NY AG: NOT SO FAST ON THAT SETTLEMENT BONY-MELLON!

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COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

Mr. Schneiderman’s contention that Bank of New York breached its duties to investors is significant because a trustee that agrees to oversee loan pools like those issued by Countrywide must abide by the rules governing the securities. Such rules require that lenders deliver to the trust complete and original mortgage documents for each loan in a pool, for example, and require that the trustee notify investors when such loan documents are missing.”

BANK STRATEGY OF FRIENDLY SETTLEMENTS STARTS TO UNRAVEL

$8.5 BILLION Mortgage Settlement Challenged

By

The New York attorney general is moving to block a proposed $8.5 billion settlement struck in June by Bank of New York Mellon and Bank of America over troubled loan pools issued by Countrywide. A lawsuit filed late Thursday accuses Bank of New York of fraud in its role as trustee overseeing the pools for investors.

In papers filed in New York State Supreme Court, lawyers for Eric T. Schneiderman, the attorney general, contended that Bank of New York misled investors about its conduct as overseer of the securities. The bank also breached its duties to investors by agreeing to the deal with Bank of America, according to the complaint, because the trustee is conflicted and “stands to receive direct financial benefits” as a result of the agreement.

Questioning the fairness of the deal, the attorney general’s lawsuit said that it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses” that have been suffered by investors.

When the terms of the deal emerged, they appeared to be quite favorable to Bank of America. On June 29, when the deal was announced, Bank of America’s shares closed with a gain of almost 3 percent.

A spokesman for Mr. Schneiderman declined to comment. Jeep Bryant, a spokesman for Bank of New York Mellon, disputed the attorney general’s allegations, calling them “outrageous, baseless, unsupported by fact and law” and saying that the bank would fight them in court. “We are confident that we have fulfilled in all respects our responsibilities as trustee,” he said, adding that Mr. Schneiderman’s action fails to understand the “benefit the settlement would provide to investors.”

Bank of America purchased Countrywide in a distress sale in early 2008.

A judge overseeing the settlement will ultimately decide whether it should be approved. A court hearing on the proposed settlement was scheduled to take place Friday. Mr. Schneiderman’s lawsuit is likely to change the nature of those discussions.

As announced by Bank of New York, which is overseeing 530 mortgage pools issued by Countrywide, the deal would require Bank of America to pay $8.5 billion to investors holding the securities. The unpaid principal amount of the mortgages remaining in the pools totaled $174 billion. Lawyers representing 22 institutional investors, including the Federal Reserve Bank of New York, BlackRock and Pimco, contended the deal was favorable.

But other investors in the Countrywide pools who were not part of the settlement negotiations between Bank of New York and Bank of America complained that the terms were inadequate. Among the criticisms made by a group of investors known as Walnut Place were that the negotiations were conducted in secret and that Bank of New York was conflicted as a negotiator because Bank of America agreed to cover all its costs and liabilities relating to the deal.

Mr. Schneiderman’s contention that Bank of New York breached its duties to investors is significant because a trustee that agrees to oversee loan pools like those issued by Countrywide must abide by the rules governing the securities. Such rules require that lenders deliver to the trust complete and original mortgage documents for each loan in a pool, for example, and require that the trustee notify investors when such loan documents are missing.

Bank of New York led investors in the Countrywide pools to believe that the lender had in fact delivered complete and adequate mortgage files for each loan as was required, the lawsuit said. The bank also misled investors by confirming that loan files relating to hundreds of thousands of mortgages were complete.

But the bank failed in these duties, the attorney general’s complaint said. After conducting a review of court records in the Bronx and Westchester County, Mr. Schneiderman’s investigators have determined that Bank of New York did not ensure that notes underlying properties were delivered properly to some trusts, according to the lawsuit. If loan documents were not delivered as required to the trustee, investors could recover the money they invested in the mortgages.

“Investors in the trusts were misled by Bank of New York Mellon into believing that Bank of New York Mellon would review the loan files for the mortgages securing their investment, and that any deficiencies would be cured,” the lawsuit said.

24 Responses

  1. […] NY AG: NOT SO FAST ON THAT SETTLEMENT BONY-MELLON! Posted on August 5, 2011 by Neil Garfield […]

  2. […] title, rescission, RESPA, securitization, TILA audit, trustee,WEISBAND « NY AG: NOT SO FAST ON THAT SETTLEMENT BONY-MELLON! Like Be the first to like this […]

  3. Joint ReleaseOffice of the Comptroller of the Currency
    New York State Banking Department NR 2006-128
    FOR IMMEDIATE RELEASE
    November 30, 2006OCC and New York Banking Department Agree to Share Consumer ComplaintsNEW YORK – Comptroller of the Currency John C. Dugan and New York State Banking Department Superintendent Diana L. Taylor signed a Memorandum of Understanding (MOU) today that provides a mechanism for sharing consumer complaint information between their two agencies.

    The MOU is the first such agreement patterned on a template created by the OCC and the Conference of State Bank Supervisors. The template, announced by the two organizations last week, recognizes that consumers do not always know which regulatory agency – state or federal – supervises their bank, and provides model procedures to ensure that misdirected complaints are sent to the appropriate agency.

    “I want to thank Superintendent Taylor for working with us on this MOU,” said Comptroller Dugan. “The real winners here are New York consumers, who should not be expected to know which regulatory agency to send a complaint to when they run into problems.”

    “We are pleased to be the first state to sign an MOU with the OCC to ensure consumer complaints are addressed by the appropriate supervisory agency,” said Superintendent Taylor. “This agreement is an important first-step between the New York Banking Department and a federal bank regulator to enhance cooperation in the area of consumer protection.”

    Media Contacts:
    OCC Robert M. Garsson (202) 874-5770
    NYSBD Liz Billet (212) 709-1690

    # # #

  4. FCC (Federal Communications Commission) Where are you. Alike Waldo we don’t see you in the puzzle pieces…as regulator protecting consumers from frauds which harm welfare of this great nation. FCC you are vested powers by CONGRESS to protect welfare of nation and OCC does not have vistorial powers over FCC, so where are you the evidence in general purpose business entities not affixed national association and federal association, conjoined by Martin Act with Attorney General in New York, a home run!

    FCC where are you regarding eFalsified documents purchased (COMMERCE) via nationwide integrated network ?As documented by FBI trained expert witness? Why do you turn your back FCC? US Constitution all power regarding COMMERCE vested to CONGRESS both Houses. Congress prevents enforcement of laws both federal and state vesting vistorial powers to MOUTH of Federal Reserve ‘OCC’. Martin Act, and Attorney General of New York.

    Mortgage Assignments to Washington Mutual Trusts Are Fraudulent Posted on August 7, 2011 by Neil Garfield
    http://livinglies.wordpress.com/2011/08/07/study-mortgage-assignments-to-washington-mutual-trusts-are-fraudulent/

    EXPERT WITNESS:
    FBI Trained and Certified and trainor of FBI!

    FCC where are you?

