POLITICANS RUSH TO CASTRATE FINANCIAL REFORM

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

The fact that Wall Street is so intent on doing this can only indicate one thing: they intend to do it again. Wake up America!

SEE VIDEO ELIZABETH WARREN ON GOALS FOR FINANCIAL CONSUMER PROTECTION

Note: One of the things that Warren brings out in the video is that the disclosure forms come much too late in the process. The obvious effect is that besides being confusing  on their face, there is very little time for consumer to study or get help understanding the disclosure statements. Early rendition and delivery of the disclosure statements would add to the barrier of committing consumer fraud. By requiring early delivery, the “lender” would not be able to argue later that the borrower was informed of the terms and signed anyway, even when the consumer never had any real opportunity to look at those forms. Now we have to argue that the delivery of the forms was under circumstances where the consumer was meant not to understand the transaction. Warren’s goal addresses that head-on.

EDITORIAL COMMENT: The only wrong with this editorial from the NY Times is that they seem to limit it to Republicans. I’ll agree that Republicans are leading the charge, but many Democrats are in the pack racing for ways to please Wall Street which is throwing money around like confetti. By making it a Republican vs. Democrat issue, the editorial diverts us from the point — that the Dodd-Frank bill is under attack and they intend to chip away at it in pieces by denying appropriations and otherwise tangling up the works so that it doesn’t work.

Who Will Rescue Financial Reform?

In what passes for self-restraint these days, House Republicans have been insisting that they do not intend to repeal last year’s Dodd-Frank financial reform law.

Not in one fell swoop, anyway.

A direct assault on Dodd-Frank would be so blatantly biased toward banks that it would be sure to provoke a public backlash. So the Republican plan is to delay and disrupt reform. The effort is partly ideological — an insistence that regulation is unnecessary, no matter the evidence to the contrary. It is also a campaign fund-raising ploy, because Wall Street will reward the opponents of reform. Of course, Democrats are themselves not indifferent to Wall Street campaign cash, which raises the question of how effectively they will counter the Republicans’ aims. Here are areas to watch.

DERIVATIVES Budget cuts could cripple the Securities and Exchange Commission and the Commodity Futures Trading Commission — which share the vital task of regulating the multitrillion-dollar derivatives market. The budget impasse in Washington has already frozen the agencies’ budgets, even as their rule-writing duties have exploded. Worse, prevailing Republican rhetoric, adopted in part by Democrats, portends more budget cuts, which would leave the agencies unable to enforce current rules, let alone new ones. Settling for less than President Obama’s requested amounts for the agencies would be acquiescing in the derailment of Dodd-Frank.

CONSUMER PROTECTION The Consumer Financial Protection Bureau, arguably the most innovative of the reforms, has been under constant attack by banks — and Republicans. Most recently, a House hearing on the bureau that was billed as an oversight session was instead a hazing of Elizabeth Warren, the Harvard law professor and consumer advocate chosen by Mr. Obama to set up the agency. Republican objections boiled down to charges that the agency — and Ms. Warren — have too much power. Ms. Warren’s rebuttals were clear and persuasive. Mr. Obama could define the debate further — and demonstrate his professed support for the bureau — by going on the offensive and nominating Ms. Warren as its official director. Senate Republicans have said that they would object, but it is their own credibility that would be at risk in opposing so qualified a candidate.

REPEAL BY ANOTHER NAME House Republicans have unveiled several bills to undo Dodd-Frank piece by piece. One would rewrite the law so that the C.F.P.B would be run by a five-member bipartisan board, rather than one director, a recipe for delay and division. Another would exempt an array of derivatives users from the new rules, perpetuating the deregulated market.

Yet another bill would repeal a requirement for private equity firms to register with the S.E.C, in effect ignoring the systemic risks in leveraged pools of private capital. And one would repeal a requirement that publicly traded companies disclose the ratio of a chief executive’s pay to that of a typical employee, a move that would deprive analysts of data to detect bubbles that correlate to skewed pay. The list goes on.

