House Republicans want answers on how federal agencies’ mega-settlements with issuers of mortgage-backed securities came to include tens of millions of dollars in payments to “housing counseling” groups allied with the Obama Administration [DS News] Earlier on banks’ payments to activists here, here, etc.
The Obama Administration has repeatedly dodged cases in fear of judicial review of its controversial application of the disparate impact theory to mortgage lending and other aspects of the housing market, but its position has now met with a stiff rebuke from district court judge Richard Leon [Insurance Journal]:
“This is yet another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction,” Leon wrote.
He called the rule “nothing less than an artful misinterpretation of Congress’s intent that is, frankly, too clever by half.”
- SEC regs suppress small business capital formation and that’s a shame [Commissioner Daniel Gallagher via Bainbridge]
- Federally sponsored gripe site for financial institutions not likely to end well [Hester Peirce and Vera Soliman, Mercatus via Kevin Funnell]
- Alleged terror payments “routed through” sued bank also went through major New York banks, which shouldn’t be surprising [Fisher]
- Did mid-level managers in securitized mortgage finance know they were in a housing bubble but cynically go ahead? Evidence against [Cheng et al., American Economic Review via MR]
- Shareholder litigation: “New ‘loser pays’ standard could curb abusive lawsuits” [Examiner editorial] Delaware take note: corporate by-law changes that cut off fee-seeking opportunism deserve acclaim [Keith Paul Bishop via Bainbridge]
- NYT was hot on “Goldman Sachs manipulated aluminum market” allegations but judge wasn’t [Reuters, July 2013 NYT]
- CFPB might shrug off discrimination and retaliation charges, but many of the firms it regulates could not afford to [Hans Bader]
- Following public furor, are feds backing off “Operation Choke Point” program discouraging banking services to lawful but disfavored enterprises? [Daily Signal] Or does the choking continue? [Washington Business Journal (Capital One cuts off check-cashing firms)]
- FATCA challenge: “Ontario women sue Ottawa over compliance with new U.S. banking law” [Winnipeg Free Press, earlier]
- Corporate tax inversions: yes, journalist Jonathan Alter really did recommend “McCarthy-era loyalty oaths” [Taranto/WSJ] Obama admininstration was for them (in Delphi case) before it was against them [Bloomberg] And they’re popular with President Obama’s donors even aside from Warren Buffett [same] More: Charles Krauthammer.
- WSJ editorial on sanctions against Robbins Geller in Boeing securities suit. More: Daniel Fisher;
- Profile of Vanguard tax informant David Danon [Philadelphia Inquirer, earlier]
- Some Denver foreclosure lawyers settle overcharge case [Kevin Funnell, earlier]
- Contains real juice: “$35 million will go to groups that provide legal, housing and community development programs.” [AP/The Saratogian on New York’s share of Bank of America settlement; Stephen Bainbridge]
- Federally run consumer complaint database at CPSC has been unfair and unreliable mess, so naturally CFPB wants one of its own [Kevin Funnell]
- Los Angeles, Miami, Providence, and Cook County among municipalities piling on lenders with mortgage and disparate-impact suits [same]
- “Just one way to stop corporate tax inversions: cut taxes” [Chris Edwards, NYT/Cato; more]
- “The IPO is dying. Marc Andreessen explains why.” [Timothy Lee, Vox via Tyler Cowen]
- No mercy for the Swiss: feds’ “fierce campaign” on overseas tax compliance “doing more harm than good” [The Economist; Doreen Carvajal, New York Times]
- “Pretty much everything George Dvorsky says at io9 about corporate personhood is wrong” [Bainbridge] Dodd-Frank turns four, alas [same]
- “There was no evidence, period.” Preet Bharara loses one as jury acquits in insider trading case [Ira Stoll, Future of Capitalism]
WSJ editorial this morning: “We hold no brief for Citi, which has been rescued three times by the feds…. [But] good luck finding a justification for [the $7 billion figure] in the settlement agreement. The number seems to have been pulled out of thin air since it’s unrelated to Citi’s mortgage-securities market share or any other metric we can see beyond having media impact.
“This week’s settlement includes $4 billion for the Treasury, roughly $500 million for the states and FDIC, and $2.5 billion for mortgage borrowers. That last category has become a fixture of recent government mortgage settlements, even though the premise of this case involves harm done to bond investors, not mortgage borrowers.” More: Bloomberg. And the settlement directs Citigroup to hire former Eric Holder associate Thomas Perrilli, now at Jenner & Block, for a monitorship that is likely to prove an extremely lucrative plum [Reynolds Holding, Alison Frankel] Also: Ira Stoll.
