Massachusetts Senator Elizabeth Warren, in an open letter to U.S. president-elect Donald J. Trump, takes aim at the new administration’s transition team, packed with corporate insiders and lobbyists. pen

In her letter, Warren said if Trump intends to keep his promise to voters to “drain the swamp” and rid it of “powerful special interests” that “rigged” the political and economic systems against the average American, he needs to start by reevaluating his own transition team. Although Trump promised he would not be a puppet to lobbyists or special interests or donors – something that struck a cord with many voters – he has since elevated to his team a number of industry insiders, special interest lobbyists, wealthy investors and Wall Street bankers. Several more are reported to be on the short list of possible cabinet members.

For example, the reported top recommendation for treasury secretary is a hedge fund manager and partner at Goldman Sachs, who once worked for George Soros. The proposed commerce secretary is a billionaire private equity executive who owned a coal mine with hundreds of safety violations before an explosion killed a dozen miners. He’s also a top member of a Wall Street fraternity that, according to New York Magazine, finds entertainment in singing drunken show tunes that mock poor people. These are exactly the kind of people Trump vowed he was running against. Continue reading

Many were shocked by Donald Trump’s win on election day. However, it appears there may have been some foreshadowing that was largely ignored by mainstream media outlets. As we take a step back to analyze the anti-establishment, populist movement that fueled this fire, there is one element that shouldn’t be overlooked: The failure of the Obama administration to hold accountable a single, high-ranking executive at any large financial firm for the 2008 economic crisis.american flag

Millions of people lost their jobs. Millions of people lost their homes. And after the smoke had cleared, there was a failure to pursue those who knowingly engaged in fraud. It confirmed for many the suspicion that powerful players on Wall Street receive special attention. Those on Main Street? We get the short end of the stick. Trump’s repeated assertions of a “rigged” system rang true for a huge swath of the electorate.

Although there were a few media outlets that doggedly pursued this lack of accountability (Rolling Stone was one), many were content to simply report it and move one. Those in affluent areas likely overlooked the fact that this failure resonated with people long after the civil settlements had been inked. These high-profile bankers paid some fines, and sometimes shelled out money for penalties from their own pockets. In exchange, they were able to avoid any jail time. Understandably, that left millions of Americans feeling cheated, and as if the justice system was broken. Continue reading

Target Corp. recently lost a $4.6 million personal injury lawsuit after a South Carolina woman alleged she was hurt when swatting a hypodermic needle away from her young daughter, who had picked up the dangerous device in the store parking lot. needle1

According to court records, the incident occurred in 2016 at a store in Anderson. The woman testified she was getting out of her car when she spotted her 8-year-old daughter picking up the needle. Instinctively, the mother knocked the needle from her daughter’s grasp. As she did so, the needle stuck her in the right palm. She walked right into the store and reported what had happened to an employee. That worker jotted down in an incident report that the woman “seemed worried.”

She was later transported to a local hospital, where she was tested for both HIV and hepatitis. Although she tested negative for both, she did undergo treatment that involved consuming a powerful medication that would prevent her from contracting HIV. This made her extremely ill, which prompted her husband to take an extensive period of time off work. She has thus far continued to test negative for these diseases.  Continue reading

Amid sharp criticism of its actions during the alleged sham accounts scandal – specifically the inaction to it – the board for Wells Fargo is clawing back some $41 million from its embattled CEO and chairman John Strumpf. That money comes from unvested stock awards. Stumpf is also going to forego his salary while the company delves into its own retail banking practices – specifically sales – that resulted in bank employees opening hundreds of thousands of pony accounts without customer approval. Those employees were reportedly trying to reach account goals set by the bank. money12

In addition to taking action against Strumpf, the bank’s previous head of community banking is giving up her unvested equity stock awards, which currently are valued at $19 million. She is also immediately retiring and also will not receive certain retirement benefits, valued in the millions. Neither is going to take home any bonuses for this year.

This practice of “clawing back” executive awards has been within the power of federal regulators. However, it was rarely tried because typically, it required a criminal conviction – or at least the  serious threat of one. However, it’s likely that this move by Wells Fargo is going to prompt other companies to think about doing the same. Reforms passed in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 asks for stronger clawback rules. Right now, the Securities and Exchange Commission is fielding public commentary on setting some new rules on the practice. If those new rules are finalized, the agency could force clawback action in many more cases beyond what constitutes as obvious, deliberate fraud. Negligence resulting in restated earnings could also prompt clawbacks.  Continue reading

For at least five years, Wells Fargo was engaged in a practice of secretly opening some 2 million phony credit card and deposit accounts in an effort to put multiple banking products in customers’ hands. That kind of growth strategy was central to the bank’s business, and employees were pressured to meet demanding quotas calling for each customer to have eight accounts with the bank. This prompted employees to cut corners. They started opening up accounts without customers’ Ok or knowledge.moneytower

