Sunday, February 3, 2013

Pension funds sue Blackrock, allege "looting" at iShares

Pension funds sue Blackrock, allege "looting" at iShares

The BlackRock logo is seen outside of its offices in New York January 18, 2012. REUTERS/Shannon Stapleton
NEW YORK | Sun Feb 3, 2013 2:23pm EST
(Reuters) - Two U.S. pension funds have alleged in a lawsuit that Blackrock, the world's biggest asset manager, has looted securities lending returns from iShares exchange-traded funds investors, and breached its fiduciary duties.
In the suit, the pension funds allege that several iShares ETFs spent funds on "grossly excessive compensation" to agents affiliated with the ETFs, as well as on other agents, and they want to recovery the funds for investors.
Blackrock's iShares ETFs have "systematically violated their fiduciary duties, setting up an excessive fee structure designed to loot securities lending returns properly due to iShares investors," they say in the suit, filed on January 18 in the Middle District Court of Tennessee.
The Laborers' Local 265 Pension Fund of Cincinnati and the Plumbers and Pipefitters Local No. 572 Pension Fund of Nashville further allege that Blackrock officials and the iShares ETFs ran a scheme to take at least 40 percent of securities lending revenues - which they called "entirely disproportionate" - for themselves at the expense of investors.
Blackrock President Robert Kapito and iShares Chairman Michael Latham are named as defendants in the suit.
Representatives of Blackrock, the largest manager of ETFs, did not immediately respond to a request to comment on the suit.
The recently-acquired iShares unit has been a stellar performer for the New York-based asset manager, bringing in $36 billion of new business for Blackrock in the fourth quarter.
(Reporting by Jonathan Spicer; Editing by Marguerita Choy)

