Later On

A blog written for those whose interests more or less match mine.

Archive for the ‘Congress’ Category

What the US banking industry is and what has happened as a result.

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This column in Wall Street on Parade by Pam Martens and Russ Martens is worth reading. From the column:

. . . Let’s recap what the public has learned over the past eight years about the Wall Street banking model from hell. (1) The greatest housing collapse since the Great Depression resulted from Wall Street banks muzzling their internal whistleblowers who wrote memos to management and shouted from the rafters that the banks’ mortgage loan departments were ignoring their own compliance rules and buying up tens of thousands of mortgages with wildly overstated incomes by the mortgage holder. (2) The banks then knowingly bundled these toxic mortgages into pools and paid the ratings agencies, Standard & Poor’s and Moody’s, to assign triple-A ratings to the offerings (called securitizations). (3) The banks knew these toxic mortgages would fail but they sold them to their customers as sound investments. (4) The banks also used their insider knowledge that the mortgages were going to fail to place bets (short sales) and reap billions of dollars in profits as the U.S. housing market collapsed and families were thrown into the streets.

Last December, “The Big Short” movie began to play in theatres across America, allowing millions of people to see how the unchecked, insidious greed of Wall Street had destroyed the nation’s economy along with the reputation of Wall Street, the ratings agencies and the revolving door regulators. (See video below.) The movie was based on real-life people on Wall Street and adapted from the book by the same title by author Michael Lewis, an authoritative source through his previous career on Wall Street.

Years before the movie made it to the big screen, thousands of activists around the country created the Occupy Wall Street movement to advocate for a realignment of their democracy and a radical overhaul of what Wall Street had become: a thinly disguised wealth transfer system for the one percent, being propped up by a corrupt political campaign finance system. After commanding news headlines for months and being carefully monitored by government surveillance, a brutal police eviction was orchestrated against Occupy Wall Street, journalists covering the protests and even New York City Council Members attempting to monitor what was happening. Congressman Jerrold Nadler sent a letter on December 6, 2011 to Attorney General Eric Holder at the  U.S. Department of Justice requesting that an investigation be undertaken. Nadler’s description of the events were reminiscent of a police state protecting the criminals: . . .

The column explains what this toxic culture has done to IPOs. And do read the whole thing: it’s good to be reminded of the sort of society in which we actually live.

Written by LeisureGuy

23 September 2016 at 5:44 pm

All In The [EpiPen] Family

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David Epstein reports in ProPublica:

If you notice the news and/or aren’t that guy in Plato’s favorite cave, you’ve probably already suffered rage-induced anaphylaxis while reading about the cool 600 percent price increase for EpiPens in recent years. In all the commotion about unaffordable lifesaving injections, however, you probably missed a USA Today story explaining how Mylan Specialty, maker of EpiPen, developed “a near monopoly in school nurses’ offices.” Your three W’s:


USA Today reports that, in 2012, Gayle Manchin became head of the nonprofit National Association of State Boards of Education, and “spearheaded an unprecedented effort” to make schools purchase emergency treatments for allergic reactions. Manchin’s efforts were rewarded, as 11 states created laws to require epinephrine auto-injectors (i.e. EpiPens) in schools, and other states recommended schools get them. And we’re using the strong form of “recommend” here, since the 2013 “EpiPen Law,” as the White House called it, gave funding preference to schools stocking EpiPens. So this is the kind of “recommend” like when you’re playing make-believe and making “vroom” sounds on that Harley parked outside a bar and someone burly walks out and recommends you stop doing that.

What’s wrong?

Good question. Seems totally reasonable for schools to have emergency treatments handy. Did I mention that the CEO of Mylan is Heather Bresch? Did I mention that her maiden name is Heather Manchin? Did I mention that Gayle Manchin, who helped get schools to purchase EpiPens gave birth to Heather Manchin who runs the company that profits when schools purchase EpiPens? (Oh and Gayle’s husband and Heather’s dad is Sen. Joe Manchin, D-W.Va.) USA Today mentioned all of that stuff. This might take supportive parenting to a heretofore unseen plane of existence.

What now?

According to The Guardian, on Wednesday . . .

Continue reading.

Written by LeisureGuy

23 September 2016 at 4:16 pm

Wells Fargo: It wasn’t just bogus accounts, the bank also screwed customers with foreclosures

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Unfortunately, the agencies responsible for regulating the banking industry are, with the cooperation of the President, controlled by the banking industry, so I doubt that anything will be done long term. Still, it’s interesting to see that banks can pretty much do what they want with the sure knowledge that no bank official will be punished in any way. (The person who ran the bogus-accounts scam was given $125 million bonus when she retired: that’s the sort of “accountability” banks practice.