This practice started at least as far back as 2011, but there is evidence to indicate it may have been going on even back in 2009. As a result, the bank was able to rake in at least $2.6 million in additional fees on accounts customers never wanted to begin with. In many cases, customers didn’t even know they existed, and the fees were simply being deducted from other legitimate accounts. Federal regulators got involved this month, and the bank quickly agreed to settle the case for $185 million. Thousands have been fired (though not the company CEO) and U.S. Attorneys have begun investigations. Sen. Elizabeth Warren (D, Mass.) lambasted CEO John Stumpf during a Senate Banking Committee. Although he apologized, Warren told him he was personally responsible, should resign and be criminally investigated.

But the question of why this took so long to uncover goes back to another practice that isn’t unique to Wells Fargo. It’s called an arbitration clause.  Continue reading

Prosecutors with the U.S. Justice Department are reportedly giving up their quest to take action against the co-founder of Countrywide Financial Corp. for his alleged role in doling out risky subprime mortgages that played a major role the national financial crisis. wallstreetbusinessman

Bloomberg reports federal prosecutors informed Mozilo via letter that it did not plan to take any further action against him, effectively ending more than 10 years scrutiny of the man whose lending practices were questionable at best. This lack of reckoning is also indicative of the government’s largely ineffective efforts to obtain accountability for those responsible for collapse of the U.S. housing market, which sparked the Great Recession.

Now 77, Mozilo has spent the last several years living in a 13,000-square-foot home, writing a memoir and investing in real estate. He has insisted neither he nor his firm’s lending practices had anything to do with why the market collapsed.  Continue reading

A federal jury has just awarded $2.5 million in punitive damages – on top of $6,100 in compensatory damages – to a man who sued Ocwen Loan Servicing and Equifax for allegedly willful violation of the Fair Credit and Reporting Act. gavel7

The original complaint was filed in 2014, after the firms reportedly failed to investigate an alleged error on plaintiff’s credit report – one that cost him a refinancing for which he was applying.

An element of the FCRA, codified in 15 U.S.C. 1681, requires that a company investigate all disputes. Plaintiff filed numerous disputes with the loan servicer after he got an Equifax credit report that indicated he was behind on his mortgage. Ocwen countered its investigation was sufficient, but even if it wasn’t, plaintiff hadn’t proven damages because he had other negative accounts that impacted his loan application standing.  Continue reading

Loan servicing is the process by which the borrower – either of a home loan or student loan – entrusts the daily management of that loan repayment to a third party. That third party is supposed to handle the loans on behalf of the owner, directing payments through the system and deciding how best to handle defaults. money

It is not all that complicated, loan servicing. And yet, it has become an industry rife with systemic problems that continue today, even 10 years after the start of the national foreclosure crisis. It seems many servicers are unable to rely on a business model in which they can profit and also not swindle their customers. Perhaps its’ time we start weighing some alternatives.

Consider that just recently, Ocwen, one of the country’s largest servicers, was just slapped with sanctions via the National Mortgage Settlement. These were terms the company had agreed to back in 2013, after it was accused of breaking consumer financial protection laws at nearly every step in the mortgage servicing process.  Continue reading

Ocwen Financial holds the keys to some 17,500 defaulted home mortgage loans – and can’t continue to foreclose on a single one. stop

That is true at least for the time being, after the National Mortgage Settlement monitor announced the company is barred from foreclosure action after falling short of the required performance metrics.

The monitor announced the mortgage servicer failed on a key metric that requires the mortgage servicer to send a loan modification denial notification to the borrower. This notice needs to denote why the modification was denied, as well as the facts that weighed into this ruling by the servicer. It also must indicate a timeline in which the defaulted homeowner can offer evidence the decision was a mistake.

The National Mortgage Settlement office first announced the company wasn’t in compliance with this metric back in October. However, it’s now been seven months, and the company still hasn’t remedied the problem. That led the office to bring all of Ocwen’s foreclosures to a screeching halt.  Continue reading

The majority of Americans are not prepared for retirement. This includes those who are fast approaching retirement age. grandmothersad

Study after study has shown a substantial portion of workers don’t have any pension or savings whatsoever.

Of course, this impacts these individuals directly. But it’s also a threat to the financial fabric of the rest of the country. They will either need to work long after they might otherwise have retired (which leaves less space for younger workers to break into new careers) or if they are unable to work, their cost of living after a meager Social Security check will be passed on to taxpayers.

The reasons are multi-pronged, but it has to do with:

  • Increased cost of living;
  • Stagnant wages;
  • The collapse of the housing market;
  • Mounting debt.

Continue reading