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Archive for the ‘mortgage fraud’ Category

This story was written by Katie Rose Quandt and originally published on BillMoyers.com.

Front-line workers at our nation’s big banks — tellers, loan interviewers and customer service representatives — are required by their employers to exploit customers, according to a revealing report out today from the Center for Popular Democracy (CPD). Big banks have internal systems of penalties and rewards that entice employees to push subprime loans and credit cards on customers who would be better off without them.

CPD’s report outlines several illegal predatory practices big banks have been caught employing, usually via their front-line workers:

Blatantly discriminatory lending:
In 2011 and 2012, Bank of America and Wells Fargo paid out settlements for charging higher rates and fees to tens of thousands of African American and Hispanic borrowers than to similarly qualified white customers. Minority customers were also more likely to be steered into (more expensive, riskier) subprime mortgages.
Manipulating payment processing to maximize overdraft charges:
When a savings account balance drops too low, the bank charges a hefty overdraft fee on each subsequent purchase. Both Bank of America and US Bank paid settlements for intentionally processing customers’ largest debit card payments first, regardless of chronological order, in order to hit $0 faster and maximize overdraft fees. US Bank was also accused of allowing debit card purchases on zero-balance accounts to go through (and incur overdraft fees), instead of denying the charges upfront.
Forcing sale of unneeded products:
Wells Fargo, JP Morgan Chase and Citigroup were accused of forcing customers to purchase overpriced property insurance.
Manipulative sales quotas:
Lawsuits show Wells Fargo and Bank of America created incentive programs for employees with the interests of the company — not the customer — in mind. Wells Fargo’s sales quotas encouraged bank workers to steer prime-eligible customers to subprime loans, while falsifying other clients’ income information without their knowledge. Bank of America’s “Hustle” program rewarded quantity over quality, encouraging workers to skip processes and checks intended to protect the borrower.

Instead of cutting back on the risky, unethical practices that led to the Great Recession, the CPD report asserts that big banks have not learned from their mistakes. Bank workers report higher levels of sales pressure in 2013 than in 2008, and most do not have the job security or seniority to simply refuse to hawk credit cards or steer customers into risky financial situations. While the financial sector is turning near-record profits, the average bank teller made just $12.25 an hour in 2013 (a real-dollar decrease from 2007), causing 31 percent of tellers’ families to rely on public assistance. What’s more, 85 percent of these underpaid front-line bank employees are women, and one-third are people of color. Most are in no position to risk losing their job or having their pay docked for stepping out of line.

Several anonymous big bank employees went into detail about how their employers incentivize sales:

An HSBC employee reported that when workers fell short of sales goals, the difference was taken out of their paychecks.
A teller at a major bank said she is expected to sell three new checking, savings, or debit card accounts every day. If she falls short, she gets written up.
Customer service representatives at one major bank’s call-center said everyone is expected to make at least 40 percent of the sales of the top seller. Credit card sales count for extra, encouraging callers to push credit cards on customers who would be better served with checking or savings accounts.
A call-center worker said she offers a credit card to every customer, regardless of whether it would be beneficial. She explained: “If you aren’t offering, you can get marked down — the managers and Quality Analysts listen to your call, and can tell if you aren’t offering.”

“We’re not servicing their needs,” said one front-line worker. “What they want, what they need, isn’t important to us. Selling them a product is … Some of our customers just have their savings, many are just retirees.”

As the report concludes, “Our nation’s big banks are committed to a model that jeopardizes our communities and prevents bank employees from having a voice in their workplace.”

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US Senator Elizabeth Warren is an honest politician. And she sounded like a champion of the 99 percent during an interview with Salon.com when she bashed President Obama for kowtowing to the interests of Wall Street ahead of the American people.

Warren praised Obama for the creation of the Consumer Financial Protection Bureau, a federal agency aimed at enforcing consumer protection laws. However, Obama’s financial ties with the elites of Wall Street came under closer review.

Warren told Salon that “there has not been nearly enough change” in the wake of the U.S. financial crisis.

