Forbes: TBTF Banks have $3.8 Trillion in Reported Loan Portfolios — How much of it is real?

The five largest U.S. banks have a combined loan portfolio of almost $3.8 trillion, which represents 40% of the total loans handed out by all U.S. commercial banks.

See Forbes: $3.8 Trillion in Portfolio Loans

I can spot around $300 billion that isn’t real.

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When interviewing the FDIC receiver back in 2008 he told me that WAMU had originated around $1 Trillion in loans. He also told me that most of them were subject to claims of securitization (i.e., they had been sold). Then when I asked him how much had been sold, he said that Chase had told him the total was around 2/3. Translation: With zero consideration, Chase was about to use the agreement of October 25, 2008 as an excuse to claim ownership and servicing rights on over $300 billion in loans. Chase was claiming ownership when it suited them. By my count they foreclosed on over $100 billion of those “WAMU” loans and, for the most part, collected the proceeds for itself.

Point One: If there really were $300 Billion in loans left in WAMU inventory, there would have been no receivership nor would there have been any bankruptcy.

Point Two: If there were $300 Billion in loans left in WAMU inventory, or even if there was 1/10th that amount, neither the FDIC receiver nor the US Trustee in WAMU bankruptcy would have allowed the portfolio to be given to Chase without Chase paying more than zero. The receiver and the US Trustee would have been liable for civil and even criminal penalties. But they were not liable because there were no loans to sell.

So it should come as no surprise that a class action lawsuit has been filed against Chase for falsely claiming the payments from performing loans and keeping them, and for falsely claiming the proceeds on foreclosure as if they were the creditor when they were most clearly not. whether the lawyers know it or not, they might just have filed the largest lawsuit in history.

see Young v Chase Class Action – WaMu Loans – EDNY June 2018

This isn’t unique. Chase had its WAMU. BofA had its Countrywide. Wells Fargo had its Wachovia. Citi had lots of alter egos. The you have OneWest with its IndyMac. And there are others. All of them had one thing in common: they were claiming ownership rights over mortgages that were falsely claimed to have been “acquired through merger or acquisition using the FDIC (enter Sheila Bair screaming) as a governmental rubber stamp such that it would appear that they purchased over a trillion dollars in residential mortgage loans when in fact they merely created the illusion of those loans which had been sold long ago.

None of this was lost on the insurers that were defrauded when they issued insurance policies that were procured under false pretenses on supposedly non-securities where the truth is that, like the residential loans themselves, the “securities” and the loans were guaranteed to fail.

Simplistically, if you underwrite a loan to an family whose total income is less than the payments will be when the loan resets to full amortization you can be sure of two things: (1) the loan will fail short-term and (2) the “certificates” will fail along with them. If you know that in advance you can bet strong against the loans and the certificates by purchasing insurance from insurers who were inclined to trust the underwriters (a/k/a “Master Servicer” of nonexistent trust issuing the certificates).

see AMBAC Insurance Case vs U.S. Bank

The bottom line is that inside the smoke and mirrors palace, there is around $1 Trillion in loans that probably were sold (leveraged) dozens of times where the debt is owned by nobody in particular — just the TBTF bank that claims it. Once they get to foreclosure, the presumption arises that everything that preceded the foreclosure sale is valid. And its very hard to convince judges that they just rubber stamped another theft.

Add your name: Wells Fargo must root out fraud and corruption

 The John Chiang for California Governor is asking for a full, transparent investigation to fire executives responsible for the latest Wells Fargo scandals.  At least he acknolwedged Wells Fargo is a criminal enterprise.
Wells Fargo just admitted signing up hundreds of thousands of customers for auto-loan insurance they didn’t want or need.

It’s time for Wells Fargo to take responsibility for changing their corrupt corporate culture, so this doesn’t happen again.

I’m calling on Wells Fargo to begin a full, transparent investigation and fire the executives responsible for their latest scandal. Will you join me?

Wells Fargo has ripped off Veterans, Auto Loan customers and Homeowners: The Feds do nothing.

Wells Fargo’s legal challenges pile up as the bank tries to rebuild customer trust
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Wells Fargo CEO Tim Sloan took over the company last year after the fake accounts scandal. Time


New legal challenges are piling up for Wells Fargo as the U.S. banking giant tries to rebuild trust with customers and investors after a scandal over millions of unauthorized accounts.

The San Francisco-based bank says it has discovered “issues” involving customer refunds from optional guaranteed asset protection or so-called GAP coverage that’s sold to auto loan borrowers when they buy a vehicle.

