Wednesday, February 27, 2013

New robo-signing brief: Misconduct by AG Masto's office could 'seriously damage public confidence' in that office

New robo-signing brief: Misconduct by AG Masto's office could 'seriously damage public confidence' in that office

Richard (RJ) Eskow: Sen. Kaufman on JPMorgan Chase: Private Lawsuit Found Evidence the Feds Didn't

Richard (RJ) Eskow: Sen. Kaufman on JPMorgan Chase: Private Lawsuit Found Evidence the Feds Didn't

E-Mails Show Flaws in JPMorgan’s Mortgage Securities -

E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad

Jamie Dimon, JPMorgan's chief. The bank is being sued over mortgage-backed deals.J. Scott Applewhite/Associated Press 
Jamie Dimon, JPMorgan’s chief. The bank is being sued over mortgage-backed deals.
When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix.

Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews, according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors.

The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street’s mortgage machine, which churned out billions of dollars of securities that later imploded. The documents reveal that JPMorgan, as well as two firms the bank acquired during the credit crisis, Washington Mutual and Bear Stearns, flouted quality controls and ignored problems, sometimes hiding them entirely, in a quest for profit.

The lawsuit, which was filed by Dexia, a Belgian-French bank, is being closely watched on Wall Street. After suffering significant losses, Dexia sued JPMorgan and its affiliates in 2012, claiming it had been duped into buying $1.6 billion of troubled mortgage-backed securities. The latest documents could provide a window into a $200 billion case that looms over the entire industry. In that lawsuit, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has accused 17 banks of selling dubious mortgage securities to the two housing giants. At least 20 of the securities are also highlighted in the Dexia case, according to an analysis of court records.


E-Mails Show Flaws in JPMorgan’s Mortgage Securities -

Is JPMorgan Chase Bank Fabricating Loan Documents in Court Cases?

On February 20, 2013 the Declaration of Dr. James Madison Kelley Expert Report On the Loan Documents Produced by JPMorgan Chase Bank, NA was filed in US Bankruptcy Court, Northern District of California, Division Five in Adversarial Case # 10-05245, BK Case # 08-55305 ASW, Chapter 11; Kelley v. JPMorgan Chase Bank NA, Washington Mutual Bank, and Does 1-20.

 Dr. James Kelley is a computer expert who has studied numerous computer forgeries and has developed scientifically sound methods of distinguishing computer generated signature facsimilies from direct copies of original signatures.  He examined loan documents as to a factual inquiry into the authenticity of the discovery documents produced by JPMorgan Chase Bank, NA through its outside law firm, Alvarado Smith PC.

The examiner concluded:
  1. that none of the collateral files produced for the First and Second Loans are the original documents. 
  2. that the collateral files were printed on color laser printers from layered electronics files fabricated with computer programs such as Adobe Photoshop, Illustrator and GIMP.
  3. that each collateral file produced on several different dates have been successively changed in order to correct the defects in each prior edition.
  4. that the signatures in many files other than the collateral files have been altered too appear as though they are blue ink signatures.
  5. that after four years it is clear that JPMorgan Chase Bank NA does not possess the original collateral files for the First and Second Loans and is relying on fabricated collateral files to create the illusion of standing in the Bankruptcy and Adversary cases.

To See the Declaration Go To:

Declaration of Dr. James Kelley as to Loan Documents Produced by JPMorgan Chase Bank

 Exhibits can be viewed at PACER.

ps:  The Exhibits are a bomb shell!

The Ed Show: Emails show that JP Morgan knew mortgage deals were bad


This is a must see video!  Chase knew!  Another too big to fail story.     Go to:    The Ed Show: Emails show that JP Morgan knew mortgage deals were bad

Lender Processing Services Robosigning Case -- A Gathering of Crows

Contributed by Deontos 2/27/2013

What is the real story?  You be the judge.



Judge tosses mortgage 'robosigning' case in 


By KEN RITTER, Associated Press
Updated 3:28 pm, Tuesday, February 26, 2013

Inline image 1

After a cursory review of this Judges campaign contributions the odor of CORRUPTION is more 
apparent here than the proverbial rotten smell from Denmark.