    Expert Witness Lynn Symoniak with due dilligence continues reporting frauds of commerce in which paid for a fee, employees of information services technology giants subsidiaries, third parties, bank-affiliates, non-bank affiliates, continue perpetuating mortgage frauds for TRUSTEE including the most recent recognized witness updates of Mortgage Fraud

    COCHRANE CNNFAILS REPORTING STANDARDS http://livinglies.wordpress.com/2011/08/10/cochrane-cnn-fails-reporting-standards/

    eLYNX Document Fabrication and Expedited Forgery System of Bank Attorneys for ‘TRUSTEE’ issuing Lender’s Policies of Issuing Entity PREFUNDING
    http://livinglies.wordpress.com/2011/07/30/elynx-document-fabiracation-and-expedited-forgery-system/

    ROBO-Signatories for Issuing Entity PREFUNDING TRUSTEE and Sub-Stitute TRUSTEE ADVANCING FUNDING to TRUSTEE of Issuing Entity as related to LENDER’s POLICIES ISSUED DURING ORIGINATION when Unrelated third party of Credit Facility insured Advance of escrow c/o purchase of cash as deposit into ‘Sellers’ account of ‘mortgage note collateral’
    http://livinglies.wordpress.com/2011/08/02/robo-and-other-signors-who-is-signing-now/

    MAIL FRAUD AND WIRE FRAUD, CHAPTER 18, USC AS A BASIS FOR DAMAGES AGAINST THE BANKS
    http://livinglies.wordpress.com/2011/07/26/mail-fraud-and-wire-fraud-chapter-18-usc-as-a-basis-for-damages-against-the-banks/

    SECURITIZATION FRAUD SPAWNED HUNDREDS OF MORTGAGE FRAUD SCHEMES
    http://livinglies.wordpress.com/2011/08/05/securitization-fraud-spawned-hundreds-of-mortgage-fraud-schemes/

    SECURITIZATION FRAUD SPAWNED HUNDREDS OF MORTGAGE FRAUD SCHEMES

    http://livinglies.wordpress.com/2011/08/06/spectre-of-fraud-of-all-types-haunting-bofa-citi-chase-wells-et-al/
    To Contact the Commissioners via E-mail
    Chairman Julius Genachowski: Julius.Genachowski@fcc.gov
    Commissioner Michael J. Copps: Michael.Copps@fcc.gov
    Commissioner Robert McDowell: Robert.McDowell@fcc.gov
    Commissioner Mignon Clyburn: Mignon.Clyburn@fcc.gov
    To Provide Non Docketed Comments or Seek Information via E-mail or On-line
    General information, comments, & inquiries: fccinfo@fcc.gov
    Complaints: File a Complaint
    Freedom of Information Act requests: FOIA@fcc.gov

  5. AIG is suing B of A- alleging fraud- bought 97 of the 530 trusts.

  6. 2009 Letter to IRS from Clearing House members are:
    The Bank of New Yor, The Chase Manhattan Bank (US TRUST CO), Citibank, N.A., Morgan Guaranty Trust Co of NY, Bankers Trust Co (dba Deutsche Bank Trust Co), Marine Midland Bank dba HSBC Bank (USA) NA, and Marine Midland Bank, N.A., and The United States Trust Company of New York (TRUSTEE for Bank of America NA – US TRUST CO), Fleet Bank NA is Bank of America, and Republic National Bnak of New York.

    Clearing house stands between ‘clearning firms’ also known as member firms or clearing participants by requiring ‘collateral deposits aka margin deposits. Example S&P ratings of ‘collater’ assets ‘mortgage notes’ purchased placed inside related mortgage notes serviced as assets (ESCROW) PRE-FUNDING placed inside ‘Issuing Entity’ Loan Trusts and Trust Funds to be sold.

    CLEARING HOUSE OWNER BANKS INCLUDE:
    (9 NATIONAL ASSOCIATIONS AND TWO FEDERAL ASSOCIATIONS) the number of individual ‘TRUSTEE’s for REO Loan recovery for TRUSTEE’s SIGNIFICANT.

    FDIC insured agency did not originate the debts and yet the TRUSTEE’s stated in the attached exhibits in the event of default of SERVICER holding the portfolio of a non-performing loan would track the ADVANCES, and Standard & Poor’s LSTA saw as a CREDIT ENHANCEMENT in the event the TRUSTEE named as a National Association and Federal Association are insured by the FDIC.

    Meanwhile, the defaults of payments separated from the mortgage note, allows TRUSTEE to resell the collateral sliced and diced inside of other synthetic products including CDO’s and CLO’s.

    In Court of Equity throughout nation borrowers face defaults in which ‘Servicer’ claims they are the ‘owner’ of the mortgage note c/o a SUBSTITUTE TRUSTEE sent in on behalf of the real TRUSTEE. The Substitute TRUSTEE nor the Servicer are the owners of the collateral, and don’t have access to the original documents the owners of the collateral hold and track since 1996/1997 acquring former registration statements in which the ‘mortgage notes were originally purchased’ prior to period of time borrowers were required to be notified. Meanwhile, when mortgage brokers input ‘borrowers’ personal information, the virutal network of FIDELITY, Lawyers Title Services, TDS, LPS/DOCX, eLYNX, MERS, …, reveals the ‘owner’ of the collater’ and the ‘servicer’ and deals are made inside the private network and loans and properties as mortgage notes are traded.

    During a default, Servicer and a Substitute Trustee may claim they are without access to the original documents and are granted by the mortgage note owner’s real TRUSTEE c/o Master Servicer /co Servicer c/o Sub-servicer to affix an unsecured assignment filed with the County Clerk/Recorder’s office and filed with the courts in which the SERVICER c/o REO Lender/Underwriter seeks reclamation of the ADVANCES referred to as bad debt tracked by a third party credit risk manager for the SERVICER c/o which TRUSTEE? Substitute Trustee has to be for the ‘collateral’ inside the ‘trust fund’ must be performing and all non-performing loans liquidated are swapped with performing loans and/or REO properties collecting insurance.

    Why is the courts time wasted in this mechanical process of felonies in which the robo-firms do process falsified documents nationwide c/o SERVICERS including FREDDIE MAC in agreement with David Stern and nationwide servicers including FANNIE MAE v. Ben=-Ezra & Katz, PA.

    FREDDIE caught wants to sell back to Bank of Americas servicing portfolio? Bank of America NA does not want back. Do they have a choice? Will FREDDIE spill the beans and be the first whistle blower?

    Meanwhile, the real TRUSTEES continue to collect funds for the mortgage notes which indeed purchased and are tracked as ‘collateral’ as electronic eNote and collateral resold over and over and they collect their distributions and seek immunity from Frank-Dodd Act as discussed below.

    The Servicers’ asset c/o TRUSTEE c/o Master Servicer collect for TRUSTEE

    ‘promissory note loan revenue’ as governed by the reconstitution agreements affixed to each loan trust as legally binding agreements.

    The mortgage note as collateral as recorded by the TRUSTEE in which PRE-FUNDING was acquired as DEPOSITS by the DEPOSITOR – the pass through agency – as ESCROW on behalf of the SELLER of the ‘mortgage note’.

    The Clearing House Assocaition members track the collateral, remitters, and the borrower without the documents held in the ‘black hole’ private owners of the nationwide network control the ‘collateral’ mortgage notes of the majority of every transaction of the USA collectively since 1995/1996.

    RETAIL Alternative A loans procured by the mortgage brokers during origination were already connected to the pipeline that controlled since 1996/1997 owner of the collateral the mortgage note.

    Each ‘mortgage’ when ESCROW deposited c/o settlement agent, was part of the pipeline the ‘collateral owner’ benefitting from the trades.

    The CREDIT FACILITY 1995/1996 of 11 Banks directly related to Fidelity, TDS, LPS/DOCX, eLynx, MERS, …,

    The Clearing House Owner Banks LISTED 8/8/08:
    Banco Santander
    Bank of America N.A.
    The Bank of New York Mellon
    Bank of Tokyo-Mitsubishi (Union Bank)
    BB&T
    Capital One N.A.
    Citibank N.A.
    Comerica
    Deutsche Bank dba Bankers Trust of California NA
    HSBC (HSBC Bank (US), NA)
    JPMorgan Chase NA
    KeyBank
    PNC
    RBS Citizens
    UBS
    U.S. Bank NA
    Wells Fargo NA

    Payments Company
    Shared Board Seat:

    City National
    Fifth Third Bank
    First Citizens
    M&T

    ‘TCH’ THE CLEARING HOUSE ASSOCIATION (LOBBY GROUP) MEMBERS LISTED ABOVE – THINK – SENT UNSOLICITED LETTER 8/5/2011:

    Aug 5, 2011 — The Clearing House Association submitted an unsolicited letter to the FASB and IASB on TCH’s proposed alternative approach on impairment that seeks to balance well-defined classifications for impaired loans to ensure a consistent approach among financial institutions and to allow for management judgment.