Separately, a new federal lawsuit has accused Wells Fargo’s merchant services unit of misleading businesses about fees for credit card processing.

Added to a collision insurance policy, GAP coverage can help pay the difference between the amount a borrower would owe on a car lease or loan, and the total the insurer would pay if the vehicle is stolen or declared a total loss after an accident.

Borrowers typically are entitled to refunds for a portion of the GAP insurance premiums if they repay their auto loans early.

However, In the bank’s second-quarter earnings report issued Friday, Wells Fargo said it had discovered issues involving GAP insurance that could result in paying overdue refunds to customers in some states.

“During an internal review, we discovered issues related to a lack of oversight and controls surrounding the administration of guaranteed asset protection products,” Wells Fargo spokeswoman Catherine Pulley said in a statement issued Tuesday. “We believe we can make the refund process more consistent for customers in the future and make things right for customers in the past.”

Two of the bank’s federal regulators, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, declined to comment on the refund issue.

The Federal Reserve, which oversees the bank’s overall risk management compliance, as well as financial safety and soundness, said it does not comment on “confidential, firm-specific supervisory matters.”

The separate lawsuit against Wells Fargo’s merchant services unit was filed Friday by a Patti’s Pitas, a Pennsylvania restaurant, and Queen City Tours, a tour operator based in Charlotte, N.C.

Wells Fargo uses a confusing, 63-page program guide that outlines fees charged for processing credit card payments, the lawsuit alleged. However, the bank unit improperly “implements mark-ups by inflating ‘pass through’ costs, increasing agreed-upon fees, and imposing new junk fees,” the lawsuit alleged.

The lawsuit seeks class-action status on behalf of other companies that may have been overcharged.

“The accusations outlined against Wells Fargo in this lawsuit do not reflect how we operate our Merchant Services business. We believe our negotiated pricing terms are fair and were administered appropriately,” the bank said in a statement that added it plans “to defend against the misrepresentations outlined in the lawsuit.”

Wells Fargo has labored to make amends since the bank was hit with $185 million in penalties by federal and state officials for opening millions of accounts that may not have been authorized by customers.

The scandal stemmed from internal sales goals that pushed bank employees to open multiple accounts, credit cards, and other financial products for customers. The bank has since ousted some top managers, paid $3.26 million in customer refunds and revamped its compensation program to remove the sales goals from decisions on employee pay raises.

However, the bank’s latest quarterly earnings report disclosed that a continuing review of the embarrassing episode “may lead to a significant increase in the identified number of potentially unauthorized accounts” that tops earlier estimates.

Wells Fargo also acknowledged in late July that it would issue $80 million in refunds or account adjustments to more than 570,000 auto loan customers who were charged for vehicle insurance without their knowledge.

New York state’s banking and insurance regulator issued subpoenas for Wells Fargo records related to the forced insurance payments.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

Wells Fargo customer: It felt like my car was held as extortion

Wells Fargo customer: It felt like my car was held as extortion
Wells Fargo CEO: We must get back America’s trust

Imagine keeping up with your Wells Fargo car loan payment every month — but having your vehicle repossessed anyway. That’s exactly what Samir Hanef said happened to him.

“My car was held as extortion and I was forced to pay for Wells Fargo’s mistake,” Hanef told CNNMoney.

“The stress and anxiety … are truly indescribable,” said the clinical social worker from Durham, North Carolina.

Hanef is a victim in the latest Wells Fargo scandal. He is one of up to 570,000 auto loan borrowers that Wells Fargo has said it may have enrolled and charged for car insurance without their knowledge. Wells Fargo has admitted that as many as 20,000 of those customers may have defaulted on their car loans or had their vehicles repossessed in part due to these unnecessary insurance costs.

Wells Fargo told CNNMoney that it plans to work directly with Hanef to give him a refund.

“We are truly sorry for any inconvenience this caused our customers,” a Wells Fargo spokeswoman said in an email to CNNMoney.

Related: Wells Fargo may have forced 570,000 into unneeded auto insurance

Unlike most big banks, Wells Fargo’s auto loan contracts allowed the lender to obtain collateral protection insurance on a customer’s behalf if they failed to buy liability coverage themselves. Wells Fargo conceded that it bought insurance for some customers — and charged them for it — even when they had their own.

Lenders can impose collateral protection insurance on borrowers if their normal coverage lapses. It’s designed to protect from a financial loss in the event the borrower gets hit with an insurance claim, such as for an accident, and doesn’t have any coverage.