Why Police Lie Under Oath


Why Police Lie Under Oath

Wesley Allsbrook
But are police officers necessarily more trustworthy than alleged criminals? I think not. Not just because the police have a special inclination toward confabulation, but because, disturbingly, they have an incentive to lie. In this era of mass incarceration, the police shouldn’t be trusted any more than any other witness, perhaps less so.
That may sound harsh, but numerous law enforcement officials have put the matter more bluntly.  Peter Keane, a former San Francisco Police commissioner, wrote an article in The San Francisco Chronicle decrying a police culture that treats lying as the norm: “Police officer perjury in court to justify illegal dope searches is commonplace. One of the dirty little not-so-secret secrets of the criminal justice system is undercover narcotics officers intentionally lying under oath. It is a perversion of the American justice system that strikes directly at the rule of law. Yet it is the routine way of doing business in courtrooms everywhere in America.”
The New York City Police Department is not exempt from this critique. In 2011, hundreds of drug cases were dismissed after several police officers were accused of mishandling evidence. That year, Justice Gustin L. Reichbach of the State Supreme Court in Brooklyn condemned a widespread culture of lying and corruption in the department’s drug enforcement units. “I thought I was not na├»ve,” he said when announcing a guilty verdict involving a police detective who had planted crack cocaine on a pair of suspects. “But even this court was shocked, not only by the seeming pervasive scope of misconduct but even more distressingly by the seeming casualness by which such conduct is employed.”
Remarkably, New York City officers have been found to engage in patterns of deceit in cases involving charges as minor as trespass. In September it was reported that the Bronx district attorney’s office was so alarmed by police lying that it decided to stop prosecuting people who were stopped and arrested for trespassing at public housing projects, unless prosecutors first interviewed the arresting officer to ensure the arrest was actually warranted. Jeannette Rucker, the chief of arraignments for the Bronx district attorney, explained in a letter that it had become apparent that the police were arresting people even when there was convincing evidence that they were innocent. To justify the arrests, Ms. Rucker claimed, police officers provided false written statements, and in depositions, the arresting officers gave false testimony.
Mr. Keane, in his Chronicle article, offered two major reasons the police lie so much. First, because they can. Police officers “know that in a swearing match between a drug defendant and a police officer, the judge always rules in favor of the officer.” At worst, the case will be dismissed, but the officer is free to continue business as usual. Second, criminal defendants are typically poor and uneducated, often belong to a racial minority, and often have a criminal record.  “Police know that no one cares about these people,” Mr. Keane explained.
All true, but there is more to the story than that.
Police departments have been rewarded in recent years for the sheer numbers of stops, searches and arrests. In the war on drugs, federal grant programs like the Edward Byrne Memorial Justice Assistance Grant Program have encouraged state and local law enforcement agencies to boost drug arrests in order to compete for millions of dollars in funding. Agencies receive cash rewards for arresting high numbers of people for drug offenses, no matter how minor the offenses or how weak the evidence. Law enforcement has increasingly become a numbers game. And as it has, police officers’ tendency to regard procedural rules as optional and to lie and distort the facts has grown as well. Numerous scandals involving police officers lying or planting drugs — in Tulia, Tex. and Oakland, Calif., for example — have been linked to federally funded drug task forces eager to keep the cash rolling in.
THE pressure to boost arrest numbers is not limited to drug law enforcement. Even where no clear financial incentives exist, the “get tough” movement has warped police culture to such a degree that police chiefs and individual officers feel pressured to meet stop-and-frisk or arrest quotas in order to prove their “productivity.”
For the record, the New York City police commissioner, Raymond W. Kelly, denies that his department has arrest quotas. Such denials are mandatory, given that quotas are illegal under state law. But as the Urban Justice Center’s Police Reform Organizing Project has documented, numerous officers have contradicted Mr. Kelly. In 2010, a New York City police officer named Adil Polanco told a local ABC News reporter that “our primary job is not to help anybody, our primary job is not to assist anybody, our primary job is to get those numbers and come back with them.” He continued: “At the end of the night you have to come back with something.  You have to write somebody, you have to arrest somebody, even if the crime is not committed, the number’s there. So our choice is to come up with the number.”
Exposing police lying is difficult largely because it is rare for the police to admit their own lies or to acknowledge the lies of other officers. This reluctance derives partly from the code of silence that governs police practice and from the ways in which the system of mass incarceration is structured to reward dishonesty. But it’s also because police officers are human.
Research shows that ordinary human beings lie a lot — multiple times a day — even when there’s no clear benefit to lying. Generally, humans lie about relatively minor things like “I lost your phone number; that’s why I didn’t call” or “No, really, you don’t look fat.” But humans can also be persuaded to lie about far more important matters, especially if the lie will enhance or protect their reputation or standing in a group.
The natural tendency to lie makes quota systems and financial incentives that reward the police for the sheer numbers of people stopped, frisked or arrested especially dangerous. One lie can destroy a life, resulting in the loss of employment, a prison term and relegation to permanent second-class status. The fact that our legal system has become so tolerant of police lying indicates how corrupted our criminal justice system has become by declarations of war, “get tough” mantras, and a seemingly insatiable appetite for locking up and locking out the poorest and darkest among us.
And, no, I’m not crazy for thinking so.
Michelle Alexander is the author of “The New Jim Crow: Mass Incarceration in the Age of Colorblindness.”

Friday, February 1, 2013

NRA's 'enemy list' includes Temptations

NRA's 'enemy list' includes Temptations

I am the world's leading expert in temptology. As such, I know just about every trivial thing there is to know about Motown's storied singing group, The Temptations.

I know they recorded once as The Pirates. I know they were the first Motown act to win a Grammy. I know bass singer Melvin Franklin's nickname was Blue.

But the one thing I didn't know was how they wound up on an enemy's list posted by the National Rifle Association.

We have Bob Herbert to thank for alerting us to said list. The New York Times columnist recently disclosed the fact that, if you dig around the NRA's Web site (, you'll find a compilation of "anti-gun" journalists, officials, groups and celebrities - an old-fashioned, honest-to-Nixon enemy's list.

Among the other names: Oprah Winfrey, Patrick Stewart, Bruce Springsteen, Spike Lee, Paul Newman, Michael Eisner, Lakers forward Rick Fox and singer Moon Zappa. Under the apparent theory that one doesn't stop being an enemy just because one stops breathing, the list also includes Ann Landers, former Atlanta Mayor Maynard Jackson and the cartoonist Herblock.

