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Sense on Cents Calls Out Jamie Dimon, Vikram Pandit, Brian Moynihan, Michael Carpenter, and John Stumpf

Posted by Larry Doyle on May 17, 2011 9:30 AM |

(This commentary is a little lengthy, but not overly so. I strongly encourage you to read and ponder the details embedded here as I firmly believe America’s core principles of decency and justice are on the line. Let’s stand up for America!!)

What would be the outcry in America if a foreign government or corporation knowingly and willingly abused the personal finances of multiple tens of thousands of our fellow citizens? Imagine if that entity were a large Chinese national bank or a Russian financial conglomerate? What if it were a division of an organization involved in illicit activities or even worse?

Do you think the United States government would intervene very aggressively on behalf of our fellow brethren? Might the media be up in arms with headline stories on a daily basis? Would the personal assaults precipitate an international trade embargo or a discontinuation of diplomatic relations? Does this sound like the stuff of a Harrison Ford virtuoso performance? Even better, this must be the plot to the next James Bond thriller, right? 

I do not believe the scenario I paint in my introductory paragraphs is all that far fetched. Americans take real pride in defending the honor and integrity of our fellow citizens. Then why I ask does the American government, the American media, and the American electorate – largely speaking – stand idly by when the entities which have financially assaulted our fellow citizens are not based overseas but have their home offices in New York, Charlotte, and San Francisco? Why is it that to the best of my knowledge—and I watch very closely—only one journalist from a major media outlet calls these organizations on the carpet? Why, why, why?

I have written previously about the ongoing travesty and nightmare encompassing the mortgage foreclosure mess and the accompanying horrendous practices of the mortgage servicing entities within our large money center banks. I have often questioned, Did Wall Street Violate the Racketeering Act? in a variety of its mortgage practices. These financial titans and the executives running them would just as soon pay a relatively modest fine (while still being able to borrow funds from the Federal Reserve at next to nothing), impede real disclosure and discovery, sweep the nightmare under the rug, and get back to the benefits and easy pickings of the oligopoly which currently defines Wall Street.

For those of us who embrace the virtues of truth, transparency, and integrity, I have little interest in allowing the assaults on our fellow citizens to pass without greater attention and focus. On that note, let’s navigate and highlight the findings of The New York Times’ fabulous journalist Gretchen Morgenson (a surefire first ballot inductee into the Sense on Cents Hall of Fame) as she recently detailed how the Wall Street banks would care to make A Low Bid for Fixing a Big Mess:

As the Rajaratnam verdict captivated many on Wall Street last week, the institutions that service about two-thirds of the mortgages in this country offered to pay $5 billion to settle allegations about robo-signing and other shady practices that quick-step troubled borrowers out of their homes.

That figure is a fraction of the $20 billion that state attorneys general had apparently floated. If regulators accept the lowball offer, perhaps that would be because they haven’t dug deep enough.

Because evidence of extensive and abusive servicing practices does in fact exist. It is piling up at the offices of the United States Trustee Program, the arm of the Justice Department that monitors the bankruptcy system. Over the past six months, the trustee has drawn material from 95 field offices covering 88 judicial districts. The findings should dispel any notion that toxic servicing practices were atypical or have done no harm.

Clifford J. White III, director of the executive office of the United States Trustee, discussed some of the findings in an interview last week. But before we recount the ugly details, it’s worth noting the immense pushback the banks have mounted against the trustee office.

Banks have repeatedly tried to thwart the program’s actions, filing lawsuits and court motions to prevent officials from compiling evidence. Never mind that part of a trustee’s job is to investigate possible improprieties in foreclosures to determine if they are poisoning the bankruptcy system.

“We have faced consistent opposition by all of the major servicers,” Mr. White said. “We are currently facing 200 motions to quash our discovery requests. We also are facing upwards of 20 appeals either in district courts or in circuit courts.”

Those pushing back include Bank of America, Citigroup, G.M.A.C., JPMorgan Chase and Wells Fargo, he said.