Wells Fargo told CNNMoney that it has discontinued this insurance program after “finding errors” that hurt some customers.

Most big banks don’t force auto insurance on borrowers who don’t have it. JPMorgan Chase (JPM), Bank of America (BAC), PNC Financial (PNC) and Santander Consumer USA told CNNMoney that they do not follow this practice.

This week, a New York regulator subpoenaed two Wells Fargo divisions, demanding the bank turn over loan agreements and other documents related to the auto insurance charges, a source told CNNMoney.

Related: Wells Fargo hit with subpoenas over auto insurance scandal

Wells Fargo’s auto insurance scandal comes nearly a year after the bank said it had created about 2 million potentially unauthorized checking and credit card accounts.

Hanef, a Wells Fargo customer for 23 years, said he took out a Wells Fargo auto loan in June 2014 to purchase a used Honda Civic. To be safe, Hanef said he always paid $300 per month, even though the bill was only $280.

The problem was that starting around March 2016, Wells Fargo (WFC) raised his monthly bill to $374 because it added the collateral protection insurance. Hanef insists he had auto insurance, so there was no need for Wells Fargo to charge him for more.

“My insurance never lapsed,” he said, echoing the claims of other customers. Wells Fargo told Hanef that it sent him notices about the insurance charges, but he never saw them.

Hanef said that he didn’t notice the insurance charges added to the monthly invoices sent to his home. He admits he stopped looking at the bill closely because for almost two years the amount due never changed.

“It always stayed the same,” Hanef said.

wells fargo insurance customer samir hanef
Wells Fargo customer Samir Hanef had his Honda Civic reposessed as part of the bank’s auto insurance scandal.

He didn’t know there was a problem until it was too late. Hanef’s Honda Civic was repossessed on December 27, 2016, according to a letter sent by Wells Fargo to Hanef and viewed by CNNMoney. Losing his car meant that Hanef missed work and inconvenienced his patients, many of whom have mental health and substance abuse problems.

Before he got his car back on January 10, 2017, Hanef said he was forced to pay the repo fee and get current on the loan — or risk losing the car for good.

“They told me the car would be sold on auction if I didn’t pay the ransom,” Hanef said.

Wells Fargo wrote Hanef a letter on January 31 saying it removed the insurance surcharge after he proved he had insurance. But the bank refused to refund the repo fee because it said he would have been late on his payments in any case.

The worst part? Hanef said his credit score has been “decimated” by the Wells Fargo experience, dropping more than 100 points. Now he’s not able to refinance his house.

Related: Wells Fargo ordered to rehire whistleblower

Wells Fargo said last week it’s “extremely sorry” for the auto insurance debacle. The bank promised to pay $80 million in refunds and account adjustments. Wells Fargo said it will also work with credit bureaus to correct errors in customers’ credit records.

Hanef is considering joining a class action lawsuit launched this week by the law firm Keller Rohrback over the auto insurance scandal. The firm reached a $142 million preliminary class action settlement with Wells Fargo earlier this year over the fake account scandal.

Senator Elizabeth Warren and some of her Democrat colleagues want to grill Wells Fargo CEO Tim Sloan and Chairman Stephen Sanger about the recent scandals. They wrote a letter on Tuesday to Mike Crapo, the Republican chairman of the Senate banking committee, requesting a September hearing. Crapo’s committee did not respond to a request for comment from CNNMoney.

Wells Fargo Alert: Shares fall Friday after filing warns ‘significant increase’ in unauthorized accounts

Wells Fargo shares fall after filing warns may find ‘significant increase’ in unauthorized accounts

Tim Sloan, Chief Executive Officer of Wells Fargo & Company

Lucas Jackson | Reuters
Tim Sloan, Chief Executive Officer of Wells Fargo & Company

Wells Fargo shares fell Friday after a filing with the U.S. Securities and Exchange Commission showed a new review of the bank’s consumer sales scandal could reveal a “significant increase” in unauthorized accounts.

“We expect that our review of the expanded time periods … may lead to a significant increase in the identified number of potentially unauthorized accounts,” the firm said in the filing. “However, we do not expect any incremental customer remediation costs as a result of these efforts to have a significant financial impact on the Company.”

Wells Fargo said in the filing it expects legal costs could exceed what it has already set aside by $3.3 billion.

“To regain the trust we have lost, we must continue to be transparent with all our stakeholders and go beyond what has been asked of us by our regulators by reviewing all of our operations —leaving no stone unturned — so we can be confident we have done all that we can do to build a better, stronger Wells Fargo,” CEO Tim Sloan, who took the position in the wake of the sales scandal, said in a separate press release Friday.