I'm sure this all raises for you the same searing question it raised for me:

Why didn't Leonard Pitts make the list!? I'm anti-gun, too! What, they hate Molly Ivins more than me?

Actually, my exclusion is probably my own fault. I don't write about guns that often. Worse, my opinion doesn't translate easily to a bumper sticker. If you've got a moment, I'll lay it out for you.

I believe the right to keep and bear arms is a fiction. Legal experts I respect - including Departments of Justice previous to the current one - have all held that the Second Amendment confers no right of individual gun ownership.

But - and here's the tricky part - I also believe the perception of such a right is so deeply ingrained in the American psyche that the legal niceties are largely immaterial. As a practical matter, the right exists.

I'm reminded of the First Amendment attorney who told me that as a strictly legal issue, it can be argued that the Constitution grants you no right to read this newspaper. Yes, freedom of speech allows the newspaper to print what it wants, but where is it written that you have

a right to have access to it?

Nevertheless, the perception of such a right is so much a part of the American character that if government tried to deny it, newspaper readers would take to the streets in protest. It's the same with the gun owners except, of course, that they'd be better armed.

So I hate guns. But I also accept that they're not going anywhere.

The question is: what can we do within that reality?

Unfortunately, extremists on both sides of the issue have robbed us of the ability to do much. We are in dying need of mandatory registration and training to govern those who choose to own guns and sensible laws to prevent their use by those who have no business with them. At a minimum, we need to be able to discuss the issue rationally. But we'll never have that ability so long as gun control advocates tar responsible gun owners as "gun nuts" and cling to the fantasy that guns can be erased from these shores.

We'll also never have it so long as gun owners' interests are represented by an organization that sets new standards for crazy.

The NRA, by the way, says The Tempts earned their way onto its list by lending their name to an anti-gun newspaper ad in 1999.

Wow. The nerve.

Still, you'll forgive me if I don't run out to burn the rare, factory-sealed Temptations live album that cost me $60 bucks. And if I say that I see in this predilection for listing enemies a sweaty, shifty-eyed, hunker in the bunker mentality that recalls Nixon at his worst.

In the face of such asininity, of paranoia beyond parody, I have just one thing to say to the NRA:

There are two "ts" in Pitts.

DOJ: We Can’t Tell Which Secret Application of Section 215 Prevents Us From Telling You How You’re Surveilled

DOJ: We Can’t Tell Which Secret Application of Section 215 Prevents Us From Telling You How You’re Surveilled

