Fast Foreclosures

J.P. Morgan Chase acknowledged that employees signed off on thousands of foreclosure documents without really reading them. This was in response to a sworn statement by a Chase employee that her team signed off on 18,000 foreclosures a month without proper document review. The firm just froze the foreclosure of 56,000 homes until their documents are re-examined. 

Chase is not alone. An Ally Financial document processor admitted signing off on 10,000 foreclosures a month without reading the paperwork. “That’s barely a minute per case,” notes the Washington Post‘s Brady Dennis, “assuming he works a normal eight-hour day.”

Instead of oversight, banks have “robo-signers.” Still believe that financial institutions can regulate themselves?

 Update: “Robo-Signing: Documents Show Citi and Wells Also Committed Foreclosure Fraud,” Abigail Field, AOL Daily Finance.

 

Image (“American Dream, after Grant Wood”) by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

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1000 Dollars and a Scam

Texas billionaire Sam Wyly needs to write a sequel to his self-congratulatory memoir 1000 Dollars and an Idea. Mr. Wyly and his brother Charles have been charged with 13 years of securities fraud yielding $550 million in illegal gains. The Wyly brothers stashed their loot offshore in the Cayman Islands and Isle of Man. Now that’s a story.

Sheriff Andy’s Health Care Posse

There’s been a heap o’ loose talk ’round Mayberry ’bout the new health care reform law. Barney Fife’s friend Sara has pore Aunt Bea plumb scairt to death, and lil’ Opie, he cain’t hardly sleep a wink.

Let’s all just simmer down here, now, and see what Sheriff Andy has to say ’bout this:

Wall Street’s Bailout Bonuses

 

Kenneth Feinberg, Special Master on Compensation Reform, cited 17 financial firms for “ill-advised” excessive payments to their executives while taxpayers were bailing their companies out with TARP funds. He called this “bad judgement.” Total of the bonuses and other executive payouts: $1.6 billion.

Penny-Ante Fine for Goldman Sachs

Goldman Sachs Group agreed to pay $550 million in federal fines and damages after misleading investors. That’s what Goldman earns in two weeks, points out the Washington Post‘s  Matt Miller.

Goldman admitted only that its marketing information about the Abacus deal could have been a bit clearer (or weasel words to that effect). The Wall Street firm’s stock price rose after the announcement, adding more than $3 billion to Goldman’s market value, so the payout essentially made the firm $2.5 billion in one day.

There. That should teach them.

Wanted: Icelandic Banker

Interpol wants Sigurdur Einarsson, former chairman of Iceland’s failed Kaupthing bank. Iceland has already arrested the bank’s former CEO, Hreidar Mar Sigurdsson.

Mr. Einarsson, accused of counterfeiting, forgery and fraud, is said to be in London. The real Interpol wanted notice is here. There’s no reward but, if you find the guy, grateful Icelandic authorities will probably treat you to a glass or two of Brennivin.

Regulating Wall Street’s Gamblers

“Over the last decade, the wealthiest Americans got richer by trading in the unregulated financial casinos on Wall Street.” — Senator Tom Harkin (D-IA).

“Once Congress deregulated the swaps market in 1999 it became a $600 trillion high-stakes casino for Wall Street to take big risks and bring our economy to the brink.”– Senator Maria  Cantwell (D-WA).

” … without action, we’ll continue to see what amounts to highly-leveraged, loosely-monitored gambling in our financial system, putting taxpayers and the economy in jeopardy.” – President Barack Obama.

“Wall Street’s a casino, so maybe state gambling laws apply,” Les Blumenthal, McClatchy Newspapers. (See an opposing view here).

Monstrous News From Wall Street

Goldman Sachs claims it didn’t know the housing market would collapse. That’s their story and they’re sticking to it.

There are indications it was otherwise. A 2007 email by Goldman’s Fabrice Tourre says the index used in trading subprime mortgage derivatives is “like Frankenstein” turning against its creators.  Email from other execs outlines strategies for Goldman to make money betting against its own failing securities.

The firm released its own raft of emails as evidence of corporate ignorance and indecision. That should inspire confidence on The Street.

More:

“Goldman executives cheered housing market’s decline, newly released e-mails show,” Zachary A. Goldfarb, Washington Post.

 

Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

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Iceland: Wrath of the Gods

The earth of Iceland belches fire. Huge ash plumes blot out the sky. It this Ragnarök, Twilight of the Gods, the End of the World?

Nei (No). The Althingi Special Investigation Commission Report on Iceland’s financial collapse has reached Asgard. The eruption of Eyjafjallajokull is merely a concurring opinion from Odin, Thor, Loki and the gang. Think it’s excessive? Throw a few former government ministers and the principals of failed Glitnir Bank, Kaupthing Bank and Landsbanki into the volcano and the world can have its air lanes back.

 

Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

Comments are welcome if they are on-topic, substantive, concise, and not boring or obscene. Comments may be edited for clarity and length.

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SEC Asks Banks About Accounting Dodge

The Securities and Exchange Commission (SEC) has sent a letter to a score of bank CFOs asking if they used the same maneuver as Lehman Brothers to cook the books during quarterly reporting periods. In the trick, called Repo 105, a  bank uses a short-term contract (a Repurchase Agreement) to exchanges assets for cash, agreeing to buy them back later at 105 percent of their value, but the firm reports the resulting cash as if it were a straight sale. This gives the temporary illusion of bank soundness and profitability.

More:

“SEC: Did others use Lehman accounting gimmick?” AP via Salon.

“SEC to Banks: Who Else Used Repo 105?” Marian Wang, ProPublica.

“Do other firms use Lehman’s accounting ‘drug’?” Alistair Barr, MarketWatch.

 

Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

Comments are welcome if they are on-topic, substantive, concise, and not obscene. Comments may be edited for clarity and length.