Obama Cutting (Another) Deal With Banks

[boedicca]

Anyone who thought that the Obama Administration's investigation into Big Banks for mortgage fraud would result in relief for homeowners, think again. The Obamanoids are just using it as a pretext to squeeze a $10B indulgence from the banksters.

President Obama’s financial regulators are reportedly negotiating a secret settlement with 14 banks to end an investigation into predatory loans and foreclosures because federal investigators are having trouble finding the evidence they need for a successful end to the probe.

Fourteen banks — such as JP Morgan Chase, Citigroup, and Bank of America — would pay $10 billion, under the settlement, that would be used for relief for homeowners and families that have lost their homes.

What do the banks get? “The proposed settlement would also halt a separate sweeping review of more than four million loan files that the comptroller’s office and the Federal Reserve required the banks undertake as part of a consent order in April 2011,” The New York Times reports.

That’s an improvement on the status quo for the banks — it could save the banks as much as $10 billion on the review alone. Based on figures in the Times report, initial estimates suggested that the review would cost $8 billion, but “the costs of the reviews have ballooned” such that it could cost $20 million if it were to be carried out. And that’s just the cost of the review — it doesn’t account for what the banks would then have to do to ameliorate any problems uncovered by the review.

The federal government likes the idea of a deal because the investigation is going poorly. “In private meetings with top bank executives, these people said, regulators have admitted that the reviews had gone awry,” per the Times. “At one point this month, an official from the comptroller’s office said the agency had ‘miscalculated’ the scope and requirements of the reviews, according to the people with knowledge of the negotiation.” Sources also said that the review is not going to “yield promised relief to homeowners.”

So, the Obama administration is using the review as leverage to convince the banks to settle, which will end with a photo op for the president and a speech about holding Wall Street accountable, even as he gives them a better deal relative to their current position....

Report: Obama cutting secret deal with banks because foreclosure probe is going badly | WashingtonExaminer.com

 

[waltky]

Borderline banking puts economy at risk...

The crackdown on bank misbehavior masks a troubling reality
7 Aug.`13 - "Ex Goldman Trader Found Guilty for Misleading Investors." "Bond Deal Draws Fine for UBS." "JPMorgan Settles Electricity Manipulation Case for $410 million." "Deutsche Bank Net Profit Halves on Charge For Potential Legal Costs." "US Sues Bank of America Over Mortgage Securities." "Senate Opens Probe of Banks' Commodities Businesses." "US Regulators Find Evidence of Banks Fixing Derivatives Rates." "Goldman Sachs Sued for Allegedly Inflating Aluminum Prices."

So goes a sampling of headlines about the banking industry from the past week - yes, just one week. We seem to be living in an era where bankers can do no right. I can't put it any better than a smart hedge fund friend of mine, who upon reading the news about the $410 million that JPMorgan paid to make allegations that it manipulated energy markets go away, sent me an email. "I am a bank friendly type," he said. But, he added, in typically terse trader talk, "Something structurally amiss when so much financial activity is borderline."

By one measurement, the problem has gotten worse by an order of magnitude in recent years. In the annual letter he writes to shareholders, Robert Wilmers, the chairman and CEO of M&T Bank, has started keeping track of the fines, sanctions and legal awards levied against the "Big Six" bank holding companies. In 2011, those penalties were $13.9 billion. In 2012, they more than doubled to $29.3 billion. Wilmers writes that the past two years represent the majority of the cumulative $52 billion in charges, from 236 separate actions in eight countries, over the past 11 years. Wilmers also cites a study done by M&T, according to which the top six banks have been cited 1,150 times by the Wall Street Journal and the New York Times in articles about their improper activities. Perhaps not surprisingly, the biggest bank, JPMorgan, accounts for a sizable chunk of all this. According to a report by Josh Rosner, a managing director at independent research consultancy Graham Fisher & Co, JPMorgan has paid $8.5 billion in fines between 2009 and 2012, or about 12 percent of its net income over that period.

The results aren't in for 2013 yet, but so far, the tune is more of the same. In addition to all of last week's news, there's the $8.5 billion that 13 banks agreed to pay to address allegations of robo-signing. Barclays, while not a "Big Six" bank, was also ordered to pay $488 million by FERC; that bank, along with RBS and UBS, has also agreed to pay a combined settlement that is well over $1 billion to settle charges that they manipulated the key interest rate called Libor.

How you explain those numbers depends on where you sit. In his letter, Wilmers embraces the argument that a predisposition to wrongdoing is now built into the system, in part because of the decline of traditional banking and the merger of commercial and investment banking. Money center banks, which are desperate to pump up their profits, have increasingly invested in things they know nothing about, whether it be emerging market debt or subprime mortgages. At the same time, Wall Street firms have pushed the envelope in developing newfangled ways for their customers to lose money. (Oops - I meant newfangled ways to help "markets remain efficient and liquid.") Then, commercial banks have used their balance sheets to inject steroids into Wall Street's products. Or as Wilmers writes, "One's cash from deposits and the other's creativity led to a symbiotic relationship, enhanced by the closeness of geography."

More Column: The crackdown on bank misbehavior masks a troubling reality

 

[Claudette]

WOW What does one expect from the most open and transparant administration in history??

 

[ScreamingEagle]

....but.....but.....Elizabeth Warren sounds so good.....

[ame=http://www.youtube.com/watch?v=Xvi7RNr8s4A]Elizabeth Warren On Illegal Foreclosures. INCREDIBLE VIDEO - YouTube[/ame]

 

[zeke]

WOW What does one expect from the most open and transparant administration in history??

The rethugs go bat shit crazy if the banks are dealt with in a harsh manner. Now that Fannie and Freddie will be going away, the plutocrats have us just about where they want us.

Broke, dumb and hating each other. Divide and conquer works.

 

[Claudette]

Last I heard Barry and his merry band are a long way from being in the GOP.

In fact they are Democrats. Imagine that.