Category Archives: Banking industry

Banks Have Hissy Fit, Cancel Meeting With Attorneys General Due to FHFA Mortgage Litigation

Yours truly has said for months that the negotiations among major banks, state attorneys general, and Federal regulators to reach a settlement of various types of mortgage liability were not going to result in a meaningful deal. Further confirmation of our views came today, via Time’s Swampland (hat tip Lisa Epstein).

The five biggest banks cancelled a session today with the state attorneys general.

Payday Loans Are Dead! Long Live Payday Loans!

In yet another example of finance double-speak, major financial players have moved into that netherworld of the functional equivalent of loansharking known as payday lending.

While in theory short-term loans can be a boon to cash-strapped individuals, in practice, the usurious interest of payday loans result in many borrowers falling into a debt treadmill

Florida Appellate Decision May Be a Major Obstacle to Foreclosure

A ruling issued today, Glarum v. LaSalle Bank, by the court of appeals for Florida’s fourth district, may have thrown a really big wrench in the foreclosure machinery state-wide. I say “may” because this ruling has such big implications that the bank has good reason to appeal to try to get the decision reversed or narrowed.

The ruling itself is remarkably straightforward and damning.

More Proof of DoJ Lack of Interest in Enforcing the Law: The Case of the Kickback-Demanding Banks

In this world of rampant banking miscreance, it may seem hard to get worked up about $6 billion in impermissible kickbacks. But this is a case of a clear-cut legal violation, with the particulars sent to the Department of Justice by the HUD Inspector General’s office on a silver platter. And one of the alleged big bad actors was the ever-sanctimonious Wells Fargo.

American Banker has a detailed write-up of a kickback scheme between major banks who were mortgage originators, in particular Wells, Citigroup, Countrywide, and SunTrust and mortgage insurers.

Matt Stoller: The Corrupt Establishment Begins Smearing Eric Schneiderman

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller

Last month we had New York Fed Board Member Kathryn Wylde whining and meddling about Eric Schneiderman’s investigation into big banks. That seriously backfired. HUD Secretary Shaun Donovan put pressure on him as well, and that didn’t go over so well. And after Tom Miller petulantly stopped allowing Schneiderman on his AG conference calls, there was a mini-media storm over the rancid character of the DOJ and bankster-owned Miller. None of the insider signals worked, so now it’s on to stage two of neutralize Schneiderman. It’s time for…. the smear campaign!

50 State Attorney General Effort to Sell Out to Banks Makes Even More Egregious Offer

The so-called 50 state attorney general mortgage settlement negotiations (a bit of a misnomer, since at least 4 attorneys general appear to be out, and various Federal banking regulators are alos party to the deal) are looking more and more like a desperate effort to reach any kind of a deal so as to save the officialdom’s face. The only good news is the banks are so insistent on total victory that despite the efforts to pretend the talks are making progress, the odds of a deal being consummated still look remote.

It is nevertheless frustrating to continue to see the media depict the flailing about by the attorneys general headed by Tom Miller as progress.

The Decline of Manufacturing in America: A Case Study

One frequent and frustrating line that often crops up in the comments section of this blog is that American labor has no hope, it should just accept Chinese wages, since price is all that matters. That line of thinking is wrongheaded on multiple levels. It assumes direct factory labor is the most important cost driver, when for most manufactured goods, it is 11% to 15% of total product cost (and increased coordination costs of much more expensive managers are a significant offset to any cost savings achieved by using cheaper factory workers in faraway locations). It also assumes cost is the only way to compete, when that is naive on an input as well as a product level. How do these “labor cost is destiny” advocates explain the continued success of export powerhouse Germany? Finally, the offshoring,/outsourcing vogue ignores the riskiness and lower flexibility of extended supply chains.

This argument is sorely misguided because it serves to exculpate diseased, greedy, and incompetent American managers and executives. In the overwhelming majority of places where I lived in my childhood, a manufacturing plant was the biggest employer in the community. And when I went to business school, manufacturing was still seen as important. Indeed, the rise of Germany and Japan was then seen as a due to sclerotic American management not being able to keep up with their innovations in product design and factory management.