    AND, TCH – THE CLEARING HOUSE ASSOCIATION CLAIMS TO BE A NON-PARTISAN ADVOCACY ORGANIZATION REPRESENTING THE INTEREST OF ITS OWNER BANKS ON A VARIETY OF SYSTEMICALLY IMPORTANT BANKING ISSUES.

    AND ON 8/5/2011 TCH LEADERSHIP LED A COALITION OF FELLOW TRADE ASSOCIATIONS RESPONE TO FEDERAL RESERVE CAPITAL PLANNING ‘NPR’ ADVOCATING FOR … changes to the proposed process; clarifications that would permit firms to make uninterrupted capital distributions, and related substantive requests pertain to the timing and amount of distributions.

    DO YOU AGREE WITH THE LOAN SYNDICATIONS TRADING ASSOCIATIONS’ PROPOSAL TO THE FEDERAL RSERVE, SEC, FDIC, OCC AND OTHER REGULATORS EXPLAINT THE IMPACT OF RISK RETENTION ON THE CLO MARKET AND ARGUING THAT – DUE TO THE INTENT AND CONSTRUCTION OF THE DODD-FRANK RISK RETENTION ‘PLANK’ – CLO’S ARE NOT TO BE SUBJECTED TO THE RISK RETNETION RULES?

    AND, DO YOU AGREE WITH THE LSTA COMMENTS ON RISK RETENTION REQUIREMENTS TO ‘JOINT REGULATORS’? 20 PAGE COMMENT LETTER.

    Should CLO’s Be “Exempt From Dodd-Frank Retention Rule?”?
    Loan Syndications Trading Assocaition “Says YES on 8/1/2011.
    Come on Kristen Haunss make your ‘report’ more interesting. Ask for a vote counter on Bloomberg Businessweek virtual article.

    Collateralized loan obligations (CLO’s) the Loan Syndications Trading Group EXCLAIM in their 20 page letter to joint regulatoros “SHOULD NOT BE SUBJECT TO FRAND-DODD’

    What do you think? CLS’s should or shouldn’t be subject to the risk retention rules proposed by the Dodd-Frank Act?

    Who benefits if the CLO’s and CDO’s are NOT SUBJECT to Frank Dodd Act? The Federal Reserve? Surely not the FDIC and not the US government who insures the collateral sitting inside of the CLO’s and CDO’s in default collateral swapped and moved to Bank of America, N.A.

    The Loan Syndications and Trading Association letter submitted to regulators.

    LSTA wants exemption of all CLO’s hold at least a 5% stake in debt they package or sell.

    LSTA (Loans Syndications Trading Association) includes Wells Fargo, Bank of America, JPM, Chase, Deutsche, Citi, …seeking to leave markets alone or risk a shutdown of business that provides much needed credit to U.S. companies that they claim creates jobs and invests in growth. What growth? What jobs?

    Funny, prior to 2000 plenty of growth and jobs and employment.
    Loans that feed the CDO’s and CLO’s stopped caused September 2008. Does the LSTA speak truth or deceit?

    Big problem. TRUSTEE’s track every mortgage note purchased and every mortgage note sold (leased).

    TRUSTEE’s track via FIDELITY’s nationwide network who, what, when, where, why, and but for the very good reason why Loan Syndications and Trading Association begging Geithner to bless their stakes in CLO’s and CDO’s in which the stated collateral is connected to the PRE-FUNDING of S-3 and S-3/A transactions, trustee by securitizers as aggregator, underwriter as lender’s ESCROW for Retail table funding of securitized loans.

    Whether a tranche or shelf the collateral of the ‘mortgage notes’ sliced and diced placed into CLO’s a ‘type’ of collateralized debt obligation pooled yielding high-yield, high-risk loans, and slice them into securities of varying risk and return. The securities are claimed to be different from ‘other’ securitizations and shouldn’t fall under the definition in Dodd-Frank rules, the Loan Syndications Trading Association says.

    Are the recipients of the ‘pleading’ subject to undue influence? Lack of knowledge? Or do the recipients know that every ‘collateralized’ transactions nested with loan trusts and trust funds used as collateral for the CDO’s and CLO’s each tranche, shelf ‘notes’ are ‘collateral’ already sliced and diced and but for that good reason the logic behind the Frank-Dodd Act which is already how old? And unenforced CLO’s and CDO’s continue to harm the economy and do not create jobs or growth. What jobs? Jobs to ‘sell’ the CDO’s and CLO’s by the long arm reach of brokers who sell certificates for trusts who will be unnamed parties who can’t be sued?

    Loan Syndications Trading Association says:

    “Unlike an “originate to distribute” model, in which lenders make loans and securitize them in order to remove them from their balance sheet, these CLO’s are a third-party purchaser that exist only to buy loans in the open market as an investment according to the LSTA.

    Managers of these funds achieve the ‘bulk’ of their compensation ONLY IF THE CLO PERFORMS as expected. (Managers are the UNDERWRITERS) who get upfront commissions for registering CLO’s and CDO’s.

    If “INVESTORS in the CLO’s do not receive their interest payments, mangers don’t receive most of their fees, according to the letter.

    You can a liken this to 2009 when the largest originator of non-conforming mortgage brokered products incorporated managers of storefronts into the stock model of officers, and include ad-hoc by recommendation other mortgage broker affiliates while the market is depressed they are receiving stock as unearned compensation to stick it out.

    CLO’s are a type of collateralized debt obligation. (What’s the collateral? Your mortgage note that will generate ‘revenue’ from ‘somebody’ in perpetuity as loan revenue from a performing loan or while serviced as a nonperforming loan until debt as collateral can be recycled as an REO property.

    Membership Profile of LSTA on Google

    List 8/8/08 of Full Members as Full Dealers
    Bank of America
    Bank of Ireland (TDS)
    Barclays Capital
    BMO Nesbitt Burns
    BNP Paribas Group
    Calyon (2005 4 IPO’s Cendant dba PHH, Realogy, TRG, Intrawest)
    Cantor Fitzgerald Securities
    Citadel Securities
    Citigroup
    Credit Suisse (CS First Boston)
    Deutsche Bank Trust Co (dba Bankers Trust California, N.A.)
    FBR Capital Markets
    Fieldstone Capital
    Gleacher & Company Securities
    Goldman Sachs & Co
    Jefferies High Yield
    JP Morgan Chase (Chase Manhattan Mortgage & US TRUST CO)
    Knight Libertas LLC
    LaBranch
    Macquarie Bank LTD
    Mortgan Stanley
    Oppenheimer & Co. Inc.
    R.W. Pressprich & Co
    Santander
    Scotia Capital
    Societe Generale
    TD Securities (USA) LLC
    UBS Securities LLC
    US Bank
    Wells Fargo

    See: Associate Members’s and Associate Institution and Full Institutions

    SEE FULL OTHER:
    Bank of Tokyo-Mitsubishi UFJ,
    GE Corporate Financial Services,
    HSBC,
    Mizuho Corporate Bank, Ltd.,
    PNC Capital Markets,
    RBC Captial Markets,
    Intesa SanPaolo

    SEE AFFILIATE MEMBERS LAW FIRMS & ASSOCIATE’S including
    WELLS FARGO FOOTHILL
    REED SMITH LLP
    SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
    SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
    TROUTMAN SANDERS, LLP
    WEIL, GOTSHAL & MANGES LLP
    WHITE & CASE LLP
    Lehman Commercial Paper, Inc.
    AXA
    Black Rock ‘ Merrilly Lynch
    The Carlyle Group
    CIT
    First Trust
    Capital One, NA,
    The Royal Bank of Scotland,
    Regions Bank,
    M&T Bank,
    Branch Bank & Trust BBT),
    Sun Trust
    TowerBrook Capital
    IMPCO Advisors LP
    PRUDENTIAL
    NEW YORK LIFE INSURANCE CO
    MFS Investment Management
    PRINCETON ADVISORY
    STATE STREET
    T. Rowe Price
    Key Bank

  7. TIMELY.

    S&P is SPOKESGROUP for ‘Clearing House Association’ lobbyist group SpokeLawyerGroup Sullivan & Cromwell.

