how much revenue is being lost. But the amount could be significant.

“I’m trying to do my best to follow Virginia law here,” said John T. Frey, clerk of the Fairfax County Circuit Court, but “people are getting the break that aren’t eligible.”

When Virginia homeowners refinance their mortgages, they are required to pay a recordation tax. On a loan of $400,000, the tax would typically total $1,333.

The state’s portion of recordation taxes soared to $669.8 million in fiscal 2006 and declined by more than half to $298.4 million in fiscal 2009. Those numbers include taxes on deeds, mortgages to buy homes, and other recorded documents, not just refinancings. Extrapolating from the state figure, in fiscal 2009, roughly $100 million more would have gone to localities.

In a refinancing, if the lender issuing the new loan is the same as the lender holding the old loan, the borrower is exempt from the tax.

The trouble is figuring out who holds the old loan.

After issuing mortgages to homeowners, banks routinely sell the IOUs to other banks or institutions such as Fannie Mae and Freddie Mac. Huge volumes of mortgages have been packaged into securities and sold on Wall Street.

Unbeknown to the borrower, the note can change hands again and again – at least electronically – while the bank that issued the loan continues to collect the monthly payments on behalf of the new owner.
ad_icon

The buyers of the mortgages were not required to record the note assignments in county courthouses, and, as the lending business sped up, many transfers went unfiled, county clerks say.

As a result, the clerks who process claims for the tax exemption are ordinarily unable to tell whether the lender whose name appears on the paperwork owns the loan or is merely servicing it, officials say.

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



Posted in STOP FORECLOSURE FRAUDComments (2)

[VIDEO] Mortgage Fraud Clearing House

[VIDEO] Mortgage Fraud Clearing House


MUST WATCH

Investors are looking for banks to buy back potentially fraudulent residential mortgage-backed securities (RMBS). “The Strategy Session” hosts discuss this topic with Talcott Franklin, the principal of Talcott Franklin PC, whose firm has organized a RMBS clearinghouse on behalf of investors.

“Creature of their own Creation”

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



Posted in STOP FORECLOSURE FRAUDComments (3)

DEFECTIVE MORTGAGES| CITIGROUP, Trouble For Other Banks

DEFECTIVE MORTGAGES| CITIGROUP, Trouble For Other Banks


One by one these will soon all come out…

Fraction of an Excerpt from BLOOMBERG:

Richard M. Bowen, former chief underwriter for Citigroup’s consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.

In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”

<SNIP>

“The potential for owners to challenge lenders on foreclosure improprieties certainly is there,” Pallotta said. “Even if it turns out that the banks were right in 99 percent of these foreclosures, the additional diligence on their part, going forward, is going to cost them more money.”

The litigation over buybacks, also known as putbacks, can also pit big banks against each other. Last month, Deutsche Bank AG, acting as a trustee, refiled a lawsuit over misrepresented mortgages in $34 billion of Washington Mutual Inc. mortgage securities, with $165 billion in original balances.

The new suit in the U.S. District Court for the District of Columbia included JPMorgan as a defendant, after the Federal Deposit Insurance Corp. said that JPMorgan was wrongly claiming its insurance fund had agreed to cover the liabilities, according to the amended complaint.

Continue reading…BLOOMBERG

.

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



Posted in STOP FORECLOSURE FRAUDComments (1)

Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages

Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages


By Jody Shenn – Oct 19, 2010 5:27 PM ET

Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.

A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc.

Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Last month, BNY Mellon declined to investigate mortgage files in response to a demand from the bondholder group, which has since expanded. Countrywide’s servicing failures, including insufficient record keeping, may open the door for investors to seek repurchases by bypassing the trustee, said Kathy Patrick, their lawyer at Gibbs & Bruns LLP.

“We now are in a position where we have to start a clock ticking,” Patrick, who is based in Houston, said today in a telephone interview.

If the issues aren’t fixed within 60 days, BNY Mellon should declare Countrywide in default on its servicing contracts, Patrick said.

Continue reading…BLOOMBERG

.

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



Posted in STOP FORECLOSURE FRAUDComments (1)

FHLB Of Chicago Sues BofA, Goldman Sachs, Citigroup, Wells Fargo Banks Over MBS others to follow

FHLB Of Chicago Sues BofA, Goldman Sachs, Citigroup, Wells Fargo Banks Over MBS others to follow


October 15, 2010

Today the Federal Home Loan Bank of Chicago will file complaints against several defendants regarding some of the private-label mortgage-backed securities (MBS) they sold us between 2005 and 2007. We contend that the quality of the loans that comprise the pools of securities cited in today’s complaints was inconsistent with the description in the pre-purchase documents prepared by the underwriters and issuers of the securities.

