THE INEVITABILITY OF THE BREAK-UP OF BIG BANKS

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Once Unthinkable, Breakup of Big Banks Now Seems Feasible

EDITOR’S NOTE: Nothing can stop it because the fact remains and gets clearer every day that a large part of what these banks are calling their “assets” in reports to the public and to shareholders is pure fiction.

There are 7,000 community banks and credit unions around the country that are connected to the exact same backbone for electronic funds transfer and clearance as the Mega Banks. The only thing the Mega banks is a marketing advantage. They have done a pretty good job of raising barriers to entry in deployment of ATMs by manipulating the associations that provide network connections. That advantage is slipping away and ATM fees may well start falling soon as community banks use the old ATM Scrip terminal as Point of Banking.

It is a question of time. Will it happen sooner or later? I don’t know. But I will tell you that based upon historical events, when the big banks fail it will be with a bang and not with a whimper. Politicians  will be looking for connections with an industry that is no longer the same.

by Jesse Eisinger
ProPublica, July 27, 2011, 3:50 p.m.

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Note: The Trade is not subject to our Creative Commons license.

What was made can be unmade.

JPMorgan Chase and Wells Fargo may have venerable names, but they and the pseudo-venerable Citigroup and Bank of America are all products of countless mergers and agglomerations.

Jesse Eisinger

About The Trade

In this column, co-published with New York Times’ DealBook, I monitor the financial markets to hold companies, executives and government officials accountable for their actions. Tips? Praise? Contact me at jesse@propublica.org

There is no rule of markets that requires a financial system dominated by four cobbled-together, lumbering behemoths.

Lawmakers and regulators have failed to remake our system with smaller, safer institutions. What about investors?

Big bank stocks have been persistently weak, making breakups that seemed politically impossible no longer unthinkable.

Bank of America’s recent quarterly earnings were so weak that investors and commentators wondered whether the bank should sell off Merrill Lynch [1], the investment bank for which it foolishly overpaid at the height of the crisis. Bank of America trades at half of its book value (the stated value of its assets minus its liabilities), an indication that investors view its asset quality and prospects just a notch below abominable, as Jonathan Weil of Bloomberg News pointed out [2] last week.

For Bank of America, the question is whether it will have to raise capital. Selling shares at such depressed prices would be costly. Regulators won’t push for it. They just gave stress tests to the biggest banks and merely restricted the bank from paying out a dividend. The logical solution is that Bank of America shed business lines in a bid to improve its prospects in the eyes of Wall Street.

Citigroup’s stock, revenue and earnings have lagged for a decade.

“Look, if you can’t compete in the major leagues for over a decade, it’s time to go back to the minors,” said the always outspoken Mike Mayo, an analyst with CLSA. His chronicle of ruffling bank management feathers, “Exile on Wall Street” (Wiley), will be published in the fall.

JPMorgan Chase is as well managed as any gargantuan bank can be. But if you look at its businesses, it’s hard to see any area where it is clearly the best, something even its own executives concede. Not in credit cards, where the premier name is American Express. Not in money management, where you might offer up T. Rowe Price. Investment banking—Goldman Sachs (the last quarter notwithstanding). Back-office transactions, State Street.

Yet even JPMorgan is merely trading at book value. Put another way, the market regards the value that JPMorgan provides as a financial services conglomerate as zilch. How well do all of JPMorgan’s divisions work together? In presentations [3] to investors [4], JPMorgan executives show how much revenue they gain from existing clients. But these measures are hardly unbiased. Executives have an incentive to defend their empires. Who is to say that a certain division of JPMorgan wouldn’t have won that business anyway? And nobody measures how much a bank loses through conflicts of interest.

Even in the face of investor pressure, there are forces that would hold bank breakups back. Mainly pay.

“The biggest motivation for not breaking up is that top managers would earn less,” Mayo said. “That is part of the breakdown in the owner/manager relationship. That’s a breakdown in capitalism.”

Institutional investors—the major owners of the banks—are passive and conflicted. They don’t like to go public with complaints. They have extensive business ties with the banks. The few hedge fund activist investors who aren’t cowed would most likely balk at taking on such an enormous target.

Also, there are reasons to think that smaller banks wouldn’t necessarily make the system safer. A wave of small bank failures can have systemic effects, as was the case in the Great Depression. Focused companies like Washington Mutual and Bear Stearns failed in the recent crisis, worsening it.

Making a nuanced argument [5], John Hempton, a blogger, investor and former regulator in Australia, says that it’s better for shareholders—and societies—to have large banks with lots of market power. That makes them more profitable and leads them to take less risk, making them safer and more enticing for investors.

Another oft-trotted-out argument against breakups: The United States needs global banks to service its giant, multinational corporations and to preserve our position in world markets.

Color me unconvinced. When a giant corporation wants to do a major bond offering or a big company goes public, the banks, despite their size, don’t want to shoulder all the risk themselves, preferring to share the responsibility.

If the stocks continue to lag for quarters upon years, these arguments will seem less convincing, while institutional reluctance will begin to erode.