Gretchen Morgenson reports in the NY Times:

John Stumpf, the chairman and chief executive of Wells Fargo, won a dubious achievement award from one of his interrogators during Tuesday’s scorching hearings on Capitol Hill. The bank’s yearslong practice of opening bogus accounts for customers and charging fees to do so, said Senator Jon Tester, Democrat of Montana, had united the Senate Banking Committee on a major topic for the first time in a decade. “And not in a good way,” headded.

But this was not the first time problematic and pervasive activities at Wells Fargo succeeded in uniting a disparate group. After observing years of abusive mortgage loan servicing practices at the bank, an increasing number of judges hearing foreclosure cases after the financial crisis grew to understand that banks could not always be trusted in their pleadings.

This was a major shift: For decades, the nation’s courts had been largely pro-bank when hearing foreclosure cases, accepting what big financial institutions produced in documentation and amounts owed by borrowers.

“Wells didn’t intentionally educate judges. They didn’t raise their hand and say, ‘Judge, we’re sorry,’” said O. Max Gardner III, a prominent foreclosure defense lawyer who teaches consumer counsel how to represent troubled borrowers. “It was people really digging in and having the resources and the time to ask the right questions about what they were doing with the money.” Those practices included levying improper fees and incorrectly foreclosing on homes.

Tom Goyda, a Wells Fargo spokesman, said: “The housing downturn was a challenging time for our nation, and Wells Fargo has acknowledged that we made mistakes in the handling of mortgage foreclosures along the way. Lenders, investors, along with policy makers and regulators — all sides — learned foreclosure processes had to be addressed, and Wells Fargo made significant improvements to the way we work with customers when they fall behind in their payments and during the foreclosure process.”

During the financial crisis, Wells Fargo was at a remove from Wall Street and was not a big player in creating toxic and complex mortgage securities that were engineered to fail. But the bank’s ability to emerge from the crisis with a relatively good reputation is something of a mystery to anyone who paid attention to its aggressive foreclosure activities.

The only difference: Mr. Stumpf, who was named Wells’s chief executive in 2007, has apologized to the customers his bank harmed with its account opening charade. Lawyers who represented troubled borrowers say no such apology came from Mr. Stumpf during the foreclosure mess.

“I sure as heck haven’t seen it,” said Linda Tirelli, a longtime foreclosure defense lawyer at Garvey Tirelli & Cushner in White Plains, who has often battled Wells Fargo. “I don’t remember ever hearing him apologize, because that would admit wrongdoing, and that’s not part of Wells Fargo’s corporate culture. Their culture is about not holding anybody at the top accountable.”

Some judges tried to hold Wells Fargo to account for its foreclosure practices. One was . . .

Continue reading.

Written by LeisureGuy

22 September 2016 at 10:41 am

The EpiPen Outrage Continues

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Good editorial in the NY Times.

And see this report in the Washington Post.

Written by LeisureGuy

21 September 2016 at 8:43 pm

Good news but need more: 27 U.S. Senators Rebel Against Arming Saudi Arabia

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An important step in the right direction, reported by Alex Emmons in The Intercept.

Written by LeisureGuy

21 September 2016 at 2:39 pm

Sen. Elizabeth Warrens tears into Wells Fargo chairman

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This is worth watching:

It’s worth noting that the Wells Fargo manager directly responsible for the scam “left the bank earlier this summer with a $124.6 million payday.”

Wells Fargo is a criminal enterprise, but that seems to be true for quite a few banks. See, for example, “Fed Monetary Policy Is Being Held Hostage by Wall Street Banks.”

On this page you can contribute to keep Elizabeth Warren (aka “Pocahontas”) in the Senate. We really need her there, so do contribute.

Note also “Regulators danced with Wells Fargo for years before penalties.” It seems that our agencies to regulate banks are actually run by banks—for example, President Obama appointed Mary Jo White, a defense lawyer for large banks, to head the SEC. Naturally enough, she does everything she can to protect her past and future clients, resisting any efforts to rein in or punish banks. The report at the link is by Kevin Hall and appears in McClatchy. It begins:

Federal regulators were aware of wrongdoing at banking giant Wells Fargo & Co. as early as March 2012 and issued a string of supervisory letters ordering changes over the next three years, holding off on penalties while the creation of phony bank accounts and falsely issued credit cards to pad employee bonuses continued.

