Elizabeth Warren vs. Scott Brown In 2012! Its Official! Go Elizabeth!

Elizabeth Warren launches US Senate campaign with Mass. tour

Harvard Law professor and consumer advocate Elizabeth Warren officially launched her Democratic campaign for the U.S. Senate on Wednesday, hoping for a chance to take on Republican Sen. Scott Brown in next year's election.

Warren, who greeted commuters at a subway station in Boston before embarking on a tour of the state, cast herself as fighter for the middle class, saying she's "stood up to some pretty tough folks over the past few years."

"There's been a lot of very powerful interests who have tried to shut me down, squeeze me, push me sideways and so far it just hasn't worked," Warren said. "I'm willing to throw my body in front of a bus to try to stop bad ideas that are going to be harmful to the middle class."

Warren was heavily courted by Democrats hoping to win back the seat long held by Sen. Edward Kennedy, who died in 2009 after a long battle with brain cancer. Democrats are also trying to hold onto their narrow Senate majority by ousting Brown.

Warren was tapped by President Barack Obama last year to set up a new consumer protection agency, but congressional Republicans opposed her leading the office. She returned to Massachusetts this summer.

Supporters say her image as a crusader against well-heeled Wall Street interests and her national profile will give her candidacy muscle, though she's never run for political office.

Some Democrats, including Boston Mayor Thomas Menino, have voiced skepticism about how strong a candidate she will be, given her lack of political experience.

Warren said she knows she has to make her case in a crowded primary if she wants a chance to challenge Brown.

Brown political adviser Eric Fehrnstrom called Warren's entrance into the race evidence of a "crowded, long and divisive Democratic primary."

"In the meantime, people are hurting and they are looking for work. Scott Brown is going to keep his focus on creating jobs, keeping taxes low and getting spending and debt under control," Fehrnstrom said.

Republicans have already branded Warren as a liberal academic from Cambridge whose Harvard ties put her out of touch with working families. They've also mocked her as an outsider whose roots are in Oklahoma where she grew up and not Massachusetts.

Warren has lived in Massachusetts for nearly two decades and said what's most important is what's in a candidate's heart.

"People just want to know ... are you there for big corporations? Are you there for families like mine?" she said. "I think people know where I'm really from."

Democratic leaders are banking that her national profile will help her raise the money needed to topple Brown, who has more than $10 million in his campaign account.

A recent Boston Globe poll showed Brown as the most popular major politician in the traditionally Democratic state. Brown shocked the political establishment by beating Attorney General Martha Coakley in last year's special election to succeed Kennedy. He was a little-known state senator who cast himself as a moderate, an average guy with his trademark barn coat and pickup truck. He once posed as a Cosmopolitan magazine centerfold.

Warren has spent the past several weeks meeting with party activists and voters. She's already gotten a boost from EMILY's List, which raises money for female Democratic candidates.

Commuters who shook hands with Warren said they were keeping an open mind.

Katherine Kinzel, a 25-year-old Boston resident and researcher at a local hospital, voted for Brown but described Warren as "genuine."

"I'm still waiting to see what she has to say, how she plays out against the other Democratic candidates," said Kinzel, an independent voter. "There's still a long way to go."

Chad Capellman, a 38-year-old website manager from Quincy, said he's impressed with Warren's fighting spirit.

"I can tell just from everything I've seen and heard and what's she's put up with in Washington that there's something different about her," he said. "It sounds like a `Mr. Smith Goes to Washington' kind of thing." The 1939 Oscar-winning movie tells the story of a Washington outsider appointed to the U.S. Senate who refuses to back down when surrounded by corruption.

Warren planned to travel Wednesday to New Bedford, Framingham, Worcester, Springfield, Lowell, and Gloucester to meet voters.

Other Democrats already announced include Setti Warren, no relation to the consumer advocate, the first-term mayor of the affluent Boston suburb of Newton and the state's first popularly elected black mayor; City Year youth program co-founder Alan Khazei; immigration attorney Marisa DeFranco; state Rep. Tom Conroy; Newton resident Herb Robinson; and Robert Massie, who unsuccessfully ran for lieutenant governor in 1994.


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Sources: AP, Boston Globe, Youtube, Google Maps

Credit Reporting Agency Monopolies Destroy Lives! Millions Held Hostage! (Videos)

Credit Error? It Pays to Be on V.I.P. List

The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors — one for the rich, the well-connected, the well-known and the powerful, and the other for everyone else.

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list — and they may not even realize they are on it — get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem — “account not his/hers,” for example — and sending a dispute form to the creditor to investigate. Many times, consumer advocates say, the investigation translates to a perfunctory check of its records.

“The legal responsibility of the credit reporting agencies and of the creditors is well established,” said Leonard Bennett, a consumer lawyer in Newport News, Va. “There is a requirement that they do meaningful research and analysis, and it is almost never done.”

Consumers who have trouble fixing errors through the dispute process can quickly find themselves trapped in a Kafkaesque no man’s land, where the only escape is through the court system.

“You are guilty before you are proven innocent in a situation like this,” said Catherine Taylor, 45, of Benton, Ark., who said she had been denied employment and credit because her filing was mixed up with a felon who had the same name and birthday.