Dodd-Frank is no cure-all, but properly implemented and enforced, it would close dangerous regulatory gaps. That won’t happen if Republicans get their way — and they will, unless the fight is engaged in no uncertain terms. Democrats in Congress need to unite behind the law and Obama officials should denounce the antireform effort for what it is: an attempt to weaken Dodd-Frank on behalf of those who brought us the financial crisis.

Forensic Analysis: Unions Amass Armory of Research on Foreclosures of Securitized Mortgages

“We did not service the loan,” Mr. Dale said. “We did not originate the loan, and we were not the financial entity that placed it into foreclosure. Do you understand what a trustee does?”
Editor’s Note: Well, Yes Mr. Dale, we do understand what a trustee does and can do —- nothing. So why are you initiating foreclosures if you say that a trustee doesn’t do that?
Mr. Dale is reading from the end of the enabling documents instead of the first page where it looks like Trustee is really a trustee and that there really is a trust and that the trust holds assets. But by the time you read to the end of the document, the trustee is not a trustee, there is no trust and even if there was, there is nothing in the trust.
It is all an illusion. The “Trustee” is a “contingent agent” for a “conduit” (REMIC) that holds nothing. The enabling document is nothing more than the equivalent of an operating agreement in an LLC.
The “pool of loans” is owned by the investors who, as creditors, purchased mortgage backed derivative securities whose value is derived SOLELY from the promise to pay executed by the homeowners.
March 24, 2010

Unions Make Strides as They Attack Banks

By STEVEN GREENHOUSE and LOUISE STORY

When the city of Los Angeles started looking into its complex financial contracts with banks earlier this year, some council members turned to an unusual corner for financial advice: labor unions.

Turns out that union leaders had amassed an armory of research on derivatives, mortgage foreclosures and even Wall Street pay as part of their effort to hold bankers accountable for the economic pain they helped cause in Los Angeles and across the country.

Unions have criticized Wall Street before. But their attacks have taken on a new shape, both in ferocity and style, over the last 18 months, ever since the federal government doled out billions of dollars in bank bailouts.

Why? Labor leaders say the fortunes of banks and unions are linked more than people realize. Wall Street manages union pension portfolios worth hundreds of billions of dollars. Much of that is invested in financial institutions, giving unions a loud voice as shareholders.

Then there are all the unionized workers whose fates are indirectly shaped by the world of high finance. The jobs of hundreds of thousands of union members, like police officers and teachers, have been threatened by municipal budget cuts, made worse in some cases by exotic investments gone bad.

More abstractly, union leaders are framing their fight against Wall Street as a symbolic one, underscoring America’s large disparities in wealth and wages.

“Many unions see that they need to be responsible for not just members’ needs at the bargaining table, but other hardships in their lives, like foreclosures and high mortgage costs,” said Peter Dreier, a political science professor at Occidental College in Los Angeles.

Unions are holding up many of their own members as victims of the banks’ bad bets, like subprime mortgages, and are providing a steady stream of research in an effort to demystify the exotic financial products that they say are harming dozens of cities. Unions have also helped underwrite Americans for Financial Reform, a prominent group pushing for further bank regulation.

Labor leaders were among the first to call for the resignation of Bank of America’s chief executive, who did retire months later. Unions issued a scathing report on bank bonuses, months before the federal pay czar presented his findings, and they criticized Goldman Sachs’s bonus pool just before the bank said its chief would receive only stock.

This month, the A.F.L.-C.I.O., the nation’s main labor federation, has organized 200 protests nationwide to publicly shame bankers, calling for new taxes on bankers’ bonuses and on speculative short-term financial transactions — in the hope of collecting tens of billions of dollars to finance a job creation program.

“They played Russian roulette with our economy, and while Wall Street cashed in, they left Main Street holding the bag,” Richard L. Trumka, the A.F.L.-C.I.O.’s president, said last Friday at a rally in Philadelphia. “They gorge themselves in a trough of taxpayers’ dollars, while we struggle to make ends meet.”