Relying on the pre-purchase documents, we invested in these securities with the understanding that we were purchasing higher-quality instruments than turned out to be the case. After careful consideration, we have concluded that we have an obligation to you, our members, to do everything we can to recover the value lost from investing in these securities.

The lawsuits were filed in the Circuit Court of Cook County, Illinois; the Superior Court of California, County of Los Angeles; and the Superior Court of Washington, King County. The complaints allege the defendants made material misstatements and omitted important information in connection with the sale of these securities. The Federal Home Loan Bank of Indianapolis also filed similar complaints today. The Federal Home Loan Banks of Pittsburgh, Seattle, and San Francisco have previously filed similar lawsuits.

As we have discussed in prior member letters and SEC filings, and at the regional member meetings, the value of our private-label MBS portfolio has suffered dramatically. The securities listed in today’s complaints totaled more than $4.3 billion in face value and were all rated AAA when we purchased them. Since then, the same credit agencies that supplied the original ratings have downgraded substantially all of these securities to junk status. Proper accounting of our estimated credit losses on these securities has resulted in a total of $455 million in write-downs that have negatively impacted our income, our retained earnings, and our ability to restore a dividend.

In summary, we are only taking these actions out of the belief that it would be irresponsible not to explore every available option to recover the value lost to our members.

Sincerely,
Matthew R. Feldman
President and CEO
Federal Home Loan Bank of Chicago

[ipaper docId=39660905 access_key=key-15i97x07v6el065bkr5 height=600 width=600 /]

Other Source: Bloomberg

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



Posted in mbs, STOP FORECLOSURE FRAUDComments (1)

VIDEOS YOU MUST WATCH! IT ALL BEGAN w/ MARCY KAPTUR

VIDEOS YOU MUST WATCH! IT ALL BEGAN w/ MARCY KAPTUR


Back in January 15, 2009 Marcy Kaptur told Foreclosure Victims “Don’t Leave your Home” because we will find out that they don’t have the mortgage.

“They can’t find the paper up there on Wall Street”

You can feel it through her passion she knows what she’s talking about. I have a feeling I may know who might be consulting her 🙂

Go to 3:05 where they clearly mention the problems with MERS

Barry Ritholtz goes at it with Diana Olick

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



Posted in assignment of mortgage, foreclosure, foreclosure fraud, foreclosures, mbs, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., note, robo signers, scam, securitization, servicers, STOP FORECLOSURE FRAUD, Trusts, Wall StreetComments (1)

Full Deposition of Residential Funding/GMAC JUDY FABER: US BANK v. Cook

Full Deposition of Residential Funding/GMAC JUDY FABER: US BANK v. Cook


Make sure you read this carefully…This is a transcript of an employee of Residential Funding Company who is in charge of record keeping of original documents. Don’t miss the full deposition down below.

Follow the assets, don’t get lost in the trail…

17 Q. Now, when you said you’re the Director of
18 Records Management for the Minnesota office?

19 A. Uh-huh.

20 Q. Are there other offices of Residential
21 Funding that maintain records that you are
22 not responsible for?

23 A. There are records services sites in Iowa and
24 in Pennsylvania. Those deal mostly with the
25 GMAC mortgage assets.

<snip>

11 Q. And what, if anything, is your responsibility
12 with regard to those records?

13 A. To track the physical paper for those
14 assets — or that asset.

15 Q. Are you what you consider to be the keeper of
16 the records for those documents?

17 A. Sure, yep.

5 Q. Okay. And then when somebody wants to view
6 specific records from your system, is that
7 something that you’re responsible for
8 obtaining as part of your day-to-day
9 responsibilities?

10 A. The people that report to me, yes, or the
11 vendor that — that we have retained to do
12 those functions, yes. I don’t do that
13 myself.

14 Q. Who’s the vendor that you retain to do that?

15 A. A company called ACS.

16 Q. ACS?

17 A. Yep.

18 Q. And what does ACS do with regard to the
19 records?

20 A. They fulfill the request. So if somebody
21 needs a credit folder or a legal folder, they
22 research where those documents are, obtain
23 the documents and then provide that requestor
24 with either the paper documents or images.