Greenberg Traurig  
8400 N.W. 36th Street  
Miami, FL 33166
9/21/12 $500.00 

R E A L I T Y  C H E C K
The letter is from Barry Richard, a well-connected lawyer at Greenberg Traurig 
(he was part of the Bush 2000 team in Florida.) Richard attacks June Clarkson 
for her conduct during a meeting with his client. Specifically, he felt she was 
too aggressive with her questioning. In the key sentence he says:

“I have represented many clients being investigated by the Attorney General’s 
Office over the past 30 years and I do not recall a single instance in which the 
Office requested or subpoenaed a client for a sworn statement in a civil case of 
this type.”


Fox Rothchild LLP  
2000 Market St., 20th Floor  
9/27/12 $250.00


 a Delaware corporation,Plaintiff,
in her official capacity as 
Attorney General of the
State of Nevada.

Counsel for the Plaintiff:

MARK J. CONNOT (10010)
JOHN H. GUTKE (10062)
3800 Howard Hughes Parkway, 
Suite 500Las Vegas, Nevada 89169
Telephone: 702-262-6899
Facsimile: 702-597-5503

  1. __________________________________________________________
  2. Snell & Wilmer LLP  

    One Arizona Center  

    Phoenix, AZ 85004

    5/9/12 $500.00 

    >>MONETARY CONTRIBUTIONS   Report Period   # 1  
  3. Foreclosure processor fights Nevada attorney general's robosigning ...
Jan 31, 2012 – LPS is represented in the lawsuit by the law firm Snell & Wilmer LLP in Las Vegas and the firm Berger Singerman in Miami. LPS is based in ...


Motion to Dismiss - Lender Processing Services
File Format: PDF/Adobe Acrobat - Quick View
Jan 30, 2012 – SNELL & WILMER Lt .P. ... Information Services, Inc. ("FNIS"), LPSDefault Solutions, Inc. ("Default Solutions") and ..... KMPG LLP, 122 Nev


He threw her $1,000 and I added him here just because he is sc*mmy. 

Harry Mohney - Executive Profile

NV - 1045 5ST-Mb, LLC, Dallas Crossing, LLC and Deja Vu Showgirls-Sacramento, LLC
Harry W. Mohney is associated with several companies, including 1045 5ST-Mb, LLC, Dallas Crossing, LLC and Deja Vu Showgirls-Sacramento, LLC. and is ...

Harry Mohney - Wikipedia, the free encyclopedia Harry_Mohney
Harry Mohney (born May 30, 1943) is the founder of Déjà Vu, a U.S. company which (as of 2006) owns about 75 strip clubs in 16 U.S. states, as well as one club ...


Contributions to a Nevada Judge Basis for Disqualification
The question of Judge Gonzalez's impartiality stems from five political contributions 
made in 2010 to Judge Gonzalez for his successful November 2010 reelection - $5,000 
from Phil Ivey, $1,000 from Phil's divorce attorney, David Chesnoff, $2,500 from 
Chesnoff's wife, $1,000 from Chesnoff's law partner, and $500 from Attorney John 
Spilotro . . .

Nevertheless Nevada law bars judges from presiding over cases in which they have 
"actual bias or prejudice for or against one of the parties."  . . .

The Nevada Supreme Court has taken this a step further by holding that a "recusal 
would be a necessary step to alleviate or obviate" even the appearance of 
impropriety while the Nevada Code of Judicial Conduct has held that "a judge is 
disqualified whenever the judge's impartiality might reasonably be questioned." 
However the Nevada Supreme Court, following the U.S. Supreme Court in Caperton 
v. A. T.  Massey Coal Co., 129 S. Ct. 2252 (2009), has expressly rejected proposals 
that would dictate what amount of political contribution would give rise to a judicial 

Nevada Judge Steps Aside Again in Light of Campaign Contributions

Lauren Ketchum March 30th, 2012 | Category: Recusal
Nevada District Judge Brent Adams has recused himself from a case for the 
second time after concerns that campaign money he received from one of 
the parties created an “appearance of impropriety.”