Investors don’t care about size, they care about performance. It’s undeniable that smaller banks are easier to manage. And they are easier for regulators to unwind—and therefore less terrifying to trading partners—when they fail.

One of the most remarkable aspects of the debate about overhauling the financial system after the great crisis was the absence of serious contemplation of breaking up the largest banks.

It’s not a perfect solution. Banks responding to investor pressure would react haphazardly. But it’s a good start.

24 Responses

  1. MERSCORP, Inc. is structured as a privately held stock company. Its principal owners are the Mortgage Bankers Association, Fannie Mae, Freddie Mac, Bank of America, Chase, HSBC, CitiMortgage, GMAC, American Land Title Association, and Wells Fargo. MERS is headquartered in Reston VA.

    David Stephens formerly HUD Tri-State in 2010 in charge of MBA

  2. An interesting fact: The American Mortgage Bankers Association, who took out a $79 million dollar loan for it’s headquarters DEFAULTED.

    They were underwater, owing way more than it was worth, so they walked away. They saved so much money by renting a place a few blocks away, that they could throw a lavish party!

    So, I guess it’s okay for them to just stop paying but not us, who have suffered far more serious financial losses, including the roof over our family’s head? Phooey on you self-righteous people who look down your nose at those of us who stopped paying because we lost jobs that paid the bills, and those of us who know how to fight fire with fire by not funding the big banks criminal activities anymore.

    There is great evil at work, here. Wake up and smell the stench of fraud and deceit. Banks think they can operate above the law. It is our job…actually our DUTY to hold their feet to the fire. They’re due a dose of their own bitter medicine. Read about the MBAssn. default here: http://www.mortgage-mod-monster.com/strategic-default-ok-for-mortgage-bankers-association-but-not-for-you/

  3. Right on—default and make them show proof that the “trust” is really affected by your default…they CAN’T. Pigs.

  4. I get a migraine thinking about all the families who are living in tents because the evil monsters behind these big banks care nothing about human life or suffering. They are insulated from reality.

    They took the bailouts, tarp funds, investor’s money, borrower’s money and then they took the houses too, and gambled against loans they set up to fail, to further capitalize on the misfortunes of the people who lost their jobs when the big players crushed the economy, deliberately.

    It was planned and skillfully orchestrated while America was numbed by bad TV and tainted news broadcasts which carefully hid the real agenda. Who do you think owns the media? Big banks and wealthy families. When your news is bought and paid for by someone with a vested interest, you hear what they want you to hear and nothing else.

    In protest of the racketeering, fraud, theft, lies and mega scale usury we have endured, we cut off the money we kill them like Andrew Jackson did. Stop funding the criminals and cut off the head of the snake. Take back your country, Americans.

  5. getting a migraine trying to wrap my head around the idea that “Everyone has a CONTRACTUAL RIGHT to default”….

  6. Everyone has a CONTRACTUAL RIGHT to default, because these loans were made on a FRAUDULENT basis and we were lied to, for one reason.
    Contractual laws that govern all mortgage loans state that both parties must provide something of value or the contract is null and void. We sign a power of attorney giving banks the right to foreclose if we default, (Security Deed) and promise to make payments. That is our “item of value” we bring to the contractual table. They loaned someone else’s money, and therefore brought nothing of value nor any risk whatsoever to the table. We got the shaft and they are doing foreclosure after foreclosure without actually OWNING the properties.
    If enough people wake up and realize that even if they paid their loans off in full, they could never get a clean title because of the mess the banks made of our paperwork, then stop funding these criminals, it will make a difference. If you are making your payments to an entity that can’t issue you a title, you are throwing your money away and that is exactly what they want!
    They’ve conned everyone into feeling guilty for not making payments. More over, they’ve punished borrowers by destroying their credit, which further limits the remedies and recourse we have to refinance. What else do they have to do before you realize how badly they’ve defrauded you? What will it take before you start to think critically and stop just accepting every bit of propaganda they put out as fact?

  7. BSE

    State or Federl? are organized by ‘charter’ under Federal Credit Union Act, which permitted credit unions to be organized anywhere in the United States. The legislation allowed credit unions to incorporate under either state or federal law, a system of dual chartering that persists today.

    Point of 2005 Subsidiaries of nationwide network all benefit from credit union monies. TD Escrow Services and ‘Fidelity’ right there …

    Fiserv, Inc. expands with Credit Uion (NasdaqGS: FISV – News) recently announced that Randolph-Brooks Federal Credit Union (RBFCU) has chosen to implement the Acumen account processing solution from Fiserv.

    Fiserv, which competes with Fidelity National Information Services Inc. (NYSE: FIS – News), assists financial institutions and health plan administrators in managing their information systems, thus helping them deliver services to their customers efficiently.

    Randolph-Brooks Federal Credit Union is a $4.3 billion institution and is the sixteen-largest credit union in the U.S. RBFCU selected Acumen due to its advanced architecture, scalability and member-centric design, as well as the scale, support and expertise of Fiserv as key decision factors.