“He picked his economic team and when the going got tough, his economic team picked Wall Street. …They protected Wall Street. Not families who were losing their homes. Not people who lost their jobs. Not young people who were struggling to get an education. And it happened over and over and over.”

On lobbyists: Banks spend millions on “armies of lobbyists and lawyers,” she told Salon, but there are few people at “the decision-making table” representing the concerns of everyday Americans.

“And when that happens — not just once, not just twice, but thousands of times a week — the system just gradually tilts further and further.”

Under Obama, during the greatest crisis since the Great Depression, in which massive fraud and money laundering for drug cartels and other crimes were committed by Wall Street executives and their employees, not a single person was charged by Obama’s Justice Department. “I’m the only one standing between you and the pitch forks,” Obama told a group of Wall Street executives during the height of the crisis. He was right, and he did his job for them. Goldman Sachs was the largest of his campaign financiers.

Under George W. Bush, people actually were charged with crimes in corporate scandals, and sent to prison, such as the Enron and Worldcom scandals. Under President George H.W. Bush and President Bill Clinton, over a thousand people were convicted of felonies for their parts in the savings and loan scandal.

This indicates how corrupt to the core the government of the United States has become, and  it’s not just Obama. It’s both major political parties, all Republicans in congress, and 90 percent of all Democratic lawmakers. The system is awash in money and corruption, all the way to the corporate wing of the US Supreme Court. The political and economic games are completely corrupted and rigged against the middle class.

For the complete interview, click on the link below.

Elizabeth Warren on Barack Obama: “They protected Wall Street. Not families who were losing their homes. Not people who lost their jobs. And it happened over and over and over”–Salon.com

 

 

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Bill Moyers says that Eric Holder has a mixed record as attorney general of the United States. Moyers gives Holder an A on civil rights, but an F on the frauds of Wall Street. Bill Black, a former bank regulator, calls the latter, “the greatest failure in the history of the department of justice.”

No banking executives have been criminally prosecuted for their role in causing the biggest financial disaster since the Great Depression.

“I blame Holder. I blame Timothy Geithner,” Black told Bill last week. “But they are fulfilling administration policies. The problem definitely comes from the top. And remember, Obama wouldn’t have been president but for the financial contribution of bankers.”

“While large banks have been penalized for their role in the housing meltdown, the costs of those fines will be largely borne by shareholders and taxpayers as the banks write off the fines as the cost of doing business. And by and large these top executives got to keep their massive bonuses and compensation, despite the fallout.”

But the story gets even more infuriating, the more Black laid out the culture of corruption that led to the meltdown.

“The Clinton, Bush and Obama administrations all could have prevented [the financial meltdown],” Black tells Moyers. And what’s worse, Black — who exposed the so-called Keating Five — believes the next crisis is coming: “We have created the incentive structures that [are] going to produce a much larger disaster.”

According to Black, that’s because the bankers have not been proscecuted for their crimes, thanks to Obama and Holder, and federal law prohibits people with criminal records to be in charge of banks. So the same people that brought the economic meltdown are doing the same thing with a nod, a wink, and a helping hand from the white house and both houses of congress.

Check out Moyers interview with Black by clicking on the link below.

Full Show: Too Big to Jail? | Moyers & Company | BillMoyers.com.

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“As Ben S. Bernanke walks away from the Federal Reserve’s marble headquarters on the Mall here after presiding over his last policy meeting on Wednesday, he will leave behind a bittersweet legacy.

On one hand, his unprecedented efforts to drive down interest rates and stimulate the economy are widely credited by his peers with saving the nation from a second Great Depression, strengthening the economic recovery and leaving the nation’s financial condition poised to take off this year.

Yet those same policies have added momentum to one of the greatest surges in economic inequality in US history, helping the wealthiest Americans add to their enormous riches while the incomes of almost everyone else stagnated.”