To Ensure Fair Courts, Group Urges Strong Recusal Rules
November 20th, 2012 | Category: Recusal
Citing an explosion of big spending on judicial elections as 
documented by Justice at Stake, the Center for American Progress 
has issued a policy paper entitled, “Strong Recusal Rules Are Crucial 
to Judicial Integrity.”


Justice at Stake Executive Director Bert Brandenburg called for more rigorous recusal rules in a Chicago Tribune op-ed in September 2011. He wrote:
“If judges are going to accept the spoils of big money politics, they must accept a new duty: deciding when to step aside to assure justice. After all, judges are supposed to be accountable to the Constitution, not special-interest supporters. They take an oath to deliver due process under the law without regard to who voted for them or spent the most to help elect them.”


Friday, February 22, 2013


deontos says:

A California Appellate Court has RULED for a homeowner in a stinging rebuke of its district Trial Court and JPMorgan Chase Bank, N.A.

A N*E*X*U*S here of GREAT import exists between the treatment of homeowners by JPMC and the PUTBACKS Controversy in the Deutsche Bank litigation. JPMC is apparently fighting a “rearguard” action against the homeowners attempting to TERMINATE them and thereby LIMIT Chase's looming putback exposure.

 Definition of 'Mortgage Putback'

The forced repurchase of a mortgage by an originator from the entity currently holding the mortgage security. A mortgage putback is most commonly required due to findings of fraudulent or faulty origination documents in which the creditworthiness of the mortgagor or appraised value of the property are misrepresented.

JPMC knows that  they cannot win against the FDIC and Deutsche Bank but they can STALL. And then LIQUIDATE the home mortgages (profitably and illegally) and use those funds to finally settle with the “900 Pounders”

By the way, when the rich f*ck the rich the little guy is still “out of luck". 

The JPMC-DBNTC-FDIC litigation is for the most part all filed under SEAL.

[02/11] Jolley v. Chase Home Finance

Summary judgment for defendants on dispute following foreclosure on construction loan agreement reversed and remanded as to defendant bank who purchased assets of the bank that entered into  the loan agreement, where:

1) the trial court improperly rested its holding on the terms of a shorter, disputed version of the Purchase and Assumption Agreement submitted by defendant;
2) prolonged miscommunication about a possible loan modification raises a triable issue of fact of intent by defendant bank to profit by misleading plaintiff about his loan modification prospects;
3) a triable issue of fact exists whether defendant bank has potential liability for its own conduct under a theory of promissory estoppel;
4) there is a triable issue of material fact as to a duty of care to plaintiff, which potentially makes defendant bank liable for its own negligence;
 5) triable issues of fact exists as to whether defendant bank’s conduct was fraudulent or unfair for the purposes of the unfair competition claim;
 6) a triable issue of fact exist as to the reformation claim; but
 7) summary adjudication for defendant bank on the declaratory relief and accounting causes of action was proper.

On Scribd:

Secret FDIC and JPMorgan Chase Bank 118 Page Purchase and Assumption Agreement for Washington Mutual BankNon Public Document disclosed in Sworn Testimony indicates JPMORGAN CHASE and FDIC are concealing material information regarding the JPMC purchase of WAMU. The FDIC so far REFUSES to release the document unless under a draconian protective order forbidding ANY disclosures by any of the involved parties in the court case INCLUDING the judge.\        x_



Investopedia explains 'Mortgage Putback'

Following the collapse of the American real estate market in 2008 and the subsequent financial crises that followed, it was found that mortgages and mortgage-backed securities had been widely dispersed throughout the financial system and that the validity of many mortgages and documents were questionable with regards to lending standards, income verification and appraisal values. Many mortgage security holders demanded mortgage putbacks by mortgage originators who had not completed their due diligence, or in some cases had blatantly defrauded the industry.