    Assets have increased by 64% for RBFCU in the last four years and its membership increased by 38% to more than 350,000 diverse members in South Central Texas.

    Acumen is the newest choice in account processing for credit unions from Fiserv. This technology is designed to meet the needs of the largest and most progressive credit unions.

    Earlier, Fiserv launched Data Vaulting, a solution that delivers secure and efficient data backup, storage and recovery for banks and credit unions. Data Vaulting supports compliance with regulations governing the security, transportation, storage and accessibility of data. It has become increasingly important for financial institutions to minimize downtime and manage regulatory requirements related to data security.

    Data Vaulting offers deployment options tailored to the data protection and business needs of a financial institution.

    The company continues to emphasize long-term client relationships and recurring, transaction-oriented products and services, which, in turn help it combat the pressure from the consolidation of financial institutions.

    Furthermore, Fiserv enters into multi-year agreements with its customers to lock in the contribution to the top-line for a stipulated period of time.

    FISERV INC (FISV): Read the Full Research Report

    FIDELITY NATL INFORMATION SV (FIS): Read the Full Research Report

    Source Zacks Investment Research
    Zacks Equity Research, On Wednesday June 29, 2011, 4:25 pm EDT

    Not all credit unions are “not-for-profit cooperative institutions” legal arrangements vary by jurisdiction, state and/or federal. Credit unions attempt to solve the principal-agent problem by ensuring that the owners and users are the same people. Credit Unions must be able to prosper in a competitive market economy.

  8. @christine – why in the world would everyone purposefully default just to make a point?

  9. I say run them out of town completely, along with the corrupt Federal Reserve. Breaking them up is not a valid remedy for the tyrannical deathgrip these huge banks and the multi-national corporations they own, have on the world economy. We need to rethink the whole credit trap. We can revisit the times of peace and prosperity America the Beautiful enjoyed before she became America the Broken by fraud, deceit, usury and debt enslavement. Death to the “too big to fail” banks and the destructive force behind them.

  10. FIDELITY NATIONAL TITLE GROUP, INC.
    601 Riverside Avenue
    Jacksonville, Florida 32204

    http://www.secinfo.com/dR7Km.zPx.htm

    We are a holding company whose primary assets are the securities of our operating subsidiaries. Our ability to pay dividends is dependent on the ability of our subsidiaries to pay dividends or repay funds to us. If our operating subsidiaries are not able to pay dividends or repay funds to us, we may not be able to declare and pay dividends to our stockholders.
    Our title insurance subsidiaries must comply with state and federal laws which require them to maintain minimum amounts of working capital, surplus and reserves and place restrictions on the amount of dividends that they can distribute to us. Compliance with these laws will limit the amounts our regulated subsidiaries can dividend to us. During the remainder of 2005, our title insurance subsidiaries can pay dividends or make distributions to us of approximately $89.1 million without prior regulatory approval.

    We face competition in our title business from traditional title insurers and from new entrants with alternative products.

    The title insurance industry is highly competitive. According to Demotech, the top five title insurance companies accounted for 90.2% of net premiums collected in 2004. Over 40 independent title insurance companies accounted for the remaining 9.8% of the market. The number and size of competing companies varies in the different geographic areas in which we conduct our business. In our principal markets, competitors include other major title underwriters such as The First American Corporation, LandAmerica Financial Group, Inc., Old Republic International Corporation and Stewart Information Services Corporation, as well as numerous smaller title insurance companies and independent agency operations at the regional and local level. These smaller companies may expand into other markets in which we compete. Also, the removal of regulatory barriers might result in new competitors entering the title insurance business, and those new competitors may include companies that have greater financial resources than we do and possess other competitive advantages. Competition among the major title insurance companies, expansion by smaller regional companies and any new entrants with alternative products could affect our business operations and financial condition.
    From time to time, we adjust the rates we charge in a particular state as a result of competitive conditions in that state. For example, in response to recent rate reductions by certain of our competitors, we recently filed for an adjustment of our rate structure in California for refinancings. This change could have an adverse impact on our results of operations, although its ultimate impact will depend among other things on the volume and mix of our future refinancing business in that state.

    Our historical financial information may not be representative of our results as a consolidated, stand-alone company and may not be a reliable indicator of our future results.

    Our historical financial statements may not be indicative of our future performance as a consolidated, stand-alone company. We were incorporated on May 24, 2005 in anticipation of the distribution. Prior to the distribution, FNF will contribute to us the various FNF subsidiaries that conduct our business. Our historical financial statements reflect assets, liabilities, revenues and expenses directly attributable to our operations. Accordingly, they exclude certain of our expenses that have been allocated to other operations of FNF and of FIS, and they reflect an allocation to us of a portion of the compensation of certain senior officers and other personnel of FNF who will not be our employees after the distribution but who have historically provided services to us. These allocations are expected to in general continue after the distribution under the corporate services agreements to be entered into in connection with the distribution. Further, our financial statements reflect transactions with related parties, which were not negotiated on an arms-length basis. Our historical financial statements presented in this prospectus do not reflect the debt or interest expense we might have incurred if we had been a stand-alone entity. In addition, we will incur other expenses, not reflected in our historical financial statements, as a result of being a separate publicly traded company. As a result of these and other factors, our historical financial statements do not necessarily reflect what our financial position and results of operations would have been if we had been operated as a stand-alone public entity during the periods covered, and may not be indicative of future results of operations or financial position.
    Risks Relating to the Distribution

    We will be controlled by FNF as long as it owns a majority of the voting power of our common stock and our other stockholders will be unable to affect the outcome of stockholder voting during this time.

