Bank of America Foreclosure Reviews: Whistleblowers Reveal Extensive Borrower Harm and Orchestrated Coverup (Part I – Executive Summary) On January 7, ten servicers entered into an $8.5 billion settlement with the Office of the Comptroller of the Currency and the Federal Reserve, terminating a foreclosure review process which was set forth in consent orders issued in April 2010.
Borrowers who had had foreclosures that were pending or had completed foreclosure sales in 2009 and 2010 could request an investigation by independent reviewers, selected and paid for by the servicers but subject to approval by the OCC. Some experts argued that the 2009 and 2010 time range was too narrow and excluded many borrowers who had been treated improperly. These professionals also questioned whether the investigators would operate independently and fairly. Nevertheless, the reviews were touted as delivering a measure of justice to abused homeowners, since any found to be have suffered wrongful foreclosures were to receive sizable monetary awards, and smaller payments would be made to those who experienced other forms of abuse.
Bank of America Settlement on Customer Overbilling Proves Bank Crime Pays. Here’s the Bloomberg story on one of today’s regulatory theater announcements: Bank of America Corp.’s Merrill Lynch wealth-management unit was fined $2.8 million by the Financial Industry Regulatory Authority for overbilling customers by $32.2 million over an eight-year period.Merrill Lynch charged the fees to about 95,000 accounts between April 2003 and December 2011, FINRA said in a statement today. New York-based Merrill Lynch, which was acquired by Bank of America in 2009, lacked an adequate supervisory system to ensure that customers were billed in accordance with their contracts and disclosure documents, the regulator said. Now of course, the bank says this was all a mistake, but it’s pretty certain the way Finra found about about it was via customer complaints, since the average amount pilfered per customer was under $400.
One also assumes the money was disgorged. But let’s make some simple assumptions. So much for regulatory competence. Activists Call for Breakup of Bank of America. Jim Wilson/The New York TimesProtesters chained themselves to the doors of Bank of America and Wells Fargo branches in San Francisco last week. Public Citizen, a consumer advocacy group, is calling for the breakup of Bank of America.
In a petition to Treasury Secretary Timothy F. Geithner and Ben S. Bernanke, chairman of the Federal Reserve — who are the chairman and vice chairman of the Financial Stability Oversight Council, respectively — the group argues that the bank is too big to be either governed or regulated, and represents a real risk to the financial system. They are urging Mr. In an accompanying letter, a group of leading business law professors urges regulators to “take any actions necessary to ensure systemic stability,” although the professors do not go as far as urging a breakup of the bank.
Chris Ratcliffe/Bloomberg NewsTreasury Secretary Timothy F. Joshua Roberts/Bloomberg NewsBen S. Think the collapse of MF Global was a problem? The bank’s chief executive, Brian T. Bank of America Is Too Much of a Behemoth to Fail: Simon Johnson. Oct. 24 (Bloomberg) -- The Obama administration says the Dodd-Frank financial reform law ends “too big to fail,” meaning that no financial institution will ever again need to be bailed out.
The promise is alluring, but it’s already proving to be false. The argument rests on the premise that bank capital is now high enough to withstand serious shocks, so a calamity is less likely. It also assumes that Dodd-Frank’s new resolution authority allows global financial institutions to be wound down in an orderly fashion, and that the law’s call for “living wills” ensures that banks provide all the necessary technical details regulators might need to take prompt pre-emptive action. Consider the law’s promise in the context of Bank of America Corp. Through the back door, U.S. regulators are facilitating another round of implicit bailouts, putting more taxpayer money on the line in the form of guarantees.
The move puts the Federal Deposit Insurance Corp. on the hook for any losses. Bank of America petition. Bank of America: Too Crooked to Fail | Politics News. By Matt Taibbi | At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever.
All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. But these laws didn't sit well with Hugh McColl. And why? Bank of America Bosses Find Friend in the Fed: Jonathan Weil. One of the reasons so many Americans are ticked off at the Federal Reserve is a lingering sense that it puts big banks’ interests above those of ordinary taxpayers.
