Obama Administration And Banks Near Deal On Mortgage Fraud Legal Liability.

he Obama administration, state attorneys general, and, perhaps, the nation’s largest banks are close to a final settlement on the years-long struggle over allegations of massive foreclosure fraud, according to several sources familiar with the talks. And the final details of the arrangement, according to the source who revealed them, will apparently not preclude prosecutors and regulators from taking legal action against many of the common abuses during the house bubble. It remains to be seen whether all parties will ultimately sign off on the language.

The settlement is worth $25 billion, a sum which will be distributed to homeowners who were wrongfully foreclosed on as well as those who remain underwater. In addition, banks could still face future legal action over 12 specific violations.

According to someone intimate with the negotiations, there will be no legal release of the banks with respect to:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

In addition, the source said, there will be preservation of the vast majority of securitization claims including all claims regarding state pension funds as well as the vast majority of the origination fraud claims from HUD, the VA and the USDA.

According to Mike Lux, who originally reported the settlement for The Huffington Post, the release will be “almost entirely confined to robosigning cases” — meaning that banks will likely not see further punishment from the states for foreclosure fraud. Robosigning fraud is perhaps the easiest type of misconduct for prosecutors to target.

That said, their legal liabilities on the federal level remain vast, even after handing over $25 billion for homeowner relief.

The announcement is, in some regards, a victory for the few state attorneys general who, over the course of several months, refused to sign off on a quick and limited settlement with the big banks.

“I think it is fair to give [New York Attorney General] Eric Schneiderman and the other progressive attorneys general a lot of credit for holding the line,” said a source intimate with the negotiations. “This is a big victory for them.”

The announcement comes just two days after President Obama announced the creation of a mortgage crisis unit to be headed by Schneiderman and other prosecutors. Federal claims, such as those that will be permissible under the negotiated settlement, have not been aggressively pursued over the last three years despite widespread evidence of abusive lending. The emergence of the unit as well as the final language of the settlement suggests that the administration is refiguring its approach to future litigation.

New York Attorney General Eric Schneiderman says there’s been a resolution of one major objection to a proposed settlement between U.S. states and the nation’s biggest mortgage lenders over deceptive foreclosure practices.

Schneiderman, named Friday to help lead a nationwide probe of wrongdoing in the mortgage-backed securities market, says his issue with the multistate settlement was that it shouldn’t interfere with a comprehensive investigation.

He says he’s confident those releases for the banks have been “narrowed.”

Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial agreed to the settlement, with up to $25 billion for lowering homeowners’ mortgage principal, refinancing, a reserve account, and checks to homeowners.

The settlement grants immunity from civil lawsuits brought by state attorneys general against the lenders over narrowly defined “robo-signing” cases.

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Housing Task Force Will Zero In on Wall Street.

After failing to produce any major prosecutions stemming from the housing crisis, an expanded federal task force is planning a new tack, cracking down on financial firms suspected of improperly bundling home loans into securities for investors, officials said Wednesday.

The Obama administration tried to instill confidence in the effort by installing Eric T. Schneiderman, the New York state attorney general who is viewed by liberal groups as a crusader against big banks, as one of the leaders of a new unit within the Financial Fraud Enforcement Task Force. But skeptics still doubted the sincerity of the new effort.

The unit, announced by President Obama in the State of the Union address on Tuesday night, while Mr. Schneiderman looked on from a prime seat behind Michelle Obama, is the latest in a string of efforts undertaken by the administration over the last three years to prosecute crimes related to the financial crisis, bolster the housing market and help homeowners who are suffering under unaffordable mortgages.

Many of those efforts have met with limited success. The Financial Fraud Enforcement Task Force, created in late 2009, seemed little more than “a press release collection agency” being propped up by the Justice Department “to collect examples of investigations or prosecutions that would otherwise have been brought,” said Senator Charles E. Grassley, an Iowa Republican, at a Senate oversight hearing in June.

Officials said the new effort would be more focused than previous interagency programs to tackle the mortgage crisis.

“There have been investigations going on in various states and branches of the federal government,” Mr. Schneiderman said, speaking to reporters in Washington. “We’re now making a concerted effort to pull everything together and move forward aggressively to address these issues.”

Officials said the unit would most likely focus on Wall Street firms, big banks and other entities that many people thought had escaped scrutiny for their role in the housing crisis. The task force will most likely follow the lead of New York and Delaware, which are investigating potential flaws in the creation of mortgage-backed securities that could lead to charges of tax evasion, insurance fraud and securities fraud.