Posted: 22 Feb 2013 03:30 AM PST

It’s really easy to have a fortress balance sheet if you can get other people to eat your losses.  It’s also how some scandals are picked up and amplified by the media while others lie fallow. The London Whale scandal, which was never going to rise to the level of bank-threatening losses, did reveal JP Morgan to have grossly deficient risk controls and Dimon to be arrogant, lackadaisical, and dishonest in dealing with the problem. Predictably, regulators have refused to acknowledge serious Sarbanes-Oxley violations. And Dimon, who loves to take personal responsibility for JP Morgan’s successes, rapidly threw members of his laxly-managed Chief Investment Office under the bus to salvage his reputation.

We’ll go into more details on JP Morgan’s WaMu machinations below. The very short version is this story came to the fore last year, when Deutsche Bank filed a putback suit against both JP Morgan and the FDIC for dud loans in 99 WaMu mortgage securitizations (recall that when a mortgage backed bond is found to have worse merchandise in it than than the investors were promised, the trustee is supposed to put the bad loans back to the originator and have them replaced with good loans or get cash compensation. The Deustche Bank suit was noteworthy because trustees normally do nothing). The FDIC has made a compelling case that WaMu is no longer its problem and JP Morgan assumed the relevant liabilities.

Yet we’ve been told that in the next few weeks, JP Morgan is about to enter into a settlement with Deutsche Bank regarding…hold your breath….the liabilities it insists sit with the FDIC. I’m not making this up (the source is legally savvy). I’m not even sure how you paper up something which is so clearly nonsensical.

This looks to be a larger scale version of the strategy it entered into with billionaire Len Blavatnik. Blavatnik’s operating business Access Industries hired JP Morgan to manage the cash it had sitting around among its various entities, which was roughly a billion dollars. The agreement called for it to be conservative, remain very liquid, and it also limited the amount that could be invested in any asset type. In 2007, JP Morgan quit sending timely account statements and quit providing straight answers on what was happening with the cash management account. It turns out it stuffed it full of toxic mortgage dreck. Blavatnik lost $100 million, which is just unheard of for that sort of vehicle. If JP Morgan had apologized and written a $20 million check, I suspect Blavatnik would have been satisfied. Instead, the bank continued to be uncooperative and Blavitnik sued, and he is not the litigious type.

At least on the surface, the bank’s strategy isn’t even remotely economically rational. Blavatnik is one of the 100 richest men in the world and had been a JPM private banking client, plus he does lots of deal and hence also generates a lot in the way of transaction fees. The bank simply tried to make the litigation as protracted and costly for him as possible: it put three costly lawfirms against Blavatnik’s one. I met with Blavatnik and his general counsel early on in the discovery process (Blavatnik had been a client roughly 20 years ago on an oddball acquisition he made in the US) and they made it clear then that even with the bank stonewalling on delivering information, what they had gotten so far was so damaging that they were unlikely to settle for much less than the amount they were seeking at trial. And they’ve just concluded trial.

Blavatnik spent $10 million on the lawsuit. JP Morgan has to have spent more given how many big ticket law firms it threw at the case. And it will still probably have to write a very large check. The bank increased its ultimate losses considerably. Settling after things got ugly but before Blavatnik felt he had to sue would still have been vastly cheaper for the bank. And for what purpose? To defer recognizing the losses by eighteen or twenty-four months? Is JP Morgan that desperate to manage earnings that it will engage in patently lousy “investments” (investing in litigating) to delay recognizing losses?

With the WaMu matter, we again have what looks to be a desperate attempt to delay loss recognition. It is hard to see how Slimin’ Dimon has a leg to stand on. Senator Levin, are you paying attention? The $6.2 billion in London Whale losses are similar in size to the range of likely losses that JP Morgan is trying to dump on the FDIC.

Now the background. Remember, JP Morgan bought WaMu from the FDIC in 2008 after the bank failed. The receivership wiped out the equity; the FDIC also, controversially, wiped out the subordinated debt as well (John Hempton has railed that this was unfair and unwarranted; Dimon’s desire to retrade the deal even with that concession should lead him to rethink that assessment).