Judy Johnson of Bossier City, La., was confused with a less creditworthy Judith Johnson, with a similar address and Social Security number. For nearly seven years, Judy Johnson, a 63-year-old credit manager for a building supply company, said she tried to remove the black marks from her credit report. But when she was denied a credit card, she knew the problem had returned — a third time. “This time, I was livid,” she said.

She ultimately brought a suit against one of the bureaus, and recently settled for an amount she cannot disclose. But the problems still linger. A deputy sheriff recently came to her door to serve her papers for a debt she says she does not owe.

The credit rating bureaus, private-sector companies that each attempt to track all American consumers’ credit use, have grown much more powerful over the last couple of decades as credit has become a crucial cog in the nation’s financial system. Their reports are used to formulate the all-powerful credit score, which lenders use to determine creditworthiness.

But as the bureaus’ work has become more important, consumer advocates say, regulation has not kept up, in large part because their overseer, the Federal Trade Commission, lacks broad authority. That could change once responsibility for the credit bureaus shifts to the new Consumer Financial Protection Bureau, which will be able to write rules and examine the credit agencies’ policies.



The bureaus, meanwhile, do not have an economic incentive to improve the system, consumer advocates say, because their main customers are the creditors, not consumers.

“There is no neutrality in the credit reporting agencies,” said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit.com. “They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest.”

When asked about the V.I.P. category, TransUnion said all consumers “have the ability to speak to a live representative.” Equifax said consumers who received a free copy of their credit report were provided with a number for customer service.

Experian denied that it had V.I.P. lists. But a spokeswoman did say that prominent people deemed high risk — like politicians in an election year — might have their credit files taken offline so that creditors or other companies making inquiries could not get access without the bureau’s permission. Experian said those people did not receive any other special handling.

David Szwak, a consumer lawyer in Shreveport, La., who has handled dozens of credit cases, said that the V.I.P. designation and preferential treatment did exist at Experian, and he provided sworn testimony from former Experian employees that the category existed.

Estimates of credit reports with serious errors vary widely, anywhere from 3 to 25 percent. A recent study, paid for by the Consumer Data Industry Association, the trade group for the bureaus, found potential errors in 19.2 percent of reports, but said that less than 1 percent of them had disputes that, when settled, resulted in a meaningful increase in scores. Even 1 percent translates into millions of consumers, since there are at least 200 million files at each of the bureaus.

The F.T.C. is expected to deliver a nationwide study on credit report accuracy next year that could provide more clarity. It could also include recommendations for legislative action.



The volume of disputes has been rising as consumers borrow more and gain greater access to credit reports. The automated system was a response to that. A spokesman for the trade group said most consumers received an answer within 14 days.

Experian is the only bureau that still processes disputes in the United States, experts said, though most complaints wind their way through the same online system — unless the dispute involves a V.I.P.

“They get a lot more high-end treatment,” said Mr. Szwak, the lawyer, who has read the bureaus’ internal procedure manuals and deposed or cross-examined employees. The biggest difference at TransUnion and Equifax, lawyers said, is that V.I.P.’s disputes are specially handled domestically. Regular consumers’ files, meanwhile, may get priority treatment if they involve a time-sensitive issue, like a mortgage pending, or if the consumer is represented by a lawyer or dealing with fraud.

Last year, new rules went into effect to strengthen existing regulations on the accuracy of reports. The rules also allow consumers to dispute errors directly with the creditor. But critics say the rule lacks any teeth because consumers don’t have the right to sue the companies. (Individuals can, however, sue the bureaus and creditors after lodging a dispute through their system.)

But the problem, advocates say, is that consumers cannot vote with their feet. “They cannot remove their information from the bureaus,” said Chi Chi Wu, a staff lawyer at the National Consumer Law Center, who wrote a report on the automated dispute process in 2009, “or take their business elsewhere.”


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Sources: NY Times, Wikipedia, Youtube, Google Maps

Banks Lose Debit Card Fee Battle! Obama's Law Wins!

Banks Defeated in Senate Vote Over Debit Card Fees

The Senate refused to delay new rules that would sharply cut the fees that banks can charge retailers to process debit card transactions.

The debit card rules were a major part of the Dodd-Frank financial regulation law passed last year. The Senate vote on Wednesday afternoon was the first major challenge to the new law.

Although 54 senators voted in favor of the delay, the measure, which was sponsored by Senator Jon Tester, a Montana Democrat who is facing a tough re-election battle next year, and Senator Bob Corker, a Tennessee Republican, failed to garner the 60 votes that were required for it to pass under Senate rules. Forty-five senators voted against the measure.

Even with the defeat, the vote represented a remarkable come-from-behind lobbying campaign by banks to recover from the drubbing they took during the anti-Wall Street atmosphere that prevailed last year. The debit card measure, sponsored by Senator Richard J. Durbin, an Illinois Democrat, passed last year by a two-to-one ratio after little debate and no hearings.

The Wednesday vote, which followed a vigorous floor debate, was a victory for retailers, who have complained that banks and the companies that control the largest debit card networks, Visa and MasterCard, have consistently raised the fees on debit card transactions even as the market has grown rapidly and technology costs have declined.

Those fees topped $20 billion last year, according to industry reports.