    8/18/05 Fidelity National Title Group/Inc S-1/A

    EX-21.1 • Subsidiaries of the Registrant

    FIDELITY NATIONAL TITLE GROUP, INC.
    All companies
    As of 8/17/2005

    1 Stop Cyber Mall, Inc. New York
    2027267 Ontario Inc. Canada

    Manchester Development Corporation California
    (d/b/a Orion Realty Group)
    Marble Title Company, LLC (12%) Texas
    McHenry County Title Company Illinois
    McLean County Title Company Illinois
    McNamara, Inc. Nevada
    Member First Title Agency, LLC (50%) Michigan
    MFS Title of Texas, LP (5%) Texas
    MGEN Services Corp. Delaware
    Micro General, LLC Delaware
    Midwest Title Company Delaware
    Mission Trails Escrow, Inc. (51%) California
    National Link, L.L.C. (49.8%) Pennsylvania
    National Link, L.P. (49.5%) Pennsylvania
    National Link of Alabama, L.L.C Alabama
    National Title Company of Fresno County (51%) California
    National Title Company of San Francisco (51%) California
    National Title Company of Southern California (51%) California
    National Title Company of Ventura County (51%) California
    Nations Title Insurance of New York Inc. New York
    Nationwide Settlement Source, L.L.C Pennsylvania
    Nationwide Settlement Source, L.P. Pennsylvania

    Nationwide Settlement Source of Alabama, L.L.C Alabama
    New Market Title Agency, LLC (50.1%) Ohio
    Northwest Equities, Inc. Texas
    d/b/a NW Equities)
    NRT Title Agency, LLC (30%) Delaware
    Ocean Escrow, Inc. (51%) California
    Ottawa-Kent Title Agency, LLC (50%) Michigan
    Pacific Escrow Solutions, Inc. California
    Palm Beach Joint Title Plant, Inc. (12.5%) Florida
    Perrett Title Agency, LLC (50%) Michigan
    Pioneer Land, LLC (51%) New York
    Pioneer Land Services, LLC New York
    Pioneer National Title Company Arizona
    Preferred Title Services, LLC (50%) Michigan
    Premier National Title Company (51%) California
    Prospect Office Partners, LP California
    Real Estate Index, Inc. Illinois
    Real Estate Settlement Solutions, L.L.C Pennsylvania
    Real Estate Settlement Solutions, L.P. Pennsylvania
    Real Estate Settlement Solutions of Alabama, L.L.C Alabama
    Real Living Title Agency, Ltd. (45.1%) Ohio
    RealtyCheck.com, LLC Michigan
    Recodat Co. (25%) Ohio
    Referral Connection, LLC North Carolina
    Region Title, LLC (35%) Indiana
    Rio Grande Title Company, Inc. (20%) New Mexico
    River Valley Abstract & Title, Inc. Wisconsin
    Rocky Mountain Printing Services, Inc. California
    Rocky Mountain Support Services, Inc. Arizona
    Saddleback Title Company (51%) California
    S.D.C. Title Agency, LLC (50.1%) Ohio
    Security Title Agency, Inc. Arizona
    Security Title Company, LLC Wisconsin
    Security Union Title Insurance Company California
    Sentry Service Systems, Inc. Arizona
    Service Link, L.P. Pennsylvania
    Service Link of Alabama, L.L.C Alabama
    Service Link of Texas LLC Texas
    S-K-L-D Title Services, Inc. (12.9%) Colorado
    Southeast Funding Title Associates, LLC (10%) Florida
    SouthshoreTitle, LLC (10%) Indiana
    Southwest Michigan Title Agency, LLC (50%) Michigan
    Spring Service Corporation California
    Spring Service Texas, Inc. Texas
    Statewide Settlement Services, LLC (25%) Ohio
    Stetler Title Agency, LLC (50%) Michigan
    SunCoast Team Title, LLC (10%) Florida
    Sunrise Research Corp. New York
    Superior Data Services, Inc. New York
    SWT Holdings, LLC Texas
    Tam Title & Escrow, LLC (10%) Tennessee
    Ten Thirty-One, L.L.C Oregon
    The Album CD, LLC (66 2/3%) Delaware
    The Maryland Title Guarantee Company Maryland
    The Title Company of Canada, Ltd. Ontario, Canada
    The Title Guarantee Company Maryland
    Third Millenium Title Agency, LLC (50.1%) Ohio
    Ticor Financial Company California
    Ticor Services, LLC Delaware
    Ticor Title Abstract of New York, Inc. New York
    Ticor Title Agency of Arizona, Inc. Arizona
    Ticor Title Company Washington
    Ticor Title Company of California California
    Ticor Title Company of Oregon Oregon
    Ticor Title Consultants Ltd. Canada
    Ticor Title Insurance Company California
    Ticor Title Insurance Company Limited England
    Ticor Title Insurance Company of Florida Florida
    Ticor Title of Nevada, Inc. Nevada
    Ticor Title of Washington, Inc. Washington
    Title Accounting Services Corporation Illinois
    Title America, LLC (50.1%) Ohio
    Title and Trust Company Idaho
    Title Closing Services, LLC (17.5%) New Jersey
    Title Data, Inc. (5.6%) Texas
    Title Info Now, LLC (14.29%) Minnesota
    Title Offices, LLC (30%) Florida
    Title Reinsurance Company (36.18%) Vermont
    Title Services, Inc. Tennessee
    TitleTek, Inc. (inactive) Texas
    TPO, Inc. Oklahoma
    Tri County Title Plant Association (37.5%) Oregon
    Triple Crown Title and Settlement Services, LLC (51%) New Jersey
    TSNY Agency of New York City, Inc. New York
    (d/b/a Title Services)
    TT Acquisition Corp. Texas
    (d/b/a Texas Taxes)
    United Financial Management Company Nevada
    United Land Title Agency, LLC (50.1%) Ohio
    United Title of Nevada, Inc. Nevada
    UTC Capital Group, Inc. Texas
    Villager Title, LLC (10%) Florida
    Washington Title Company Washington
    Washington Title Insurance Company (inactive) Washington
    Welles Bowen Title Agency, LLC (50.1%) Ohio
    Wentworth Title Agency, LLC (20%) Florida
    West Point Appraisal Services, Inc. California
    West Point Properties, Inc. California
    Western Financial Trust Company California
    Woodland Title Agency, LLC (50%) Michigan
    Yuma Title & Trust Company Arizona