The banks typically make two arguments. First, they say the trustee program has no legal standing to delve into individual cases between lenders and borrowers because it is not a “party” to these disputes. Every court has rejected this claim. Nonetheless, the tactic has allowed servicers to stall trustees’ discovery requests.

In other cases, the banks agree to turn over information in specific matters of interest to the trustee program but refuse to provide details on their overall policies and procedures, which could show deep and systemic flaws.

Why are these institutions so afraid of a little sunlight? (LD’s edit)

To be sure, the nationwide investigation by the United States Trustee’s office represents an aggressive tack that big financial institutions are unaccustomed to. “The bankruptcy system provided an early warning sign of problems in mortgage servicing,” Mr. White said. “We began looking a few years ago at some of the violations of mortgage servicers, on a case-by-case basis. What’s different from the past is, if we find a facial discrepancy” — something that’s a problem on its face — “we are off the bat seeking discovery.”

When the banks have provided information, lawyers for the trustee program have often found extensive errors in amounts owed and charges levied. Needless to say, these mistakes do not typically favor the borrowers.

Mr. White declined to get specific. But the mistakes that his office has found fall into two broad categories. One involves inaccurate amounts that the banks say borrowers owe. The accuracy of these documents, which are filed with the courts, is crucial. Borrowers and bankruptcy judges overseeing their cases use them to determine payment schedules to cure defaults, for example.

Inaccuracies often arise because loan servicers fail to reflect that borrowers are in trial loan modifications, like those offered by the government, Mr. White said. As a result, though borrowers are paying the proper amounts, the servicer shows them falling behind. Then the bank moves to restart foreclosure.

In other cases, proofs of claim filed by servicers are just wildly off base. In one matter, a bank claimed to the court that a borrower owed $52,043. After the borrower objected and a trustee asked for documentation, the amount owed dropped to $3,156.

Imagine what would have happened if the amount hadn’t been questioned?

The other problematic area showing up in the trustees’ inquiries relates to what Mr. White calls improper default servicing fees. These include charges for legal work, property inspections, insurance and appraisals.

Often, the fees charged to troubled borrowers are not even specified. Trustee program officials found a defaulted borrower who was charged $10,260.50 in “prior service fees” with zero documentation. In another case, a borrower fell behind after the lender doubled his escrow payments with no explanation or justification. Then the bank filed a motion to lift the bankruptcy stay so that it could foreclose.

“In fewer than 20 judicial districts,” Mr. White said, “we have identified hundreds of facial deficiencies, including cases in which we seek to investigate inflated or improper escrow charges and cases in which the mortgage servicer sought relief from stay so it could foreclose on a debtor’s home.”

Mistakes happen, of course. And loan servicers like to contend that if errors occur, they are rare and honestly made. But after sifting through the data produced by this investigation, Mr. White disagreed that problems are rare. “In Senate testimony, an executive from Countrywide said its error rate was 1 percent,” Mr. White recalled. “The mortgage servicer industry error rate might be 10 times higher, based on the number of cases we are looking at.”

“There are continued flaws in the process, and they are not merely technical,” Mr. White continued. “Those flaws undermine the integrity of the bankruptcy system. Many homeowners have been harmed, including where the lender has come in and said ‘we want to lift the stay and go back into foreclosure proceedings,’ even though they lacked a sufficient basis to do it.”

He went on: “There are enough examples of this to know that we are not dealing with small numbers.”

So an authoritative source with access to a lot of data has identified industry practices as not only pernicious but also pervasive. Which makes it all the more mystifying that regulators seem eager to strike a cheap and easy settlement with the banks.

Is your blood boiling? Why aren’t the banks willing to provide real disclosure and proper discovery? What are they trying to hide? Imagine if a foreign entity operating within our borders engaged in these types of practices? Would our officials in Washington bow down and roll over? Would the regulators overseeing these entities accede to these financial behemoths? Is our nation still being held captive by these institutions under the guise that the banks need the capital more than our nation needs its principles?