The Federal Reserve, as guided by the new law, had proposed rules that would cut the average debit card processing fee to 7 to 12 cents per transaction, from 44 cents currently. Though Congress exempted small banks with less than $10 billion in assets from the new limits, banking regulators warned that such a two-tiered fee system among banks would not be competitive. Opponents of the delay said that all but 100 banks and three credit unions would be exempt from the fee restrictions.

The new regulations are scheduled to take effect by July 21, and the Federal Reserve, which received more than 11,000 comments on its proposals, has said that it intends to meet the deadline.

The vote also provided a victory for Senator Durbin. Mr. Durbin, who sponsored the original measure to roll back the fees that banks are able to charge on debit transactions, was opposed in the effort by Senator Charles E. Schumer of New York, whose constituency includes Wall Street and major banks.

Mr. Durbin said that a delay of the debit rules would have kept fees at current levels and given banks “a windfall of profit that they do not deserve.”

By coming close to victory, banks are likely to be emboldened to fight other regulations being drawn up under the Dodd-Frank bill. Those include rules that would subject derivatives to increased margin requirements and force derivative trades through a central exchange. Bankers and business lobbies are also opposed to the structure of the new Consumer Financial Protection Bureau, which is scheduled to take over regulation of mortgages and other consumer-related areas from other banking regulators.

“This shows the banking industry has mounted a very effective fight,” Bill Allison, editorial director for the Sunlight Foundation in Washington, which monitors lobbying activity, said in an interview.

Both sides sought to portray the fight as pitting big, well-financed interests against small-town retailers or banks. Bank lobbyists said that the rule would most harm small community banks and credit unions, while benefitting giant retailers like Wal-Mart and Home Depot that account for most of the nation’s debit card transactions.

Similarly, a coalition of retailers framed the debate as the giant banks that issue the most debit cards — JPMorgan Chase, Bank of America and Wells Fargo — against mom-and-pop retailers who were trying to scrape by on meager profit margins.

There were elements of truth to both arguments. Home Depot executives, for example, told financial analysts on a conference call this year that a cap on debit fees could save the company $35 million a year.

Banks, in a flurry of ads in subway cars and on television, portrayed the debit fee reduction as a $12 billion gift to retailers. “Bureaucrats want to take away your debit card!” read a print ad that tried to argue that the fee cuts would make debit cards so unprofitable that smaller banks and credit unions would either charge for debit cards or raise fees on checking accounts or other consumer services to make up the loss.

Similarly, independent business owners testified before Congress that debit fees had raised their costs.



The Federal Reserve had already missed an April deadline to complete the debit card rules, and lobbyists on both sides of the issue said that Fed officials expressed a desire for Congress to take the issue out of their hands.

Though the major card companies said they would work to put a system in place that allowed for two tiers of charges — one for big banks subject to the limits and another for smaller banks that were exempt — the top banking regulators at the Fed and the Federal Deposit Insurance Corporation each expressed doubts that such a system would work, because market forces would guide transactions to the lower-cost option.

“It’s going to affect the revenues of the small issuers,” Ben S. Bernanke, the chairman of the Federal Reserve, told a Senate committee earlier this year, “and it could result in some smaller banks being less profitable or even failing.”

The Sunlight Foundation said in an April report that 24 lobbying firms had been hired last year to influence action on the debit card rules. Eighteen of those firms were registered as representatives of the two major debit card networks, Visa and MasterCard. A large portion of those lobbyists have gone through the revolving door between government and industry: 68 of the 79 people who registered as lobbyists for Visa or MasterCard previously worked in government, according to the Center for Responsive Politics in Washington.

Among the heavy-hitters who worked to influence votes on the debit card measure were Richard A. Gephardt, the former House majority leader and a Democrat, who represented Visa. The retailers had Don Nickles, the former Republican senator from Oklahoma, in their corner.


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Sources: NY Times, PBS, Youtube, Google Maps

Foreclosure Ruins Consumer Credit For 7 To 14 Years

After Foreclosure: How Long Until You Can Buy Again?


Walking away from a mortgage you can still afford to pay has consequences; everyone knows that. Your credit score is shot and it can be impossible to get credit.

Some homeowners, no doubt, believe that the credit score hit is worth getting out from a deeply underwater mortgage. They may owe, say, $500,000 when their house value is only valued at $350,000. And, they figure, there's no way it will ever be worth what they owe so it's better to get out from underneath the burden.

After default, they reason, they can raise their FICO scores by paying all their bills on time and eventually finance another home purchase.

Don't count on it.

While homeowners who default due to economic hardship, such as a job loss or divorce, normally must wait two to five years before buying a home again, walkaways may face double that time.

"It could be well over seven or eight years before [walkaways] are able to obtain a mortgage to buy a home again," said Jay Brinkmann, chief economist for the Mortgage Bankers Association.




How Foreclosure impacts your credit score

"Credit scores are only one component of a complete credit decision," Brinkmann said. "[In these cases] credit scores are not a good indicator of their willingness to continue to pay their mortgage."

But future underwriters will scrutinize their records very closely, and if they find no precipitating factors leading to the defaults -- no job loss, no health issues --the repaired credit score won't overshadow the black mark of a walkaway.

"If you made a strategic decision to default on paying your mortgage, it will work against you," said Bill Merrell of the National Association of Review Appraisers and Mortgage Underwriters.



