Bank of America Tries To Buy Their Way Out of Trouble

8 Responses to Bank of America Tries To Buy Their Way Out of Trouble

1. Peggy says:

   Thursday, July 17, 2014 at 11:22 am

   Citi just did the same thing to avoid civil lawsuits. And the price was cheep taken that it cost them about one quarts worth of earnings. Not a bad deal they cut with our DOJ.

   Citi inks $7 billion mortgage settlement:

   “Citigroup agreed to pay $7 billion to settle charges that it packaged bad mortgages during the run-up to the financial crisis.

   It includes $4 billion in penalties, $2.5 billion in mortgage modifications and other relief to homeowners, and $500 million going to five states and the Federal Deposit Insurance Corp.

   The settlement means Citi will be able to avoid a civil suit by the Justice Department and mirrors similar agreements with JPMorgan Chase (JPM) and other lenders in recent years.

   While Citi took a $3.8 billion hit because of the deal, which essentially wiped out its earnings for the quarter, it can afford it. Last year, the bank earned $14 billion and had $35 billion of cash on its balance sheet as of June 30.”

   http://money.cnn.com/2014/07/14/news/companies/citi-settlement/index.html
2. Tina says:

   Thursday, July 17, 2014 at 12:01 pm

   National Mortgage Settlement:

   In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo

   Meanwhile Fannie and Freddie have also reached settlements with some of the banks. Example:

   Under the agreement, Bank of America will pay Fannie $4.4 billion to satisfy all claims and buyback private label securities from Fannie with an unpaid principal balance of approximately $1.9 billion.

   Meanwhile, Bank of America will pay Freddie $5.1 billion.

   According to the FHFA, the agreement provides for an aggregate payment of approximately $9.33 billion by Bank of America that includes the litigation resolution as well as a purchase of securities by Bank of America from Fannie Mae and Freddie Mac.

   I’d like to know when those at Fannie Mae who created the instrument and then profited from the purchase of those bundled securities get to pay a price for this mess. So far they have only been on the receiving end with multi-millions in bonuses!

   And our readers should know that the Presidents Secretary of the Treasury, Jack Lew, had a major role at Citigroup when the bank got in trouble:

   In early 2008, he became a top executive in the Citigroup unit that housed many of the bank’s riskiest operations, including its hedge funds and private equity investments. Massive losses in that unit helped drive Citigroup into the arms of the federal government, which bailed out the bank with $45 billion in taxpayer money that year.

   Our readers should also know that banks are sitting on large chunks of cash because they are being forced to do so through Dodd/Frank regulations. They are required to hold the money in reserve rather than lending it to businesses.
3. Pie Guevara says:

   Friday, July 18, 2014 at 7:55 pm

   Well that explains why my “free checking” went to fee with a high balance requirement in order to waive it.
4. Chris says:

   Saturday, July 19, 2014 at 12:23 pm

   “What is needed is indictments for anyone committing a crime, the money settlement won’t fix the problem. It does little or nothing for the stockholders injured by a variety of frauds.’

   100% agreed.

   The problem is that the board members of corporations are protected from being prosecuted for the criminal behavior of said corporations because of limited liability. This is inherent to the existence of corporations. Now that the Court has ruled that corporations are people with rights, the higher-ups have all the advantages of treating their corporations as people, with little of the corresponding responsibility.

   Elizabeth Warren seems to be the only politician going after the big banks and demanding more accountability. These puny settlements are not good enough.
5. Tina says:

   Saturday, July 19, 2014 at 4:10 pm

   Good reading at Breitbart on this subject and the Obama administration’s failure to prosecute.

   Also, regarding the administration’s “hijacking of Fannie and Freddie,” Bankers Lawyer Blog dishes some dirt that expands the breadth of Obama scandals.

   National Review in 2010 on the Obama/Elizabeth Warren approach:

   The Left already is presenting this as a case of the wicked bankers fraudulently throwing families out of their homes and onto the street. That does not seem to have happened: The vast majority of people who have been foreclosed upon are in fact not making their mortgage payments; in the tiny number of cases in which homeowners have been foreclosed on wrongly, it seems to have been from genuine error rather than malfeasance. (It goes without saying that these homeowners should be made whole and their grossly negligent tormentors punished civilly or criminally, as appropriate.) But the Obama administration has a new Consumer Financial Protection Bureau at its disposal, with left-wing scold Elizabeth Warren waiting in the wings to run it, and some Democrats already are arguing that the administration should use this mess to twist the arms of mortgage lenders until they offer the significant writedowns of principal and interest that the Left has been after since 2008. Their implements of torture: Fannie and Freddie, whose enormous clout could be used to bully the banks. This “solution” would do little or nothing to alleviate the threat of a second financial crisis; it would be merely punitive. In any case, the banks risk taking another beating, either from government strong-arming or from the unraveling of mortgage-backed securities, which will dump a load of bad loans back onto their books.