    S&P taking down US AAA rating will show President Obama they mean business. Now clear what President Obama was ‘crafting’ for Standard & Poor’s Leveraged Commentary & Data (“LCD”) SPOKESGROUP for The 4 Trillion is what S&P wanted to keep AAA and are prooving to President Obama the ‘CREDIT FACILITY of 20 BANKS’ of the USA FEDERAL RESERVE insured by FDIC the 9 national associations and 2 federal associations will fail and be carried by the taxpayers.

    Why could President Obama and Speaker of the House not speak outloud about the conflicts. The current residents of the United States have the right to know the truth. For the USA will not be held hostage to financial terrorists who’ve inflicted upon the nation weapons of mass destruction harming economy, third element of national security with their ABS, MBS, RMBS, CDO’s, CLO’s BOMBS owning the collateral sold to FREDDIE & FANNIE, TRACKED INSIDE THE
    “CLOUD” OWNED BY the CLEARING HOUSE ASSOCIATION’s ‘CREDIT FACILITY’ of 20 BANK TRUSTEES BENEFACTORS of Fidelity’s TD Services, & LPS/DOCX, ….

  8. S&P/and the LSTA

    Loan Syndications and Trading Association
    Internet Website Agreement

    This Internet Website Agreement (the “LSTA User Agreement”) is between you and the Loan Syndications and Trading Association, Inc. (the “LSTA”) with a principal place of business at 366 Madison Avenue, 15th Floor, New York, New York 10017. The LSTA’s telephone number is 212-880-3000; its Webmaster, Christine Ramos.

    Board of Directors OF LSTA

    -Chairman INVESCO
    -Highbridge
    -Barclays Capital
    -GE Capital
    -Octagon Credit Investors, LLC
    -Silver Point Capital
    -Fidelity
    -Deutsche Bank
    -JP Morgan Chase
    -Blackrock
    -Sankaty
    -Bank of America Merrilly Lynch
    -Citigroup
    -ING.
    -Goldman Sachs
    -Morgan Stanley
    -Credit Suisse
    -Halcyon
    -Eaton Vance

    Clearing House Payments Company, an organization owned by the same banks, was established in New Yor for the purpose of processing transactions among banks major offices in New York, Illinois, North Carolina and elsewhere.

    In September 2009, the Clearing House joined a lawsuit in support of the Federal Reserve after a federal court in New York ruled against the Fed. As reported by Bloomberg News under the Freedom of Information Act, the lawsuit sought records showing where the Fed had lent $2 trillion of taxpayer funds during the bank bailout of the financial crisis of 2008.

    The Clearing House has filed an appeal before the United States Supreme Court on October 26, 2010.As of March 2011 the case remains on appeal.

    The Clearing House was also sued by the State of New York in Andrew Cuomo v. the Clearing House Association, LLC to determine whether the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) had the authority to preempt a state’s right to enforce its own fair lending laws against national banks.

    A 5-4 decision by the Supreme Court overturned previous lower court decisions that had ruled in favor of the Clearing House and the OCC – CONGRESS enforces vistorial powers of OCC overstepping their limited powers preventing enforcement of laws.

  9. On No@!!@ Geitner renewed UGGGGGGGG!!!!!
    Example of undue influence
    Clearing House Association LLC (Lobby group)
    Letter to Financial Stablity Oversight Council

    The Clearing House Members are the gang who were allowed to harm the economy and benefitted from TARP.

    2/25/2011
    via Electronic Delivery

    Financial Stability Oversight Council
    c/o United States Department of the Treasury
    Office of Domestic Finance
    1500 Pennsylvania Avenue, N.W.
    Washington, D.C. 20220

    Comments from the LOBBYING GROUP

    RE: Notice of Proposed Rulemaking Regarding Authority to Require
    Supervision and Regulation of Certain Nonbank Financial Companies

    Dear Sir or Madam:

    The Clearing House Association L.L.C.
    (“The Clearing House”), (1) an association of major commercial banks, appreciates the opportunity to provide comments on the Financial Stability Oversight Council (the “Council”) in response to its Notice of Proposed Rulemaking (the “NPR”) regarding the Council’s authority under Section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) (2) to designate certain nonbank financial companies (“NBFC’s”) as sysstemically important to require enhanced supervision of such NBFCs. We previously submitted comments in response to Council’s Advance Notice of Proposed Rulemaking (the “ANPR”) regarding the same subject.(3) We appreciate the opportunity to reiterate several observations and suggestions from our ANPR comment letter and to comment on the “analytical framework” (4) set forth in the NPR. We also respectfully suggest that the Council, as it proceeds to designate appropriate NBFCs as promptly as practicable, consult with

    1 Established in 1853, The Clearing House is the nation’s oldest banking association and payments company. It is owned by the world’s largest commercial banks, which collectively employ 1.4 million people in the United States and hold more than half of all U.S. deposits. The Clearing House Association L.L.C. is a nonpartisan advocacy organization representing—through regulatory comment letters, amicus briefs and white papers—the interests of its owner banks on a variety of systemically important banking issues. Its affiliate, The Clearing House Payments
    Company L.L.C., provides payment, clearing and settlement services to its member banks and other financial institutions, clearing almost $2 trillion daily and representing nearly half of the automated‐clearing‐house, fundstransfer and check‐image payments made in the U.S. See The Clearing House’s web page at
    http://www.theclearinghouse.org for additional information.

    2 Pub. L. No. 111‐203, § 113, 124 Stat. 1620 (2010). Section and title numbers refer to corresponding portions of the Act in the form in which it was enacted or as proposed in the NPR, as appropriate, unless the context otherwise requires.

    3 See Letter from The Clearing House to the Council dated November 5, 2010 (our “ANPR comment letter”),
    available at
    theclearinghouse. org reference /comment_letters / 069518 . php

    4 See 76 Fed. Reg. 4560.

    Page 2

    financial industry participants in the development of emerging analytic models and set forth its reasoning for any designation explicitly and publicly. Finally, we support the view that designating an NBFC as systemically important does not carry with it implied government support or “too‐big‐to‐fail” status.

    I. Designation of Systemically Important NBFCs
    The judicious exercise of the Council’s designation authority is a critical pillar of the systemic regulatory architecture established under the Act. This task is also very challenging, as there are neither one‐size‐fits‐all definitions of systemic importance nor objective standards that can be applied in all cases. As we described in more detail in our ANPR comment letter,
    the Clearing House believes that the Council’s designation authority should generally be exercised subject to the considerations set forth, in part, below. As a general observation, we believe that the suggested analytical framework in the NPR for evaluating the statutory factors under Section 113 is largely consistent with the basic approach we espoused in our ANPR
    comment letter, particularly with respect to several of the six broad categories outlined in the preamble to the proposed rule.
    A. Size, Activities and Interconnectedness
    We strongly concur that an NBFC’s size is an important—but neither exclusive nor threshold—consideration, as contemplated under the first broad category in the NPR framework.5 We also agree that the Council should consider, in addition to size, an institution’s “interconnectedness,” as contemplated under the third broad category in the NPR framework.6 As we noted in our ANPR comment letter, an assessment based on these core criteria should be supplemented by other important factors, such as the nature, scope, scale, concentration, and mix of an NBFC’s activities.
    B. Dependency The Council should also consider the closely related concept of “dependency,” which, in turn, is similar to the second of the six proposed broad categories in the NPR framework;
    namely, a “lack of substitutes for the financial services and products the company provides.”7 However, by “dependency” we refer to a somewhat broader concept: namely, that the risk that the material financial distress of a company, or the abrupt cessation of a critical activity or function that it performs, would reasonably be expected to trigger truly systemic consequences
    arising out of either (i) materially adverse effects on many of the company’s counterparties, which effects would have a deleterious secondary impact on an important market, or (ii) an
    inability to replicate readily an activity or function performed by the company and critical to the

    5 Ibid.
    6 Ibid.
    7 Ibid.

    Financial Stability Oversight Council ‐3‐ February 25, 2011
    financial system. We urge the Council to consider not solely the latter but both of these aspects of dependency in order to analyze systemic importance comprehensively.