Merrell, who teaches underwriting, said banks are looking at several factors in determining whether to grant mortgages: the amount of money borrowers have in the bank; employment histories; payment history.

However, banks may be far more lenient if the default resulted from factors somewhat beyond the borrower's control, such as from local economic problems. "They'll give you more consideration if it's job related," he said. But, he added, banks look at strategic defaults "very negatively."

That said, it's not impossible to get a loan. Banks still want to make interest payments, so they might be willing to gamble with a walkaway.

"It might be a little more difficult for them to borrow, but [banks'] drive for market share -- to profit from making loans -- will trump that caution," said Keith Gumbinger, of the mortgage information publisher HSH Associates. "I don't think we'll see a full denial."

It's hard to foresee the state of mortgage lending six or seven months from now, let alone seven or eight years into the future. So lenders may look at applications from one-time strategic defaulters and say, "Yes, they walked away but it's a whole different market now," according to Gumbinger.

Even so, lenders may require more from borrowers who walked away than those who didn't.

"To the extent they could get a mortgage," said Brinkmann, "they can count on needing a heavy down payment."

The lenders may ask for 30% down or more. That would provide enough collateral cushion that the bank could get all or most of its money back in a foreclosure.

Strategic defaulters might also be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.


Sources: CNN, Video Credit Score

Obama Vetos Foreclosure Docs Bill! Consumer Protection!

Obama Sends Foreclosure Docs Bill Back To Congress


President Barack Obama has rejected a bill that the White House fears could worsen the mounting problems caused by flawed or misleading documents used by Banks in Home Foreclosures.

White House press secretary Robert Gibbs said Thursday that Obama is sending a newly passed bill back to Congress to be fixed because the current version has "unintended consequences on consumer protections." The bill would loosen the process for providing a notary's seal to documents and allow them to be done electronically.

Obama will not sign a bill that would allow foreclosure and other documents to be accepted among multiple states. Consumer advocates and state officials had argued the legislation would make it difficult for homeowners to challenge foreclosure documents prepared in other states.

The White House said Thursday it is sending the bill back to Congress for revisions, and that the administration would work with lawmakers on it.

O. Max Gardner, a consumer lawyer in Shelby, N.C., said the bill would have made the problems with foreclosure documents worse. That's because mortgage companies would have been able to mass-produce documents and affix a digital version of a notary's seal rather than one on paper.



"They could process more foreclosure cases with improper and invalid documents and make it more difficult for consumers to try to fight," he said.

Obama used a rare "pocket veto" - a tactic for killing a bill that can be used only when Congress is not in session. It essentially takes effect when the president fails to sign a bill within 10 days. Obama has yet to issue a traditional veto during his presidency; he has used a pocket veto once before, in December 2009, to address what amounted to a technicality on a defense spending bill.

A furor has been growing as mounting evidence has surfaced that mortgage lenders have been evicting homeowners using flawed court papers. State and federal officials have been ramping up pressure on the mortgage industry over concerns about potential legal violations.

Also Thursday, Senate Majority Leader Harry Reid, D-Nev., urged five large mortgage lenders to suspend foreclosures in Nevada until they have set up systems to make sure homeowners aren't "improperly directed into foreclosure proceedings." Nevada is not among the states where banks have suspended Foreclosures.

Attorney General Eric Holder said Wednesday that the government is looking into the issue. Earlier in the week, House Speaker Nancy Pelosi and dozens of Democratic lawmakers urged bank regulators and the Justice Department to probe whether mortgage companies violated any laws in handling foreclosures and borrowers' requests for loan assistance.

Ohio Secretary of State Jennifer Brunner, along with liberal groups, had urged Obama to reject the measure after allegations surfaced of widespread flaws in the documents used in the foreclosure process. Those included not having a notary public in the room to certify that a signature is valid.

Three banks have halted some foreclosures in 23 states after evidence surfaced that their employees or outside lawyers signed documents without reading them or filed inaccurate paperwork.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.

Those states are:

Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.


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Sources: Washington Post, CBS News, CNN, Huffington Post, Youtube, Google Maps

Wall Street Battles Washington: Who Will Win?

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The Wall Street-Washington Divide


For all the money that has moved back and forth between Wall Street and Washington in recent years, what’s most striking is how little each understands, still, about the other.

When young executives from Goldman Sachs appeared before a Senate panel Tuesday, members were taken aback by what they viewed as an Arrogant and Condescending tone; “smart asses,” said one Conservative Republican.

Yet by afternoon, there were flashes of sympathy for Goldman chief Lloyd Blankfein as he tried to get senators to appreciate his pride in making the markets work — not just in profiting from “short” and “long” bets on derivatives.

All this comes to bear now in a few lines in the giant bill that would force major banks to spin off their swaps operations or lose all federal aid, including access to the Federal Reserve’s discount window. And Wednesday’s agreement to begin debate means the issue could be joined as early as Thursday, when Democrats take up their revised derivatives language — including this Section 716.

The restrictions go beyond even the “Volcker rule” associated with the former Fed chairman, Paul Volcker, an adviser to President Barack Obama. And since just five commercial banks — including Goldman, JPMorgan Chase and Morgan Stanley — account for 97 percent of the value in the derivatives market, it’s seen as a direct hit on Wall Street, provoking a fierce reaction.