<snip>

21 Q. There’s a file folder that shows it came from
22 the outside vendor?

23 A. Yes. Their sticker is affixed to the front
24 of the folder, so I know it came from them.

25 Q. Okay. And then is there anything on the
1 documents themselves that show where they
2 came from?

3 A. No.

4 Q. And by the outside vendor, do you mean ACS?

5 A. No. Actually, the vendor that stores the
6 actual folder is Iron Mountain.

7 Q. So there’s a sticker on that file that shows
8 it came from Iron Mountain?

9 A. Correct, yes.

10 Q. Does Iron Mountain maintain your system or do
11 they just maintain hard copies of documents?

12 A. They maintain the hard copies of the
13 documents.

14 Q. Not any records on your computer system,
15 correct?

16 A. No.

17 Q. Is that correct?

18 A. Correct.

<snip>

18 Q. What’s the relationship between Residential
19 Funding Company, LLC and U.S. Bank National
20 Association?

21 A. In — in this instance, U.S. Bank is the
22 trustee on the security that this loan is in.
23 And RFC was the issuer of the security that
24 was created.

25 Q. Who was the issuer of the security?

1 A. RFC was the issuer of the security.

2 Q. Oh, RFC is what you call Residential Funding
3 Company?

4 A. Yes.

5 Q. So RFC issued the security?

6 A. Right.

7 Q. Can you explain to me what that means?

8 A. No, I can’t.

9 Q. Okay. How do you know RFC issued the
10 security?

11 A. It’s the normal course of business as to how
12 our — our business works. RFC is in the
13 business of acquiring assets and putting them
14 together into securities to sell in the — in
15 the market.

16 MR. SHAW: I would like to
17 register a general objection to this line of
18 questioning. There’s not been a foundation
19 laid for Judy Faber being competent to reach
20 some of these conclusions that are being
21 stated on the record.

22 BY MR. HOLLANDER:
23 Q. So in this particular instance, do you have
24 any personal knowledge of the relationship
25 between RFC and U.S. Bank National
1 Association as trustee?

2 A. No.

3 Q. For whom is U.S. Bank National Association
4 acting as the trustee?

5 A. I believe it would be for the investors of
6 the — that have bought the securities.

7 Q. I’m sorry. Something happened with the phone
8 and I didn’t hear your answer. I’m sorry.

9 A. I believe it would be for the different
10 investors who have bought pieces of that
11 security that was issued.

12 Q. Are there different investors that have
13 purchased the Peter Cook note?

14 A. I don’t think I’m qualified to answer that.
15 You know, I can tell you from what my basic
16 understanding is from the process, but I’m
17 not an expert.

18 MR. SHAW: Once again, I’d like to
19 raise a continuing general objection that she
20 being — testifying with respect to what her
21 job is, and I believe you’re getting into
22 areas that is other than what her job is and
23 you’re asking for possibly even legal
24 conclusions here. So I would like to raise
25 that objection again.

[…]

[ipaper docId=39156662 access_key=key-hxfsobk1503f3iza8sn height=600 width=600 /]

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



Posted in assignment of mortgage, bifurcate, conspiracy, deposition, foreclosure, foreclosure fraud, foreclosures, GMAC, mbs, securitization, STOP FORECLOSURE FRAUD, trade secrets, trustee, Trusts, us bankComments (2)

WaMu Will Face Trial in November Over $4 Billion of Low-Ranking Securities

WaMu Will Face Trial in November Over $4 Billion of Low-Ranking Securities


By Steven Church – Aug 25, 2010 4:20 PM ET

Washington Mutual Inc., the ex-owner of the biggest U.S. bank to fail, will face a November trial in an investor lawsuit over ownership of $4 billion in low-ranking debt known as trust-preferred securities, a judge said.

U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Delaware, scheduled a trial for Nov. 1, the first day of a confirmation hearing on WaMu’s reorganization plan. Lawyers for WaMu and investors, including Black Horse Capital LP and Lonestar Partners LP, agree the issue must be resolved before the company can end its bankruptcy and distribute more than $6 billion to creditors.

As the confirmation hearing continues in November, other critics of WaMu’s plan may want to use any facts or arguments presented by the investors to attack the reorganization proposal, Walrath said. Shareholders claim that the holding company’s bank should never have been seized by regulators and sold to JPMorgan Chase & Co. in 2008.

“Others may want to ride your coattails,” Walrath told an attorney for Black Horse at a court hearing yesterday. “The first day of confirmation will be yours.”

