Federal Reserve Vs. Treasury Dept. Fight Over Shaming the Banks

STANDARD CHARTERED accused of conducting secret money laundering transactions with Iran.
“Mr Lawsky has accused the bank, which employs nearly 90,000 people worldwide, of breaking money-laundering rules and processing $250bn of transactions on behalf of Iranian clients. The regulator has given the bank until next week to “demonstrate why [the bank’s] license to operate in the state of New York should not be revoked”.
Apparently some public officials are expressing their outrage and going off the reservation. In this case of money laundering the official went around the Federal Reserve and used his position to issue a report about the illegal activities — laundering money for terrorists — about $160 billion worth, which is a drop in the bucket when you compare it to HSBC and other banks who reportedly engaged in the same activities on behalf of drug cartels. It was Benjamin Lawsky, head of the recently created New York State Department of Financial Services
The Federal Reserve is issued off because they were in “delicate negotiations” with the offender, following a policy of limiting the “shaming” of Banks that violate laws and public policy and in this case, potentially treason.
The official in this case decided that shaming and exposing Bank practices to the light of day was exactly what was needed and I agree with him. Hopefully more regulators will issue such reports regarding the massive mortgage fraud perpetrated upon the world economies. This official was obviously not feeling bound by the veil of secrecy that served as policy.
Millions of homeowners have been foreclosed, their lives ruined, and their neighbors lived ruined by unemployment and the blight of rows upon rows of vacant homes. Many of these homes homes were promptly abandoned by the Banks after foreclosure. Banks are creatures of the societies that charter them and allow them to exist. When Banks go errant acting against the interests of the society that allows them to exist they must be held with their feet to the fire.
More than 6 million homes foreclosed and it looks like another 10 million will follow unless we stop this charade. This was a direct strike against the entire society the government. It created world chaos and nearly destroyed our ability to recover and certainly delayed a recovery for decades.
 This was accomplished by fraud. Investor-lenders and homeowners were fooled into signing papers that served only as vehicles for the Banks to act as though they were principals in a transaction that never existed — while at the same time acting as intermediaries in the real transaction, leaving the borrower and lender high and dry.
While the illegal, wrongful and perhaps treasonous behavior of the Banks is allowed to continue, in order to maintain public confidence in a corrupt system, countless lives have been lost to suicide and depression. Maybe more officials will be encouraged to beat a new path to the criminals who ran these Banks and their societies into the ground.
Don’t talk to me about “delicate negotiations” when the is being used to create loss of life and mayhem across the world. I don’t want to hear about public confidence relating to the housing market and Foreclosures when practically none of the Foreclosures were ever legal, proper or moral. The fact that ordinary people cannot decipher the real fraud is no excuse for keeping them in the dark and failing to act on such behavior with law enforcement, regulation and legislation.
These banks have turned into wild beasts defeating every step we take domestically and in foreign policy. They must be stopped — and this report is a good place to start. Creditors should be paid once on each obligation. Allowing intermediaries who are supposed to facilitate transfers of  money to become “temporary principals” is a dangerous precedent. It invites moral hazard and plays on the unfortunate view that business people can reorganize their debt and other obligations while individuals are forced through hoops and ladders.
While the investor lenders thought they were covered by proper behavior in handling the vast quantities of money they handed over to the banks, their agreements were routinely ignored as the money was subjected to fast talking titans of Wall Street who took some of that money for themselves. While the investors thought they were properly protected by the documentation of loans, insurance and credit default swaps, the Banks left them buck naked with no documentation to support their ownership of specific loans and no proceeds distributed from insurance, credit defaults swaps and federal bailout.
The Banks committed the further fraud of “borrowing” the loss of the investor lenders and using it as an excuse for the bailout — a fact now corroborated in public reports.
So where is your outrage? When will you step up t the allot box, march in the streets and write a dozen letters to law enforcement and legislators to put the pressure, the accountability and the light of day on a sector that we let become half of our reported gross domestic product trading paper on on existent transactions. All I ask is the truth. What about you?

The Fed And The Treasury Are Furious That A No-Name NY Regulator Went Around Them And Attacked Standard Chartered
http://www.businessinsider.com/lawskys-go-it-alone-attack-on-standard-chartered-angers-us-regulators-2012-8

Banks Pushing Homeowners Over Foreclosure Cliff

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Editor’s Comment:

Whether it is force-placed insurance or any other device available, banks and servicers are pushing homeowners, luring homeowners and tricking homeowners into foreclosures. It is the only way they can put distance between them and the collosal corruption of title, the fact that strangers are foreclosing on homes, and claims of predatory, deceptive and fraudulent lending practices.