The purchase and sale agreement is below.
Note Section 2.1:
Liabilities Assumed by Assuming Bank. Subject to Sections 2.5 and 4.8, the Assuming Bank expressly assumes at Book Value (subject to adjustment pursuant to Article VIII) and agrees to pay, perform, and discharge, all of the liabilities of the Failed Bank which are reflected on the Books and Records of the Failed Bank as of Bank Closing, including the Assumed Deposits and all liabilities associated with any and all employee benefit plans, except as listed on the attached Schedule 2.1, and as otherwise provided in this Agreement (such liabilities referred to as “Liabilities Assumed”). Notwithstanding Section 4.8, the Assuming Bank specifically assumes all mortgage servicing rights and obligations of the Failed Bank.
A colleague of mine took a look at the P&S agreement and some of the filings last summer. He’s normally understated, so for him to get this exercised is a sign of how barmy the JP Morgan argument is. From his e-mail (and note that the indents in his message is where he is citing the FDIC’s filing. Emphasis his):
I went to dinner with some Wall Street lawyers last week and they talked at length about how the new regulations create so much uncertainty in the mortgage market (such as the “qualified mortgage” definition) and this is preventing the mortgage and securitization markets from recovering. In reality, the biggest obstacle to the mortgage securitization market recovering is the tremendous uncertainty created for investors by MBS litigation – investors have no idea what they are on the hook for and how much it will cost to enforce their rights. BS litigation like what JPM is arguing in this WaMu case is a big cause of this litigation uncertainty. WaMu signed up for a bunch of deals and JPM signed up to succeed them, and now JPM is trying to weasel out of it with stupid legal arguments (though argued by expensive attorneys) whose only purpose seems to be to delay the obligation that is clearly JPM’s.

In my view, this case is another piece of evidence that bitching and moaning about onerous regulations by the banks is just a smokescreen to cover their own damaging and irresponsible behavior.

It’s really outrageous that JPM is arguing, on one hand, that it is entitled to a one-sided sweetheart deal from the FDIC with WaMu, while complaining, on the other hand, that government regulations are strangling the mortgage market.
The arguments made by both Deutsche Bank and the FDIC in this case are straightforward and sensible enough. JPM’s position, however, makes little sense. I’m inclined to think they are just trying to waste time (and kick the can down the road) without any actual hope of winning. It is fairly ironic that in one of the few cases where the trustee has been willing to act on behalf of investors, JPM has managed to successfully muddy the waters for 4 years and avoid any liability.

The FDIC is quite clear that JPM purchased the rights and liabilities of WaMu in the transaction. They argue JPM is being disingenuous (ie lying) by claiming that the rep repurchase obligations were not mature (technically, the did not represent any “Book Value”) at the time of the WaMu sale and so they shouldn’t be JPM’s problem. This seems like a pretty strange defense by JPM. (To be clear, Deutsche Bank brought the claims against the FDIC because JPM argued that the FDIC was entirely on the hook for the rep and warrant obligations).
DBNTC’s claims against FDIC Receiver should be dismissed in their entirety, because FDIC Receiver transferred all of WaMu’s liabilities and obligations under the Governing Agreements to JPMC. Under the Purchase and Assumption (“P&A”) Agreement1 that JPMC and FDIC Receiver entered into when the Office of Thrift Supervision (“OTS”) closed WaMu on September 25, 2008, JPMC acquired WaMu’s ongoing banking operations in a “whole bank” transaction, “purchas[ing] substantially all of the assets and assum[ing] all deposit and substantially all other liabilities” of WaMu, for a purchase price of $1.9 billion. P&A Agreement at 1, Art. VI. JPMC expressly agreed to “pay, perform, and discharge” all liabilities reflected on WaMu’s books and records as of September 25, 2008, including specifically “all mortgage servicing rights and obligations.” Id. § 2.1. JPMC purchased “all” the assets of WaMu, including specifically “all the mortgage servicing rights and obligations,” id. § 3.1, and “all rights of [WaMu] to provide mortgage servicing for others . . . and related contracts,” id. Schedule 3.2. Further, the assets were purchased subject to “all liabilities” affecting those assets, as provided in Section 2.1. Without question, JPMC succeeded to all of WaMu’s interests, rights, obligations, and liabilities under the Governing Agreements, which, according to DBNTC, are for each Trust an integrated set of agreements governing the transfer of loans into the Trust, the securitization of the loans in the Trust, the servicing of the loans, and the rights and obligations of all the parties to the transaction.

