New Congress Supports Wall Street, Not the Public

capitol

Congress began a new session at the beginning of 2015, with the Democrats in the House of Representatives handing the reins over to the Republicans. Though the previous Congress wasn’t exactly known for being tough on Wall Street, the recent bill proposed by Representative Michael Fitzpatrick (R-PA) was a predictable giveaway to large financial institutions by way of slashing regulations […]

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Update – US Banks Still Investing Heavily in Coal

Coal

Banktrack.org released an updated review of various financial institutions’ holdings in dirty coal energy. Green America promoted a scorecard earlier this year outlining the banks that were the strongest supporters of coal extraction and electricity production. The lowest marks went to Wells Fargo (D+), Bank of America (D-), Citi (F) and Chase (F). Of course, each of these banks has […]

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Bank of America Reaches Record Settlement with Justice Department, and Taxpayers Cover the Costs

Over the past year, the Justice Department has reached multiple settlements with the country’s largest financial institutions regarding their involvement in the 2008 financial crisis. JP Morgan Chase forked over $13 billion this past November, Citigroup settled for $7 billion this July, and now Bank of America will pay a record $16.65 to the DOJ. While all of these settlements involved the sale of toxic mortgage-backed securities to unknowing investors, the recent case is different. Under the guise of providing relief to homeowners who have lost their houses, BofA will actually stick the taxpayer with a bill of up to $5.8 billion for their wrongdoings. The settlement, reached last Thursday, is unique in that it actually allows Bank of America to write-off most of the cost as a tax deduction. Previous settlements with similar large banks contained more restrictions on this practice, but BofA will be able to treat the payment as if it were just another operating cost, for tax purposes. Approximately $5 billion of the grand total is considered a “civil penalty.” Typically, money paid to resolve a civil penalty cannot be written off as a business expense, but a tenth circuit court ruled earlier this month that businesses may write off penalties such as these as a “compensatory cost.” If Bank of America doesn’t try to write off these $5 billion of civil penalties, the other $11.63 billion portion of the settlement will still stick the taxpayer […]

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Citigroup Reaches $7 Billion Settlement with Justice Department, but What’s Really Been Settled?

On Monday, July 14, Citibank agreed to pay a $7 billion settlement related to sub-prime mortgage-backed securities sold to investors during the lead up to the financial crisis of 2008. The settlement results from a Justice Department effort to crack down on the complex and risky behaviors that led Wall Street to the brink of collapse in 2008. While the overwhelming majority of Americans want to hold bankers accountable for gambling on peoples’ livelihoods, the recent settlements don’t represent a real victory for the population. If we break down the structure of the most recent settlement, it’s easy to see why. Citi agreed to pay a total of $7 billion dollars to end a DOJ inquiry into its involvement in the financial crisis. Citi will pay $4.5 billion in cash, and $2.5 billion to provide relief to struggling homeowners and low-income tenants in the form of restructured mortgages. Of the $4.5 billion cash payment, $4 billion will go to the Justice Department as a civil penalty. The other $500 million will be paid as fees to state Attorneys General and to the Federal Deposit Insurance Corporation (FDIC). There are a few reasons why this settlement looks more like a PR stunt than Citi actually trying to right any wrongdoing. First of all, the majority of the settlement will go to the agencies doing the prosecution, pretty much to spend at their discretion. The prosecuting agencies do not represent the true […]

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Megabanks can afford to break the rules, but can the economy afford the risk?

Recent high-profile settlements involving some of the nation’s largest banks have consumers scratching their heads. Since 2012, banking giants like Chase and Bank of America have come under fire from regulators in an effort to discourage the kind of egregious behavior that drove the economy to the brink of collapse in 2008. While the sums collected thus far by regulators appear to be huge, they are little more than a drop in the bucket for the megabanks. Have a look at some examples of the fines and settlements these banks have reached so far: Bank of America has paid over $15 billion since 2007 to settle claims related to the financial crisis, including $11.6 billion to Fannie Mae in 2012 to resolve repurchase claims related to bad mortgages between 2000 and 2008. Since October of 2012, American Express has refunded approximately $144.5 million to 585,000 customers for deceptive marketing regarding add-on products like payment protection and credit monitoring, as well as charging unlawful late fees to customers’ accounts. Capital One paid $210 million to the Consumer Finance Protection Bureau in 2012 to reimburse customers that they deceptively charged for unnecessary services like credit monitoring, generally targeting unemployed people and those with poor credit. Last year, Citi paid almost $1 billion to Fannie Mae resolving claims over nearly 3.7 million subprime mortgages it sold. In addition to paying $1.32 billion to Fannie Mae and Freddie Mac over subprime mortgages, Wells Fargo […]

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Mega-banks: More than just Banks

One of Green America’s goals is to teach consumers how the businesses you choose to support can have a big impact on the world around you. From the food we buy each week, to the clothes we wear, to the energy we use to heat and power our homes – on almost all levels of the economy, we have a choice between companies that operate with an awareness of the effects of their presence on the world, and companies that pursue the goal of growth over anything else. And while it is easy to see the negative impacts of massive agricultural engineering companies, clothing companies’ sweatshops in faraway countries, and dirty international oil companies, the financial services industry influences nearly every sector of the economy – often with serious implications for people and the planet. And as banks actually sell very few tangible products, it is more difficult to recognize that our choices can drastically affect our environment and our communities. To give an example, let us look at commodities: the raw materials for nearly every product you can buy. Recent news coverage of the banking industry has revealed that large investment institutions like JP Morgan Chase and Goldman Sachs have been spending their money on warehouses. As in the large empty buildings where industrial materials, like aluminum and copper are kept before manufacturers buy them to produce goods. Why would a bank be interested in owning a warehouse? There are […]

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“Dad, What’s a Financial Crisis?”

wall st

“It’s something that happens every five to seven years,” Jamie Dimon told his daughter without a breath of sarcasm, writes Bloomberg financial reporter Bob Ivry in his book “The Seven Sins of Wall Street.” As the United States navigates its way through a post-recession financial environment, our tendency to fall back on old habits makes the term “recovery” questionable at […]

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When in Doubt: Commit Forgery?

This week, Linda Tirelli, a lawyer representing a client in a foreclosure case with Wells Fargo came across a very disturbing piece of evidence: a company manual instructing the bank’s staff in how to forge documents to proceed with foreclosures.  The manual instructs employees how to process [mortgage] notes without endorsements and obtaining endorsements and allonges.  In essence, if employees lacked the documents needed for foreclosure, they were instructed to make them up.  As Tirelli stated to the Washington Post: “This is a blueprint for fraud,” said Tirelli, who attached a copy of the manual as evidence in the lawsuit filed in U.S. District Court in White Plains, N.Y. “The idea that this bank is instructing people how to produce these documents is appalling.” The disclosure of the manual has been duly reported in the business sections of major media, but has not made a huge splash.  It’s shocking that the media and the public are this numb to the latest revelations of fraudulent behavior by megabanks.  Two years ago, several banks paid a settlement of $25 billion for their fraudulent conduct in robo-signing mortgages (although much of that money never actually benefited the people who lost their homes).  Apparently, the money paid by Wells Fargo for its portion of the settlement was not enough to deter ongoing wrongdoing.  The bank is so emboldened by the failure of the US government to truly crackdown on bank fraud that it was […]

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