In July, a group of investors sued WaMu and JPMorgan over the way the trust-preferred securities were converted from debt- like investments into equity. The investors, who bought $1 billion of the trust-preferred securities, got preferred equity in WaMu when the exchange happened just before WaMu collapsed.

‘Rampant Fraud’

Continue reading…REUTERS

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



Posted in CONTROL FRAUD, corruption, investigation, jpmorgan chase, Real Estate, Trusts, wamu, washington mutualComments (0)

What does DJSP, Enterprises Newly Appointed Counsel have in common with PBC Judge Meenu Sasser?

What does DJSP, Enterprises Newly Appointed Counsel have in common with PBC Judge Meenu Sasser?


DJSP, Enterprises announced today that they have added a General Counsel to their Senior Management Team.

Howard S. Burnston has accepted the position of Vice President, General Counsel and Corporate Secretary effective August 5th 2010. Prior to joining the company, Mr. Burnston was a shareholder with Gunster, Yoakley, & Stewart, P.A., a Florida law firm, where he practiced for 12 years, most recently as chairman of the firm’s Securities and Corporate Governance Practice Group.

“We are very pleased to add such a seasoned professional to our executive team,” said David J. Stern, Chairman and CEO of DJSP Enterprises. “Howard’s business experience and legal expertise in the areas of securities and corporate governance will add tremendous value to DJSP and our shareholders.”

Mr. Burnston stated, “The company is operating in a dynamic and challenging business environment. I believe the company has a promising future and I am excited to join the impressive management team assembled at DJSP.”

Palm Beach County Judge Meenu Sasser was also a shareholder of Gunster, Yoakley, & Stewart from 2002-09, Associate 1995-02.

Again, when is this all going to be disclosed to both investors and defendants? Where does one put a stop to conflict of interest? Where are the disclosures?

I am 100% certain that both The State of Florida and DJSP Investors want to know did Mr. Burnston and Mrs. Sasser have a working relationship and to what extent?

Inquiring minds do wish to know!

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



Posted in conflict of interest, djsp enterprises, investigation, Law Offices Of David J. Stern P.A., non disclosure, STOP FORECLOSURE FRAUDComments (1)

Dual Role in Housing Deals Puts Spotlight on Deutsche

Dual Role in Housing Deals Puts Spotlight on Deutsche


By CARRICK MOLLENKAMP And SERENA NG

Federal probes of the collapsed mortgage-bond boom are shedding light on how Wall Street firms sometimes created securities and sold them to one set of investors, while advising others to bet against them.

One firm that was a major player in mortgage securities, Deutsche Bank AG, illustrates a pattern investigators are looking at. While creating and selling mortgage securities to some of its clients, the big German bank was not only advising other clients to bet the other way, but also sometimes doing so itself.

A Deutsche trader helped create an index that made it easy to bet against housing, and the bank itself then used the index to do just that.

After the collapse of mortgage securities led to a costly bailout of the firm that insured many such securities—American International Group Inc.—some of the federal cash that was sunk into AIG flowed to Deutsche, to cover bearish bets by its hedge-fund clients.

Deutsche’s actions are a vivid example of potential conflicts on Wall Street—the way big financial firms play both sides of the fence with investors. The issue became more extreme during the mortgage bubble and subsequent bust because of the size of the bets on Wall Street and subsequent losses on Main Street.

Regulators now are grappling with whether the business-as-usual conduct at financial firms merely looks bad in hindsight, or whether there were misrepresentations or other legal issues that need to be further investigated and guarded against in the future. “This is a gray area that we need more investigation into,” says Andrew Lo, a finance professor at Massachusetts Institute of Technology and a hedge-fund manager.

Deutsche says that helping investors bet either way—either for or against an asset—is part of doing business for a securities firm.

“Some clients sought more exposure to the housing market, while others sought less,” a spokesman for Deutsche said. “We served clients whatever their investment objective, but only after being satisfied that they had arrived at their view after thorough consideration.”

Continue reading …The Wall Street Journal

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



Posted in concealment, conspiracy, deutsche bank, investigation, mbs, mortgageComments (1)

Holding Bankers’ Feet to the Fire | GRETCHEN MORGENSON

Holding Bankers’ Feet to the Fire | GRETCHEN MORGENSON


By GRETCHEN MORGENSON Published: July 16, 2010



KUDOS to the Federal Housing Finance Agency, overseer of Fannie Mae and Freddie Mac, the crippled mortgage finance giants. While some in Washington have continued to coddle the big banks even after they drove our economy into the ditch, this agency seems serious about recovering money for taxpayers by holding bad financial actors to account.