Now, JPMC is attempting to rewrite history. The unambiguous terms of the P&A Agreement, which the Court may construe as a matter of law, demonstrate that any and all of WaMu’s rights, obligations, and liabilities under the Governing Agreements were transferred to and assumed by JPMC. Accordingly, FDIC Receiver can have no liability to DBNTC for any obligation owed under the Governing Agreements, whether arising before or after WaMu’s closure, and all claims against FDIC Receiver should be dismissed under Rule 12(b)(6).
The FDIC helpfully points out to the court that JPM has told its shareholders, repeatedly, that it was assuming WaMu’s liabilities, including rep and warrant liabilities, in the transaction.
Notwithstanding the plain terms of the P&A Agreement and the many benefits that JPMC has received from the acquisition of WaMu’s assets, JPMC has denied assuming any of WaMu’s liabilities under the Governing Agreements.25See Am. Compl. ¶ 91 (“JPMC further contends that ‘all other liabilities of [WaMu], including the DBNTC liabilities, remain with [FDIC Receiver].’”) (quoting 8/25/10 letter from JPMC counsel to DBNTC counsel) (emphasis in original). JPMC’s public statements both before and after the WaMu transaction, however, belie this denial, and instead evince a clear awareness that those liabilities were reflected on WaMu’s books and records prior to its closure and transferred to JPMC along with all of WaMu’s rights, interests, and obligations under the Governing Agreements.
JPMC’s public filings after the P&A Agreement make repeated reference to its assumption of WaMu’s rights and responsibilities under the Governing Agreements. When discussing its accounting for the WaMu transaction in its 2008 Form 10-K, for example, JPMC noted that the liabilities it had assumed include WaMu’s “executory contracts and other commitments.” Elsewhere in that Form 10-K, in presenting data about its residential mortgage securitization activities, JPMC included the principal balances of the loans in securitizations sponsored by WaMu in a table displaying “the total unpaid principal amount of assets held in JPMorgan Chase-sponsored securitization entities . . . to which the Firm has continuing involvement” such as ongoing repurchase or indemnification obligations.

Indeed, in the “Risk Factors” section of a December 2009 prospectus supplement, JPMC forthrightly discussed its potential exposure resulting from its assumption of WaMu’s repurchase and indemnification obligations. Under the heading “Defective and repurchased loans may harm our business and financial condition,” JPMC stated:
In connection with the sale and securitization of loans (whether with or without recourse), the originator is generally required to make a variety of customary representations and warranties regarding both the originator and the loans being sold or securitized. We and certain of our subsidiaries, as well as entities acquired by us as part of the Bear Stearns, Washington Mutual and other transactions, have made such representations and warranties in connection with the sale and securitization of loans (whether with or without recourse), and we will continue to do so as part of our normal Consumer Lending business. Our obligations with respect to these representations and warranties are generally outstanding for the life of the loan, and relate to, among other things, compliance with laws and regulations; underwriting standards; the accuracy of information in the loan documents and loan file; and the characteristics and enforceability of the loan… Accordingly, such repurchase and/or indemnity obligations arising in connection with the sale and securitization of loans (whether with or without recourse) by us and certain of our subsidiaries, as well as entities acquired by us as part of the Bear Stearns, Washington Mutual and other transactions, could materially increase our costs and lower our profitability, and could materially and adversely impact our results of operations and financial condition.
This is a pretty amazing “gotcha”. Not only does the Purchase & Sale agreement pretty unambiguously leave JP Morgan on the hook for the representation and warranty liabilities, JP Morgan clearly told shareholders it was assuming representation and warranty liability with respect to WaMu.

