FedUpUSA

Archive for January 7th, 2012

The always behind-the-curve Fed seeks to fine mortgage servicersfor unsafe practices and robo-signing with an amount dependent on allegedly independent review by consultants.

Federal Reserve Governor Sarah Bloom Raskin on Saturday said the Fed must impose monetary penalties on banks who entered into an April agreement with regulators over how to fix problems in their mortgage servicing businesses.

“The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law,” Raskin said in remarks prepared for delivery to the Association of American Law Schools. “The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties.”

In April, 14 mortgage servicers, including Bank of America and JPMorgan Chase entered into a settlement with the Fed, the Office of the Comptroller of the Currency and the now defunct Office of Thrift Supervision on steps that have to be taken to correct and improve their servicing practices, such as providing borrowers with a single point of contact for questions.

As part of the agreement, these mortgage servicers have hired consultants to review foreclosures that took place in 2009 and 2010 to see if any were improper.
Regulators have said these reviews will help determine the size of any penalties the servicers will have to pay.

Expect Trivial Penalties, Spread a Mile Wide

Don’t expect this announcement to amount to much of anything. Penalties, if any will be trivial and the fines are nearly guaranteed to not benefit those harmed in any substantial way. Instead, expect fines to be spread out to include those not harmed at all.

Another Whitewashing Move by the SEC

Similarly, don’t expect much of anything from this feeble announcement: SEC to demand admission of wrongdoing in some cases

Securities regulators will no longer let companies settle civil cases without admitting or denying the charges if they have already admitted wrongdoing in parallel criminal cases.

The policy change, announced by Securities and Exchange Commission Enforcement Director Robert Khuzami on Friday, applies only to instances where a defendant has already admitted to violating criminal laws.

It comes just over a month after a federal judge in New York rejected a proposed $285 million settlement between the SEC and Citigroup, in part because the bank had not admitted to wrongdoing. However, in that case, no parallel criminal charges have been filed.

It seemed “unnecessary” for the SEC to include its traditional “neither admit nor deny” approach if a defendant had already been criminally convicted of the same conduct, Khuzami said.

In one of the most egregious examples, Bernard Madoff pleaded guilty for his role in a multi-billion dollar Ponzi scheme in 2009, but neither admitted nor denied the allegations in a settlement with the SEC.

In rejecting the Citigroup accord, U.S. District Judge Jed Rakoff said the SEC’s failure to require Citigroup to admit or deny its charges left him with no way to know whether the settlement was fair. Rakoff also called the $285 million payout “pocket change” for the third-largest U.S. bank.

The Citigroup settlement was intended to resolve charges that the firm sold risky mortgage-linked securities in 2007 without telling investors that it was betting against the debt.

“My take on things is it is all about managing the press,” said James Cox, a professor at Duke Law School. The agency “looked pretty silly before Judge Rakoff the other day,” he said.

This policy “non-change” borders on the absurd. The ruling only applies to only to instances where a defendant has already admitted to violating criminal laws. Notice that the ruling does not even apply to the Citigroup case in which a Judge Blasted  the the SEC.

“Doesn’t the S.E.C. have an interest in what the truth is?” Judge Rakoff asked, in reference to the commission’s longstanding practice of not forcing a defendant to admit any wrongdoing when settling a case.

Judge Rakoff called the contempt power — a judge’s ability to punish a party for disobeying a court order — “the backbone of the judiciary.” He questioned whether the S.E.C. was really serious about ever seeking an injunction against repeat offenders.

“It’s just for show,” Judge Rakoff said.

“We’re not saying that we will never use injunctive relief,” said the S.E.C. lawyer.

“Hope springs eternal,” the judge replied.

The S.E.C.’s current enforcement action against Citigroup is at least the fifth time that the commission has reached a settlement with the bank related to civil fraud accusations.

SEC Fine vs. Citigroup Gain

Please consider SEC Tired of Fighting Big Banks-Calls Federal Judge Rakoff Refusal to Approve Citigroup Settlement-Shortsighted.

Estimates are that Citigroup made a $3.8 billion profit from the bogus investment portfolio.  The investors lost over $700 million.  The $285 million offer to settle is a joke.  The Judge made clear he would not allow corporations to continue to buy their way out of fraud from “a cost of doing business” fund.  The Judge demands the truth to be revealed and the public protected.