The agency announced last Monday that it had issued 64 subpoenas to a throng of unidentified financial services institutions, seeking documents related to mortgage securities that Fannie and Freddie bought from Wall Street during the boom years.

The subpoenas are designed to tell the agency what many of us want to know: How did Wall Street package and sell private-label mortgage securities to investors, even though the nature and quality of some of the loans crammed inside those tidy little packages were, at best, suspect?

Once that question has been answered, Fannie and Freddie can force the institutions that sold the securities to repurchase the improper loans, allowing taxpayers to recover some of the losses they’ve swallowed on Fannie’s and Freddie’s federal bailout.

Investigating this aspect of the mortgage mess seems a pretty logical step for a regulator. But in the topsy-turvy world of Washington, the housing finance agency’s move is unusually aggressive. Edward J. DeMarco, its acting director, seems to be that rarity — a regulator who not only talks about looking out for the taxpayer, but actually does something about it.

The subpoenas went to companies that act as trustees for mortgage pools or that service the loans in them. The housing finance agency wants to see loan files and transaction documents related to those pools, including mortgage applications and property appraisals. Recipients of the subpoenas have 30 days to produce the requested documents. Additional subpoenas may follow, it said.

The agency had to resort to subpoenas, it said, because when it asked the institutions for the records it got nowhere for many months. “Difficulty in obtaining the loan documents has presented a challenge to the enterprises’ efforts” to ascertain whether losses at the companies are the responsibility of others, its press release said.

Fannie and Freddie bought only the highest-rated pieces of these deals, but they bought buckets of them. During 2006-7, these entities bought $294 billion of so-called private-label securities. Not all of these purchases are under scrutiny, the agency said.

It is clearly turning up the heat on the major players in mortgage servicing and securitization. Among the bigger trustees in the business are Deutsche Bank and the Bank of New York, while loan servicers include Bank of America and many more. None of the banks would confirm if they had received subpoenas.

Continue reading…The New York Times

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



Posted in bank of america, bank of new york, deutsche bank, fannie mae, Freddie Mac, mbs, mortgage, STOP FORECLOSURE FRAUDComments (0)

US tries to recoup Fannie, Freddie losses

US tries to recoup Fannie, Freddie losses


WILL WE FIND OUT THE TRUTH…THESE LOANS NEVER MADE IT TO THE POOLS?? NEVER SECURITIZED??

WASHINGTON – July 16, 2010 – A federal regulator is taking steps that could lead to the recovery of some losses sustained by mortgage giants Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency said Monday it is looking to get back money that the two government-controlled companies have lost on mortgage securities packaged and sold by Wall Street firms.

During the housing market’s boom years, the two government-sponsored companies snapped up those securities, which contained some of the riskier loans made during the housing boom years. But they declined dramatically in value after the market went bust.

The regulatory agency said it has issued 64 subpoenas seeking loan files and other documents to determine whether the sellers of those securities made any false statements or omissions. Fannie and Freddie had tried to do so themselves but have faced resistance in getting the loan documents, said the agency, which was given subpoena power two years ago.

The agency said in a statement that it is “prepared to take appropriate action to ensure compliance, if necessary.” Any money recovered by the government would offset losses at Fannie and Freddie, which have cost taxpayers $145 billion so far.

Many analysts agree that Fannie and Freddie fed the boom in shady mortgage lending by snapping up billions in dubious mortgage investments and by lowering standards for the mortgages they guaranteed.

“It’s a shame Fannie and Freddie didn’t ask these questions themselves when they were buying these securities in the first place,” said Howard Glaser, a Washington mortgage industry consultant who formerly had both companies as clients. “The truth is that they never really wanted to dig too deep into the true nature of the loans they were buying.”

But the government’s ability to recover money will depend on whether the mortgage companies that made the loans are still operating, said Scott Buchta, chief mortgage strategist with Braver Stern Securities. Many of the lenders who made the worst-performing loans have gone out of business.

“It’s going to be a long process,” Buchta said.

Fannie and Freddie currently hold about $255 billion of these mortgage-backed investments, known as “private label” securities. They amount to less than 5 percent of the $5.5 trillion in mortgage securities the companies own or guarantee and are separate from those issued by Fannie Mae and Freddie Mac themselves.