I implore the attorneys general in our great land to stand their ground. I call on Congress to hold a public hearing and bring the chief executives to Washington for serious and open questioning. Let’s hear from JP Morgan’s Jamie Dimon, Citigroup’s Vikram Pandit, GMAC’s (Ally Financial) Michael Carpenter, Bank of America’s Brian Moynihan, and Wells Fargo’s John Stumpf.

America deserves nothing less.

Thank you Ms. Morgenson for your continued fabulous work.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.



  • Peter S.

    May 4, 2011

    Dear Assistant U. S. Attorney Jack W. Pirozzolo,
    I have been frozen in time. Despite my family being destroyed – they too did not sign on for this; I remain relentless. Anticipating my making public “Response to SEC-OIG Report PI-09-38,” I will allege, among other things, that JPMorgan Chase General Counsel, Stephen M. Cutler, perjured himself in the office of the Massachusetts United States Attorney on March 11, 2009.

  • fred


    I feel your passion! What is missing here is a connection between those that have remained current on their mortgages and those that have not. United we stand divided we fall.

    Those that have not remained current are being abused by a failed system and a market desperatly trying to repair itself by moving homeownership from weak to strong hands, regardless of the methods being employed.

    In my opinion, a better question to be asked and answered is, did a “failed leadership” manipulate the real estate market higher for personal gain via the securitization process so that all home buyers paid a higher price than they otherwise might have?

    If yes, all homebuyers are entitled to an overpayment rebate by mortgage originators and bank creditors? Let’s return those free bank reserves to the people!

    Should the government more vigourously pursue it’s enforcement mandate by pursuing those that benefitted from a wrongfully inflated market?

    Look no further than the Raj trial for the answer.

  • Red Ribbons
    America’s Modern Wild West

    By James McGuire
    Red Ribbons was inspired by A Campbell

    Banks are similar to a leprechaun, as the leprechaun placed a red ribbon on every tree to hide the “Pot of Gold”; the banks red ribbons of words conceal the truth. “Mortgage, mortgage note, assignment, conveyance, transfer, Indorser, Indorsee, grantor, grantee, transferor, transferee, tangible, intangible, UCC and a host of additional words operate as the banks red ribbons.”

    One source, Huffington Post , reported that federal audits noted the banks may have violated the Civil War era, False Claims Act.

    This author has to wonder if the banks learned their method of deception from the outback kangaroos of Australia. A Joey , the baby, must be really confused knowing that his dad is known by several names, “Jack, Buck or Boomer” and the mom is known as a “Jill, Flyer or Doe,” and they live in groups known as “Mobs.”

    Remarkable, a kangaroo cannot move backwards once it has leapt beyond somewhere. In the world of violating laws, the banks have an issue; they leaped into an area where they believed the people would not look! This author was taught at a young age, “Look before you Leap.”

    There are many pro bank law firms attempting to red ribbon the truth from the people, law enforcement and the courts, but the number of ribbon removers is increasing exponential on a daily basis.

    Buzzards’ will prey upon a dead carcass, the banks prey upon the living.
    Both will puke on you if confronted!

  • JPM

    From today’s Washington Post,

    Protester Handcuffed at JP Morgan Chase Shareholder Meeting

    Police had each entrance blocked ahead of the meeting, as protesters gathered in the rain and cold chanting slogans such as “Make Banks Pay” and carried signs that said: “Chase gets rich, we lose homes, jobs, services.” At least 20 police cruisers circled the building.

    Inside, several shareholders spoke out against the bank’s handling of mortgage foreclosures.

    “As a person of faith, my God believes you shouldn’t take advantage of people when they are down,” said Dawn Dannenbring of the community group Illinois People’s Action, addressing CEO Jamie Dimon. “Do you believe in the same God I believe in?”

    Dimon answered: “That’s a hard one to answer.”

    After another question on foreclosures, Dimon said: “We are doing everything we can to keep people in their homes that should stay in their homes.”