Public service is a public trust.  Federal employees have a duty to protect the public interest.  Apparently, the SEC forgot their duties and the fact that the Court is the final arbiter.  The legal team at the SEC that crafted the Citigroup deal need to remember they are federal service not bank employees.  It’s refreshing to see Judge Rakoff remind government workers who employs them.  show.php?db=special&id=138

Rakoff’s words to the SEC and big banks has been globally hailed as public policy genius.  Thank you Judge Rakoff.The trial is scheduled for July 16, 2012.

While essentially ignoring billions of dollars in repeated fraud allegations against Citigroup, the SEC brought full weight down on Martha Stewart over (drum roll please) … $45,673.

Martha Stewart went to prison and was fined $30,000. Since then, no one has gone to prison or even been criminally indicted in $trillions of dollars of fraud in the global financial crisis. And unless someone does admit criminal action, the SEC reserves the right to do more whitewashing without seeking admission of guilt.

Mike  “Mish”  Shedlock – Global Economic Analysis

They’re at it again!

Remember this article from the third – just a few days ago?

Well, “No” means no.  When it’s sex anyway.  When it’s various other forms of behavior.  But….. when it’s robbery of the citizens for the benefit of certain corporate interests, committed and put forward by government, well then “no” means we’ll try to sneak in a second vote when nobody’s paying attention so we can claim we said “no” but really say “yes”, and you, the fine citizens, get violated once again.

This hit my mailbox this morning — to be shared with you.

If you live in Troy, show up at the meeting and make clear that a “Yea” vote will be prosecuted in the next set of elections as a resignation of the Councilmember’s seat — that you will run against any “Yea” vote, will campaign against them, and will expel this vermin from your town.

Dear Troy friends

The Transit Center is on the agenda again for Jan 9th, and this time they seem to have  lowered  it to a price that only Wade Fleming seems to be happy with.   But who knows in this agreement what was left out and will come back later for us to pay for i.e. landscaping etc.  There still is no mention of paying for road widening or maintenance costs with our federal tax dollars, rather than our city tax dollars.  These things always seem to come back and haunt us. Below is the resolution from the agenda.

  Email wade.fleming@troymi.gov with your opinion on the issue.  I think putting your opinion in the subject line is a good idea   Also your presence and opinion at the microphone is needed on Monday at 7:30pm.

(As you know a Magna employee was not happy with the last vote, but do not fear- Magna headquarters, the beneficiary of our tax abatements has issued a press release saying that they are not going to bad mouth Troy to other businesses or remove their businesses from Troy.  It is attached.)

Here is an article that relates to our issue sent by a fellow Troy citizen:

High-speed rail is a fast track to government waste Washington Post, Monday, February 14, 2011   

Robert Samuelson writes a weekly economics column that usually runs in The Post on Mondays. He was a columnist for Newsweek magazine from 1984 to 2011. He began his journalism career as a reporter on The Post business desk, from 1969 to 1973. He was an economics reporter and columnist for National Journal magazine from 1976 to 1984

“High-speed rail would definitely be big. Transportation Secretary Ray LaHood has estimated the administration’s ultimate goal – bringing high-speed rail to 80 percent of the population - could cost $500 billion over 25 years. For this stupendous sum, there would be scant public benefits. Precisely the opposite. Rail subsidies would threaten funding for more pressing public needs: schools, police, defense.

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/13/AR2011021302203.html

Email to:    wade.fleming@troymi.gov

Here is the resolution to be voted on Monday.

A resolution on the Transit Center again, on the agenda for the Monday, January 9th,  City Council Meeting:

WHEREAS, A 2.41 acre site was deeded to the City of Troy as part of a Consent Judgment, with the condition that it be developed as a transit facility.

WHEREAS, The City of Troy received a $8,485,212 federal grant for the final design and construction of the Troy Multi-Modal Transit Facility through the American Recovery and Reinvestment Act (ARRA) High-Speed Intercity Passenger Rail (HSIPR) Program, Federal Rail Administration (FRA), as secured through a TIGER grant; and

WHEREAS, The facility will be served by AMTRAK and the Suburban Mobility Authority for Regional Transportation (SMART), which will utilize the Troy Multi-Modal Transit Facility as a central hub for their bus network; and

WHEREAS, The Troy Multi-Modal Transit Facility complements transit oriented initiatives throughout southeast Michigan, including the Detroit Region Aerotropolis project; and