Sen. Judd Gregg (R-N.H.) was almost apoplectic this week in a floor speech condemning the provision as an ill-informed attempt to really rough up Wall Street — not reform it.

“It is penal. That is the purpose of this: punitive,” said Gregg. “In the end, it is going to cut off our nose to spite our face.”

“Rampant pandering populism” was his favorite catchphrase; that and Argentina under Juan Peron in the 1950s.

The Treasury — albeit considerably calmer — shares some of his concerns. An unusually aggressive memo from the Federal Reserve staff recommends outright that the provision be deleted. But at the insistence of Senate Agriculture Committee Chairwoman Blanche Lincoln, it remains.

The Arkansas Democrat has touched a chord among senators wanting to break up the concentration of power in a few banks and put the focus back on traditional lending, not speculative trades.

“If they want to do swaps, there’s no problem with them wanting to be in this business,” Lincoln told POLITICO. “But they need to separate themselves out so they are not putting at risk the depositors from the bank. And I don’t think that’s an unreasonable thing to ask.”

“They can do it. They just have to separate it out. They have to capitalize it on its own. They can’t capitalize it from the depositors at the bank.”

Nonetheless, Volcker, who remains an icon for many in Congress, has proposed a more qualified ban: allowing banks to operate a derivatives business to serve their customers but not to trade among themselves or take positions on a proprietary trade.

For example, if a big Wall Street bank were asked to offload a large block of stock for a retirement investment fund, it might decide to do so in increments, so as to guard against any sudden impact on the markets. Since those stock transactions could then take some time, Volcker would allow the bank to protect itself — and its depositors — by generating derivatives as a hedge on the stock price.

Lincoln said she’s not fazed by going beyond Volcker. But as she explained her language, she also seemed to be leaving some room for compromise. Bank holding companies could have swap operations — separate from the bank itself, for example. And she said she is not opposed to a bank’s buying a swap to protect itself but that it ought not to be the dealer.

“They can still use a derivative as a risk-balancing tool,” Lincoln told POLITICO. “They just can’t be a major swap dealer.”

Watching from across the Capitol, House Financial Services Committee Chairman Barney Frank (D-Mass.) said that Lincoln’s comments did leave room for compromise.

“The question is whether there is a legitimate need for commercial banks, including small ones, to be able to hedge their own risks,” Frank said in an interview. “If that’s made clear, then there is no problem.”

“There’s a bit of a push-pull in this. I believe the consensus will be, they can’t be dealers, they can’t be major players, but they should be allowed to hedge their own commercial risk.”

“Volume becomes very important for the regulators,” Frank said, imagining some conversation in the future when a regulator asks a bank: “‘You’re saying you’re hedging your own risk, and you’re way out there?’”

“I like the idea that banks don’t have other profit centers,” the chairman said, smiling. “They’ll have to lend more money.”

Gregg warned that separating the banks from swaps operations will create less credit, not more, since the new independent entity will drain away capital to meet its own needs.

“Where it comes from, quite honestly, is the creditworthiness of other activity. ... It will cause a contraction of about $700 billion of credit in this country.”

Within Democratic ranks, Lincoln’s activist stance is not without some irony. In the run-up to her committee markup last week, Treasury officials had portrayed her as being too weak on derivatives regulation and took credit for turning her around.

But she’s now gone further than the administration expected — and left Treasury in a position where it now looks like it’s defending the Wall Street banks from a more populist Congress.

Treasury Secretary Timothy Geithner didn’t help himself in this regard by failing to even meet with the new chairwoman before her markup. And given his own history with the New York Federal Reserve and dealings with many of the same Wall Street interests, it’s the Lincoln camp that now suggests he ought to be on the defensive.


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Sources: Dylan Ratigan Show, MSNBC, Politico, Google Maps

Pres. Obama Praises Auto Industry, Challenges Wall Street - Weekly Address

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Sources: WCNC, Whitehouse.gov, Google Maps

Obama Invites Wall Street To Join Reform Debate

President Obama Seeks Reform Buy-In From Wall Street


President Barack Obama told an audience stocked with some of Wall Street's brightest luminaries that he wants them to join him in passing new financial regulation legislation, criticizing a “failure of responsibility” that stretched from Wall Street to Washington and “nearly dragged our economy into a second Great Depression."

"I believe in the power of the free market," Obama said in remarks delivered at New York's Cooper Union. "But a free market was never meant to be a free license to take whatever you can get, however you can get it. That is what happened too often in the years leading up to the crisis."

Obama's remarks came at a moment when Senate negotiators said they were getting closer and closer to a deal allowing the regulatory legislation to move to the Senate floor. The political momentum led some observers to predict the bill could pass — and be signed by Obama — by Memorial Day.

Still, Obama urged the Wall street executives packing the hall to stop resisting the measure.

Both bills, he said, represent "significant improvement on the flawed rules" that are in place today, "despite the furious efforts of industry lobbyists to shape them to their special interests."

"I am sure that many of those lobbyists work for some of you," Obama said. " But I am here today because I want to urge you to join us, instead of fighting us in this effort."

Sitting in the third row as Obama addressed the audience were two executives squarely in the sights of Obama's administration: Goldman Sachs CEO Lloyd Blankfein and his number two, Gary Cohn.