    Chase, headquartered in New York, is holding its annual meeting in Columbus for the first time. Along with all the major banks in the country, Chase has been criticized for its handling of mortgage foreclosures.

    The protests were organized by The New Bottom Line, a coalition of clergy and unions, which is pushing for action and legislation around banking practices that hurt troubled homeowners.

    Annual shareholder meetings of large banks routinely draw protesters. However, security this year has been especially tight after Wells Fargo & Co.’s annual meeting on May 4 in San Francisco became a rowdy scene after hundreds protested outside. Inside the meeting, a group of shareholders demanded that the bank immediately stop foreclosures and waive principal for troubled home owners. The shareholders were escorted out of the meeting by police. Eight people were arrested for blocking entrances to the building.

  • BM

    As if the Taibbi article wasn’t bad enough!?!

    What are we to do? Likely justice will not be served.

    Wouldn’t it be great to start a sell off of these companies’ shares in a nation wide show of disgust! Better yet, before the sell off commences let those harmed, short the shares!

    That would hit these morally bankrupt a-holes where it hurts!!!

  • Jim

    Settling the robo signing case for 5 large is ok as long as it doesn’t release the banks from the 200 byn they owe investors…..robo signing wasn’t the problem rep and warrantee violation and fraudulent loans were…trust me on this , this i know a lot about……

  • Jamie’s Mea Culpa

    How does this work? Jamie apologizes,

    Jamie Dimon, JPMorgan Chase & Co. (JPM)’s chairman and chief executive officer, said he was sorry for foreclosure mistakes as hundreds of protesters at the annual meeting demanded he do more to help homeowners and small businesses recover from the financial crisis.

    For any errors that were made, “we deeply apologize,” Dimon, 55, said today at the shareholders’ meeting in a 2- million-square-foot office building in Columbus, Ohio. “We are doing everything we can to keep people in their homes that should stay in their homes.” Dimon said he especially regretted the bank’s mistakes in foreclosing on active-duty military personnel and for fumbling paperwork on other home seizures.

  • Jerry


    Give me a call. I have some new information that may turn JPMorgan Chase upside down. You have my number if not e-mail me and I will get to you.


  • Nora

    Well said Larry, thank you for shedding more light on the issues of foreclosures, as you can tell it brings out so much out rage from our nation’s citizens, that includes me. Larry please call Jerry, and let us know what he has on JP Morgan, we can use any information that can prove the misconduct. Banks seem to think that they are above the law, because they can BUY the law. Corruption does not stop at the court house steps, unfortunately! The regulators are trying to get to the truth, and the banks are trying to prevent the truth from coming out by blocking the truth with court motions, then it would seem that it would be up to the judges to rule in favor of the truth, at least we all would hope so. Even the main stream media has been bought out, it seems obvious that something is being swept under the rug. I don’t understand so much needed coverage by the media on the foreclosure crisis and the media is playing it down, why one would ask? Like you said Larry, the banks are afraid, they know they screwed up royally, they know they scammed their own people and now they are trying to scam the entire system. The system itself needs to be changed in order to get to the bottom of this crisis and turn things around, but do they want to? Having to hear on an hourly basis how our government is going broke while the banks are profiting from the very scheme that brought down our economy is unreal. yes Larry, you are right, the nation is being held captive and paralyzed economically, socially and politically not to mention legally! What a shame, that we the people had to lose faith in our system! The one good thing we have is that there are people like you who care enough to speak your mind about this issue and the various other issues concerning our economy, and Ms. Morgenson for being devoted to the subject matter. I hope the AG are not going to give up, and I hope that a measly settlement is out of the question. Unless the banks recognize their mistakes and admit to the problems they caused and begin to take actions to improve their impression of the reality, we cannot move forward. Those CEO’s need to know that this issue is not going to go away if they hide it or pretend it does not exist. They lost credibility already there’s no redemption without a turn around. They lost the trust of millions of americans whether home owners or investors, we will never forget unless they forgive! Thank you Larry and thanks to those people who are sharing their opinions and their insights. God bless America and not forget me 🙂

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