Shares traded 1 percent lower.

Wells Fargo one-day performance

Source: FactSet

Wells Fargo said it has expanded the review to “cover the entire consent order period of January 2011 through September 2016, and to perform a voluntary review of accounts from 2009 to 2010.” The firm expects to complete the review by the end of the third quarter of this year.

The Consumer Financial Protection Bureau (CFPB) has also begun an investigation into whether customers were affected by Wells Fargo’s freezing and, in many cases, closing, of consumer deposit accounts, the filing said.


David Dayen Broadcasts: Wells Fargo deserves the Corporate Death Penalty


David Dayen also joins Ring of Fire Radio withScott Millican today.

Today on Ring of Fire, Investigative Journalist, David Dayen, will join us to unpack the latest Wells Fargo Bank scandal and why he thinks they should receive the corporate death penalty.


David Dayen: Wells Fargo Is Trying to Bury Another Massive Scandal

The bank became notorious last year for creating fake accounts on behalf of customers. Now it’s trying to kill a class-action lawsuit over shady debit card fees.

Wells Fargo became a poster child for corporations that abuse their own customers last year when it got fined for ginning up roughly 2 million (maybe even more) fake accounts to meet high sales goals. The bank has since tried to block customer lawsuits over that misconduct, using fine print buried in contracts known as the forced arbitration clauses, which force customers to go not before judges but a secretive non-judicial process to get relief.

It turns out Wells Fargo has a long history of using arbitration to evade legal scrutiny. In fact, for the past six years, Wells has tried to use arbitration to block a class-action suit that every other major bank in America long ago settled. This has not only delayed restitution for regular customers, but revealed exactly why Elizabeth Warren’s brainchild Consumer Financial Protection Bureau (CFPB) moved to eliminate class-action bans through arbitration clauses earlier this month: It hands big banks a license to steal with impunity.

The case centers on something called debit card reordering. Let’s say you have $100 in your bank account, and you make three purchases, costing $20, $30, and $110. Under Wells Fargo account guidelines, the bank can charge you a $35 overdraft fee for taking out more than you have in your account. But by reordering the transactions from highest to lowest, putting the $110 charge first, the bank could charge three separate overdraft fees, one for each attempt to draw insufficient funds. Simply by altering the transaction order, Wells Fargo could make an additional $70.

Multiply that by millions of customers, and you’re talking about serious money.

This was a common scheme in the banking industry for years, affecting the poorest customers—those most likely to overdraw their account. A 2014 federal report showed that approximately 8 percent of the US customer base paid nearly 74 percent of all overdraft fees. High fees are one reason the poor often stay out of traditional banks, but lack of access to banking also imposes large burdens from check-cashing and payday lending. In short, it’s very expensive to be poor in America.

Reordering has been ruled deceitful in federal court. Starting around 2008, consumers filed national class-action lawsuits against more than 30 different banks over these bogus overdraft fees. The cases got consolidated in 2009, in the Miami federal courtroom of US district court Judge James King. Most banks eventually settled with the plaintiffs: Bank of America agreed to pay $410 million in 2011; JPMorgan Chase promised $162 million in 2013. To date, banks have shelled out $1.1 billion in restitution for overdraft abuses.

Wells Fargo was the only one to keep fighting.

The bank knew it could be liable for a big payout. In 2010, a California judge ordered it to pay $203 million to customers in that state alone over deceptive overdraft practices. Wells fought that all the way to the US Supreme Court but lost last spring; they finally starting paying Californians in 2016.

A national class-action suit was supposed to compensate Wells Fargo customers in the other 49 states, but a 2011 US Supreme Court ruling offered the bank a potential reprieve. In AT&T Mobility v. Concepcion, a 5-4 decision effectively said companies could use arbitration agreements to ban class-action lawsuits. “Before that, it was assumed that consumers had a right to join a class action,” said Amanda Werner, campaign manager with the consumer groups Americans for Financial Reform and Public Citizen.

Literally two days after the Concepcion ruling was released, Wells Fargo filed to dismiss the overdraft case in favor of arbitration. But Wells had a problem: In both 2009 and 2010, Judge King explicitly asked banks if they wanted to file a motion to move to arbitration, and Wells Fargo declined, apparently preferring to try to win the case. Wells told the court then it “did not move for an order compelling arbitration… nor does it intend to seek arbitration of their claims in the future.” For two years, company lawyers took depositions and filed motions and did everything a litigant would do. Then, after receiving more favorable precedent from the Supreme Court on arbitration, Wells Fargo changed course.