The arrival of the Goldman duo, whose powerhouse Wall Street firm faces securities fraud charges from the SEC, heightened the drama of a speech.

Also in the audience as Obama spoke was Rolling Stone publisher Jann Wenner — whose magazine famously called Goldman Sachs a "great vampire squid wrapped around the face of humanity" in an article on the bank's vast influence last summer.

Wenner told POLITICO that Blankfein approached him before the speech began and said "I feel like I know you," mentioning the vampire squid article, which proved hugely damaging to Goldman's public image. Today, though Wenner said he doesn't think the phrase was overstated. "It met the case," he said, describing, as Blankfein schmoozed with audience members a few seats away, Goldman's "blood tentacles sucking money out of everything."

The Rev. Al Sharpton was also in the crowd, and told POLITICO that he and Blankfein chatted about growing up in Brooklyn, where the two men attended rival high schools. "It seems like we've been on rival sides for a long time," Sharpton said of Blankfein.

But Sharpton said he was pleased with Obama's decision to come to New York. "I'm glad he's here," Sharpton said. "He's doing what he said he'd do, despite the fact that so many on Wall Street contributed to his campaign."

In his remarks, the President also pushed back against GOP claims that the bill allows for more bailouts of Wall Street. "But what is not legitimate is to suggest that we’re enabling or encouraging future taxpayer bailouts, as some have claimed" Obama said. "That may make for a good sound bite, but it’s not factually accurate."

Obama made a pitch for several of the key items of the reform legislation.

On the "Volcker Rule," which would prohibit banks from engaging in certain transactions the president calls risky, Obama said, new restrictions would bring confidence back to the financial system -- which would be good for Wall Street. "By enacting these reforms, we’ll help ensure that our financial system – and our economy – continues to be the envy of the world," he said.

On the complex financial products known as derivatives, Obama said, that there are some legitimate uses of the instruments, such as for hedging business risk. Still, he said, the sector needs more transparency. "We want to ensure that financial products like standardized derivatives are traded in the open, in full view of businesses, investors, and those charged with oversight."

On the proposed new consumer financial protection agency, which would be housed inside the Federal Reserve, Obama said that customers too often suffered large losses as a result of abusive business practices. And he laid out a vision of what might happen once the agency was in place:" "Instead of competing to offer confusing products, companies will compete the old-fashioned way: by offering better products," he said. "That will mean more choices for consumers, more opportunities for businesses, and more stability in our financial system."

Obama closed by offering the bankers in the room a history lesson, quoting from a Time Magazine article from June of 1933 -- in which bankers said that the recently created FDIC created a "monstrous system."

But the FDIC, Obama said, became "an institution that has successfully secured the deposits of generations of Americans."


Sources: Politico

Goldman Sachs To Blame For Economy Crippling Foreclosure Crisis?

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Visit msnbc.com for breaking news, world news, and news about the economy

For Goldman, A Bet’s Stakes Keep Growing



For Goldman Sachs, it was a relatively small transaction. But for the bank — and the rest of Wall Street — the stakes couldn’t be higher.

Accusations that Goldman defrauded Customers who bought investments tied to risky subprime mortgages have only just begun to reverberate through the financial world.

The civil lawsuit that the Securities and Exchange Commission filed against Goldman on Friday seemed to confirm many Americans’ worst suspicions about Wall Street: that the game is rigged, the odds stacked in the banks’ favor. It is the first big case — but probably not the last, legal experts said — to delve into a Wall Street firm’s role in the mortgage fiasco.

It is a particularly sensitive time for Wall Street. Washington policy makers are hotly debating a sweeping overhaul of the nation’s financial regulations, and the news could embolden those seeking to rein in the banks. President Obama on Saturday stepped up pressure for financial reform by accusing Republicans of “cynical and deceptive” attacks on the measure.

The S.E.C.’s action could also hit Wall Street where it really hurts: the wallet. It could prompt dozens of investor claims against Goldman and other Wall Street titans that devised and sold toxic mortgage investments.

On Saturday, several European banks that lost money in the deal said they were reviewing the matter. They could try to recoup the money from Goldman.

And it raises new questions about Goldman, the bank at the center of more concentric circles of economic and political power than any other on Wall Street. Goldman — whose controversial success has leapt from the financial pages to the cover of Rolling Stone — has fiercely defended its actions before, during and after the financial crisis. On Friday, it called the S.E.C.’s accusations “unfounded.”

Wall Street played a complex and, at times, seemingly conflicted role in the mortgage collapse. Goldman and others worked behind the scenes, bundling home loans into investments for sale to investors the world over. Even now, more than 18 months after Washington rescued the teetering financial system, no one knows for sure how much money was lost on those investments.

The public outcry against the bank bailouts was driven in part by suspicions that a heads-we-win, tails-you-lose ethos pervades the financial industry. To many, that Goldman and others are once again minting money — and paying big bonuses to their employees — is evidence that Wall Street got a sweet deal at taxpayers’ expense. The accusations against Goldman may only further those suspicions.

“The S.E.C. suit against Goldman, if proven true, will confirm to people their suspicions about the total selfishness of these financial institutions,” said Steve Fraser, a Wall Street historian and author of “Wall Street: America’s Dream Palace.” “There’s nothing more damaging than that. This is way beyond recklessness. This is way beyond incompetence. This is cynical, selfish exploiting.”