The Delaware attorney general, Beau Biden, has not yet signed on to the new effort. “We are willing to work with any agency that has the same interest in pursuing accountability in the mortgage finance industry,” said Ian McConnell, the director of Mr. Biden’s fraud division, which has joined forces with other states to pursue their own mortgage-related cases. “But any collaboration has to be real and meaningful.”

With only a year left in the president’s term, the task force also has a limited amount of time to produce results.

Mr. Obama told Congress that the new unit would include federal law enforcement officials and state attorneys general and would “expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.”

That sounds much like previous White House efforts, particularly in 2009 when Mr. Obama outlined a new program to strengthen the investigation and prosecution of mortgage fraud, promising more money and people to target “virtually every step of the process, from predatory lending on Main Street to the manipulation on Wall Street.”

But Tuesday’s announcement shifted focus away from yet another faltering effort — an attempt, led by federal officials, to reach a settlement between state attorneys general and the large banks on foreclosure abuses.

Administration officials had tried unsuccessfully to reach a settlement before Tuesday night’s State of the Union address. On Wednesday, one of the crucial players, Kamala D. Harris, the attorney general of California, rejected the most recent terms, saying, “We believe it is inadequate for California.”

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$500 billion in defense cuts begins to take shape.

President Barack Obama plans to cut the defense budget by half a trillion dollars over the coming decade, include trimming the Army by at least 38,000 soldiers and grounding of a number of drones, defense officials told CNN Wednesday.

The officials — all of whom spoke on condition of anonymity — laid out details of the cuts, which are to be released Thursday by Defense Secretary Leon Panetta and the chairman of the Joint Chiefs of Staff Martin Dempsey.

As part of those cuts, the officials said, the Air Force will ground 30 Global Hawk drones — used for surveillance and reconnaissance — and will not buy new ones. The drones are to be replaced by U-2s, the high-altitude, piloted recon aircraft that have similar capabilities and are paid for

It was not clear how many aircraft will be cut, the officials said.

The Navy’s number of carriers will drop from 11 to 10 for three years but then return to its previous strength, the officials said. The temporary drop in carrier strength is explained by the fact that the USS Enterprise is to be decommissioned this fall, and the USS Ford is not slated for completion for three years, they said.

In addition, seven old cruisers will be mothballed as will a few old, small, amphibious ships, the officials said.

The Army’s troop strength will drop from its current force of 558,000 to 520,000 and perhaps to 490,000, the officials said. Two brigades — a total of 7,000 to 8,000 soldiers — will be moved from Europe to the United States, which would leave about 40,000 soldiers in Europe, they said.

The officials said the Marines, too, would see a reduction in troop strength, but they could not quantify how many would be cut.

The officials described the cuts before Secretary of Defense Leon Panetta’s dinner with congressional leaders to preview Thursday’s planned announcement.

There may be more cost-cutting ahead. That’s because the failure of Congress and the president to come to terms on budget cuts could leave the military on the hook for another $500 billion in automatic reductions.

Early this month, Obama traveled to the Pentagon to unveil his plan for a leaner, cheaper military that he said will retain the nation’s ability to fight terrorism and to confront new threats from countries such as China and Iran.

“We are determined to maintain a ready and capable force, even as we reduce our overall capacity,” the administration said in a summary of its defense priorities. “Our global responsibilities are significant; we cannot afford to fail.”

The strategy is the result of months of study at the Pentagon. And it is a high-stakes, high-wire balancing act by Obama as he faces a more austere budget climate with U.S. demands at home and overseas.

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Feds create database to find those who rip off soldiers

WASHINGTON — Attorney General Eric T. Schneiderman joined officials from the Consumer Financial Protection Bureau (CFPB), the Department of Defense, and the Federal Trade Commission today to announce the development of a database to combat consumer financial frauds directed at military members, veterans, or their families. The Repeat Offenders Against Military (ROAM) Database will track completed enforcement actions against companies and individuals who repeatedly scam military personnel.

Today’s announcement comes months after Schneiderman secured a $3.5 million settlement against Rome Finance Co., Inc., an unlicensed lender. Rome solicited through storefronts, including “SmartBuy” in New York, that targeted servicemembers for sales and financing of high-priced electronics. The servicemembers were locked into Rome’s high interest revolving credit contracts, which resulted in the troops paying undisclosed fees and incurring massive debt. Schneiderman’s investigation revealed that this network was targeting servicemembers not only in New York, but also in California, Tennessee, Colorado, Georgia, North Carolina, Oklahoma, Texas, and even overseas.

