As JPM Chase and BofA enable subprimers like World Acceptance, Regulators Do Nothing

Bottom feeding subprime lender World Acceptance, charging interest rates up to 215%, is enabled by credit lines from JPM Chase and Bank of America, among others.

World Acceptance feasts off repeated refinances and roll overs, using the rule of 78s to fleeces its borrowers.

Do Chase and BofA have any standards for the subprime lenders they will lend to?

JPM Chase was previously exposed by Inner City Press / Fair Finance Watch for extensive lending to pawn shops and high cost check cashers. Even post-crisis, the sleaze just continues. And what do the regulators do? Watch this site.

Public Comment Period on Merger Only a "Technicality," Bank Law Insider Argues

When is a Federal Reserve public comment period not public?

When banking law insider H. Rodgin Cohen says so, he seems to feel. In a February 17 letter copied to the Fed's general counsel Scott Alvarez, H "Can We Call You Rodge" Cohen urges the Fed to disregard a timely comment on lending disparities and other irregularities, arguing that the comment period was only open due to a "technicality."

While some would think this beneath ol' Rodge, perhaps Sullivan & Cromwell markets him as truly full service...

-on behalf of Inner City snark

As Wells Fargo’s Stumpf Cashes In, Stealth Subprime Highlighted by FFW in The Guardian (UK)

The Guardian (UK), in a February 16 article outing “Wells Fargo chairman John Stumpf []as corporate America's highest paid executive last year,” quotes Fair Finance Watch that

“although Wells Fargo was not involved in packaging toxic mortgage-backed securities on the capital markets, it did its fair share of risky lending on the high street, shrewdly passing the loans on to third parties. ‘They were as big in sub-prime as some of the others were but they weren't left holding the baby when the music stopped,’ said Lee.”

What do we mean by what? Well, how many subprime loans a company made can be measured with some objectivity, using Home Mortgage Disclosure Act data including the Federal Reserve’s own definition of subprime: three percentage points over prime on a first lien, five on a second. By that measure, Wells Fargo has been a major subprime mortgage lender.
But beyond mortgages, Wells Fargo is a major subprime personal loan provider, through storefronts of Wells Fargo Financial. See, www.innercitypress.org/wells.html

Fifth Third, from foreclosures to horse loans, scrutiny is needed

Fifth Third Bank is not only involved in foreclosing on families’ homes – it is also seeking to find a horse that it lent against, or actually 203 horses. From the Thoroughbred Times:

“Fifth Third Bancorp claims Ahmed Zayat concealed a mortality insurance claim for multiple Grade 1 winner Thorn Song last summer in order to hide $2,750,000 in proceeds that he should have paid to the bank. Zayat Stables owned Thorn Song, who was pulled up in the Eddie Read Handicap (G1) on July 25 at Del Mar after bolting to the outside rail in the first turn… Fifth Third said it made multiple inquiries into the whereabouts and well-being of the Unbridled’s Song horse… Fifth Third said the concealed insurance payment is evidence that a receiver should be appointed to oversee Zayat Stables' 203 horses, which are collateral for $34,265,970 in loans that he owes the bank.”

So Fifth Third, still fueled with TARP bail out funds, has been lending tens of millions of dollars secured by horses. We first ran into Fifth Third when they bought Old Kent, coming into the Detroit market. Click here for a scan of a newspaper article about the Community Reinvestment Act challenge, complete with St. Patrick’s Day karaoke and happy hour ads, courtesy of Google.

After the Federal Reserve approved the Fifth Third’s Old Kent acquisition, in the Detroit MSA “at Fifth Third Mortgage, American Americans were over 10.3 times more likely to be confined to higher cost loans than whites, and Hispanics were over 6.3 times more likely to be confined to higher cost loans than non-Hispanic whites.”

And now, horses. Fifth Third deserves more scrutiny….

Subprimers from Fremont resurface as bottom feeders buying foreclosed home: Impunity

Once subprime, always subprime. Or, subprime never dies --

"Kyle Walker, a former top executive at Fremont Investment & Loan - a once-high-flying subprime lender - has a new firm that is buying distressed homes, some for as little as $1,000... 'We have a pitch book out with Cohen Financial and hope to raise between $6 million and $7 million,' said Mr. Walker. The company he owns and manages is called Home America. His management team includes Bob Clafford, a former executive vice president in charge of wholesale lending at FI&L." NMN

Our first run-in with Fremont was when, despite a timely request for the Home Mortgage Disclosure Act (HMDA) data in electronic format, they refused and gave it in a format that could not be analyzed. Later, Fremont settled predatory lending charges for $10 million with Massachusetts Attorney General Martha "Don't Go There" Coakley.

Now Fremont's Walker and Clafford resurface, buying foreclosed homes and renting or "land contracting" them back to lower income people while holding the note or deed in portfolio.

Some might call this impunity. And they would be correct.

As NJ Senator Lobbied Fed for Campaign Donor Bank, re (CRA?) Sunshine

Today's WSJ news, that NJ Senator Menendez wrote to urge the Federal Reserve to fast approve an acquisition by JJR Bank Holding Co. of First BankAmericano, whose owners were big contributors to his campaigns, brings to mind the so-called Community Reinvestment Act "sunshine" provisions the Senate adopted in 1999. Their rationale was that community groups should disclose any support from banks. Then Senator Phil Gramm, now with Swiss bank UBS, called commenting, mostly to the Federal Reserve, by funded groups "a piece of old Italy." But now it seems that it's elected officials, in this case a Senator, who are more in need of sunshine....

Who's that sleeping behind Geithner? Business press asks and finds out

A profile of the business press, Congress and Geithner, during the Snowmaggedon lull -- following a recent Geithner appearance on Capitol Hill, business reporters at a major Mayor-named publication spent countless hours trying to identify the person behind Geithner, nodding off. Who could they be?

Ultimately this press concluded it had been a Geithner staffer with narcolepsy. One opined that maybe Geithner brought this staffer on purpose, for sympathy. And still it won't save him. Nor should it....

What did and does Hank Paulson think of the Community Reinvestment Act?

So what did and does Hammering Hank Paulson think of the Community Reinvestment Act? He was Secretary of the Treasury, in charge of the Office of the Comptroller of the Currency and Office of Thrift Supervision, which regulate national banks and saving banks, respectively, including for CRA.

But on February 2 on the Larry Kudlow show, when Kudlow included CRA among the causes of the economic crash, Paulson said nothing, then agreed, "That's right... you had all of this going on."

From the transcript:

Mr. PAULSON: Well, what you need to understand is what had happened before even the middle of '07, which is you'd had these excesses had been building up for some times. You'd had a--we had been overstimulating housing. So if you look at the combined weight of all of our policies in the US government...
KUDLOW: Wait. It's HUD-backed, unaffordable mortgage loans, Fannie and Freddie?
Mr. PAULSON: What you have--yeah, yeah, Fannie and Freddie, the FHA, various state programs.
KUDLOW: Community Reinvestment Act.
Mr. PAULSON: You know, mortgage interest deduction. I'm not saying of them were...KUDLOW: Zero capital gains tax on home sales.
Mr. PAULSON: That's right. And so you had--so you had all of this going on

Meanwhile, click HERE for an InnerCityPress.com article last week about Paulson's book.