- In banking and FCPA cases, targets of DOJ prosecution are disproportionately firms domiciled abroad, and other countries do notice that [Jesse Eisinger, NYT “DealBook”]
- “Los Angeles’ Confused Suit against Mortgage Lenders” [Mark Calabria, Cato] Providence also using disparate impact suits in hopes of making banks pay for its housing failures [Funnell]
- Podcast discussion on Operation Chokepoint with Charles J. Cooper, Iain Murray, and Todd J. Zywicki [Federalist Society, earlier]
- New round of suits against banks based on ATMs’ imperfect wheelchair accessibility [ABA Journal, earlier here]
- Walgreen’s could save billions in taxes if it moved to Switzerland from U.S. Whose fault if anyone’s is that? [Tax Foundation]
- “Left unmentioned: how fed regulation and trial lawyers deter banks from protecting themselves with overdraft fees.” [@tedfrank on NYT report about banks’ use of databases to turn down business from persons with records of overdrawing accounts, a practice that now itself is being targeted for regulation]
- Scheme to seize mortgages through eminent domain stalling as cities decline to come on board [Kevin Funnell]
- Furor grows over Obama administration’s Operation Chokepoint program chilling bank access for legal but disfavored groups [Iain Murray, Elizabeth Nolan Brown, FDIC list (not just payday lenders but also lawful purveyors of pills, guns, ammunition, and much more), Hans Bader] Parallel, though not happening under same program: JP Morgan abruptly closes accounts of former Colombia finance minister who is a renowned international economist, apparently because he made it onto a list of diplomats and other “politically exposed persons” statistically associated with legal risks and high compliance costs [Business Insider] Update via Nolan followup: Dana Liebelson at Mother Jones quotes anonymous bank officials as claiming that some account closures are wrongly being attributed to the program, but even in defending it concedes that should banks opt for continuing to service clients in disfavored lines of business they will shoulder distinctive (maybe decisive) compliance costs from “manag[ing] these relationships and risks,” engaging in due diligence, etc. Also, lawmakers like Sens. Jeff Merkley (D-Ore.) and Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.) back the program; besides, this isn’t “the first time that feds have asked banks to keep an eye on their customers” since the Know Your Customer program goes back some years. So that’s comforting!
- “Court: Standard & Poor’s is entitled to discovery supporting its ‘selective prosecution’ claim” [Volokh, earlier here and here]
- “Plaintiff? Is That Really Necessary In A Class Action?” [Daniel Fisher on ZymoGenetics case]
- Backed by hedge fund, lawyers exploit anti-terror law to squeeze global banks [Norman Lamont, New York Post]
- “CEO facial masculinity predicts firm’s likelihood of being subject to SEC enforcement action” [Jia, Van Lent, and Zeng, SSRN via @brucecarton]
- “Reflections on High Frequency Trading” [Robert Levy, Cato]
- Banks finally lay to rest long-running litigation under Missouri second-mortgage law (MSMLA), though only after one Kansas City law firm ran up more than $600 million in settlements [Litigation Daily]
A big source of frivolous litigation these days, the “sovereign citizen” cult originated on the political right but has now spread more widely [Lorelei Laird, ABA Journal]:
When involved in any legal matter, from pet licensing to serious criminal charges, sovereigns are known for filing legal-sounding gibberish, usually pro se, learned from other sovereigns who sell lessons in “law” online. Frequently, they cite the Uniform Commercial Code, maritime law and the Bible.
They’re also known for the sheer volume of their filings, which can double the size of a normal docket. …
Some sovereigns hold trials in their own “common-law courts,” convicting public officials in absentia and sentencing them to death for “treason.” …Sovereigns sometimes say they are subject only to “God’s law” or to “common law,” meaning the U.S. legal system as they believe it existed before the conspiracy. They may declare themselves independent nations, join fictional American Indian tribes or attempt to create a replacement government within the sovereign community.
Don’t assume that public officials and public employees are the only ones swept in:
The Atta family locked up their Temecula, Calif., home and went on vacation in 2012. While they were gone, Victor Cheng moved in.
Cheng had owned the home before the Attas, but he lost it in foreclosure. Nonetheless, he filed a fraudulent deed with the county recorder’s office, transferred the utilities into his name and even tried to evict the Attas after their return. During his prosecution for burglary, trespassing and filing a false document, he insisted that he was not the person being prosecuted because the indictment spelled his name in all capital letters.
Full story here.
- Reminder: SB 353, which would ban bringing of knives and other weapons onto private school property whatever the school’s wishes, up for hearing at 1 p.m. Wed. Feb. 26 [text, Senate, related Virginia] With Ninth Circuit’s Peruta decision, Maryland now one of only six holdout states to resist any recognition of gun carry rights [David Kopel]
- Slew of labor proposals moving through Annapolis would require employers to offer paid sick leave, push unionization on community college employees, and require employers to pay interns’ transportation costs. Study finds boosting state’s minimum wage would cost jobs [WaPo]
- Supremely irresponsible: state already hobbled by nation’s slowest foreclosure process, but NAACP, Casa de Maryland and Legislative Black Caucus demand six-month foreclosure moratorium on top of that [Washington Post; earlier on Maryland foreclosure law here, here (couple spends five years in million-dollar home without making mortgage payment), here, etc.]
- Review of recent developments in asbestos litigation in the state [Lisa Rickard, Chamber Institute for Legal Reform]
- Goodbye to another Free State tradition? Senate votes ban on sale of grain alcohol, with urging from Johns Hopkins Bloomberg nanny crew [Washington Post]
- Just say no to the Maryland Small Business Development Financing Authority [Mark Newgent, Baltimore Sun]
- Sen. Zirkin “litigates dog-bite cases on behalf of plaintiffs” and is player on dog bite bill [Insurance Journal]