As Mike Scarcella reported yesterday, the government has moved for summary judgment in an Electronic Privacy Information Center FOIA suit for details on the government’s investigation into WikiLeaks. EPIC first FOIAed these materials in June 2011. After receiving nothing, they sued last January.
The government’s motion and associated declarations would be worth close analysis in any case. All the more so, though, in light of the possibility that the government conducted a fishing expedition into WikiLeaks as part of its Aaron Swartz investigation, almost certainlyusing PATRIOT Act investigative techniques. The government’s documents strongly suggest they’re collecting intelligence on Americans, all justified and hidden by their never ending quest to find some excuse to throw Julian Assange in jail.
EPIC’s FOIA asked for information designed to expose whether innocent readers and supporters of WikiLeaks had been swept up in the investigation. It asked for:
  1. All records regarding any individuals targeted for surveillance for support for or interest in WikiLeaks;
  2. All records regarding lists of names of individuals who have demonstrated support for or interest in WikiLeaks;
  3. All records of any agency communications with Internet and social media companies including, but not limited to Facebook and Google, regarding lists of individuals who have demonstrated, through advocacy or other means, support for or interest in WikiLeaks; and
  4. All records of any agency communications with financial services companies including, but not limited to Visa, MasterCard, and PayPal, regarding lists of individuals who have demonstrated, through monetary donations or other means, support or interest in WikiLeaks. [my emphasis]
At a general level, the government has exempted what files it has under a 7(A) (ongoing investigation) exemption, while also invoking 1 (classified information), 3 (protected by statute), 5 (privileged document), 6 (privacy), 7(C) (investigative privacy), 7(D) (confidential source, which can include private companies like Visa and Google), 7(E) (investigative techniques), and 7(F) (endanger life or property of someone) exemptions.
No one will say what secret law they’re using to surveil Americans
But I’m most interested in how all three units at DOJ — as reflected in declarations from FBI’sDavid HardyNational Security Division’s Mark Bradley, and Criminal Division’s John Cunningham – claimed the files at issue were protected by statute.
None named the statute in question. All three included some version of this statement, explaining they could only name the statute in their classified declarations.
The FBI has determined that an Exemption 3 statute applies and protects responsive information from the pending investigative files from disclosure. However, to disclose which statute or further discuss its application publicly would undermine interests protected by Exemption 7(A), as well as by the withholding statute. I have further discussed this exemption in my in camera, ex parte declaration, which is being submitted to the Court simultaneously with this declaration
And then, as if DOJ didn’t trust the Court to keep sealed declarations secret, it added this plaintive request in the motion itself.
Defendants respectfully request that the Court not identify the Exemption 3 statute(s) at issue, or reveal any of the other information provided in Defendants’ ex parte and in camera submissions.
DOJ refuses to reveal precisely what EPIC seems to be seeking: what kind of secret laws it is using to investigate innocent supporters of WikiLeaks.
By investigating a publisher as a spy, DOJ gets access to PATRIOT Act powers, including Section 215
There’s a very very large chance that the statute in question is Section 215 of the PATRIOT Act (or some other national security administrative subpoena). After all, the FOIA asked whether DOJ had collected business records on WikiLeaks supporters, so it is not unreasonable to assume that DOJ used the business records provision to do so.
Moreover, the submissions make it very clear that the investigation would have the national security nexus to do so. While the motion itself just cites a Hillary Clinton comment to justify its invocation of national security, both the FBI and the NSD declarations make it clear this is being conducted as an Espionage investigation by DOJ counterintelligence people, which — as I’ve been repeating for over two years – gets you the full PATRIOT Act toolbox of investigative approaches.
Media outlets take note: The government is, in fact, investigating a publisher as a spy. You could be next.
So it’s likely DOJ is trying to hide that they’re using Section 215 to investigate supporters of a media outlet.
Which is pretty ironic. Ever since Section 215 went into place, the one issue about which there was occasionally debate was whether the government could be permitted to find out, either from libraries or book stores, what people were reading. Because people feared precisely this kind of thing would happen.
DOJ doesn’t want to reveal how many WikiLeaks supporters’ data has been data mined