    C. The NPR framework; consideration of pre‐existing regulation
    The Clearing House appreciates that the analytical framework set forth in the preamble to the proposed rule focuses on size, substitutability, and interconnectedness (the “first group”) as the criteria that “seek to assess the potential for spillovers from a firm’s distress to the broader financial system or real economy”.8 The three other enumerated categories— “leverage, iquidity risk and maturity mismatch, and existing regulatory scrutiny” (the “second
    group”)—are, in our view, correctly described as criteria that “seek to assess how vulnerable a company is to financial distress.”9 We submit that the categories in the second group are more
    likely to aid the Council in determining the probability, as opposed to the systemic effects, of an NBFC’s failure. Therefore, we believe that, while it is proper to consider all six categories listed
    in the preamble in an evaluation of the systemic importance of an NBFC, the first group should be at the core of the designation framework. Subject to the caveat below regarding prior
    regulation, the second group should be used to inform the conclusions drawn based on the first group. For example, the financial distress or failure of an NBFC would not necessarily have any systemic ramifications if it is small, its distress or failure does not affect other entities, and substitutes for the financial services and products that it provides are readily available.
    Further, as we discussed in our ANPR comment letter, whether a company is already subject to prudential financial regulation is appropriate in determining both the degree to
    which an already‐designated company should be regulated for systemic risk and the nature of such systemic regulation, not whether a company should be designated as systemically
    significant in the first place. We submit that a designation of systemic importance should not be influenced by either the manner or extent of a company’s regulation, except possibly to the
    extent that the company is a subsidiary of a systemically important bank holding company or nonbank financial company that is already subject to the enhanced prudential supervision
    provisions of Title I. We accept that Section 113 requires the Council to consider prior regulation in making a determination of systemic importance. However, we believe that this
    factor should not be given too much weight in the Council’s considerations, in part because Section 113 does not state how prior regulation should influence systemic‐importance
    designation. In particular, Section 113 does not require that more regulated companies be less likely to be designated as systemically significant.

    D. Resolution under the orderly liquidation authority
    As detailed in our ANPR comment letter, we believe that the systemic risk posed by an
    institution is most closely correlated to whether, were the institution to experience material
    financial distress, there would be a reasonable prospect that it would be resolved under the

    8 Ibid. (emphasis added).
    9 Ibid. (emphasis added).

    Financial Stability Oversight Council ‐4‐ February 25, 2011

    orderly‐liquidation‐authority provisions in Title II (the “OLA”). This test of an institution’s systemic importance correlates directly to the need for it to be subject to heightened systemic regulation. Accordingly, we believe that the list of systemically important NBFCs should be, at a minimum, sufficiently expansive to capture all institutions that have a reasonable prospect of
    being subject to the OLA. Of course, the enhanced prudential regulation that applies to NBFCs that are designated as systemically important significantly reduces the chances of a systemically significant firm failure requiring OLA resolution, while the absence of such enhanced prudential
    regulation for appropriate NBFCs would heighten the risk of a systemic failure.

    E. Determinations of systemic importance should not depend on charter or structure

    Finally, we reiterate that the systemic importance of any institution is fundamentally a function of what the institution actually does, as opposed to its nominal legal form or business model. We urge the Council, in exercising its designation authority, to focus on the activities in which an NBFC engages and not to determine in advance whether any particular business model or charter poses, or is likely or unlikely to pose, systemic risk. II. Scope of Designations; Timing and Process Considerations

    A. Breadth of systemic‐importance designation
    We continue to consider it critically important to define systemic importance with sufficient breadth to ensure that the full range of the Act’s supervisory tools are brought to
    bear on the identification and regulation of material risks to the stability of the financial system. Section 113 requires the Council to monitor for new types of systemic risk that may emerge
    from any area of the financial system, including areas that may not currently be adequately regulated. To limit the Council’s designations to only those types of NBFCs that have previously
    manifested systemic importance would be to embrace a regulatory strategy devoted to “fighting the last war.”

    Moreover, failing to designate an appropriately broad range of NBFCs would further encourage the expansion of the so‐called “shadow banking system,” in which nonbanks provide
    many of the same financial products as those offered by regulated banking organizations but do so largely outside the purview of the financial‐regulatory apparatus and often with a high
    degree of leverage and opacity.

    B. Prompt designation
    We recommend that, to the maximum extent feasible, systemically important NBFCs be identified as promptly as practicable and, as other NBFCs emerge as systemically important, on
    an ongoing basis. Doing so would (a) reduce systemic risk more quickly, (b) allow creditors and counterparties to appropriately consider the legal and economic implications of the OLA,
    (c) create a broader base over which to spread potential resolution costs and thereby minimize

    Financial Stability Oversight Council ‐5‐ February 25, 2011
    disruption of the financial system and (d) create a level playing field among systemically important institutions.

    III. Prudential Standards Should Be Tailored to Specific Institutions
    Section 115 authorizes the Council to make recommendations to the Board of Governors of the Federal Reserve System concerning the establishment and refinement of the prudential standards and requirements applicable to designated NBFCs and large, interconnected bank holding companies In so doing, the Act specifically authorizes the Council to “differentiate among companies … on an individual basis.

    ”10 We strongly encourage the Council to avail itself of this authority to distinguish among institutions to help ensure that,
    similar to the designation process itself, the regulation of systemically important NBFCs and covered bank holding companies is not conducted on a one‐size‐fits‐all basis.

    IV. Ongoing Development of a Specific Framework for Designation
    We understand that the details of the framework for designation and enhanced regulation of systemically important NBFCs are still under development by the Council and other regulators. Although the NPR, and in particular the analytical framework in the preamble
    to the proposed rule, are a step forward in that process, the NPR does not set out any specific tools, models or other concrete designation metrics. We commend the Council’s desire to
    avoid narrow or rigid approaches to designation of systemic importance. Nevertheless, we recognize that analytical models must continue to be developed for systemic‐importance analysis, however discretionary their use by the Council may be. While, as set forth above, we support prompt designation of appropriate NBFCs, we respectfully ask that, as the Council
    develops these models, it consult not only with the academic community, but also with all stakeholders and participants in the financial industry. Furthermore, as the Council designates
    NBFCs for enhanced regulation, it should explain its reasoning explicitly and publicly. Doing so would enhance the Council’s developing reputation for transparency and equitable treatment,
    increase the market’s confidence in regulatory decisions and decrease uncertainty, demonstrate that the regulatory structure created by the Act is serving its intended purpose,
    and thereby help to increase systemic stability.

    V. Systemic‐Importance Designation Does Not Imply Government Support Some state that the Council should not designate a broad set of NBFCs as systemically important because of the false perception that such designation confers not only a degree of
    implied government support, but also “too‐big‐to‐fail” status. We understand that such sentiments are not expressed by the Council in the NPR or elsewhere. Nonetheless, we want to take this opportunity to reiterate that the express provisions of the Act require that resolution under the OLA does not confer on any firm any benefit that might be described as a “bail‐out.”
    We further submit that, on the contrary, a broad conception of systemic importance would 10 Sec. 115(a)(2)(A).
    Financial Stability Oversight Council

    Page ‐6‐ February 25, 2011

    ensure an equitable regulatory framework that would help prevent systemically dangerous firm failures and eliminate regulatory arbitrage.