What isn’t mentioned in Bernanke’s legacy is the probable wholesale corruption going on at the Federal Reserve. The primary purpose of the Fed appears to be to shield rich investors from any market forces they encounter that lessons their wealth. In other words, the Feds primary responsibility appears to be to rescue the rich from their own foolish decisions. This has opened the door to what appears to be a massive amount of corruption, both in the Fed and in the US government. See Breakdown of the $26 Trillion the Federal Reserve Handed Out to Save Incompetent, but Rich Investors–Johnhively.wordpress.com

As for the rest of Bernanke’s dubious legacy, click on the link below.

Ben Bernanke Leaves Legacy of Stimulus and Stagnation–The Sydney Morning Herald

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A couple of weeks ago, Pope Francis denounced the “idolitry of money” and the worship of the “autonomy of the market.” However, it should be pointed out that markets are not autonomous, that they are largely controlled mostly by one to ten major manufacturers of goods and services, who act in concert to raise prices to meet Wall Street expectations. Those expectations are always higher profits than the previous quarter, and everything else be damned.

For example, most homes are constructed using sheet rock, or what is also known as drywall. Early this year, a friend of mine named Sloan, who is a home builder, received a letter from two retailers letting him know that drywall prices are rising 20 percent because all of the manufacturers of drywall are simultaneously jacking up their prices. This is called a conspiracy in restraint of trade, but the financial markets require prices, profits and stock prices continue to always rise. This means violating the law. This requires price fixing by the manufacturers of goods and services in almost every economic category. This is, of course, nothing less than an income redistribution scam since ultimately, the 99 percent purchase the goods and services and the 1 percent receives the profits. As an aside, I should mention that sheet rock prices jumped up 35 percent in 2012, and there is a lawsuit moving through the courts to break up this drywall cartel, which includes all of the drywall market in all of North America. Also be aware, that these price increases are inflationary. In effect, they are what cause inflation, for the most part.

This, of course, isn’t capitalism in any traditional sense. This is a controlled economy created to redistribute income from the 99 to the 1 percent. We live in an economic rigged game.

This is precisely why, during these economic weak times, corporate profits reached an all-time high during the third quarter of 2013. Prices are rigged upward. Wages and salaries are rigged downward. So that profits, dividends and share prices are rigged upward. It’s a massive economic scam perpetrated on the 99 percent by the parasites of the 1 percent, the government and the corporate propaganda machine.

Check out the link below for how drywall manufacturers have conspired to jack up prices to keep their profits moving up, which pushes up their dividends and stock prices.

Continent-Wide Price-Fixing Alleged in Drywall Industry–Courthouse News

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The answer to the above question is a resounding, “No.”

The job of the Federal Reserve Bank under Ben Bernanke has simply been to rescue rich investors from their bad investment decisions. These include individuals, banks such as Goldman Sachs and JP Morgan, and hedge funds (which are unregulated investment banks worth trillions of dollars). The Fed under Bernanke has given $26 trillion and more to save these folks from their own stupidity. They invested in derivatives, credit default swaps, and stuff like this.

According to Wikipedia, “During Summers’s presidency at Harvard, the University entered into a series totaling US $3.52 billion of interest rate swaps, financial derivatives that can be used for either hedging or speculation.[49] Summers approved the decision to enter into the swap contracts as president of the university and as a member of Harvard Corporation, which bears “the school’s ultimate fiduciary responsibility.”[50] By late 2008, those positions had lost approximately $1 billion in value, a setback which forced Harvard to borrow significant sums in distressed market conditions to meet margin calls on the swaps.[51] In the end Harvard paid $497.6 million in termination fees to investment banks and has agreed to pay another $425 million over 30–40 years.[50] The decision to enter into the swap positions has been attributed to Summers and has been termed a “massive interest-rate gamble” that ended badly.”

In 1998, during congressional testimony, then Deputy Secretary of Treasury Lawrence Summers supported government policy decisions to not regulate the derivatives markets because, “the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counter-party insolvencies.” In his testimony, Summers offered no proof that he was right. He was wrong again. There’s been massive fraud in the derivatives markets, especially among the big investment banks, such as Goldman Sachs. And this has led in large part to the weakening of the economy and the melting down of the middle class since his testimony. There is nothing to indicate that he has changed his mind.