But if you were to ask most people, they’d now blame the fall of American manufacturing on our workers, which serves to shift focus from the top of the food chain at a time when they’ve managed to greatly widen the gap between their pay and that of the folks reporting to them.

Let me give you an all too typical example of how American management has contributed to the demise of our industrial competitiveness, namely, the former Mead Corporation paper mill in Escanaba, Michigan, which is now part of NewPage, owned by Cerberus.

Quelle Surprise! Partitioning Bank Retail and Wholesale Operations Won’t Cost Much

One of the most annoying aspects of Life After the Crisis is the utter refusal of banks to take responsibility for the costs they have imposed on the rest of us. This is directly related to their efforts to fight any and all interference with their God-given right to loot.

Iowa Attorney General Tom Miller’s Yawning Credibility Gap

Even though it turns out that Eskimos (Inuit) don’t have as a rich vocabulary of words for snow as urban legend would have you believe, the Welsh do have a plethora of expressions for various types of rainfall.

Since corruption is becoming as rich, complex, and important a topic as precipitation apparently is in Wales, the time has arrived for devising more nuanced ways to describe its many manifestations. And it’s always preferable to take advantage of established terminology.

So to encourage the revival of the Johnson Administration coinage, “credibility gap,” we’ll discuss a prime example: Iowa attorney general Tom Miller’s conduct in his role as head of the 50 state attorney general mortgage “settlement”. His latest claims, contained in a letter defending his ouster of New York attorney general Eric Schneiderman from the executive committee of the 50 state AG efforts, is more than a tad disingenuous, but that simply makes them par for the course for Miller.

Summer Rerun: Bankruptcy Cramdown Defeated: Banksters Again Prevail Over Real Economy

This post first appeared on April 30, 2009

In another disheartening development on the banking front, the Senate defeated legislation giving judges the authority to modify residential mortgages in bankruptcy.

Note that the popular description is often misconstrued in short form descriptions. Judges would not have had open-ended authority to make changes. The construct is that mortgages are collateralized loans. The mortgage balance is written down in bankruptcy to the value of the collateral, and the excess is added to the unsecured creditor claims.

Philip Pilkington: The Irish Establishment – Mad as Goats?

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

Learn to say the same thing
What defeats people is a double confession
One time they will confess one thing
And the next they will confess something else
Talk to them, they will say:
Learn to say the same thing
Let us hold fast to saying the same thing”
– Cat Power, ‘Say’

In Ireland we used to measure our economic performance based on GDP (GNP actually, but we won’t go into that). Pretty standard fare for any advanced economy, really. Not so anymore. These days we measure our economic performance based on the government’s ability to extract tax revenue out of the general populace to pay for extortionate loans to our EU masters.

The More You Look, The More Bank Criminality You Find in Mortgage Land

hate giving such short shrift to two new mortgage stories today, but the news accountscontain a good deal of the critical information.

First is that the Associated Press reports that Guiford County, North Carolina register of deeds Joe O’Brien has found evidence of robosigning in his filed dating back to 1998. This is significant because:

Regulators Ask Bank of America About Contingency Plans

The Feds appear to be taking the risk that Bank of America might go wobbly seriously, but are they taking it seriously enough?

We quoted Tom Adams on the matter of the Buffett investment in the Charlotte bank:

This is being spun as good news for BofA but it is really a sign of just how much trouble they are in. This is step one of their rescue. The powers that be felt they could not wait any longer with BofA so damaged, and that a run or crisis was one bad news day away (earlier this week I predicted some rescue action within 2-3 weeks). Step two, some additional lifeline will show up in September. Step three will be a sale of Merrill.

Some readers rejected the idea that a Merrill separation would ever be in the cards, given that Bank of America has made a great deal of noise about how it has integrated the securities firm. But the fact is that Merrill, or any of the major capital markets players would be well nigh impossible to resolve.

Dumb things bloggers say

Alright, I have a mea culpa here. Check out this quote from June 2008: Bank of America’s Ken Lewis is trying to crack a big nut in taking on Countrywide Financial to its balance sheet. To date, BofA has been fairly successful in limiting its writedowns during this credit crisis, but there are any number […]