Labor is directly at odds with Wall Street on unionization drives and many other matters. Banks and private equity firms own stakes in many businesses that unions would like to unionize, like nursing home chains and food service companies. Labor groups like the Service Employees International Union and the A.F.L.-C.I.O. are pressuring financial companies not to oppose union membership drives.

It is hard to know for certain whether the unions’ efforts have affected decisions made by Wall Street firms. But for cities like Los Angeles, feeling the squeeze of lower tax receipts, the service employees’ pressure campaign seemed to have had an impact.

“They knew more about our own water deal than I knew,” said Richard Alarcón, a Los Angeles councilman, referring to an interest-rate swap between the city’s water system and the Bank of New York Mellon that converted the system’s variable-rate bonds into bonds with a fixed rate. “They also knew the dynamics of swap deals, and they were very helpful.”

As the city faces a deficit of nearly $500 million, the council was unhappy that Los Angeles would have to pay Bank of New York millions of dollars a year.

“Our members don’t like it any more than other Americans when cities have less firefighters, less teachers or less police officers,” said Andy Stern, president of the service employees’ union.

The labor protests against the banks sometimes have murky targets. This month, service employees joined community leaders on the City Hall steps in Oakland, Calif., to denounce Goldman Sachs for arranging interest-rate swaps that have the city paying the bank millions a year.

After that rally, union leaders led a march to a local Citigroup branch. Goldman declined to comment, but a Citigroup representative scoffed.

“We weren’t even involved in those deals,” said Alex Samuelson, a Citigroup spokesman. “We were just a symbolic place to go and rail against Wall Street. You can’t go to a Goldman Sachs branch.”

Many bankers criticize the protests, saying they make lots of noise but often accomplish little. Steve Bartlett, president of the industry’s Financial Services Roundtable, who has been the target of several union-led protests, including one outside his home on a Sunday morning, said, “Protests can be misguided or even damaging to your cause.”

While union leaders say they are championing the concerns of Main Street, their antibank campaign has certainly advanced some of labor’s longtime objectives, like unionizing workers.

For instance, the S.E.I.U. has pressed several banks and private equity firms to agree to allow card check — a process that makes unionization easier — at companies in which they own stakes.

Service employees officials say they urged Goldman Sachs, which owns part of the food service company Aramark, to get Aramark to accept card check and not oppose an organizing drive. In December, the union’s president, Mr. Stern, even met with Goldman’s chief executive, Lloyd C. Blankfein, about universal health care and other labor-related issues.

Labor unions are using some of their members’ hard-luck stories to frame their battle as one between the haves and the have-nots, and in some cases that tactic is advancing the unions’ traditional goals in contract talks.

In February, for example, the service employees’ union publicized that one of its members cleaned the office of U.S. Bank’s chief in Minneapolis. That janitor, Rosalina Gomez, was facing foreclosure, and the union publicized that U.S. Bank had purchased her home in the foreclosure.

Steve Dale, a spokesman for the bank, said the union was attacking U.S. Bank even though JPMorgan Chase was the bank servicing Ms. Gomez’s mortgage. U.S. Bank, he said, was just the trustee, holding the loan for a mortgage bond.

“We did not service the loan,” Mr. Dale said. “We did not originate the loan, and we were not the financial entity that placed it into foreclosure. Do you understand what a trustee does?”

That aside, when the union threatened to have Ms. Gomez approach U.S. Bank’s chief, Richard K. Davis, at an awards luncheon, the bank rushed to set up a meeting between Ms. Gomez and JPMorgan. Fifty union supporters were at the site of the luncheon to conduct a silent vigil, with several reporters on hand.

Also at that time, the union was in contract negotiations with Ms. Gomez’s employer, the janitorial company that cleans U.S. Bank’s headquarters. Javier Morillo-Alicea, a leader of the union’s Minneapolis local, said its effort to embarrass the bank helped persuade the cleaning company to reach a contract that raised wages and provided better health insurance for the janitors.

“We put a lot of pressure on the bank,” he said, “and that led to a really good contract settlement in a tough economy.”

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