And it’s not just whether they’re using Section 215 to collect information that DOJ is trying to hide. They’re also trying to hide the scope of the data collected.
The Government should not be required to divulge sensitive information concerning an investigation, including non-public information concerning the scope or size of the investigation, in order to protect other sensitive information.
In justifying its reliance on Exemption 7(A), the Government need not discuss the exemption on a document-by-document basis. To do so could itself impede the investigation, as providing details such as the volume of the responsive material or the nature of particular documents could itself reveal sensitive information that could impede the investigation. [my emphasis]
Revealing how many WikiLeaks supporters’ data DOJ vacuumed up, perhaps to data mine with other data (FBI and NSD have records from Other Government Agencies, plural, suggesting they may be cross-referencing this information with NSA; since Julian Assange is a foreigner, he and all his American contacts could be legally collected under the FISA Amendments Act), would “itself reveal sensitive information.”
You know? Like that they’re sucking up the data of totally innocent people and data mining it with wiretap information?
The FBI doesn’t have lists, it has data sets
Then there’s the squirmy way the FBI, in particular, deals with the question of whether or not it keeps lists of WikiLeaks supporters.
Hardy’s unclassified declaration offers this reassurance.
Plaintiffs request seeks “[a]ll records regarding any individuals targeted for surveillance for support for or interest in WikiLeaks,” as well as certain information regarding “lists of individuals who have demonstrated support for or interest in WikiLeaks.” The FBI is not investigating individuals who simply support or have an interest in WikiLeaks. However, reading Plaintiffs request broadly, the FBI concluded that records concerning its investigation of the disclosure of classified information that was published on the WikiLeaks website would be responsive to Plaintiffs request. The FBI does not, however, maintain lists of individuals who have demonstrated support for or interest in WikiLeaks, and thus has no records responsive to this portion of Plaintiffs request. [my emphasis]
Read plainly, this reassurance would seem to say it has no records responsive to bullets 2, 3, and 4 above, as all of them pertain to lists of individuals.
Though maybe not. Bullets 3 and 4 request, primarily, agency communications, not the lists themselves. After all, it is always possible the private entities or the NSA keeps any lists in question, not the FBI.
Moreover, the motion itself refers to a comment in Hardy’s sealed declaration that seems a lot fuzzier.
In responding to the request, Defendants confirm that they have records responsive to the request as a whole, the terms of which they have interpreted broadly. See LaCedra v. Exec. Office of U.S. Attorneys, 317 F.3d 345, 348 (D.C. Cir. 2003) (requiring agencies to interpret requests “liberally in favor of disclosure”). But Defendants do not confirm the existence of records responsive to any particular portion of the request. See Hardy Ex Parte Decl. (Ex. 2) ¶ 8 n.1. [my emphasis]
Maybe all FBI has is surveillance information, not any lists. Or perhaps rather than lists, per se, FBI has data sets from each of these vendors that it sticks into a computer to cross-reference.
But don’t worry — these data sets were only “compiled” for this investigation
Of course, the success of this entire motion depends on whether DOJ went out and got these records after an investigation started or not. That probably is what happened — at least with the Section 215 material (assuming that’s what they used).
Nevertheless, the government’s argument that this material was “compiled” for “law enforcement purposes” — as opposed to intelligence purposes — betrays some doubt, in my opinion.
“In assessing whether records are compiled for law enforcement purposes, . . . the focus is on how and under what circumstances the requested files were compiled, and ‘whether the files sought relate to anything that can fairly be characterized as an enforcement proceeding.’” Jefferson v. DOJ, 284 F.3d 172, 176-77 (D.C. Cir. 2002) (quoting Aspin v. Dep’t of Defense, 491 F.2d 24, 27 (D.C. Cir. 1973)). “Because the DOJ is an agency ‘specializ[ing] in law enforcement, its claim of a law enforcement purpose is entitled to deference.” Ctr. for Nat’l Sec. Studies, 331 F.3d at 926. To demonstrate that the records were compiled for law enforcement purposes, an agency “must establish (1) ‘a rational nexus between the investigation and one of the agency’s law enforcement duties;’ and (2) ‘a connection between an individual or incident and a possible security risk or violation of federal law.’” Id. (quoting Campbell v. Dep’t of Justice, 164 F.3d 20, 32 (D.C. Cir. 1998)).