That timeline emerged Tuesday at a Senate Banking Committee hearing on allegedly illegal sales practices at Wells Fargo. Despite the supervisory letters, a scathing investigative reportby the Los Angeles Times and this month’s $185 million settlement with California and federal regulators, CEO John Stumpf argued that the scandal did not point to larger risks.

The Wells CEO also told Congress he did not err in signing off on quarterly reports filed with the Securities and Exchange Commission that said the company’s internal controls were strong, maintaining that the problems did not reflect a material event warranting a notice to investors.

“It was not a material event,” Stumpf told the Senate Banking Committee in sometimes testy testimony.

It’s an important statement because there is now pressure on the SEC to investigate why Wells Fargo, the nation’s third-largest bank by size of assets, did not disclose to investors the potential risks to share prices associated with the ongoing probe by bank regulators.

Continue reading.

Written by LeisureGuy

21 September 2016 at 9:27 am

A case of really bad Republican timing

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Matt O’Brien reports in the Washington Post:

It’s generally a bad idea to say something is a failure right after its biggest success.

That may seem sort of self-evident, but apparently it isn’t. Take House Speaker Paul D. Ryan (R-Wis.). He has been trying to recast the presidential campaign as a contest between Hillary Clinton and not Donald Trump, but rather his “Better Way” agenda — basically tax cuts for the rich, spending cuts for the poor and deregulation for big business — and what he says would be President Obama’s third term. Now, as part of that, he recently had this to say about the newly created Consumer Financial Protection Bureau, whose job is, well, to protect consumers from financial malfeasance.


This was not the best timing. The CFPB, after all, just fined what’s supposed to be one of the best run banks in the country — Wells Fargo — $185 million for allegedly creating 2 million bank and credit card accounts for customers without their knowledge so that bank employees could hit their rather ambitious sales goals and get — earn isn’t quite the right word here — bonuses. That sure seems like the definition of protecting people to me.

Ryan’s spokesman didn’t respond to an email seeking comment.

This is a lot more important, though, than just an inopportune tweet. It shows us what the non-Trump portion of the Republican Party’s priorities are. Those are, on the one hand, trying to get more people to become investors and, on the other hand, trying to get rid of investor protections. Now let’s back up a minute. It’s important to remember that Republicans don’t think the financial crisis was a case of bankers blowing up the global economy because that was what maximized their year-end bonuses, but rather the government pushing bankers to blow up the global economy out of a misguided attempt to help poor people buy homes. Never mind that it was Wall Street banks, and not Fannie Mae or Freddie Mac, that were behind the subprime boom. Or that even a conservative former Federal Reserve official says there’s no evidence that the Community Reinvestment Act, which outlaws redlining, “contributed in any substantive way” to the housing bubble’s bad lending.

That’s why Republicans seem to think that trying to stop financial fraud is a bigger problem than the risk of financial fraud itself. Indeed, Ryan’s budget would give less money to the market cops at the Securities and Exchange Commission. It would also get rid of the CFPB’s independent funding — right now it gets its money from the Fed so that it’s free from influence from members of Congress who might not be free from influence from bank lobbyists — and replace its independent director with a five-person bipartisan committee. His anti-poverty plan, meanwhile, would make it legal for financial advisers to once again recommend things that are in their own — but not their clients’ — best interests. (Believe it or not, that was changed only in the past year). And on top of that, House Republicans want to make it easier for penny stock companies — which, the SEC has warned, are a veritable playground for scammers and other assorted manipulators — to issue shares without as much oversight.

It’s as if Republicans are telling people to jump in a pool that Democrats are worried is shark-infested — and then saying that the real problem is there are too many lifeguards.

Republicans say this is all about consumer choice. It’s not the government’s job, they say, to tell people which financial products they can and cannot buy. Why shouldn’t I be able to take out a risky mortgage that I can probably pay back just because my neighbors might not be able to? Well, the answer is that if enough of them don’t, as we found out in 2008, it’s not just their problem — it’s everybody’s. And besides, is the freedom to take out a potentially dangerous loan or get bad financial advice really something we should be worrying about? What about the insiders who profit off their info, the bankers who move your money into accounts you didn’t ask for, the advisers who steer you into high-fee investments, and the con artists who pump up their penny stocks and then dump them on unsuspecting investors? These people exist. Regulators have caught them. Why should we do less about it? . . .

Continue reading.

Written by LeisureGuy

16 September 2016 at 2:08 pm

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