“The ROAM Database will allow us to act much more quickly to stop fraud against members of the military,” said Schneiderman. “Had the ROAM Database existed during our investigation of SmartBuy, we likely could have shut them down more quickly and saved countless servicemembers thousands of dollars each. This database will be an important tool in our ongoing, comprehensive effort to crack down on those unscrupulous individuals who prey on the men and women who serve our country.”

“As a former Ohio Attorney General, I know how frustrating it is to expose a scam and then see it take root in another state. The ROAM Database will help law enforcement crack down on frauds that cross state lines,” said CFPB Director Richard Cordray. “ROAM is a huge step forward in our mission to improve consumer protection for the military community.”

Law enforcement officials across the country, including state Attorneys General, United States Attorneys, and Judge Advocates (JAGs) from all five branches of the armed forces, will be able to search the ROAM Database for publicly available information about completed civil and criminal legal actions against perpetrators of financial scams against military personnel, veterans, or their families.

“During my visits to military bases across the country, I have heard too many stories of servicemembers and veterans being defrauded by businesses that see our troops as easy targets for a quick profit. This database will help law enforcers stop some of the worst offenders – those that have made a habit of targeting our men and women in uniform and our veterans,” said Holly Petraeus, CFPB’s Assistant Director, Office of Servicemember Affairs.

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So President Obama is “Weak” on Iran

The United States on Monday sought to tighten the financial screws on Iran by imposing sanctions on the country’s third-largest bank for allegedly helping Tehran develop its nuclear program.

Now any foreign firm that deals with Iranian state-owned Bank Tejarat and its affiliate, Belarus-based Trade Capital Bank, will no longer be able to access the U.S. financial system.

The sanctions “will deepen Iran’s financial isolation, make its access to hard currency even more tenuous, and further impair Iran’s ability to finance its illicit nuclear program,” Treasury Undersecretary David Cohen said in a statement.

The United States and Europe are pressuring Iran to talk to the international community about its nuclear activities, which the West says are aimed at developing a weapons program but which Tehran says are peaceful.

The European Union on Monday banned imports of oil from Iran and followed the United States in imposing sanctions on its central bank, which acts as the clearinghouse for the country’s oil revenue.

A senior U.S. Treasury official said he was optimistic that Europe would also blacklist Bank Tejarat, which has nearly 2,000 branches in Iran, as well as branches in France and Tajikistan.

Bank Tejarat was penalized for providing financial services to the Islamic Republic of Iran Shipping Lines and other entities already sanctioned for their involvement with the country’s nuclear program.

The action “strikes at one of Iran’s few remaining access points to the international financial system,” Cohen said. Twenty-three Iranian-linked firms have been sanctioned by the United States, a list that now includes all of the largest state-owned banks.

Washington also accused Bank Tejarat of indirectly supporting the activities of Iran’s Revolutionary Guard.

The United States is working to apply sanctions signed by President Barack Obama last year that seek to block countries and their institutions from dealing with the Iranian central bank.

The aim is to starve Iran of revenues needed to develop nuclear weapons without disrupting jittery oil markets and impeding the U.S. economic recovery.

“We do expect there will be a significant reduction in Iran’s exports,” said the senior U.S. official.

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Iran’s rial drops 10 pct as EU bans oil imports

Iran’s rial currency plunged 10 percent to a new record low on Monday as the EU imposed a ban on Iranian oil imports, posing a major headache for President Mahmoud Ahmadinejad who has said sanctions will not hurt the economy.

European Union governments agreed to an immediate ban on all new contracts to import, purchase or transport Iranian crude oil and petroleum products, EU officials said, in a move aimed at ramping up pressure on Tehran to curb its nuclear activities.

The ban, which comes on top of new U.S. sanctions aimed at hampering Iran’s oil exports around the world, sent Iranians rushing to convert their savings into hard currency as efforts to curb black market trading failed.

The price of dollars rose 7 percent from Saturday, the last working day, to 20,500 rials, up 15 percent from last week. It has rallied almost 50 percent from a month ago, according to the financial website Mesghal.

The rial’s slide is likely to exacerbate inflation which is already at 20 percent and rising, as Iran is heavily reliant on imported consumer and intermediate goods whose prices have surged as the rial has depreciated.

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