It made more statements to that effect. For instance, in SEC reports discussing 2010 earnings:
….we and certain of our subsidiaries, as well as entities acquired by us as part of the Bear Stearns, Washington Mutual and other transactions, have made such representations and warranties in connection with the sale and securitization of loans (whether with or without recourse… Our obligations with respect to these representations and warranties are generally outstanding for the life of the loan, and relate to, among other things, compliance with laws and regulations; underwriting standards; the accuracy of information in the loan documents and loan file; and the characteristics and enforceability of the loan…. if a loan that does not comply with such representations and warranties is sold, we may be obligated to repurchase the loan and bear any associated loss directly, or we may be obligated to indemnify the purchaser against any such loss.
It again acknowledged its responsibility for the WaMu reps and warranties in a February 28, 2011 SEC filing for all of 2010. It wasn’t until 2012 that it tried backpedalling from this position, as even Deutsche Bank noted in court filings:
JPMC, by its own post-acquisition actions, evidenced an understanding that it is liable for all other liabilities reflected on WaMu’s books and records….JPMC’s own statements and actions were inconsistent with its current position, but very much consistent with the plain reading of the PAA advanced by the FDIC and the Trustee.
The reason to go into this case at such length is to puncture the myth that Dimon has managed to perpetuate. In a more sober time, the astonishing qualifications that JP Morgan’s auditors issued to its financial statements in the wake of the London Whale trading debacle would have finished most CEOs. But this is also a time in which people like Angelo Mozilo and Jon Corzine not only have not been prosecuted, but have most of the money they earned while driving their enterprises into the ditch intact. I strongly suspect that the reason Dimon has gotten away with so much is that he is running the ultimate too big to fail institution. JP Morgan’s standing as one of the biggest derivatives clearing shops makes it too critical to allow it to even wobble. But the fact that JP Morgan has wound up at such a critical financial nexus is not excuse to allow Dimon to remain so firmly attached to its helm.

Wednesday, February 20, 2013

JPM and ING: Some Trading with the Enemy Is More Equal than Other Trading with the Enemy | emptywheel

JPM and ING: Some Trading with the Enemy Is More Equal than Other Trading with the Enemy | emptywheel 

JPM and ING: Some Trading with the Enemy Is More Equal than Other Trading with the Enemy

ING just signed a $619M settlement with Treasury for sanctions violations, largely with Cuba, but also with Iran, Burma, North Korea, Sudan, and Syria. Aside from the fact that that’s the biggest sanctions settlement ever, I’m interested in it because of just how different Treasury’s publication of ING’s settlement looks from JPMC’s $88.3M settlement last August.

The difference largely comes down to one big detail: Treasury didn’t release the actual settlement with JPMC, but did with ING. Rather than the JPMC settlement, Treasury released just a PDF version of the public announcement on a blank sheet of paper (compare smaller civil penalties, for example, where they release just a link and a PDF of the details, link and PDF). With ING, the settlement appears in full, on letterhead, with the signatures of ING’s General Counsel and Vice Chair at the bottom, not far below the terms of the settlement. And the settlement reads like an indictment, with a 6 pages of factual statements. Indeed, ING signed Deferred Prosecution Agreements with both the NY DA and DC US Attorneys Offices.