On Friday, Goldman’s stock took a beating, falling 13 percent and wiping out more than $10 billion of the company’s market value. It was a possible sign that investors fear that the S.E.C. complaint will damage Goldman’s reputation and its ability to keep its hands on so many sides of a trade — a practice that is immensely profitable for the firm.

It is unclear whether the S.E.C. can prevail against Goldman. The bank has long maintained that it puts its clients first and, in a letter in its latest annual report, it reiterated that position. Goldman said it never “bet against our clients” in its trades but rather was trying to hedge against other trading positions.

The transaction cited in the S.E.C. complaint cost investors just over $1 billion, relatively small by Wall Street standards.

Still, Wall Street analysts said Goldman and other banks, having navigated the financial crisis, might now face a new kind of risk: angry investors. Most major Wall Street banks also created collateralized debt obligations, which are at the heart of the Goldman case. C.D.O.’s, which are essentially bundles of securities backed by mortgages or other debt securities, turned out to be among the most toxic investments ever devised.

“Any investor who bought these C.D.O.’s and lost a significant amount of money is probably looking at their investment and wanting to know: what were the details behind the sale?” said William Tanona, an analyst at Collins Stewart. “Will they contact the S.E.C. and say, ‘Here’s the transaction we participated in, and we’d love to know who is on the other side of it?’ ”

The biggest victim among investors, the S.E.C. complaint said, was the Royal Bank of Scotland, which inherited a loss of $841 million after it took over the Dutch bank ABN Amro. According to a person briefed on the matter, the Royal Bank, now controlled by the British government, is studying the documents but is not ready to decide whether to try to recoup money from Goldman.

The German bank IKB Deutsche Industriebank, as well as the German government, which in 2007 put up billions to prevent IKB from collapsing, still seemed to be sorting out who might have legal standing to pursue a possible claim.

Goldman faces a dilemma in its response. Wall Street firms tend to settle cases like this one, but Goldman’s statement on Friday indicated it intended to dig in its heels and fight, perhaps in part to discourage suits by investors. That strategy could set it up for a long, messy and public battle.

The S.E.C. complaint named just one Goldman employee: Fabrice Tourre, a vice president in the bank’s mortgage operation who worked on the questionable transaction.

But securities lawyers say Mr. Tourre appears to be a small fish. Federal investigators may try to gain his cooperation and extend their investigation to other Goldman employees. On Friday, Mr. Tourre’s lawyer did not provide a comment on the complaint.

A big question is how far up this might go. The S.E.C. said the deal in its complaint had been approved by a panel at Goldman, the Mortgage Capital Committee.

“It’s typical that they’d start with someone lower down on the chain and try to exert pressure on that person,” said Bradley D. Simon of Simon & Partners, a white-collar defense lawyer in New York. “Is it really conceivable that no one else was involved in this?”

As the housing market began to fracture in 2007, senior Goldman executives began overseeing the mortgage department closely, said four former Goldman Sachs employees, who spoke on the condition they not be identified because of the sensitivity of the matter.

Senior executives routinely visited the unit. Among them were David A. Viniar, the chief financial officer; Gary D. Cohn, then the co-president; and Pablo Salame, a sales and trading executive, these former employees said. Even Goldman’s chief executive, Lloyd C. Blankfein, got involved.

Top executives met routinely with Dan Sparks, the head of the mortgage trading unit, who retired in spring 2008. Managers instructed several traders to sell housing-related investments. Indeed, they urged Mr. Tourre and a colleague, Jonathan Egol, to place more bets against mortgage investments, the former employees said.

A Goldman spokesman said Saturday that the top executives were not involved in the approval process for Abacus, the deal cited by the S.E.C., and that their involvement with the mortgage department in 2007 was related to their desire to counterbalance the positive bets on housing the banks had already made.

Mr. Blankfein has already been questioned by a Congressional commission about the toxic vehicles Goldman devised and sold, even as the bank realized the housing market was in trouble.

Recent public statements made by Mr. Blankfein seem to conflict with the S.E.C. account.

In testimony in January before the Financial Crisis Inquiry Commission, the panel appointed by Congress to examine the causes of the crisis, for example, he described Goldman’s approach to dealing with its clients: “Of course, we have an obligation to fully disclose what an instrument is and to be honest in our dealings, but we are not managing somebody else’s money.”

But the S.E.C. complaint says Goldman misled investors who bought one of the bank’s Abacus deals. The bank failed to tell them the mortgage bonds underpinning the investment had been selected by a hedge fund manager who wanted to bet against the investment, the S.E.C. says. Those bonds were especially vulnerable, the commission says.


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Sources: MSNBC, NY Times, Red Tape Chronicles, Google Maps

Obama Talks Tough About Wall Street Reform..Weekly Address

Obama's Weekly Address: Holding Wall Street Accountable

The strongest Consumer Protections ever.

Bringing Transparency to financial dealings.

Closing loopholes to stop recklessness and irresponsibility.

Holding Wall Street accountable and giving shareholders new power in the financial system.

President Obama lays out what Wall Street Reform is about, and questions whether opposition from the Senate Republican Leader might have something to do with his recent meeting with Wall Street executives.