   How bad a beating? Nobody knows. It could be mild, or it could be catastrophic. The critical issue of oversight — gathering intelligence about the financial system rather than attempting to micromanage it — has been comprehensively neglected by the Obama administration, which came into power on a slick of Goldman Sachs money and little appetite for intelligent, market-oriented reform. While the Democrats have been frittering away time and energy on non-issues like executive compensation and risible non-performing initiatives like the Home Affordable Mortgage Program, the deeper problems, as usual, have been ignored or misunderstood by the law professors and career politicos who have installed themselves as regents of the nation’s financial system.

   Prosecution would eliminate the ability to control and manipulate financial institutions…and the cash that is expected at election time.

   Elizabeth Warren is exactly like the Obama administration. She knows nothing about business and banking. Her motivation is central power and control of industry.

   Ms. “YOU DIDN’T BUILD THAT” is the last person we should look to for answers:

   Townhall:

   Sen. Elizabeth Warren (D-MA) may market herself as a progressive populist, but when forced to choose between everyday Americans and billion dollar international corporations, Warren sides with the corporations.

   “Senator Warren believes that the Export-Import Bank helps create American jobs and spur economic growth,” Warren spokeswoman Lacey Rose wrote in an e-mail to Bloomnberg News, “She looks forward to reviewing re-authorization legislation if and when it is introduced.”

   In fact, the Export-Import Bank does not create any net jobs. Whatever jobs it does create for the corporations it subsidizes are lost by non-subsidized businesses.

   In reality, all the Export-Import Bank really is, to quote then-candidate Barack Obama, is “little more than a fund for corporate welfare.”

   This is why President Ronald Reagan proposed shrinking the Export-Import Bank saying at the time, “We’re doing this because the primary beneficiaries of taxpayer funds in this case are the exporting companies themselves–most of them profitable corporations.”

   Over 75 percent of all Export-Import corporate welfare subsidies go to large corporations, not small businesses.

   And the corporate welfare bank is set to cost taxpayers more than $2 billion over the next ten years while bank officials are being investigated for fraud and corruption.

   If the Progressive movement and their Democratic Party want to become the part of corporatism, then conservatives and the Republican Party must offer the American people an alternative by fighting corporate welfare in all its forms, including the Export-Import bank.

   Liberals…progressives…collectivists…whatever they are calling themselves this week, are phonies.

   Limited liability doesn’t protect bankers from legal prosecution for fraud or other crimes:

   Former JP Morgan Chase banker convicted of bank fraud

   Former Houston Banker convicted of Bank fraud

   FDIC bans Hammond banker convicted of fraud

   The Rise of Corporate Impunity:

   Serageldin’s life was about to become more ascetic. Two months earlier, he sat in a Lower Manhattan courtroom adjusting and readjusting his tie as he waited for a judge to deliver his prison sentence. During the worst of the financial crisis, according to prosecutors, Serageldin had approved the concealment of hundreds of millions in losses in Credit Suisse’s mortgage-backed securities portfolio. But on that November morning, the judge seemed almost torn. Serageldin lied about the value of his bank’s securities — that was a crime, of course — but other bankers behaved far worse. Serageldin’s former employer, for one, had revised its past financial statements to account for $2.7 billion that should have been reported. Lehman Brothers, AIG, Citigroup, Countrywide and many others had also admitted that they were in much worse shape than they initially allowed. Merrill Lynch, in particular, announced a loss of nearly $8 billion three weeks after claiming it was $4.5 billion. Serageldin’s conduct was, in the judge’s words, “a small piece of an overall evil climate within the bank and with many other banks.” Nevertheless, after a brief pause, he eased down his gavel and sentenced Serageldin, an Egyptian-born trader who grew up in the barren pinelands of Michigan’s Upper Peninsula, to 30 months in jail. Serageldin would begin serving his time at Moshannon Valley Correctional Center, in Philipsburg, where he would earn the distinction of being the only Wall Street executive sent to jail for his part in the financial crisis.

   The Obama administration could have prosecuted and chose not to…instead they have used the power position not prosecuting afforded them to manipulate and control…and fine!

