Obama Administration Finds New Way to Let Criminal Banks Avoid Consequences

[Karmadillo]

https://firstlook.org/theintercept/2015/07/15/obama-administration-finds-new-way-let-criminal-banks-avoid-consequences/

Obama Administration Finds New Way to Let Criminal Banks Avoid Consequences
David Dayen
Jul. 15 2015

Three top Democrats are accusing the Department of Housing and Urban Development of quietly removing a key clause in its requirements for taxpayer-guaranteed mortgage insurance in order to spare two banks recently convicted of federal crimes from being frozen out of the lucrative market.

HUD’s action is the latest in a series of steps by federal agencies to eliminate real-world consequences for serial financial felons, even as the Obama administration has touted its efforts to hold banks accountable.

In this sense, the guilty plea has become as meaningless to banks as their other ways of resolving criminal charges: out-of-court settlements, or deferred prosecution agreements. “Too Big to Fail” has morphed into “Too Big to Jail” — and then again, into “Bank Lives Matter.”

Sens. Sherrod Brown and Elizabeth Warren and Rep. Maxine Waters fired off a letter to HUD on Tuesday, saying they believe that the timing of the change was designed to clear the way for two banks recently convicted of federal crimes — JPMorgan Chase and Citigroup — to continue to make Federal Housing Administration-insured loans. Last year, JPMorgan Chase wrote $1.67 billion in FHA loans, and Citi wrote $342 million, according to data from the Congressional Research Service.

On May 20 of this year, JPMorgan Chase and Citigroup both entered a guilty plea on one felony count of conspiring to rig foreign currency exchange trades, the largest market on the globe.

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[KoKo]

1. Sens. Sherrod Brown and Elizabeth Warren and Rep. Maxine Waters standing up....

[msanthrope]

4. I'd like to see the actual letter......I highly doubt Senator Warren is advocating

shrin king the market of FHA lenders. I applaud her for questioning if this is a rule change as opposed to merely a paper work change.

[CharlotteVale]

2. Business as usual.

[msanthrope]

3. What a pantload. The May 20 plea wouldn't keep either lender out of the FHA

market. I appreciate the diligence of our representatives, but I find it pretty telling that the author of this piece doesn't provide the actual letter.....

OP...... do you have the actual letter?

[TiberiusB]

5. What's the opposite of pantload again?

Lenders must certify that their firm and its principals “have not, within a three-year period … been convicted of ... commission of fraud … violation of Federal or State antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements or receiving stolen property.”

JPMorgan and Citi’s guilty plea would be admission of violation of the antitrust statute. That would, apparently, make them ineligible to obtain FHA insurance on their loans.

[msanthrope]

9. According to the article, they were already waived as part of the plea.

That being said, I wish we had the actual letter.

[SoapBox]

6. Maybe you should contact the article author?

[msanthrope]

11. primary sourcing is a lost art. nt

[Karmadillo]

13. Google is your friend. But

the link to Senator Warren's press release is below and the link to the letter is at the end of the press release.

http://www.warren.senate.gov/?p=press_release&id=892

<edit>

HUD's proposal would eliminate the requirement that lenders approved by the Federal Housing Administration (FHA) certify on each loan application that they are not, or have not recently been, subject to certain charges or penalties. In their letter, the lawmakers called on HUD to provide a thorough explanation for its proposal to lower the lending standards and give the public an opportunity to comment on whether the changes are appropriate.

"We are concerned that the proposed changes, the most significant of which were not described in the notice, would make it easier for lenders who have engaged in illegal behavior to obtain FHA insurance - insurance that is ultimately provided by American taxpayers," the lawmakers wrote. "HUD's proposed changes appear to effectively waive a contractual obligation for obtaining FHA insurance for a mortgage and allow HUD to turn a blind eye to these and other criminal violations - putting homebuyers and taxpayers at additional risk."