WHEREAS, the purpose of the project is to benefit intercity passenger rail service, and the City is committed to helping achieve, to the extent to which it is capable, the anticipated project benefits; and

WHEREAS, the highest rated bidder, Hubbell, Roth & Clark (HRC), Inc. of Pontiac, MI was selected using a Qualifications Based Selection process; a required process as a condition of the grant; and

WHEREAS, on December 19, 2011 City Council took no affirmative action on a proposed MDOT sub-contract between the City of Troy and HRC to provide architectural and engineering services for the final design of the Troy Multi-Modal Transit Facility; and

WHEREAS, based on express statements made by City Council members at the December 19, 2011 City Council meeting, there was an indication that there may be support for the transit center project if there were cost reductions; and

WHEREAS, HRC volunteered to review the project, at no cost, to see if reductions could be made to the project that would meet the requirements of the federal grant and comply with federal, state and local requirements; and

WHEREAS, Councilman Wade Fleming and Troy Chamber of Commerce representative John Tagle met with Mark Miller, Director of Economic and Community Development on December 22, 2011, to request permission to meet with HRC to obtain some clarification as to the costs associated with rail projects; and

WHEREAS, on December 23, 2011, HRC hosted a meeting to explain some of the required costs of a rail project, and to discuss possible cost reduction ideas, which was attended by Troy City Council members Wade Fleming and Dane Slater, as well as architect/Troy Chamber of Commerce Representative/ Planning Commission member John Tagle and architect/Planning Commission member Tom Strat and Mark Miller, Director of Economic & Community Development; and

WHEREAS, subsequent to this meeting, HRC prepared a revised cost proposal that modified the scope of the project to be at an estimated cost of $6,272,500, excluding contingency; and

AND WHEREAS, the City wishes to construct a Troy Multi-Modal Transit Center for a total cost not to exceed $6,272,500 which includes contingencies, and will still meet State and Federal requirements, and not jeopardize the functionality of the project,

THEREFORE BE IT RESOLVED, That Troy City Council hereby AWARDS the MDOT sub-contract between the City of Troy and HRC to provide architectural and engineering services for the final design of the Troy Multi-Modal Transit Facility at an estimated cost not to exceed $648,750,

THEREFORE BE IT FURTHER RESOLVED, That the total estimated cost of the Troy Multi-Modal Transit Center shall not exceed $6,272,500,

BE IT FURTHER RESOLVED, That the award is contingent upon consultants’ submission of properly executed proposal and contract documents, including agreements, insurance certificates and all other specified requirements.

BE IT FINALLY RESOLVED, The Mayor and City Clerk are authorized to execute the agreements once in acceptable form as approved by the Michigan Department of Transportation.

Note the underlined: The “estimated” cost — capital cost only — is over $6 million.  There is no penalty for exceeding estimates (and it will), there is no “hard stop” at the quoted price, nobody will go to jail if they waste $6 million of your money and the project is not complete and there is no bar against anunlimited amount of tax money being spent in the future both to complete what will almost-assuredly turn into a boondoggle and require millions in continual and permanent expenditure by the City.

Troy is one of the wealthier areas in the Detroit Metro area with a median family income of roughly $80,000.  Less than two percent of the population of the city lives below the poverty line.  It has a population of approximately 81,000 people, meaning that this project’s “estimated costs” are about $75 per person, or roughly $300 for a family of four – a cost that will come back to you in the form of increased taxes, and this is before overruns (which I’m willing to bet will at least double the price) — for something that will have zero benefit to Troy residents.

How many Troy residents don’t have a car to get where they want to go?  None!  How many will use this mass-transit system to get where they want to go instead of driving their car?  None!  Where is this thing going to go that the residents of Troy would want to travel to?  Pontiac?  Are you kidding me?

This project will bring no value to the city of Troy at all.  What it will bring is massive cost overruns and tax increases, and if it is ever completed the people of the City of Troy will almost-certainly not use it, since it will go nowhere they need to travel in their daily lives!

It will thus be a massive and outrageously-expensive white elephant — a “make work” project that will bring negative economic value to the city and it’s residents.

It was properly voted down previously and this cat-and-mouse game of “let’s vote again!” needs to be met with a strong showing by the people of Troy who stand and say in a loud, united voice: Cut that crap out or lose your job!

Response To Motion To Dismiss