    As a threshold matter, the use of the OLA is subject to a determination of the broad systemic risk that a company’s potential failure poses. Absent such a finding, the OLA cannot
    be invoked, and the company, whether or not designated as systemically important under Section 113, can only be resolved under standard insolvency law. Moreover, even in those
    instances when OLA procedures are used, nothing resembling a bail‐out would ensue. On the contrary, Sections 204 and 206, as well as the Federal Deposit Insurance Corporation’s interim
    final rule implementing the OLA,11 make clear that the losses that result from a systemically important firm’s failure would be borne by its counterparties, shareholders and creditors. To the extent that any expenditures are incurred in connection with an OLA resolution, they will be recouped from assessments on failed companies and systemically important firms, as
    applicable.

    12 Therefore, rather than laying the groundwork for a future bail‐out, a designation of systemic importance ensures that any NBFC that poses sweeping risk is properly regulated in
    advance of a potential failure to prevent the adverse externalities that would otherwise adhere to an unregulated, but still systemically important, NBFC.

    VI. Conclusion
    The Council should base its designations of NBFCs as systemically important primarily on a firm’s size, interconnectedness, dependency and reasonable prospects of ever being
    subjected to the OLA’s special resolution provisions. These factors, which directly evaluate a firm’s impact on the financial system in the event of distress, should be the core elements of a
    determination of systemic importance, although an evaluation of a firm’s vulnerability to financial distress should be used to inform the designation. The extent to which an NBFC is
    subject to prudential supervision should not be a factor in deciding whether to designate it as systemically important. Decisions regarding systemic designation should be made as promptly
    as practicable. Systemic importance should be defined with sufficient breadth to ensure that the Council best fulfills its statutory mandate. Finally, if the Council develops concrete
    analytical models for systemic designation, it should do so in consultation with all financial industry participants and make public the methodology behind designations of systemically
    important NBFCs.
    * * *
    11 76 Fed. Reg. 4207, implementing 12 C.F.R. Part 380.
    12 See Section 210(o).
    Financial Stability Oversight Council ‐7‐ February 25, 2011
    Thank you for considering the views expressed in this letter. We appreciate the opportunity to share our views and would be happy to discuss any of them further at your convenience. If you have any questions, please contact me at (212) 613‐9812 or
    Mark.Zingale @ TheClearingHouse . org
    or Eli Peterson, Vice President and Regulatory Counsel, at
    (202) 649‐4602 or Eli . Peterson @ TheClearingHouse.org.

    Sincerely,
    Senior Vice President and
    Associate General Counsel
    cc: Hon. Timothy Geithner

    Chairman, Financial Stability Oversight Council, and
    Secretary, Department of the Treasury
    Hon. Ben Bernanke

    Vice Chairman, Financial Stability Oversight Council, and
    Chairman, Federal Reserve Board

    Hon. Sheila Bair
    Chairman
    Federal Deposit Insurance Commission

    Hon. Gary Gensler
    Chairman
    Commodity Futures Trading Commission

    Hon. Mary Schapiro
    Chairman
    Securities and Exchange Commission

    Mr. John Walsh
    Acting Comptroller
    Office of the Comptroller of the Currency

    Mr. Edward DeMarco
    Acting Director
    Federal Housing Finance Agency
    Financial Stability Oversight Council ‐8‐ February 25, 2011

    Hon. Debbie Matz
    Chairman
    National Credit Union Administration

    Mr. John P. Ducrest
    Commissioner
    Louisiana Office of Financial Institutions,
    on behalf of the Conference of State Bank Supervisors

    Ms. Susan E. Voss
    Commissioner
    Iowa Insurance Division,
    on behalf of the National Association of Insurance Commissioners

    Mr. David Massey
    Deputy Administrator
    North Carolina Securities Division,
    on behalf of the North American Securities Administrators Association

    Hon. Austan Goolsbee
    Chairman
    Council of Economic Advisers

    Ms. Karen Shaw Petrou
    Managing Partner
    Federal Financial Analytics, Inc.

    H. Rodgin Cohen, Esq.
    Partner
    Sullivan & Cromwell LLP

    Samuel R. Woodall III, Esq.
    Legislative Counsel
    Sullivan & Cromwell LLP

    The Clearing House Association Advisory Group on Nonbank‐SIFI Designation

    The Clearing House Association Bank Regulatory Committee

    The Clearing House Association Government and Legislative Affairs Committee

    The Clearing House Association CFO Summit Participants
    Paul Saltzman

    Executive Vice President and General Counsel
    Head of The Clearing House Association

  10. Write to your AG and inundate him/her with demands for action. Here is my own letter, sent this morning. Once again, I don’t expect any response with any substance but I’ll be damned if I don’t do everything in my power.

    Dear Attorney General DeWine,

    Thank you for your August 1st e-mail answer. I am afraid, however, that it completely fails to clarify your intentions with respect to the horrendous bank and mortgage fraud committed on this country and your plan of action toward redress, on behalf of the Ohioan people. It is, in fact, so vague that a believer in our American Constitution and sense of justice would feel as justifiably insulted by it as I was. Mr. DeWine: I chose America as my country of adoption and Ohio and my adoptive state. I sincerely hope that neither was a mistake. To a large extent, you have the ability to help me decide how and where I wish my taxes to be spent. You also have the ability to make Ohioans decide how long you will remain in office. Please, do not make us regret our choice.

    Recently, we have read or heard about your efforts toward curtailing Medicaid and Medicare fraud and it is my understanding that your office was able to prosecute a number of individuals and recover over 103 million dollars since taking office. While I congratulate you for it, I am also deeply concerned that your efforts are completely misdirected and amount to little more than a drop in a bucket in today’s economic climate. Mr. DeWine, and with all due respect, Medicaid and Medicare frauds have existed since the implementation of both programs, decades ago. While I do not condone fraud in any shape or form, neither has, to my knowledge, ever brought our country down to its knees as a whole nor caused people to lose jobs, houses, hope and, all too often in the past years, their lives. Neither has ever caused the level of hunger and homelessness recorded in this country since 2006 and… neither has ever resulted in the biggest economic crisis since 1929. Neither has ever caused the dramatic increase in violent crimes we have seen in the past years in Columbus, Cleveland, Cincinnati and other large cities. Neither has ever left people as exposed and destitute.

    As everyone of us, you have read that Attorneys Generals Schneiderman (NY), Harris (CA), Coakley (MA) and a few others have taken a strong stand against the banks, who literally destroyed the entire fabric of our country and of our financial systems and are at the origin of the enormous debt our children and grand children will have to carry and repay for decades to come. When you took office a year ago, we, Ohioans seriously victimized by mortgage banks and servicers abuses (6th state most affected by mortgage fraud and foreclosures), hoped and dreamed that you would follow Richard Cordray’s footsteps and tackle, heads on, the problem with the same crusading spirit as your predecessor and current counterparts. Yet, you have remained remarkably silent on the issue… I cannot find any media article in which you even broached it and I find it extremely worrisome. You e-mail answer to my inquiry remained extremely vague and non-committal as to your investigation and prosecution efforts.

    It has become patently obvious to me, in view of your year-long track record and the lack of any mention on your part of the foreclosure and mortgage crisis, that you do not consider it as the primary –and possibly the exclusive- origin of America’s current financial crisis. Under the circumstances, you make it very difficult for Ohioans not to question your motives and your sincerity.
    Mr. DeWine, America’s is owed over 7 trillion by banks and mortgage servicers in the form of federal, state and county revenues. 7 trillion! I have yet to find statistics and hard numbers concerning the damages caused to Ohio but I would be willing to venture that they exceed 103 millions by a factor of 10, if not even 100.

    As your constituent, I ask that you publicly join the ranks of the above named Attorney General and make the commitment to all Ohioans to investigate and prosecute bank fraud and illegal foreclosures in our state with as much dedication and vigor as Mr. Cordray displayed during. The urgency of the situation demands that you cross party lines, ignore special interests of the large banks settled in our state and fight, purely in the name of justice for all. Now is the time for drastic and unyielding action.
    In your capacity, please take it now. Thank you.