Here, each component’s declaration makes clear that the information withheld under this exemption was “compiled for law enforcement purposes” because it is part of a broader investigation being conducted by the Department of Justice into the unauthorized disclosure of classified information. See Hardy Decl. (Ex. 1) ¶ 23; Bradley Decl. (Ex. 3) ¶ 13; Cunningham Decl. (Ex. 5) ¶ 12. The investigation of criminal conduct, particularly when it entails serious threats to the national security, is plainly a high-priority law enforcement duty of the Department. See Ctr. for Nat’l Sec. Studies, 331 F.3d at 926 (recognizing that the Exemption 7(A) threshold is satisfied by an investigation concerning “a heinous violation of federal law as well as a breach of this nation’s security”). Insofar as individuals are being investigated for their role in the unauthorized disclosure of classified information, there is a clear nexus between the subjects “and a possible security risk or violation of federal law.” Id. Because the records at issue were compiled as part of a Department of Justice investigation into possible violations of federal law, they were “compiled for law enforcement purposes,” and the threshold inquiry under Exemption 7(A) is satisfied.
From the start, DOJ asserts the standard that something has been “compiled” for law enforcement if it “relates” to anything that might be law enforcement. Remember, the standard for collection under Section 215 is whether it is relevant to an investigation, which may be an intelligence investigation, so you might have relation on top of relevance to an intelligence investigation serving as “proof” that this is a law enforcement investigation.
Also: the citation from 2001 that DOJ specializes in law enforcement seems rather quaint, given that every time FBI reports in to Congress it boasts it is an intelligence agency.
DOJ then cites a case — CNSS v. DOJ — that not only served to hide information on the thousands of people rounded up after 9/11 (making it an ignoble citation in any case), but also referred to actual arrests rather than what seems likely to fall solidly under DOJ’s renewed intelligence mandate. It’s one thing to say an arrest for an immigration violation counts as law enforcement, and yet another to say that data collected under the standard of “relevance” to an intelligence investigation counts as law enforcement.
Next, it says this information is part of a broader investigation (note, even here the boundary between intelligence gathering and criminal investigation seems iffy). And then it asserts that the investigation of generic criminal conduct related to national security is a very serious thing, without asserting that the conduct at issue here is criminal.
It has been two years since leaked reports indicated that DOJ’s theory implicating Julian Assange in an actual crime had fallen flat. Which suggests the government hasn’t found any criminal conduct on the part of the primary target of the investigation (though I’ll have more to say about the investigation into Assange in a later post). Which suggests — particularly given the involvement of multiple OGAs and particularly given that they were conducting intelligence investigations of WikiLeaks before the State cable leaks in question — that this is an intelligence investigation, not a law enforcement one.
Which brings us to the sketchiest part of this sketchy passage:
Insofar as individuals are being investigated for their role in the unauthorized disclosure of classified information, there is a clear nexus between the subjects “and a possible security risk or violation of federal law.”
To the extent that individuals (defined as supporters of WikiLeaks, remember) are being investigated in the unauthorized disclosure of classified information, DOJ asserts, there is a nexus between them and law enforcement.
Except that the government is almost certainly using Section 215, which doesn’t require that those being investigated have any imagined tie at all to an actual crime to have their data sucked up and data mined. Insofar as these people have a role in an illegal leak, they have a law enforcement nexus, DOJ says, without admitting what the rest of the filing strongly suggests — insofar as most of the people “being investigated” have zero suspected role in the actual disclosure (as distinct from the publication and consumption) of this information — then their data has been collected as intelligence, not law enforcement.
While it never explicitly says any of this (indeed, it doesn’t even admit the very likely possibility the records at issue come from intelligence collection under Section 215), this filing hints at the huge problem with FBI’s dual hat as an intelligence and law enforcement agency. It has not, apparently, found any crime to charge the primary target of this investigation with. But because Assange is a foreigner and — especially — is someone the Attorney General has called a spy, without presenting any evidence, FBI can legally continue to investigate him and anyone they want to say is relevant to their investigation of him.
They can suck up the data of thousands of Americans guilty of doing no more than reading about how their government really works.
Which seems to be what the government is hiding in those classified declarations.
Update: I made some changes to this post after first posting, mostly for grammar and clarity. Also, it appears that the refusal to name a statute like this is actually an unusual thing in FOIA response.
 2 17 19