Sources: Whitehouse.gov, Youtube

BOFA Finally Offers Relief For Countrywide Mortgage Holders

Visit msnbc.com for breaking news, world news, and news about the economy

Bank Of America To Start Reducing Principal On Underwater Mortgages



Bank of America Corp. is giving some of its most troubled mortgage borrowers relief from the threat of foreclosure.

The bank, the largest mortgage servicer in the country, said Wednesday it will forgive up to 30 percent of some customers' total mortgage balances. The homeowners must have missed at least two months of mortgage payments and owe at least 20 percent more than their home is currently worth.

The plan is the newest provision of an agreement the Charlotte, N.C.-based bank reached 18 months ago with state attorneys general to settle charges over high-risk loans made by Countrywide Financial Corp.

The loans were made before Bank of America acquired the mortgage lender in mid-2008. The bank has since stopped making those loans.

Although the motivation for Bank of America's announcement was to resolve legal problems, it has the potential of putting pressure on other banks to also forgive principal on loans that are in danger of failing. Bank of America is the nation's largest bank, and it's among the first to take a systematic approach to reducing mortgage principal when home values drop well below the amount owed.

The Treasury Department, which already has a mortgage modification program, is developing similar plans for principal reductions at other mortgage servicers, according to industry officials speaking on condition of anonymity because they were not authorized to discuss the conversations. They said an announcement could come in the next few months.

"They're talking about doing something and talking seriously about it," Julia Gordon, senior policy counsel at the Center for Responsible Lending, a consumer group, said of Treasury officials. "I think the concern now is fairness and making sure that the public understands the importance of principal reductions toward stabilizing the housing market and helping everybody."

Bank of America estimates that about 45,000 customers will qualify for its plan. The offer will cut total reduced principal by about $3 billion.

Some banks said they have already reduced principal on some mortgages. Wells Fargo & Co. said Wednesday it has modified more than 52,000 adjustable-rate mortgages that it inherited through its acquisition of Wachovia Corp. in late 2008. As of the fourth quarter, the bank also had reduced the principal on those mortgages by more than $2.6 billion.

Citigroup Inc. would not say whether it planned a similar program, but it did issue a statement that said in part, "Citi does reduce principal for borrowers on a case-by-case basis after other options to address affordability are exhausted."

A spokeswoman from JPMorgan Chase & Co. declined to comment on whether it planned a similar program.

Bank of America's announcement came as another report pointed to continuing problems in the housing market. The government said new home sales dropped to a record low last month, a day after the National Association of Realtors said sales previously occupied homes also fell in February, the third straight monthly decline.

Millions of homes have gone into foreclosure since the housing market collapsed in late 2007. The loans affected by Bank of America's announcement include certain subprime and option adjustable rate mortgages. Option ARMs allow borrowers to start with minimal monthly payments that actually increase the loan's balance.

The borrowers who can take advantage of the Bank of America program must also qualify for the Obama administration's $75 billion mortgage loan modification program.

The program announced Wednesday could lower the bank's earnings, which have already been hurt by consumers' continuing defaults on mortgage and credit card loans. Bank of America was among the hardest hit by the credit crisis and recession.

It's not clear how big a financial hit Bank of America will take by reducing mortgages. But the move will likely be less costly than having homeowners walk out on their mortgages or opt to do a short sale, banking analyst Bert Ely said. A short sale happens when a seller owes more than the house is worth, and the lender is willing to accept less than the mortgage balance.

"This is about loss minimization," Ely said. "There's going to be losses (for Bank of America). The question is what's the easiest way out."

The plan does carry risks. For starters, borrowers who aren't 60 days behind on their mortgages may stop making payments so they can qualify. The more borrowers who try to qualify, the bigger the potential loss for Bank of America. The bank will also have to absorb the costs of renegotiating the loans.

Even so, "the move helps create the best prospect of avoiding a further downward home price spiral, which would result in even deeper losses" for the bank, said Howard Glaser, a mortgage industry consultant, in an e-mail.

Investors appeared pleased with the news, and sent Bank of America shares up 44 cents, or 2.6 percent, to close Wednesday at $17.57.

According to new plan, which begins in May, Bank of America will first offer to set aside a portion of the principal balance, interest free. That principal can be forgiven over five years, if homeowners don't miss any payments. The maximum decrease in principal will be 30 percent.

The forgiveness allows a homeowner to bring a mortgage balance back down to 100 percent of the home's value, the bank said.

Glaser said that if the Obama administration launches a similar effort for the entire industry, that would be a "major shift in loan modification efforts."

Lenders including Bank of America have been criticized for not helping enough borrowers to complete the Obama administration's $75 billion mortgage modification program, which is widely viewed as a disappointment. Only 170,000 homeowners have completed the program so far.

As of last month, Bank of America had completed modifications for about 22,000 homeowners, or about 8 percent of those signed up. That compares with about 12 percent for Wells Fargo and 11 percent for both JPMorgan Chase and Citigroup.

The mortgage modification program does not address the problems of borrowers who are considered underwater, or owing more than their homes are worth.

The Treasury Department estimates that 1.5 million to 2 million homeowners will complete the program by the end of 2012, about half of the original goal. A report issued late Tuesday by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, says numerous changes to government guidelines "caused confusion and delay" and said the government did not do enough to advertise the program.


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Sources: Bank of America, MSNBC, Huffington Post, Google Maps