    Respectfully,

    Christine

    —–Original Message—–
    From: Constituent Services
    To: cmarais3@aol.com
    Sent: Mon, Aug 1, 2011 10:55 am
    Subject: General Help

    August 1, 2011

    Dear Christine,
    Thank you for contacting me regarding foreclosure fraud.
    I am committed to protecting Ohio families. I am very concerned about foreclosure fraud and its impact on Ohioans. I am actively looking into appropriate remedies.
    Across the board, the office is working on all fronts to fight consumer fraud. Specifically, I am increasing the office’s focus on criminal prosecutions of consumer fraud.
    Again, thank you for contacting me. If my office can ever be of assistance to you in the future, feel free to contact us.

    Very respectfully yours,

    MIKE DEWINE
    Ohio Attorney General

    —–Original Message—–
    It is my understanding that AGs of all 50 states are currently negotiating a settlement with the banks responsible for the economic crisis through breach of law, fraud, irresponsible lending, misrepresentations, etc. all punishable by law.
    It is also my understanding that the 20 billion mentioned for the past weeks would be subject to immunity and that legal pursuits would not be undertaken against the culpits.
    This is absolutely unacceptable. As a homeowner who was conned into a refinancing by unscrupulous lenders and who suffered for the past three years with fraudulent fees, threats of foreclosure, violation after violation of legal statutes by the servicer, I can attest that 3 years of my life were stolen by the bank.
    Mr. DeVine, I understand that your political career is important to you. Please understand that, without people to elect you, your political career will not survive. You were elcted to defend Ohioans from the abused they were subjected to and to redress the many wrongs committed. I intend to see public servants I elect fulfill their mandate and comply with the description of the position.
    Please do not, under any circumstance, allow a 20 billion settlement (largely insufficient to redress all the wrons mentionned above) be conditional to immunity of banks officers and directors who spent the greater part of the past 15 years enriching themselves at the expense of our middle-class and literally destroyed our contry.
    Thank you in advance.
    =

  11. @Concerned……Thank you for your comment. My loan is an AWL loan and I understand their was no such place of business at the time of the origination of my loan. Recently, BOA and BAC have been transferring my loan around and filing docs with the county records……BOA sent me notice they are now the servicor of my loan and if I didn’t dispute the debt by the end of July that it was clear I owed it….

    Of course I sent a letter of dispute. They send me back one saying they are going to treat my letter as a QWR (which I actually sent BAC a QWR back in Feb. that went unanswered) Odd they want to treat my dispute as a QWR now and ignored the previous one…but of course they have created a paper trail…..Unbelievable the amount of fraud that just continues…..KUDOS to New Your AG!

  12. The Subprime Shakeout: New York AG Schneiderman Comes out Swinging at BofA, BoNY

    ——————————————————————————–
    New York AG Schneiderman Comes out Swinging at BofA, BoNY

    Posted: 05 Aug 2011 09:28 AM PDT

    This is big. Though we’ve seen leading indicators over the last few weeks that New York Attorney General Eric Schneiderman might get involved in the proposed Bank of America settlement over Countrywide bonds, few expected a response that might dynamite the entire deal. But that’s exactly what yesterday’s filing before Judge Kapnick could do.

    Stating that he has both a common law and a statutory interest “in protecting the economic health and well-being of all investors who reside or transact business within the State of New York,” Schneiderman’s petition to intervene takes a stance that’s more aggressive than that of any of the other investor groups asking for a seat at the table. Rather than simply requesting a chance to conduct discovery or questioning the methodology that was used to arrive at the settlement, the AG’s petition seeks to intervene to assert counterclaims against Bank of New York Mellon for persistent fraud, securities fraud and breach of fiduciary duty.

    Did you say F-f-f-fraud? That’s right. The elephant in the room during the putback debates of the last three years has been the specter of fraud. Sure, mortgage bonds are performing abysmally and the underlying loans appears largely defective when investors are able to peek under the hood, but did the banks really knowingly mislead investors or willfully obstruct their efforts to remedy these problems? Schneiderman thinks so. He accuses BoNY of violating:

    Executive Law § 63(12)’s prohibition on persistent fraud or illegality in the conduct of business: the Trustee failed to safeguard the mortgage files entrusted to its care under the Governing Agreements, failed to take any steps to notify affected parties despite its knowledge of violations of representations and warranties, and did so repeatedly across 530 Trusts. (Petition to Intervene at 9)

    By calling out BoNY for failing to enforce investors’ repurchase rights or help investors enforce those rights themselves, the AG has turned a spotlight on the most notoriously uncooperative of the four major RMBS Trustees. Of course, all of the Trustees have engaged in this type of heel-dragging obstructionism to some degree, but many have softened their stances since investors started getting more aggressive in threatening legal action against them. BoNY, in addition to remaining resolute in refusing to aid investors, has now gone further in trying to negotiate a sweetheart deal for Bank of America without allowing all affected investors a chance to participate. This has drawn the ire of the nation’s most outspoken financial cop.

    And lest you think that the NYAG focuses all of his vitriol on BoNY, Schneiderman says that BofA may also be on the hook for its conduct, both before and after the issuance of the relevant securities. The Petition to Intervene states that:

    Countrywide and BoA face liability for persistent illegality in:
    (1) repeatedly breaching representations and warranties concerning loan quality;
    (2) repeatedly failing to provide complete mortgage files as it was required to do under the Governing Agreements; and
    (3) repeatedly acting pursuant to self-interest, rather than
    investors’ interests, in servicing, in violation of the Governing Agreements. (Petition to Intervene at 9)

    Though Countrywide may have been the culprit for breaching reps and warranties in originating these loans, the failure to provide loan files and the failure to service properly post-origination almost certainly implicates the nation’s largest bank. And lest any doubts remain in that regard, the AG’s Petition also provides, “given that BoA negotiated the settlement with BNYM despite BNYM’s obvious conflicts of interest, BoA may be liable for aiding and abetting BNYM’s breach of fiduciary duty.” (Petition at 7) So much for Bank of America’s characterization of these problems as simply “pay[ing] for the things that Countrywide did.”

    As they say on late night infomercials, “but wait, there’s more!” In a step that is perhaps even more controversial than accusing Countrywide’s favorite Trustee of fraud, the AG has blown the cover off of the issue of improper transfer of mortgage loans into RMBS Trusts. This has truly been the third rail of RMBS problems, which few plaintiffs have dared touch, and yet the AG has now seized it with a vice grip.

    In the AG’s Verified Pleading in Intervention (hereinafter referred to as the “Pleading,” and well worth reading), Schneiderman pulls no punches in calling the participating banks to task over improper mortgage transfers. First, he notes that the Trustee had a duty to ensure proper transfer of loans from Countrywide to the Trust. (Pleading ¶23). Next, he states that, “the ultimate failure of Countrywide to transfer complete mortgage loan documentation to the Trusts hampered the Trusts’ ability to foreclose on delinquent mortgages, thereby impairing the value of the notes secured by those mortgages. These circumstances apparently triggered widespread fraud, including BoA’s fabrication of missing documentation.” (Id.) Now that’s calling a spade a spade, in probably the most concise summary of the robosigning crisis that I’ve seen.

    The AG goes on to note that, since BoNY issued numerous “exception reports” detailing loan documentation deficiencies, it knew of these problems and yet failed to notify investors that the loans underlying their investments and their rights to foreclose were impaired. In so doing, the Trustee failed to comply with the “prudent man” standard to which it is subject under New York law. (Pleading ¶¶28-29)

    The AG raises all of this in an effort to show that BoNY was operating under serious conflicts of interest, calling into question the fairness of the proposed settlement. Namely, while the Trustee had a duty to negotiate the settlement in the best interests of investors, it could not do so because it stood to receive “direct financial benefits” from the deal in the form of indemnification against claims of misconduct. (Petition ¶¶15-16) And though Countrywide had already agreed to indemnify the Trustee against many such claims, Schneiderman states that, “Countrywide has inadequate resources” to provide such indemnification, leading BoNY to seek and obtain a side-letter agreement from BofA expressly guaranteeing the indemnification obligations of Countrywide and expanding that indemnity to cover BoNY’s conduct in negotiating and implementing the settlement. (Petition ¶16) That can’t be good for BofA’s arguments that it is not Countrywide’s successor-in-interest.