Fannie and Freddie have also been trying to recover money on their own securities by forcing lenders to buy loans that have gone into default.
AP Logo Copyright 2010 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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



Posted in fannie mae, FHA, Freddie Mac, mbs, mortgage, STOP FORECLOSURE FRAUD, wall streetComments (0)

Goldman to pay record $550 million to settle CDO-related charges

Goldman to pay record $550 million to settle CDO-related charges


Firm Acknowledges CDO Marketing Materials Were Incomplete and Should Have Revealed Paulson’s Role

FOR IMMEDIATE RELEASE
2010-123

View  high-resolution photo of Robert Khuzami, Director, SEC Enforcement

“This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing.”

Robert Khuzami
Director
SEC Enforcement

Washington, D.C., July 15, 2010 — The Securities and Exchange Commission today announced that Goldman, Sachs & Co. will pay $550 million and reform its business practices to settle SEC charges that Goldman misled investors in a subprime mortgage product just as the U.S. housing market was starting to collapse.

In agreeing to the SEC’s largest-ever penalty paid by a Wall Street firm, Goldman also acknowledged that its marketing materials for the subprime product contained incomplete information.

In its April 16 complaint, the SEC alleged that Goldman misstated and omitted key facts regarding a synthetic collateralized debt obligation (CDO) it marketed that hinged on the performance of subprime residential mortgage-backed securities. Goldman failed to disclose to investors vital information about the CDO, known as ABACUS 2007-AC1, particularly the role that hedge fund Paulson & Co. Inc. played in the portfolio selection process and the fact that Paulson had taken a short position against the CDO.

In settlement papers submitted to the U.S. District Court for the Southern District of New York, Goldman made the following acknowledgement:

Goldman acknowledges that the marketing materials for the ABACUS 2007-AC1 transaction contained incomplete information. In particular, it was a mistake for the Goldman marketing materials to state that the reference portfolio was “selected by” ACA Management LLC without disclosing the role of Paulson & Co. Inc. in the portfolio selection process and that Paulson’s economic interests were adverse to CDO investors. Goldman regrets that the marketing materials did not contain that disclosure.

“Half a billion dollars is the largest penalty ever assessed against a financial services firm in the history of the SEC,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing.”

Lorin L. Reisner, Deputy Director of the SEC’s Division of Enforcement, added, “The unmistakable message of this lawsuit and today’s settlement is that half-truths and deception cannot be tolerated and that the integrity of the securities markets depends on all market participants acting with uncompromising adherence to the requirements of truthfulness and honesty.”

Goldman agreed to settle the SEC’s charges without admitting or denying the allegations by consenting to the entry of a final judgment that provides for a permanent injunction from violations of the antifraud provisions of the Securities Act of 1933. Of the $550 million to be paid by Goldman in the settlement, $250 million would be returned to harmed investors through a Fair Fund distribution and $300 million would be paid to the U.S. Treasury.

The landmark settlement also requires remedial action by Goldman in its review and approval of offerings of certain mortgage securities. This includes the role and responsibilities of internal legal counsel, compliance personnel, and outside counsel in the review of written marketing materials for such offerings. The settlement also requires additional education and training of Goldman employees in this area of the firm’s business. In the settlement, Goldman acknowledged that it is presently conducting a comprehensive, firm-wide review of its business standards, which the SEC has taken into account in connection with the settlement of this matter.

The settlement is subject to approval by the Honorable Barbara S. Jones, United Sates District Judge for the Southern District of New York.

Today’s settlement, if approved by Judge Jones, resolves the SEC’s enforcement action against Goldman related to the ABACUS 2007-AC1 CDO. It does not settle any other past, current or future SEC investigations against the firm. Meanwhile, the SEC’s litigation continues against Fabrice Tourre, a vice president at Goldman.

The SEC investigation that led to the filing and settlement of this enforcement action was conducted by the Enforcement Division’s Structured and New Products Unit, led by Kenneth Lench and Reid Muoio, and including Jason Anthony, N. Creola Kelly, Melissa Lamb, and Jeffrey Leasure. Additionally, together with Deputy Director Reisner, Richard Simpson, David Gottesman, and Jeffrey Tao have been handling the litigation.