And the information included in the settlement is quite interesting. Most interestingly, the settlement describes how ING manipulated SWIFT reporting to hide its transfers with restricted countries.
Beginning in 2001, ING Curacao increasingly used MT 202 cover payments to send Cuba-related payments to unaffiliated U.S. banks, which would not have to include originator or beneficiary information related to Cuban parties. For serial payments, up until the beginning of 2003, NCB populated field 50 of the outgoing SWIFT MT 103 message with its own name or Bank Identifier Code, Beginning in the second quarter of 2003, NCB populated field 50 with its customer’s name, but omitted address information. ING Curacao also included its customer’s name, but no address information, in field 50 of outgoing SWIFT messages.
ING Wholesale Banking’s branch in The Netherlands (“ING Netherlands”) used care not to include references to U.S. sanctioned countries in USD SWIFT messages because they believed doing so was necessary to avoid the payment being blocked by unaffiliated U.S. correspondent banks in accordance with OFAC regulations.
The first of those references is tied to Cuba–not exactly the terrorist target Treasury is supposed to be using SWIFT to investigate; though the mention of generic “US sanctioned countries” in the second reference might include an actual terrorist-sanctioned country like Iran. The DPA with the NY DA also requires ING to maintain its database of SWIFT records. To the extent this settlement suggests Treasury is using SWIFT to investigate banks for helping non-terrorists launder money, it may set off fear among banks and European civil liberties defenders.

Mind you, there are differences in the behavior described in the two settlements that might explain their different treatment from Treasury. At least for the actions described, ING’s alleged actions were far larger in terms of dollars; just the transfers involving Cuba amounted to over $1.6B, transfers involving Burma amounted to $15M, with another couple million involving Iran. By contrast, the actions listed in the JPMC settlement amounted to hundreds of millions, plus the 2 tons of bullion transferred for an Iranian bank (though the JPMC settlement covers a shorter period; JPMC had been busted for other transfers in earlier years). So perhaps the order of magnitude larger alleged actions explains the different treatment (though JPMC did more trade more recently with Iran).
But then there’s the cooperation involved. The ING transfers involved clear fraud. And after an employee tried to stop it, an ING attorney told them not to worry. But Treasury determined that OFAC cooperated by identifying weaknesses in its compliance program and providing substantial information–though on occasions, after multiple requests and in redacted form.

While Treasury said JPMC cooperated, what we know about the investigation showed less cooperation.
After a third party financial institution reported to JPMorgan management that they had flagged the transactions as potential sanctions violations, but Treasury says “the bank failed to take adequate steps to prevent further transfers,” and did not self-report to Treasury.

Treasury said that a considerable portion of the transfers happened after JPMorgan had been notified of the potential sanctions violation.

“The point of these flags being raised is for people to act on them and cease the conduct, and that didn’t happen here,” said a Treasury official.
“I view their conduct as willful,” the official said. He added that Treasury has no indication that any actual weapons of mass destruction were shipped in the incident, and in fact views that as unlikely because such shipments are rare. The problem, the official said, is that the loan undermined the US government’s ability to put pressure on Iranian shipping.

In a third apparent violation, Treasury said that it issued a subpoena to JPMorgan for documents related to a specific wire transfer referencing “Khartoum,” the capital of Sudan. But JPMorgan “repeatedly stated” it had no additional responsive documents. However, after Treasury listed the specific documents it wanted based on a tip from a third party, JPMorgan eventually produced “more than 20 responsive documents.”

“Certainly, JPMorgan knows where Khartoum is,” the official said. “This is one of those that I, at least, find most troubling,” the official said, because it goes to the heart of the government’s ability to get documents by subpoena.

LIBOR Scandal More Than Fraud - Whole Game is Rigged


LIBOR Scandal More Than Fraud - Whole Game is Rigged


Monday, February 18, 2013

Matt Taibbi: Mary White As Head Of SEC Puts Fox In Charge Of Hen House - Home - The Daily Bail


Matt Taibbi: Mary White As Head Of SEC Puts Fox In Charge Of Hen House - Home - The Daily Bail

 By Matt Taibbi

I was shocked when I heard that Mary Jo White, a former U.S. Attorney and a partner for the white-shoe Wall Street defense firm Debevoise and Plimpton, had been named the new head of the SEC.

I thought to myself: Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn't they have found someone who isn't a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?

I'll leave it to others to chronicle the other highlights and lowlights of Mary Jo White's career, and focus only on the one incident I know very well: her role in the squelching of then-SEC investigator Gary Aguirre's investigation into an insider trading incident involving future Morgan Stanley CEO John Mack. While representing Morgan Stanley at Debevoise and Plimpton, White played a key role in this inexcusable episode.

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