  11. Most states also regulate insurance holding companies like us with respect to acquisitions, changes of control and the terms of transactions with our affiliates. State regulations may impede or impose burdensome conditions on our ability to increase or maintain rate levels or on other actions that we may want to take to enhance our operating results, and could affect our ability to pay dividends on our common stock. In addition, we may incur significant costs in the course of complying with regulatory requirements. We cannot assure you that future legislative or regulatory changes will not adversely affect our business operations. See “Business — Regulation.”

    Regulatory investigations of the insurance industry may lead to new regulation and legal uncertainty, which could negatively affect our results of operations.

    In the fall of 2004, the California Department of Insurance began an investigation into reinsurance practices in the title insurance industry and in February 2005 FNF was issued a subpoena to provide information to the California Department of Insurance as part of its investigation. This investigation paralleled similar inquiries of the National Association of Insurance Commissioners, which began earlier in 2004. The investigations have focused on arrangements in which title insurers would write title insurance generated by realtors, developers and lenders and cede a portion of the premiums to a reinsurance company affiliate of the entity that generated the business. Other state insurance departments and attorneys general also have made formal or informal inquiries of us regarding these matters.
    We recently negotiated a settlement with the California Department of Insurance with respect to that department’s inquiry into captive reinsurance programs in the title insurance industry. Under the terms of the settlement we will refund approximately $7.7 million to those consumers whose California property was subject to a captive reinsurance arrangement and we will pay a penalty of $5.6 million. We also recently entered into a similar settlement in Arizona, in which we agreed to refund $0.6 million to policyholders.
    We have been cooperating and intend to continue to cooperate with the other ongoing investigations. We have discontinued all reinsurance agreements of the type the investigations cover. The total amount of premiums we ceded to reinsurers was approximately $10 million over the existence of these agreements. These investigations are at an early stage and as a result we are unable to give any assurance regarding their consequences for the industry or for us.

    State regulation of the rates we charge for title insurance could adversely affect our results of operations.

    Our subsidiaries are subject to extensive rate regulation by the applicable state agencies in the jurisdictions in which we operate. Title insurance rates are regulated differently in the various states in which we operate, with some states requiring our subsidiaries to file rates before such rates become effective and some states promulgating the rates to be charged by our subsidiaries. In almost all states in which we operate, our rates must not be excessive, inadequate or unfairly discriminatory.
    The California Department of Insurance has recently announced its intent to examine levels of pricing and competition in the title insurance industry in California, with a view to determining whether prices are too high and if so, implementing rate reductions. New York and Colorado insurance regulators have also announced similar inquiries and other states could follow. At this stage, we are unable to predict what the outcome will be of this or any similar review.
    State regulators may use their rate-regulation oversight authority to take steps to cause us to reduce our rates, or block our attempts to increase our rates. Such actions by regulators could adversely affect our operating results.
    8

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    Table of Contents

    If the rating agencies further downgrade our company our results of operations and competitive position in the industry may suffer.