# # #

For more information about this enforcement action, contact:

Robert S. Khuzami
Director, SEC Enforcement Division
(202) 551-4500

Lorin L. Reisner
Deputy Director, SEC Enforcement Division
(202) 551-4787

Kenneth R. Lench
Chief of Structured and New Products Unit, SEC Enforcement Division
(202) 551-4938

http://www.sec.gov/news/press/2010/2010-123.htm

[ipaper docId=34392476 access_key=key-17ciw5w4gbw6m59368vt height=600 width=600 /]


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



Posted in goldman sachs, S.E.C., settlementComments (1)

Securities and Investments: Fraud Digest

Securities and Investments: Fraud Digest


Securities and Investments 

Morgan Stanley

Action Date: May 12, 2010 
Location: New York, NY 

EDITORIAL: On May 12, 2010, Morgan Stanley’s Chief Executive announced in response to a Wall Street Journal article that he was unaware of any criminal investigation by the Justice Department that his firm, like Goldman Sachs, misled investors about mortgage-backed derivative deals. The WSJ had reported that Morgan Stanley was the subject of such an investigation. In addition to determining whether the firm was betting against the very products it was promoting to investors, the Justice Department COULD investigate whether Morgan Stanley and other securities firms exercised secret control over the rating agencies, causing risky investments to get the highest ratings by these firms. The Justice Department COULD also investigate whether the mortgage-backed trusts put together by Morgan Stanley were comprised of much riskier mortgages than represented to investors. Another investigation COULD be conducted regarding the pay-outs from the insurance policies behind the CDOs and whether the servicing companies working for the trusts are collecting twice – from the insurance and from the foreclosures – and then turning around, acquiring the foreclosed properties for $10 – and profiting yet a third time. Investigators COULD even determine whether foreclosure mills working for trusts created by Morgan Stanley are now using forged proof of ownership to foreclose because Morgan Stanley never acquired the mortgages, notes and assignments they claimed to have in their vaults, backing the mortgage-backed securities. In the battle between the Justice Department and Wall Street, Goliath is in New York, not D.C. 

Posted in cdo, concealment, conspiracy, foreclosure, foreclosure fraud, fraud digest, goldman sachs, Lynn Szymoniak ESQ, S.E.C., securitizationComments (0)

Federal Reserve Must Disclose Bank Bailout Records (Update5): We love Bloomberg.com

Federal Reserve Must Disclose Bank Bailout Records (Update5): We love Bloomberg.com


SHOCK & AWE …I’m betting! Thanks to Bloomberg for the lawsuit to DISCLOSE! Notice how both Bloomberg & Huffington are always the ones who go after the banksters…Because they probably don’t use the banksters to fund them!

By David Glovin and Bob Van Voris

March 19 (Bloomberg) — The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a federal appeals court said.

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.

The U.S. Freedom of Information Act, or FOIA, “sets forth no basis for the exemption the Board asks us to read into it,” U.S. Circuit Chief Judge Dennis Jacobs wrote in the opinion. “If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.”

The opinion may not be the final word in the bid for the documents, which was launched by Bloomberg LP, the parent of Bloomberg News, with a November 2008 lawsuit. The Fed may seek a rehearing or appeal to the full appeals court and eventually petition the U.S. Supreme Court.

Right to Know

If today’s ruling is upheld or not appealed by the Fed, it will have to disclose the requested records. That may lead to “catastrophic” results, including demands for the instant disclosure of banks seeking help from the Fed, resulting in a “death sentence” for such financial institutions, said Chris Kotowski, a bank analyst at Oppenheimer & Co. in New York.

“Whenever the Fed extends funds to a bank, it should be disclosed in private to the Congressional oversight committees, but to release it to the public I think would be a horrific mistake,” Kotowski said in an interview. “It would stigmatize the banks, it would lead to all kinds of second-guessing of the Fed, and I don’t see what public purpose is served by it.”

Senator Bernie Sanders, an Independent from Vermont, said the decision was a “major victory” for U.S. taxpayers.

“This money does not belong to the Federal Reserve,” Sanders said in a statement. “It belongs to the American people, and the American people have a right to know where more than $2 trillion of their money has gone.”

Fed Review

The Fed is reviewing the decision and considering its options for reconsideration or appeal, Fed spokesman David Skidmore said.

“We’re obviously pleased with the court’s decision, which is an important affirmation of the public’s right to know what its government is up to,” said Thomas Golden, a partner at New York-based Willkie Farr & Gallagher LLP and Bloomberg’s outside counsel.

The court was asked to decide whether loan records are covered by FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure because they might reveal competitive trade secrets.

The Fed had argued that it could withhold the information under an exemption that allows federal agencies to refuse disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

Payment Processors

The Clearing House Association, which processes payments among banks, joined the case and sided with the Fed. The group includes ABN Amro Bank NV, a unit of Royal Bank of Scotland Plc, Bank of America Corp., The Bank of New York Mellon Corp., Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., US Bancorp and Wells Fargo & Co.