After millions of Americans lost their homes to foreclosure during the 2008 financial crisis, it was clear that greater scrutiny of mortgage lenders was necessary. To help address the problem, Congress passed a 2009 law that gave HUD additional tools to police lenders that use FHA's government backstop, which this recent HUD proposal appears to undermine by holding lenders less accountable at the time of origination.

In their letter, the lawmakers questioned the timing of HUD's proposal to change the standards. Just days before HUD announced the changes, the New York Times and other media organizations reported that five of the world's biggest banks were preparing to agree to plead guilty to criminal antitrust violations for rigging foreign exchange rates.

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[Fred Sanders]

7. What change? What "key clause"? The banks never agreed to leave the market when they pled, did they?

If the article author can take 4 longish paragraphs to be worried about "the change", why leave out what the actual change is in those paragraphs? And I am not going to keep reading to divine vital details not yet mentioned, because that was far as I needed to read.

[Igel]

8. The media, esp. left of center, has a problem.

They (and everybody else) objected to loans in the aughts going to people that weren't good credit risks. Large loans were made to people whose jobs couldn't support them; assets were inflated; people were given loans too big to sustain. (This is in addition to inappropriate types of loans or loans at higher interest rates--but the interest rates are certainly related to mortgage size and ability to repay.) The demand was made to make loan requirements stiffer, and people saluted the (D) Congress and Obama for making it harder to get loans.

But they now object to the consequences--a lack of loans being available to house buyers without sterling credit and high incomes. The requirements are too stiff and money's not available because banks often don't want into that market. This is racist or classist or some -ist and we need to relax requirements. What idiot imposed such unrealistic requirements, anyway? We need to increase the loan market! And so the Obama administration has responded by taking regulatory steps to make it easier to qualify for loans and to get banks involved in lending.

FHA-backed go precisely to the people that are defended in my first paragraph. The loans made to these people come from some place, and that place is banks. If you cut two of the largest players out of the loan market, then the loan market is smaller.

[msanthrope]

10. exactly and that's why I want to see the original letter from Warren.....

I find it hard to believe that she would be advocating for shrinking the FHA market

[xocet]

12. You always seem to have an interesting take on things...

Here seems to be the letter which you have requested:

http://www.warren.senate.gov/files/documents/Letter_to_Sec%20_Castro_and_Director_Donovan.pdf

Though obviously you need not comment, it would be interesting to read your interpretation.

How does the letter's content square with the reporter's piece in your opinion?

[Karmadillo]

14. Pretty significant crimes by JP Morgan & others. Did anyone do time for these or

is the administration too busy going after FIFA?

http://www.justice.gov/opa/pr/five-major-banks-agree-parent-level-guilty-pleas

<edit>

Attorney General Loretta E. Lynch, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Director Aitan Goelman of the Commodity Futures Trading Commission’s Division made the announcement.

“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers,” said Attorney General Lynch. “The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct. It is commensurate with the pervasive harm done. And it should deter competitors in the future from chasing profits without regard to fairness, to the law, or to the public welfare.”

“The charged conspiracy fixed the U.S. dollar – euro exchange rate, affecting currencies that are at the heart of international commerce and undermining the integrity and the competitiveness of foreign currency exchange markets which account for hundreds of billions of dollars worth of transactions every day,” said Assistant Attorney General Baer. “The seriousness of the crime warrants the parent-level guilty pleas by Citicorp, Barclays, JPMorgan and RBS.”

“The five parent-level guilty pleas that the department is announcing today communicate loud and clear that we will hold financial institutions accountable for criminal misconduct,” said Assistant Attorney General Caldwell. “And we will enforce the agreements that we enter into with corporations. If appropriate and proportional to the misconduct and the company’s track record, we will tear up an NPA or a DPA and prosecute the offending company.”

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[hifiguy]

16. The day that any big bankster ever sees the inside of a jail.

regardless of the enormity of the crime, will be the day that winged pigs circle the Empire State Building's top floors. At least unless Bernie is the next POTUS.

[hifiguy]

15. Everyone who is surprised by this stand on your head...

They don't even bother hiding the corruption anymore. They banksters now operate in a completely lawless environment.