    Ratings have always been an important factor in establishing the competitive position of insurance companies. Our insurance companies are rated by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”), Moody’s Corporation (“Moody’s”), Fitch Ratings, Inc. (“Fitch”), A.M. Best and Demotech, Inc. (“Demotech”). Ratings reflect the opinion of a rating agency with regard to an insurance company’s or insurance holding company’s financial strength rating, operating performance, and ability to meet its obligations to policyholders and are not evaluations directed to investors. In connection with the announcement of this distribution, S&P placed our A- financial strength rating on CreditWatch negative, Moody’s affirmed our A3 financial strength rating although the rating outlook was changed to negative and Fitch placed our financial strength rating on Rating Watch Negative. In addition, A.M. Best downgraded the financial strength ratings of our principal insurance subsidiaries to A-. After the announcement of the merger between FIS and Certegy Inc., S&P revised its CreditWatch to positive from negative and Fitch revised its rating watch to stable from negative. Our ratings are likely to continue to be affected in the future by credit events that may occur with respect to FNF and its other operations.

  12. Systemic fraud? or Organized network?
    Mortgage Broker places property into pipeline. ‘Escrow’ ordered. ‘Escrow’ delivered minus HUD.
    Organized networks are integrated. There are a vast network ‘of banking, real estate attorneys, title and settlement agents, agencies, and settlement services, through which mortgage broker submits each borrowers property upon which many will sell, bid, purchase. The one person these collected and organized transactions do not benefit, the borrower. Why is this important? All of the government sponsored spin that consumers are safe in life and property protected by consumer protection agencies! Lies. Consumers are not safe nor protected when the FTC allows the banks to use their tradename as a prefix and suffix to anyone who bids, sells, purchases real estate.
    Mortgate brokers are either bank affiliated or non-bank affiliated. each responsible for inputting into the virtual network the profile of each borrower.
    Borrower presented into computer by mortgage broker as an Alt-A Loan why? Alt-A pays mortgage brokers more money, stipends, kickbacks, yield spreads.
    The in-house mortgage brokers of Norwest Financial benefit from kickbacks of ‘Trustee’ transactions of Wells Fargo Bank NA, who according to SEC documents is the trustee of Wilmington Trust Bank, and are ‘bank affiliated mortgage brokers.’ Who is the true beneficiary of transactions? The trustee. Who is the trustee? And of whose money? Is that the name the one in the ‘T-1’ form on the SEC? Interesting relationship GMAC was Wilmington Trust Company’s TRUSTEE. In 1998 Norwest (S-1, S-3, T-1).
    I wonder because the non-bank affiliates brokers of Century 21, ERA, Coldwell Banker, NRA, Better Homes & Gardens, etc. are assigned to a bank affiliated mortgage broker. The real estate broker works hand in hand with a mortgage broker. The ‘connected’ real estate broker knows which mortgage broker gets deals approved. Cendant Mortgage Corp as ‘signatory’ on SEC working with Wells Fargo Bank NA as Trustee is who? Wilmington Trust Co?
    Mortgage Broker issues orders for closing. The agents, attorneys, title & settlement agency, orders the approved transactions, specifies the Lender, mount of the transactions, provides the TILA, HUD, etc.
    Note that the party with accountability, responsibility, authority, and fiduciary duties, “Settlement Agent’ has to make sure documents are filed in accordance with closing instructions and all post-closing recordings with public offices, including the final recording of the mortgage and Lenders Policy.
    Example of another nationwide integrated network participant:
    TD Service Company corporate history important. Why? Common denominator ‘Escrow’ and borrower, integrated with the mortgage brokers, attorney, settlement agent, title and settlement agency, …
    Since 1964 TD Escrow Services vision focused on effective foreclosure services to the mortgage industry. TD Financial Services grew into one of the nation’s largest and most successful trustee firms.