Paul Saltzman, general counsel for the Clearing House, said the decision did not address the “fundamental issue” of whether disclosure would “competitively harm” borrower banks.

“The Second Circuit declined to follow the decisions of other circuit courts recognizing that disclosure of certain confidential information can impair the effectiveness of government programs, such as lending programs,” Saltzman said in a statement.

The Clearing House is considering whether to ask for a rehearing by the full Second Circuit and, ultimately, review by the U.S. Supreme Court, he said.

Deep Crisis

Oscar Suris, a spokesman for Wells Fargo, JPMorgan spokeswoman Jennifer Zuccarelli, Bank of New York Mellon spokesman Kevin Heine, HSBC spokeswoman Juanita Gutierrez and RBS spokeswoman Linda Harper all declined to comment. Deutsche Bank spokesman Ronald Weichert couldn’t immediately comment. Bank of America declined to comment, Scott Silvestri said. Citigroup spokeswoman Shannon Bell declined to comment. U.S. Bancorp spokesman Steve Dale didn’t return phone and e-mail messages seeking comment.

Bloomberg, majority-owned by New York Mayor Michael Bloomberg, sued after the Fed refused to name the firms it lent to or disclose loan amounts or assets used as collateral under its lending programs. Most of the loans were made in response to the deepest financial crisis since the Great Depression.

Lawyers for Bloomberg argued in court that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

“Bloomberg has been trying for almost two years to break down a brick wall of secrecy in order to vindicate the public’s right to learn basic information,” Golden wrote in court filings.

Potential Harm

Banks and the Fed warned that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell- off by investors. Disclosure may hamstring the Fed’s ability to deal with another crisis, they also argued.

Much of the debate at the appeals court argument on Jan. 11 centered on the potential harm to banks if it was revealed that they borrowed from the Fed’s so-called discount window. Matthew Collette, a lawyer for the government, said banks don’t do that unless they have liquidity problems.

FOIA requires federal agencies to make government documents available to the press and public. An exception to the statute protects trade secrets and privileged or confidential financial data. In her Aug. 24 ruling, U.S. District Judge Loretta Preska in New York said the exception didn’t apply because there’s no proof banks would suffer.

Tripartite Test

In its opinion today, the appeals court said that the exception applies only if the agency can satisfy a three-part test. The information must be a trade secret or commercial or financial in character; must be obtained from a person; and must be privileged or confidential, according to the opinion.

The court said that the information sought by Bloomberg was not “obtained from” the borrowing banks. It rejected an alternative argument the individual Federal Reserve Banks are “persons,” for purposes of the law because they would not suffer the kind of harm required under the “privileged and confidential” requirement of the exemption.

In a related case, U.S. District Judge Alvin Hellerstein in New York previously sided with the Fed and refused to order the agency to release Fed documents that Fox News Network sought. The appeals court today returned that case to Hellerstein and told him to order the Fed to conduct further searches for documents and determine whether the documents should be disclosed.

“We are pleased that this information is finally, and rightfully, going to be made available to the American public,” said Kevin Magee, Executive Vice President of Fox Business Network, in a statement.

Balance Sheet Debt

The Fed’s balance sheet debt doubled after lending standards were relaxed following Lehman’s failure on Sept. 15, 2008. That year, the Fed began extending credit directly to companies that weren’t banks for the first time since the 1930s. Total central bank lending exceeded $2 trillion for the first time on Nov. 6, 2008, reaching $2.14 trillion on Sept. 23, 2009.

More than a dozen other groups or companies filed friend- of-the-court briefs. Those arguing for disclosure of the records included the American Society of News Editors and individual news organizations.

“It’s gratifying that the court recognizes the considerable interest in knowing what is being done with our tax dollars,” said Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press in Arlington, Virginia.

“We’ve learned some powerful lessons in the last 18 months that citizens need to pay more attention to what’s going on in the financial world. This decision will make it easier to do that.”

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; Bob Van Voris in New York at vanvoris@bloomberg.net.

Last Updated: March 19, 2010 16:15 EDT

also see  huffington post articles on this

Posted in bloomberg, citi, concealment, conspiracy, corruption, Dick Fuld, FED FRAUD, federal reserve board, G. Edward Griffin, geithner, hank paulson, jpmorgan chase, lehman brothers, naked short selling, RON PAUL, scamComments (0)

Advertise your business on StopForeclosureFraud.com

Archives

Please Support Me!

All Of These Are Troll Comments