Most of those five million homes belong back in the hands of the people who lost them in fake foreclosures. And that day is coming.

Foreclosures are good but short- sales are better as those in the real estate Market will tell you. Either way it has someone other than the bank or servicer signing the deed to the ” buyer” and eventually it will all come tumbling down. But what Banks and servicers are betting is that the more chaotic and confused the situation the less likely the blame will fall on them.

Watch out Mr. Banker, you haven’t seen our plan to hold you accountable. You might think you have control of the narrative but that is going to change because the real power is held by the people. Go read the constitution — especially the 9th Amendment.

Look Who’s Pushing Homeowners Off the Foreclosure Cliff

By the Editors

One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.

Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.

The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.

All mortgages require homeowners to maintain insurance on their property. Most mortgages also allow the lender to purchase insurance for the home and “force-place” it if a policy lapses or is deemed insufficient. These standard provisions are meant to protect the lender’s collateral — the property — if a calamity occurs.

High-Priced Policies

Here’s how it generally works: Banks and their mortgage servicers strike arrangements — often exclusive — with insurance companies in which the banks agree to buy high-priced policies on behalf of homeowners whose coverage has lapsed. The bank advances the premium to the insurer, and the insurer pays the bank a commission, which is priced into the premium. (Insurers say the commissions compensate banks for expenses like “advancing premiums, billing and collections.”) The homeowner is then billed for the premium, commissions and all.

It’s a lucrative business. Premiums on force-placed insurance exceeded $5.5 billion in 2010, according to the Center for Economic Justice, a group that advocates on behalf of low- income consumers. An investigation by Benjamin Lawsky, who heads New York State’s Department of Financial Services, has found nearly 15 percent of the premiums flow back to the banks.

It doesn’t end there. Lenders often get an additional cut of the profits by reinsuring the force-placed policy through the bank’s insurance subsidiary. That puts the lender in the conflicted position of requiring insurance to protect its collateral but with a financial incentive to never pay out a claim.

Both New York and California regulators have found the loss ratio on these policies — the percentage of premiums paid on claims — to be significantly lower than what insurers told the state they expected to pay out, suggesting that premiums are too high. For instance, most insurers estimate a loss ratio of 55 percent, meaning they’ll have to pay out about 55 cents on the dollar. But actual loss ratios have averaged about 20 percent over the last six years.

It’s worth noting that force-placed policies often provide less protection than cheaper policies available on the open market, a fact often not clearly disclosed. The policies generally protect the lender’s financial interest, not the homeowner’s. If a fire wipes out a house, most force-placed policies would pay only to repair the structure and nothing else.

Lack of Clarity

Homeowners can obviously avoid force-placed insurance by keeping their coverage current. Banks are required to remove the insurance as soon as a homeowner offers proof of other coverage. But the system, as the New York state investigation and countless lawsuits have demonstrated, is defined by a woeful lack of clarity, so much so that Fannie Mae has issued a directive to loan servicers to lower insurance costs and speed up removal times. And it said it would no longer reimburse commissions. The recent settlement with five financial firms over foreclosure abuses also requires banks to limit excessive coverage and ensure policies are purchased “for a commercially reasonable price.”

That’s not enough. Tougher standards should be applied uniformly, regardless of the loan source. Freddie Mac should follow Fannie Mae’s lead and require competitive pricing on the loans it backs. The consumer bureau should require mortgage servicers to reinstate a homeowner’s previous policy whenever possible, or to obtain competitive bids when not.

The bureau should also prevent loan servicers from accepting commissions or, at the very least, prohibit commissions from inflating the premium. It should require servicers to better communicate to borrowers that their policy has lapsed, explain clearly what force-placed insurance will cost and extend a grace period to secure new coverage. Finally, states should follow the example of California, which recently told force-placed insurers to submit lower rates that reflect actual loss ratios.

Many homeowners who experience coverage gaps have severe financial problems that lead them to stop paying their insurance bills. They are already at great risk of foreclosure. Banks and insurers shouldn’t be allowed to add to the likelihood of default by artificially inflating the cost of insurance.

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