Banks behaving badly

Banks behaving badly April 3, 2012

Matt Taibbi: “Bank of America: Too Crooked to Fail

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?

… Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, “robo-signed” evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn’t ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

Joe Nocera: “Why People Hate the Banks

… this same kind of awful behavior has been taking place inside the credit card collections departments of the big banks. Records are a mess. Robo-signing has been commonplace. Collections practices hurt primarily the poor and the unsophisticated, just like foreclosure practices. (I sometimes wonder if banks would make any profits at all if they couldn’t take advantage of the poor and unsophisticated.)

Jeff Horwitz: “Bank of America Sold Card Debts to Collectors Despite Faulty Records

In a series of 2009 and 2010 transactions, Bank of America sold credit card receivables to an outfit called CACH LLC, based in Denver. Co. Each month CACH bought debts with a face value of as much as $65 million for 1.8 cents on the dollar. At least a portion of the debts were legacy accounts acquired from MBNA, which Bank of America purchased in 2006.

The pricing reflected the accounts’ questionable quality, but what is notable is that the bank could get anything at all for them. B of A was not making “any representations, warranties, promises, covenants, agreements, or guaranties of any kind or character whatsoever” about the accuracy or completeness of the debts’ records, according to a 2010 credit card sales agreement submitted to a California state court in a civil suit involving debt that B of A had sold to CACH.

In the “as is” documents Bank of America has drawn up for such sales, it warned that it would initially provide no records to support the amounts it said are owed and might be unable to produce them. It also stated that some of the claims it sold might already have been extinguished in bankruptcy court. B of A has additionally cautioned that it might be selling loans whose balances are “approximate” or that consumers have already paid back in full.

Maria Aspian: “Bank of America Customer Repaid Her Bill, Yet Faced a Collections Nightmare

Karen Stevens spent nearly $1,900 paying off delinquent credit card debt she owed Bank of America in 2006. She then spent another three years fending off demands from collections agencies that she repay the debt all over again. Neither a cancelled check or creditor’s letter stating that she’d fulfilled her obligations deterred the collectors.

Stevens ended the nightmare only by hiring a lawyer and counter-suing her pursuers. Bank of America was not directly involved in the legal contretemps, but it appears to have set them off by selling rights to Stevens’ account, even after assuring her she’d paid up in full.

Bruce Judson: “A Seven-Day Plan to Finally Hold Wall Street Accountable

The greatest moral hazard now confronting the nation is what appears to be increasingly brazen criminal activity by financial industry executives. With each decision not to prosecute, Wall Street executives justifiably conclude that they are immune to the rules. As a result, it appears that Wall Street criminal activity is increasing in frequency and severity, as opposed to the reverse.

Jonathan D. Salant: “Payday Lender Political Donors Hidden in Corporate Names

Of all the names disclosed as donors to Restore Our Future, a political action committee supporting Mitt Romney, some stand out for how little they reveal.

RTTTA LLC of Provo, Utah, is one of four corporations created by auto-title and payday lenders who are subject to financial regulations in the Dodd-Frank financial overhaul law that Romney has vowed to repeal.

The other companies — REBS Inc. of Las Vegas, Select Management Resources LLC of Alpharetta, Georgia, and Katsam LLC of Seattle — were listed in Restore Our Future’s Feb. 20 and March 20 campaign disclosure reports without revealing their founders’ business interests.

The four firms contributed $235,000 during the two months after President Barack Obama made the recess appointment of the Consumer Financial Protection Bureau director, which oversees the payday lenders, Federal Election Commission reports show. Select Management, which offers car title loans, spent $600,000 in 2010 to lobby on the Dodd-Frank legislation and consumer issues, Senate reports show.

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