The news that the Fed is taking Bank of America Corp.’s side in a dispute over where to park some of the company’s holdings only reinforces that impression. Here’s the gist of the story, broken two days ago by Bloomberg News. Bank of America, which got hit with a credit-rating downgrade last month by Moody’s Investors Service, has moved an undisclosed amount of derivative financial instruments from its Merrill Lynch unit to its biggest commercial-banking subsidiary. The latter is loaded with insured deposits and has a higher credit rating than Merrill or the parent company. The Federal Deposit Insurance Corp. is objecting to the transfers. That part is easy to understand: More risk for the retail lender means more risk for FDIC-insured deposits, which ultimately are backstopped by the U.S. government. Pushing an Agenda. F29 Matt Taibbi on Bank of America | Occupy Wall Street Video.
Bailout Ingrate Bank of America to Impose Monthly Fees on Many “Basic” Checking Account Customers. Of all the big US banks that managed to survive the global financial crisis, Bank of America and Citigroup were the two widely recognized to be at risk of failure in late 2008-early 2009. Sheila Bair, then head of the FDIC, really wanted to replace Citi’s CEO, Vikram Pandit, but settled for forcing the bank to do some pretty serious downsizing and streamlining. By contrast, Bank of America has not only been spared this sort of treatment (save being told it can’t pay dividends until its balance sheet is stronger) but it’s also the biggest beneficiary of the most recent “help the banks” full court press, namely, the mortgage settlement. So how does Bank of America propose to shore up its equity base? Now that bank stocks have traded up smartly, it might be able to unload some more operations (it did a bit of that when it stock was under stress).
But bankers prefer to run behemoths because executive pay is highly correlated with total asset size. On the one hand, banks aren’t charities. Bank of America Prepares Emergency Plans at Fed Behest, May Need to Amputate on Geographic Basis. As we’ve said repeatedly, despite bank executives braying about the need to be bigger to compete or to gain efficiencies, the evidence runs completely the other way. Every study on bank efficiency in the US has found that once banks hit a certain size level (the most commonly found one seems to be ~$5 billion in assets) banks exhibit a slightly positive cost curve, which means they are more, not less, costly to run.
Any economies of scale are probably offset by diseconomies of scope. So why do bank executives sell and act on a patently phony story? Aside from the fact that doing deals is much more fun than managing a business, the BIG reason is CEO pay is highly correlated with the size of the bank, measured in total assets. So no one should cry at the prospect that Bank of America might have to shrink to if it continues to be in financial and litigation hot water.
Notice that a Countrywide bankruptcy was apparently not included as an option. From the Wall Street Journal: Bank of America Settlements Impede Fraud Probe, Arizona Says. (Adds Arizona’s participation in multistate settlement in 13th paragraph.) Jan. 26 (Bloomberg) -- Bank of America Corp. is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief, Arizona officials say. The Arizona Attorney General’s office is asking a court to block those aspects of the settlements and require the bank to turn over all the agreements. The bank denies any wrongdoing. One 2011 accord involving a borrower facing foreclosure who defaulted on a $253,142 mortgage included a $5,000 payment, plus $7,500 for legal fees, and the defaulted payments were waived and the loan was modified to a 40-year term with a 2 percent interest rate, court documents show.
Non-Disparagement A hearing is set for Feb. 1 on the dispute. Frequent Contact Only four returned phone calls and none would provide a copy of the settlement, Matthews said. Quelle Surprise! Bank of America Accused of Blocking Arizona AG Investigation. One thing NC readers may have become attuned to, either via personal experience or some of the discussions we have had here, is how often a considerable portion of the value of a deal lies in releases (waivers of liability) or other provisions that might not seem all that important to the party signing away its rights. Bloomberg reports that the state of Arizona has told the court that Bank of American is undermining the state’s investigation of its loan modification practices. The probe comes out of a 2010 lawsuit which alleged that Countrywide misled customers about its loan modification policies. So what did Bank of America do? It apparently gave mortgage mods to some (many?)
This is all very entertaining. Bank of America has amusingly adopted contradictory responses to being caught out. “We look at each situation on a case-by-case basis and decide what to do based on the specific situation,” Shirley Norton, a Bank of America spokeswoman, said in an e-mail. Huh?