    I applaud the NYAG for having the courage to call this conflict as he sees it, and not allowing this deal to derail his separate investigations or succumbing to the political pressure to water down his allegations or bypass “third rail” issues. Whether Judge Kapnick will ultimately permit the AG to intervene is another question, but at the very least, this filing raises some uncomfortable issues for the banks involved and provides the investors seeking to challenge the deal with some much-needed backup. In addition, Schneiderman has taken pressure off of the investors who have not yet opted to challenge the accord, by purporting to represent their interests and speak on their behalf. In that regard, he notes that, “[m]any of these investors have not intervened in this litigation and, indeed, may not even be aware of it.” (Pleading ¶12).

    As for the investors who are speaking up, many could take a lesson from the no-nonsense language Schneiderman uses in challenging the settlement. Rather than dancing around the issue of the fairness of the deal and politely asking for more information, the AG has reached a firm conclusion based on the information the Trustee has already made available: “THE PROPOSED SETTLEMENT IS UNFAIR AND INADEQUATE.” (Pleading at II.A) Tell us how you really feel.

    [Author’s Note: Though the proposed BofA settlement is certainly a landmark legal proceeding, there is plenty going on in the world of RMBS litigation aside from this case. While I have been repeatedly waylaid in my efforts to turn to these issues by successive major developments in the BofA case, I promise a roundup of recent RMBS legal action in the near future. Stay tuned…]

  13. DELAWARE AG JOINS NY AG IN FRAUD FIGHT!!! THIS IS GOOD!!!

    http://www.huffingtonpost.com/2011/08/05/beau-biden-delaware-bank-of-america_n_919865.html

    “Countrywide Financial, the nation’s largest mortgage lender when purchased by BofA in 2008, failed to properly pool loan documents needed for the creation of mortgage securities, and BNY Mellon effectively looked the other way in its role as overseer of these instruments, Schneiderman said in court documents. This “apparently triggered widespread fraud,” he said.

    BNY Mellon should have known the mortgage securities were improperly created because the evidence was “abundant,” Schneiderman said, citing the bank’s own documents, news coverage of the issue and foreclosure actions brought on BNY Mellon’s behalf.

    In addition, Schneiderman accused Bank of America of fabricating the missing documents when it came to foreclosing on homeowners who defaulted on their loans.

    If the settlement is not finalized, Bank of America’s future mortgage-related losses could be “substantially different” than what the lender has set aside and already braced investors for, the bank said in its filing.”

  14. Cubed2k,

    I mentioned Pelosi but I could as well have mentioned Gingrich, Boehner or any others, regardless which side they are on: it is abolutely obvious that Congress stopped being on the side of middle class and America as a whole before the S & L broke out (how many of them were found to be not-so-clean at the time?) and has kept up with greed, greed and more greed. We need to go back to the old system: prove yourself, show what you have accomplished and can do (aside from dirty-campaigning) and let us decide whether you are public servant material. Our money, our Congress. And above all, know that the minute you lie, you’re out the door.

    We haven’t done that for too long. They don’t take us seriously any longer. Our fault.

  15. Christine,

    was on the road this morning listening to Rush Limbaugh. He airs a sound bite of Nancy Peloshi saying “for every dollar the US Gov gives to unemployed people for unemployement benefit, we get two dollars back in economic growth”.

    I heard it on the radio.

    Rush says with that line of thinking then everybody should be unemployed and not working and the economy will double. This will be the fastest recovery on record.

    I’d like to retire now, so I’m gonna vote for Nancy!!!!!!!!!!!!!!!!!

    How does somebody like this get elected????????????????

  16. I’m happy to inform you guys that I personally provided more fodder for the Schneiderman investigation into the CountryWide mortgages that are in various different REMIC trusts that all use NY Trust law.

    I heard in January that his office was starting to look at the securitization so I put in a VERY detailed comment via the NY AG’s website. I received a confirmation of their intention to forward my email to a mortgage investigation unit within the NY AG’s office. I also later got a letter from the servicer on my loan indicating they would be replying to a request for information. At that time, the only request would have been one from the NY AG.

    While my mortgage is on property in CA, the Deed of Trust AND the NOTE both identify my “LENDER” as “America’s Wholesale Lender” which is then immediately described in the DOT as being a CORPORATION under the laws of NY.

    I informed the NY AG’s office that the mortgage was placed in 2005. NO SUCH CORPORATION EXISTED AT THAT TIME IN NEW YORK STATE.

    CountryWide and now Bend Over (along with various REMIC Trusts’ Trustees such as BNY Mellon and Deutsche), attempt to claim these mortgages via a ‘D/B/A’ that is not in evidence whatsoever on the documents or they try to claim them via a MERS assignment. Thousands of other like mortgages were placed from 2002 – 2007. Neither the ‘d/b/a’ nor the ‘MERS’ tactic is legally valid.

    Neil Garfield has had a couple of complete posts about the ‘AWL Corporation’ loans being ‘WILD’. There is no way to get a valid satisfaction or any other type of legal document on behalf of that ‘AWL Corporation’.

    A DIFFERENT group did file to create an “America’s Wholesale Lender Inc” in the state of NY on 12-16-2008.

    These mortgages should NEVER have even gotten written with AWL Corp as the ‘LENDER’. I question if there is also possible action against the Title Company, and the initial Trustee on the mortgage. They should have realized the loan docs were not valid because of the lender that was named.

    OH, and anyone else with an “AWL Corp” loan:
    1) Put in a report on your mortgage with the FTC too. They are taking the reports.
    2) The NY AG may want info on any of the Trusts that supposedly had these loans in their ‘pool’. Mine is SUPPOSEDLY in CWABS 2005-10.

    Yeah, right, Debra Lyman, that assignment is SO much a piece of CRAP!

  17. No problem carie, at least I didn’t make them transvestites!

  18. Don’t despair, Jeff. Home relief is coming but there is a method to the undoing of this insanity, the same way that there was a method to the making of this insanity. Our turn will undoubtedly come. I have absolutely no doubt about it. We shall all be avenged. In the meantime, let’s clean up Congress, starting with all those heavily bought out and who shamelessly enriched themselves while allegedly serving the people and being paid quite well already to do it. I understand that Nancy Pelosi made an absolute killing and is the richest among them.

    Wonderful:the Great American Clean Up of 2011!

  19. Wow…yucky visual…thanks for that.

  20. Schneiderman = AG with a brass set swinging from knee to knee.

    Gotta believe Geithner and company are figuring out which penthouse to have Schneiderman wake up in with white powder all over his face and a hooker or two under the sheets. Male hookers. Boys. Underaged illegal imigrant al qaeda boys from Pakistan.

    The cost of doing nothing….Priceless.

  21. “Mr. Schneiderman’s contention that Bank of New York breached its duties to investors is significant because a trustee that agrees to oversee loan pools like those issued by Countrywide must abide by the rules governing the securities. Such rules require that lenders deliver to the trust complete and original mortgage documents for each loan in a pool, for example, and require that the trustee notify investors when such loan documents are missing.”

    Yup…no “complete and original mortgage documents” delivered BECAUSE of FRAUD at origination…not real mortgages…no real mortgages to deliver…figure it out, Schneiderman…

  22. Where is the homeowner relief?

  23. It’s about time!!!!

  24. This is where the SEC intentionally dropped the ball, along with the OCC and Office of Thrift. Should I say more. With this deliberate intention to allow this type of practice to go on, it certainly enhanced Wall Street’s ability to deceive the investor.

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