    TD Service Financial Corp parent of TD Service Co, Washington and Trustee’s Assistance Corp, TD Service Company of AZ.Company. Whether foreclosures and lien releases, to document retrieval and assignments in all 50 states, the nation’s largest servicers, and title companies look to TD to handle their most complex cases and improve turn-around times.
    TD is a privately-held company with offices in both Santa Ana, California and Phoenix, Arizona.
    TD is a preferred provider for MERS, a Fidelity Interchange partner, and an IBM business recovery Services partner.
    TD is a premier member of the MBA, a member a member of the USFN, and UTA.
    TD relies on a combination of highly experienced employees (with an average tenure of well over 15 years), a solid investment in technology and a focused management approach to provide unmatched nationwide services to the mortgage banking industry.
    Utilizing the Internet, you can transmit or receive data files securely, transact in encrypted email, interface from your servicing applications to our systems, and get reports electronically. Our network is secure and has built-in redundancy in case of a problem. TD’s foreclosure processing application, ForeStar, is custom-built and resides on the world’s most reliable servers- the IBM I-Series.
    TD is a partner in a number of networks and a premier provider for several industry providers including MERS and RconLink REconveyance/Lien Release Request. See example TD’s browser-based foreclosure file inquiry. Click on a file and access more detail including critical compliance date information, notes, fees, costs and more. Screen reveals fields: Loan Number, Trustor Company/Name File Status, Customer “xyz mortgage Agent’, TSG Liability, Mailing NOD, SUB and NOS, Trustee’s Sale Guarantees
    TD Service Financial Corp. “Forestar” Foreclosure S
    AFFILIATIONS
    – LPS – Lenders Processing Services
    – MERS READY
    – UTA – United Trustees Association
    – Premier Member – Mortgage Bankers Associations
    – Member USFN America’s Mortgage Banking Attorneys
    – ALFN American Legal & Financial Network
    – PRIA Property Records Industry Association –
    Partnership – Knowledge – Results
    -ingeo – Electronic Document Recording Solutions
    -California Bankers Association
    – CMBA
    – California Credit Union League
    – IBM Business Recovery Services
    – LENSTAR
    NOTE: eLynx another company whose integrated services nationwide conjoin mortgage brokers, attorneys, title and settlement servicers all who are indeed integrated with MERS eDelivery and MERS eParticipants, and if not MERS services will delivery via postal mail the documents.
    Escrow released by mortgage broker who ordered loan 0123456789. The Escrow issued is the whole loan minus HUD payable to the individual title and settlement agent. The escrow funds sit inside treasury of temporary lender.

    Escrow drawn upon unrelated third party not at the closing table, and not the ‘temporary lender’ rather intermediary funding whose credit line used to table fund loan, one example. Mortgage recorded in temporary lender name. The real ‘lender’ is the trustee. But who is that?

    Entity named on the ‘mortgage’ promissory note as Lender gets kick back for yield spread as temporary lender.

    What does the undisclosed and unrelated third party get out of the transactions?

    IMPORTANT:

    FNF FNT INSURANCE INVESTIGATION 2004-2005 – Again State of California almost got it right!

    ‘Arrangements title insurers write title insurance generated by realtors and cede portion to reinsurance company affiliate for generating business.’

    In the fall of 2004, the California Department of Insurance began an investigation into reinsurance practices in the title insurance industry and in February 2005 FNF was issued a subpoena to provide information to the California Department of Insurance as part of its investigation. This investigation paralleled similar inquiries of the National Association of Insurance Commissioners, which began earlier in 2004. The investigations have focused on arrangements in which title insurers would write title insurance generated by realtors, developers and lenders and cede a portion of the premiums to a reinsurance company affiliate of the entity that generated the business. Other state insurance departments and attorneys general also have made formal or informal inquiries of us regarding these matters.

    IMPORTANT
    Synthesized merger 1995 Lawyers Title Corp which kicked off the virtual-nationwide network of attorneys, settlement agents, title agents, title and settlement agencies, closering services.

    Lawyers Title Group who merged and grew Commonwealth, LandAmerica, FNF….

    “Public’s misconception” LPS owns DOCX is desired by spin and misrepresentations of FNF and FNT.

    LPS or Lenders Processing Services a ‘division’ of DOCX.

    A division may or may not be a separate business entity.

    FIDELITY NATIONAL FINANCIAL, INC.
    601 Riverside Avenue
    Jacksonville, Florida 32204

    Company History
    The predecessors to FNT have primarily been title insurance companies, some of which have been in operation since the late 1800s. Many of these title insurance companies have been acquired in the last two decades. During the 1990s, FNF acquired Alamo Title, Nations Title Inc., Western Title Company of Washington and First Title Corp. In 2000, FNF completed the acquisition of Chicago Title Corp. and in 2004, FNF acquired American Pioneer Title Insurance Company, which now operates under our Ticor Title brand. Our businesses have historically been operated as wholly-owned subsidiaries of FNF.

    Our principal executive offices are located at 601 Riverside Avenue, Jacksonville, Florida 32204, and our telephone number is (904) 854-8100.

    5/16/2005 – ‘Restructuring of outstanding stock 17.5% of FNT (Fidelity National Title Group, Inc.) will be made to Fidelity National Financial, Inc, 601 Riverside Ave, Jacksonville FL 32204

    Form S-1
    REGISTRATION STATEMENT
    UNDER THE SECURITIES ACT OF 1933

    Fidelity National Title Group, Inc.
    (Exact Name of Registrant as Specified in its Charter)

    Delaware 6361 16-1725106
    (State or Other Jurisdiction of
    Incorporation or Organization) (Primary Standard Industrial
    Classification Code Number) (I.R.S. Employer
    Identification Number)

    601 Riverside Avenue
    Jacksonville, Florida 32204
    (904) 854-8100
    (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

    Raymond R. Quirk
    Chief Executive Officer
    Fidelity National Title Group, Inc.
    601 Riverside Avenue
    Jacksonville, Florida 32204
    (904) 854-8100
    (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

    On SEC, in 8K, 10K, Exhibit 21

    DOCX a subsidiary of Fidelity National Financial and LPS referred to as division.

