Timing and Scope: The Issues With the Schneiderman JPMorgan Chase Lawsuit

By: Tuesday October 2, 2012 9:30 am

One thing I want to emphasize about the lawsuit against Bear Stearns on securitization fraud put together by Eric Schneiderman’s office is that it’s rooted in reality. Indeed, Bear Stearns did misrepresent to investors the quality of the loans they placed in mortgage backed security pools, did ignore warnings from third-party due diligence specialists about [...]

Big Banks Increasing Spread on Mortgage Profits, Not Funneling Cheaper Rates to Customers

By: Wednesday September 19, 2012 8:25 am

Banks are making more off mortgages than ever before, refusing to pass on lowered interest rates from federal policy, including the purchase of trillions in mortgage-backed securities by the Federal Reserve, to consumers. This isn’t really the enigma that the New York Times’ Dealbook makes it out to be. It’s simple collusion. Nobody offers 2.8% mortgage rates, so nobody gets them. As a result, the spread that banks capture on their mortgages widens.

Criminal Prosecutions Not Happening from New Financial Fraud Task Force

By: Monday September 10, 2012 7:01 am

I don’t need a source to tell me that there will be no criminal charges arising from the Residential Mortgage Backed Securities working group, the task force set up to “hold accountable” those financial institutions who crashed the economy through misdeeds in the securitization process. Take only this piece of evidence: all of the subpoenas [...]

Paper Criticizes Federal Reserve Approach, Suggests Radical Overhaul of Monetary Policy in the Crisis

By: Sunday September 2, 2012 11:16 am

The upshot of Ben Bernanke’s speech at the economic symposium at Jackson Hole, Wyoming, at least to most interested observers, is that the Federal Reserve will enact a new round of quantitative easing at their next policy meeting the week of September 10. This may be dependent on the jobs numbers that come out this [...]

Citi Settles for $590 Million With Shareholders Over Misrepresentations During Financial Crisis

By: Thursday August 30, 2012 6:59 am

Citigroup has settled a class-action lawsuit with shareholders over how Citi managed subprime securities during the financial crisis, a second-order fraud unconnected to the actual fraud of securitization and knowingly selling the bad securities in the first place. Citigroup said on Wednesday that it had agreed to pay $590 million to settle a class action [...]

The Worst Idea in the World: Securitizing Rental Revenue

By: Sunday August 26, 2012 10:20 am

The last financial crisis can be blamed in large part on runaway securitization. Wall Street giants sliced and diced mortgage loans into bonds that they sold around the world. They claimed that they diversified the mortgage pools so that even a few defaults would not undermine the value of the securities, and they offered tranches [...]

Judge Jed Rakoff Berates SEC for Secret Settlement Deals, in Judicial Filing

By: Wednesday August 15, 2012 11:53 am

I’m actually really enjoying the last stand of Jed Rakoff. He’s the federal judge who has engaged in a lonely crusade against the SEC’s practice of slap-on-the-wrist settlements against the nation’s largest financial firms. The SEC and Citigroup took Rakoff to court, essentially, to get their settlement on some mortgage-backed securities deals approved. Rakoff refused [...]

Yesterday Was “Relieve Goldman Sachs of Their Legal Exposure” Day

By: Friday August 10, 2012 6:20 am

I mentioned yesterday that Goldman Sachs got a rare “reverse Wells notice” from the SEC, when they were told that a mortgage-backed securities deal which they earlier heard they would face prosecution for would not net them any civil enforcement. But that was just the beginning. Later in the day, they learned they would not [...]

Goldman Sachs Escapes Liability from SEC in Mortgage Backed Securities Case

By: Thursday August 9, 2012 1:00 pm

Goldman Sachs announced in a regulatory filing that the Securities and Exchange Commission has closed their investigation into the firm misleading investors on a $1.3 billion subprime mortgage-backed security deal. This represents a flip for the SEC, which notified Goldman of impending action back in February: In February, Goldman received a so-called Wells notice from [...]

SEC Blows Easy Prosecution of Toxic CDO Salesman

By: Wednesday August 1, 2012 6:54 am

The SEC managed to lose a layup of a case against former Citigroup executive Brian Stoker, in a case which revolved around CDO sales where Citi has already agreed to pay fines on the grounds that they misled investors and took the other side of the bet. The Securities and Exchange Commission had accused Brian [...]

Homeowners Having Difficulty Collecting on Foreclosure Fraud Settlement

By: Monday July 23, 2012 1:09 pm

A little over five months after the inking of the foreclosure fraud settlement, and around three months since a federal judge blessed it and allowed it to go forward, people have begun to wonder whether the signature piece, the money pledged toward “credits” for a variety of actions, including principal reduction, has gotten off the [...]

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