Judge King denied the bank’s motion to dismiss at the end of 2011; Wells appealed to the 11th Circuit. In a unanimous ruling in 2012, the higher court denied appeal, arguing that Wells Fargo missed its chance at arbitration, and pointing out that lots of money and resources had already been spent on the case.

Two years ago, Judge King certified the class, meaning he officially allowed defrauded customers to band together and sue jointly. But the bank again tried to move to arbitration. This would have blocked anyone not named in the lawsuit from joining the suit, limiting millions of potentially affected customers. Judge King again denied the motion last year, writing, “Wells Fargo deliberately chose to pursue a strategy of litigation… it would be unfair to permit Wells Fargo to effectively ‘wait in the weeds’ and invoke arbitration… now that the alternate path the bank chose did not turn out as it had hoped.”

I think you can guess the next sentence: Wells Fargo appealed again, and the 11th Circuit will hear arguments next month. If the bank loses, it could appeal to the US Supreme Court—and all of this is happening before the trial can even begin. “The bank is being uniquely aggressive,” as Lauren Saunders, associate director at the National Consumer Law Center, a consumer justice organization, told me.

In a statement to VICE, Wells Fargo spokesman Kristopher Dahl said, “Wells Fargo continues to believe that arbitration is a fair, efficient and effective way for a customer to pursue a legal claim and resolve a legal dispute.” Dahl added that Wells Fargo stopped reordering debit card transactions in 2010, although they continued to do so for checks and automatic account withdrawals until 2014.

While Wells Fargo has been unsuccessful in blocking the overdraft case, they’ve already managed to punt for six years without having to pay up. (Even after the initial ruling in the California overdraft case, the bank spent six years appealing before eventually complying.) So through legal maneuvering, Wells Fargo could keep accountability for its deceptive practices at bay for years to come.

If the bank does prevail in moving the case to arbitration, people who got screwed and charged extra fees would have to pursue overdraft complaints by themselves. They would be at a major disadvantage: A recent study by the non-profit Level Playing field found that Wells Fargo customers have won only seven arbitration cases in the past eight years, out of just 48 that actually got to a final hearing. And just to pursue the case, consumers would have to spend heavily on legal representation and hearings. As federal judge Richard Posner of the Seventh Circuit Court of Appeals once wrote in a ruling, “The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

In this sense, arbitration can stop people from enjoying their legal rights, effectively allowing corporations to overturn the law by making it unenforceable. Deepak Gupta, who argued the Concepcion case in 2011, calls arbitration “a basic threat to our democracy.”

Incredibly, Wells Fargo went so far as to try and use a separate case to sweep this whole overdraft saga under the rug. In a $142 million settlement over the fake account scandal, Wells Fargo tried to fashion such a broad release—”any and all claims and causes of action of every nature and description”—that it could conceivably have forced some overdraft victims to give up their suits. Lawyers for the overdraft plaintiffs objected, and US district court Judge Vince Chhabria ordered the settlement rewritten to be narrower.

Congressional Republicans have been making noise in recent days about overturning the new federal ban on arbitration clauses that prevent customers from joining class-action lawsuits against their banks. Congress can use the Congressional Review act to kill regulations within 60 legislative days of their release; the rule was made final last week. But Republicans will have to explain why corporations like Wells Fargo would benefit from the rollback; the Consumer Protection Bureau’s director Richard Cordray even cited Wells Fargo—albeit over its fake account scandal—when announcing it.

We have an excellent idea of what corporations could do with such a gift: like Wells Fargo, they might try and make it virtually impossible for customers to prevent small-time rip-offs and change their shady behavior. And that could serve to just enable petty theft. In fact, according to one FDIC study, overdraft fee income at Wells Fargo in the first quarter of 2016 increased 16 percent relative to a year earlier, the largest uptick of 600 banks reviewed. We don’t know whether any of those fees were illegally gained, and if Wells Fargo has its way, we never will.

The new federal regulation on class-action suits against banks will not affect the Wells Fargo overdraft case; it doesn’t apply retroactively. But this real-world example of arbitration in action is so blatant that a Republican-led reversal of the rule would seem like a giant upturned middle finger at millions of Americans.

As Amanda Werner of Public Citizen put it, “I don’t know how [Republicans] can look a Wells Fargo customer in the eye.”

Follow David Dayen on Twitter.

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