    First: The name of the Corporation is “Fidelity National Title
    Group, Inc.” The Corporation was originally incorporated under the name “FNT Holdings, Inc.” The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on May 23, 2005.

    The address of the registered office of the Corporation in the
    State of Delaware is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. The name of the Corporation’s registered agent at that address is “The Corporation Trust Company.”

    The purpose of the Corporation is to engage in any lawful act
    or activity for which a corporation may now or hereafter be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

    “Affiliate” means any Person directly or indirectly
    controlling, controlled by, or under common control with, FNF. As used in this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the
    ownership of voting securities, by contract or otherwise.

    “Person” means and includes any individual, partnership, joint venture, association, joint stock company, corporation, trust, limited liability company, unincorporated organization, a group and a government or other department, agency or political subdivision thereof.

  13. I heard that 700 billion was lost while Washington duked it out. Of course a decision was going to be reached – it always is. I wonder how much of the 700 billion B of A and its cronies managed to capture by selling short and with puts.
    And why the heck was I too busy to notice the fortune to made there? Call me whatever, but I’m suspicious enough to believe that was the point.

  14. […] Livinglies’s Weblog Filed Under: Foreclosure Law News, Foreclosure News Tagged With: crisis, foreclosure, […]

  15. I wasn’t in favor of the bailout in 2008. I am not an economist but rather someone with a solid understanding of history and a brain. I couldn’t see how robbing all the Peters (all of us, shrinking middle-class in a country originally based on a strong middle-class) to pay all the Pauls (speculators who wanted to invest, understood what it meant and that they were taking a risk) was the solution. The system was collapsing then, it was put on life-support (without any say from the Peters, mind you. Democracy at work…) while still unraveling
    anyway under the weight of the monumental frauds uncovered since and it is still collapsing today. So, an expensive bandage had been applied placed to a wooden leg, the economy did not recover, corporate America did not create jobs, millions of people lost everything they ever worked for (house, retirement, health insurance, jobs, etc.) and, along with it, every possible means of ever rebuilding any of it while a minority enriched itself obscenely.

    Well, the wooden leg will not grow nerves and flesh regardless of how many times we change the dressing. Let’s remove the damn bandage already, go through a very diffucult time for a short time if need be and start rebuilding now. Postponing the inevitable is only prolonging the agony and the longer we wait and the more painful it will be.

    Flock the credit unions, stop paying any loan to big banks, create that collapse on your terms while you can still act and react and lets get back to basics altogether. We’ve got real work to do to come up with ideas and inventions to stop the destruction of the planet and of humanity. Investors and Banks and their self-inflicted woes are a huge distraction in what is really important: giving our children a future and leaving for them a better world than what they are bound to inherit if we keep dwelling and waiting for who knows who to act.

  16. The Question is are they gonna take the rest of the United States with them?

  17. So George Romero had it right way back when….the world is grappling with a zombie apocalypse….and the only way to kill them is to take them into receivership and dismember them one by one. Otherwise we all die a slow, nasty death. Screw them. Let’s get this done. Write all legislators and tell them you know what’s going on….congress can no longer hide their incestuous relationships. Enough is enough already!

  18. Hmmmm….. would Congress allow this?

  19. Already pulled out my cash…and put into the credit union…
    I had enough of their Bull $hit

  20. We can speed it up and get back to basics a little earlier, though.

    August 1st: everyone having an account in a large banks closes it and opens a local credit union account (that’s 80% of the people… taking out suddenly 20% of the wealth, right? Not chunk change, by any bank’s measurement… It’s called boycotting, or “fighting the American Way”.

    August 2nd: everyone having a line of credit of any kind with one of the big banks (auto loan, mortgage, student loan, credit card etc…) stops paying. This country doesn’t have enough police, military, repo guys, and courts to dfo anything about it. That will speed up the Great American Clean Up the American Way.

  21. The gigantic emperor elephant in the room has no clothes…and he’s about to explode…

  22. Specifically as to Bank of America, any bank that trades at one-half of book value is not going to “raise capital” by selling new shares; the dilution would provoke an uproar with the existing shareholders (and lawsuits against managers). It is not going to sell Merrill Lynch, as that would require booking a huge loss. Besides, Merrill is now turning a small positive cash flow. It cannot “down-size” as there is no market for assets such as retail bank branches. So it can do nothing.

    In effect, BofA and Citigroup are the American version of the Japanese “zombie” corporations, entities that can never pull themselves out of the mud and cannot be either broken up or resuscitated, so they continue indefinitely as the walking dead. They survive only because of the disguised largess of the taxpayers – in this case, by a Fed discount rate of 1/4 point allowing the Banks to float the federal money back out at whatever it will fetch, and using the difference to pay for operating expenses.

    The only way I can see that they would be broken up is through the bankruptcy courts. The managers will never do that, as then they will be out of a job. So they will be the zombie banks, forever.

  23. Any business entity that has gotten to big to fail is too big to exist and must be broken down as these business structures are detremental to the health, survival and existence of the American and as well as world economy!

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