In 1999 Summers endorsed the Gramm-Leach-Bliley Act. This bill rendered moot the highly successful Glass-Steagal Act, which had separated investment and commercial banks. In supporting Wall Street, Summers stated, “With this bill, the American financial system takes a major step forward towards the 21st Century. The bill has proven to be a disaster for the US economy, and its a principle reason for the redistribution of massive amounts of income from the 99 to the 1 percent.

In hindsight, we can see that Summers has always been a servant of Wall Street and the 1 percent, and a vocal supporter of the war against the middle class. He’s largely clueless or doesn’t give a damn that good wages and benefits spur demand for goods and services, creating a sound economy in the process.

Summers is the wrong person at the wrong time in US history to be head of the Federal Reserve, which is a private, not government, bank. The US economy needs something more than a Wall Street drone to get its financial house in order and to strengthen the middle class and the economy in the process.

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Mortgage applications are dropping from near historic lows back toward historic lows. So why are housing prices rising and there’s a price bubble?

The big banks have manipulated housing prices by conspiring together to take over two million homes off the market. Supply has shrunk, but demand has remained static.

The game’s been rigged by the government, which only enforces rules when it negatively impacts the big corporations. So don’t expect the government of Barack Obama and John Boehner to do anything about this illegal fixing of home prices.

However, because housing prices have been pushed artificially higher, as have mortgage interest rates, citizens rushed in to purchase homes over the last ten months rather than wait out the bubble. So as of now, there are less people sitting on the fence, thinking about buying a home, because so many already have. That means the number of people able to afford to purchase new homes is falling quicker than if the banks hadn’t conspired to fix the prices of homes. Demand is adjusting downward, in other words, reacting to the economic reality. Because so many rushed in to buy, and because income is being redistributed upward by the US government via legislation, from the 99 to the 1 percent, there are less and less people able to afford to purchase a home.

The weak housing bubble, a creation of a conspiracy in restraint of trade by the big banks, which is a clear violation of the law the Obama justice department has apparently decided not to investigate, most likely because of its tight financial relationship with the shakers and movers of Wall Street, is already leaking a ton of air. The bubble is bursting amid a culture of massive government corruption.

Check out the link below for more specific information on this issue.

Mortgagedailynews.com

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The corporate press has done their duty to mislead the American people about mortgage interest rates. Here’s how.

Federal Reserve Chairman Ben Bernanke announced in June that he intended the Fed to stop propping up the economy by buying worthless bonds from stupid investors. The process is called quantitative easing and increases the money supply by nearly a trillion dollars every year.  Soon after  the announcement, the corporate press dutifully claimed that mortgage interest rates were rising because of Bernanke’s statement. Let’s see if that’s true.

Bernanke announced last Thursday that the Fed intends to keep rates where they are until the unemployment rate drops to its 2008 level. The stock markets around the world soared on that news. The Dow Jones climbed to a record high of 15,423 on Bernanke’s announcement.

What the corporate propaganda media hasn’t told us is that mortgage applications are near historic lows. Thirty year fixed mortgages are the only kind that are up. Mortgage interest rates have risen to around 4.5 percent, a rise of roughly 38 percent from around 3.25 percent just six months ago.

The big banks have illegally conspired to take millions of homes off the market, thereby increasing prices. By illegally rigging the housing market, the banksters have forced people to dive into the market before the illegally rising prices put them out of financial range of owning homes. This stampede has driven interest rates higher, and not Bernanke’s June announcement.

It’s possible that Bernanke’s announcement, and the banks illegally driving housing prices up, have both played a role in the upward movement of mortgage interest rates. We’ll see how far they go down now. Although, to be blunt, it already looks like the housing market bubble is already imploding, as I wrote earlier. In which case, home mortgage interest rates should drop anyway regardless of the actions of the Fed.

Check out the link below for more on Bernanke’s Thursday announcement.

US markets hit record highs with Federal Reserve interest rate pledge–The Guardian UK

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