   Prosecution would be risky for our government and certain democrats and republicans. It would open up discovery of wrongdoing by various players including regulators and lawmakers. It would lead to the truth about how this crash was inevitable and the result of government “good intentions and failure to properly oversee the banking and lending industries. It would have further revealed the corruption at Fannie and Freddie.
6. Chris says:

   Saturday, July 19, 2014 at 4:56 pm

   Tina, I don’t understand your argument. Is the Obama administration being too hard on banks, or too easy on banks? You seem to be jumping from one argument to the other without noticing.
7. Tina says:

   Monday, July 21, 2014 at 8:58 pm

   Chris I’m just posting information that I think our readers should have. It’s not that I’m “not noticing” (nice try); it is that I am noticing!

   It’s odd that prosecutions have taken place and people don’t seem to have heard about them. On the other hand the shake down approach that the administration, through Eric Holder, is using on the banks in lieu of prosecution is very troubling. It’s troubling that Jack Lew was in the middle of this at Citi and is now serving under the President, not only untouched but rewarded! I recall President Obama making a statement that the banks didn’t break any laws and that’s why they weren’t prosecuted…Eric Holder said the bankers couldn’t be prosecuted because they were too big and it would have a “negative impact on the economy”.

   I read another article tonight:

   Washington Times:

   The Justice Department is involved in a $100 billion shakedown racket against the big banks. The banks are heavily regulated and can easily be destroyed by government officials. This past week, Citibank agreed to pay $7 billion to avoid formal charges of alleged wrongdoing by its officers. The fines largely to go to the Justice Department and to outside groups that are friendly toward the administration, while little goes to those individuals who were allegedly harmed.

   The Constitution is quite specific in that revenue measures are to begin in the House of Representatives and go through a congressional appropriation process. Yet the Justice Department and others have been able to greatly expand their budgets outside the legislative process by obtaining financial “settlements” from the private sector, through threats, intimidation and asset forfeiture. Bank settlements with the Justice Department now total something near $100 billion. This is corruption on a massive scale. Again, banks have little alternative but to settle with the Justice Department in order to stay in business. John Allison, president of the Cato Institute and former CEO of the 10th-largest bank holding company in the United States, BB&T, has noted that many laws contradict each other, such as the Patriot Act and many of the financial-privacy laws and rules, thus making it impossible for a bank to be in compliance with both. Then the Justice Department comes in and says if you pay us X billion dollars, we will not prosecute you.

   These fines on the banks are not cost-free. They are paid by the bank customers and stockholders, neither of whom had any involvement with any real or imaginary wrongdoing. It is interesting that the alleged wrongdoing at Citibank was largely in the activities of the bank that Jack Lew was responsible for at that time. (Mr. Lew is now President Obama’s Treasury secretary.) If Mr. Lew was responsible for billions of dollars of wrongdoing at Citibank — as charged by the Justice Department — why is he not in jail?

   The Department of Justice is also engaged in strong-arming banks not to do business with perfectly legal businesses they do not like, such as gun dealers, which is a denial of basic rights. As attorney general, Mr. Holder is in contempt of Congress for failure to turn over records to Congress, which he is obliged to do. He has also sent Justice officials out to harass critics of the Obama administration, ignoring the First Amendment. The real question should be: Why is Mr. Holder not in jail?

   Corruption on a very large scale, including selective prosecution, seems to be where the arrows point but where can the American people go to seek justice?

   Richard Rahn concludes “In the past, the corrupt in government stole perhaps as much as a few million dollars, but the current group is stealing hundreds of billions of dollars in extortion, neglect and mismanagement — which costs all Americans their property and liberty.

   When politicians use the term, “we” it suggests we are all in this together but the people are not privy to much of what is going on, we are not being served, we are not seeing justice done, billions are being spent and all we are experiencing is more problems and less opportunity.

   With Carter we had malaise…I don’t know what to call this.
8. Chris says:

   Tuesday, July 22, 2014 at 7:34 am

   Tina, thanks for the information. It doesn’t surprise me that many of the laws subject to banks contradict each other. And it certainly wouldn’t surprise me if the administration is using settlements as a way to raise funds for themselves rather than the people. It seems that they are using a pretense of “going after banks” to hide the fact that they are still cozying up with them. $7 billion sounds like a lot to us, but it is a very small fraction of what Citibank is worth.

   While I’m still not sure I agree with all of your claims on this issue, it’s at least the right issue to be focusing on.

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