Wells Fargo Freezes Bank Account

Richard Zombeck


Below the Fold: Wells Fargo Freezes Bank Account

Posted: 06/14/2012 10:23 am

*The original title of this post stated that Wells Fargo closed the bank account "in retaliation." As this is not factually established, the phrase has been removed in the updated title.
A wrap-up of stories and posts you might have missed or overlooked -- the ones below the fold.
Part 1: Wells Fargo Freezes Bank Account
Back in May I covered Martin Andelman's article on about a homeowner committing suicide as a result of Wells Fargo "mistakenly" foreclosing on his home. Andelman's breaking story went viral. It showed up on Facebook, Twitter and numerous media outlets -- it's probably the most press Wells Fargo has received in a while.
Here we are a couple of weeks later and Wells Fargo has taken action against ML-Implode, who hosts Andelman's site, by freezing its bank account.
Andelman blogs independently, is not paid by ML-Implode, and ML-Implode does not dictate or control what he writes. If Wells' actions are in retaliation for the articles, they may have violated federal law USC 47 USC § 230, which forbids holding an internet "common carrier" (such as an ISP, forum, or any sort of hosting outfit) liable for content users post.
According to the post, "ML-Implode Gets 'Wikileaks Treatment' As Wells Fargo Freezes, Closes Business Account" (I recommend you read the whole thing):
It is believed that the actions were taken in retaliation for a recent series of articles by ML-Implode blogger Martin Andelman which pulled no punches in criticizing Wells Fargo over its foreclosure practices -- in particular the tragic and horrific case of Norm Rousseau who was driven to suicide after Wells Fargo lost a mortgage payment and mistakenly foreclosed on the family's home, despite a lengthy back-and-forth process which gave the bank ample opportunity to correct the mistake.
In "Wells Fargo Turns Their Stagecoach in to The 4 Horsemen Of The Apocalypse" at MFI-MAIMI, Steve Dibert confirms the claim:
After reading Aaron's Press release, I contacted my sources at Wells Fargo who told me the same thing this morning.

If Wells Fargo got this riled up over the REST Report, criticism of how they handled the foreclosure and unnecessary death of Norman Rousseau and the testimony of Beth Jacobson about Wells Fargo's "Ghetto Loans" initiatives that was profiled in yesterday's Washington Post, I can only imagine what will happen next week when I post about the "special perks" we received in wholesale lending during the boom from Wells Fargo and other lenders.
Stay tuned for that one. Knowing Dibert it should be a fun read.
This isn't about Wells Fargo freezing the accounts of some drug cartel using the bank to launder money -- they actually have no problem with that. Wacovia (at the time a subsidiary of Wells Fargo) helped launder $400 billion in drug money in 2011. This is about Wells Fargo freezing a standard checking account that was used to pay rent, buy food, and pay bills because some sniveling, sanctimonious, cry baby got his feelings hurt and had a tantrum about an article written by an unpaid blogger trying to help homeowners.
Well Fargo has a history of going after businesses helping homeowners and consumers. In 2009,according to another article by Andelman, the bank unilaterally closed the business checking accounts of companies simply because they offered loan modification services.
That is truly unbelievable. Can you imagine if that were happening to any other segment? Like coffee shops... banks don't like coffee shops... so they can't take credit cards anymore and we'll cancel their checking account too. It would be on the news every single night. I've been all over the world and I can tell you that I've seen some sleazy, clip joint places... hey, I was in the service - so sue me... but they all accepted payment by credit card. But help someone get their mortgage modified so I don't lose my home to foreclosure and... Oh dear... I'm sorry, no... we simply could not allow that.
It's not as if they don't know this sort of behavior makes them look bad, they simply don't seem to care. Not too long ago, Wells Fargo, wrote in their own 2011 Annual Report, under the "Risk Factors" section on page 108 (emphasis mine):
The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the "Wells Fargo" brand, negative public opinion about one business could affect our other businesses and also could negatively affect our "cross-sell" strategy.
From the Nashua Telegraph reporting on the implications of the case:
The case drew national attention for its potential First Amendment implications. The case also had broad implications in determining who constitutes the media in an Internet age that has blurred the line between traditional news outlets and bloggers or citizen journalists.
Aaron Krowne,'s founder and publisher is one of the more respected and well known bloggers in the financial activist community. It's surprising that Wells Fargo would willingly poke that potential hornet's nest and risk the backlash from his supporters.
I spoke to Krowne earlier today, and while he, like the rest of us, is loath to ask for help, ML-Implode does have a PayPal donation up on its site that you can find here.
Part 2: Wall Street's Whining
One of the more noteworthy resignations, at least this year, was that of Greg Smith, who publicly quit Goldman Sachs after twelve years at the firm. He did it in an Op-Ed piece in the New York Times titled, Why I Am Leaving Goldman Sachs.
Of course Goldman and the rest of Wall Street didn't take that lying down and went with the disgruntled employee meme. "Some employees told Fox Business' Charlie Gasparino that Smith doesn't know what he's talking about because he "never made more than $750,000 a year," reported. At the very least it gave them something to whine about for a couple of months.
The latest rash of Wall Street whining has to do with them having little time to visit their other homes.
Take this managing director at Goldman Sachs for example; who told CNBC's John Carney over a few drinks that JPMorgan Chase's $2 billion trading loss has him so "rattled" the he hasn't been able to make it to his Long Island vacation home at all so far this summer.
It's hard not to feel for sorry for the poor guy, considering, "We really haven't had one good summer since 2006. No one can relax on the beach--again!" Realizing they're being interviewed and in an effort to redeem themselves a couple of Wall Street women provide the final quote forJohn Carney's article:
Oh my God. Are you going to write about investment bankers complaining about not having enough fun while they are sunning themselves in the Hamptons?" she asked. "That's going to do our image a load of good.
There are fourteen million unemployed people in the country, who according to Rush Limbaugh, have food, cable, cell phones, televisions and are saying, "what more do I need?" Foreclosures have reached astronomical numbers and there's no end in sight. Pension plans, retirement funds and savings have been sucked dry by Wall Street shenanigans. To make matters worse, according to a CNN article, the average American Family's net worth has dropped 40 percent as have income levels.
Much of the drop off in net worth -- to levels not seen since 1992 -- was attributable to a sharp decline in housing values, the Fed said. In 2007, the median homeowner had a net worth of $246,000. Three years later that number had fallen to $174,500, a loss of more than $70,000 on average.
Additionally the article states, "The stunning drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- indicates that the recession wiped away 18 years of savings and investment by families."
With most of the average American Family's wealth in their homes - the one investment we were all led to believe was secure, the best we can hope for, after seeing that investment lose 30-60 percent of its value seemingly overnight, is that someone with the stones to complain about not having enough fun while they are sunning themselves in the Hamptons will take pity on us and grant us a loan modification so that we can move on with our lives. Even if that means working two jobs just to put a roof over our heads and food on the table.
What happens instead is a loan modification with a balloon payment of $200,000 when you're 100 years old, collecting social security, and working for $9/hr. That's what happened to Gloria Schrager, a 76-year-old who applied for a modification with JPMorgan Chase.
During the first few years of the housing crisis, banks and other institutions that service loans made life miserable for hundreds of thousands of homeowners who tried -- and failed -- to receive a loan modification. The institutions lost paperwork, made accounting mistakes and even pushed into foreclosure some homeowners who were current on their payments.
Most of America has little hope of retiring with any dignity and Wall Street is crying because they can't visit their weekend homes.
Lucky for us, Simon Constable of the Wall Street Journal (a publication not exactly well known for catering to the interests of the middle and working class) has come up with some ingenious solutions for those of us wondering how to survive through our golden years of retirement. It's a real contender for the "Let Them Eat Cake" award.
In the article, "Beyond the Tried-and-True: Generating Cash in Later Life," Constable, who has written other noteworthy articles such as "Viacom's 'SpongeBob' Ratings Crisis; Gingrich Officially Exits Campaign" and "Dinosaurs' Gas May Have Warmed the Air; The Oscars of the East Coast" takes a look at five atypical ways to boost income in retirement, according to the articles subtitle.
There's the requisite "Don't forget about preferred stock" advice, which could bring a whopping six percent, but according to Constable carry more risk and could tank if the company went south - scratch that idea.
Tutoring students, Constable figures, could get you, in some cases, $200/hour. That's assuming, of course, you're not working in a neighborhood that could actually benefit from your tutelage.
"Rent out a room" is another one of Constable's suggestion , because there's nothing a retiree wants more, after 50-60 years of consecutive 60-80 hour work weeks, than to argue with a tenant about who used the last roll of toilet paper.
The number one suggestion in the mercifully short list however is "Grow Trees." As Constable puts it:
If you live in an area where people routinely burn wood to heat their homes, you might consider buying some woodland. Not only can you use the wood to heat your home, you can sell logs to others.
If you played your card's right, and are fortunate enough that your neighbors didn't, you may be able to profit from their misery.
"An awful lot of people in the Northeast use wood for fuel because they can't afford anything else," he writes, quoting Robert Maloney a Financial Advisor.
This seems to be his favorite suggestion and he dedicates quite a few paragraphs to the process of growing, harvesting, and cutting trees for profit.
So cozy up to your roommate in front of a fire, crack open a can of cat food, and grow some trees. We're about to live the American dream.