- Following public furor, are feds backing off “Operation Choke Point” program discouraging banking services to lawful but disfavored enterprises? [Daily Signal] Or does the choking continue? [Washington Business Journal (Capital One cuts off check-cashing firms)]
- FATCA challenge: “Ontario women sue Ottawa over compliance with new U.S. banking law” [Winnipeg Free Press, earlier]
- Corporate tax inversions: yes, journalist Jonathan Alter really did recommend “McCarthy-era loyalty oaths” [Taranto/WSJ] Obama admininstration was for them (in Delphi case) before it was against them [Bloomberg] And they’re popular with President Obama’s donors even aside from Warren Buffett [same] More: Charles Krauthammer.
- WSJ editorial on sanctions against Robbins Geller in Boeing securities suit. More: Daniel Fisher;
- Profile of Vanguard tax informant David Danon [Philadelphia Inquirer, earlier]
- Some Denver foreclosure lawyers settle overcharge case [Kevin Funnell, earlier]
- Contains real juice: “$35 million will go to groups that provide legal, housing and community development programs.” [AP/The Saratogian on New York’s share of Bank of America settlement; Stephen Bainbridge]
- Federally run consumer complaint database at CPSC has been unfair and unreliable mess, so naturally CFPB wants one of its own [Kevin Funnell]
- Los Angeles, Miami, Providence, and Cook County among municipalities piling on lenders with mortgage and disparate-impact suits [same]
- “Just one way to stop corporate tax inversions: cut taxes” [Chris Edwards, NYT/Cato; more]
- “The IPO is dying. Marc Andreessen explains why.” [Timothy Lee, Vox via Tyler Cowen]
- No mercy for the Swiss: feds’ “fierce campaign” on overseas tax compliance “doing more harm than good” [The Economist; Doreen Carvajal, New York Times]
- “Pretty much everything George Dvorsky says at io9 about corporate personhood is wrong” [Bainbridge] Dodd-Frank turns four, alas [same]
- “There was no evidence, period.” Preet Bharara loses one as jury acquits in insider trading case [Ira Stoll, Future of Capitalism]
WSJ editorial this morning: “We hold no brief for Citi, which has been rescued three times by the feds…. [But] good luck finding a justification for [the $7 billion figure] in the settlement agreement. The number seems to have been pulled out of thin air since it’s unrelated to Citi’s mortgage-securities market share or any other metric we can see beyond having media impact.
“This week’s settlement includes $4 billion for the Treasury, roughly $500 million for the states and FDIC, and $2.5 billion for mortgage borrowers. That last category has become a fixture of recent government mortgage settlements, even though the premise of this case involves harm done to bond investors, not mortgage borrowers.” More: Bloomberg. And the settlement directs Citigroup to hire former Eric Holder associate Thomas Perrilli, now at Jenner & Block, for a monitorship that is likely to prove an extremely lucrative plum [Reynolds Holding, Alison Frankel] Also: Ira Stoll.
- In banking and FCPA cases, targets of DOJ prosecution are disproportionately firms domiciled abroad, and other countries do notice that [Jesse Eisinger, NYT “DealBook”]
- “Los Angeles’ Confused Suit against Mortgage Lenders” [Mark Calabria, Cato] Providence also using disparate impact suits in hopes of making banks pay for its housing failures [Funnell]
- Podcast discussion on Operation Chokepoint with Charles J. Cooper, Iain Murray, and Todd J. Zywicki [Federalist Society, earlier]
- New round of suits against banks based on ATMs’ imperfect wheelchair accessibility [ABA Journal, earlier here]
- Walgreen’s could save billions in taxes if it moved to Switzerland from U.S. Whose fault if anyone’s is that? [Tax Foundation]
- “Left unmentioned: how fed regulation and trial lawyers deter banks from protecting themselves with overdraft fees.” [@tedfrank on NYT report about banks’ use of databases to turn down business from persons with records of overdrawing accounts, a practice that now itself is being targeted for regulation]
- Scheme to seize mortgages through eminent domain stalling as cities decline to come on board [Kevin Funnell]
- Furor grows over Obama administration’s Operation Chokepoint program chilling bank access for legal but disfavored groups [Iain Murray, Elizabeth Nolan Brown, FDIC list (not just payday lenders but also lawful purveyors of pills, guns, ammunition, and much more), Hans Bader] Parallel, though not happening under same program: JP Morgan abruptly closes accounts of former Colombia finance minister who is a renowned international economist, apparently because he made it onto a list of diplomats and other “politically exposed persons” statistically associated with legal risks and high compliance costs [Business Insider] Update via Nolan followup: Dana Liebelson at Mother Jones quotes anonymous bank officials as claiming that some account closures are wrongly being attributed to the program, but even in defending it concedes that should banks opt for continuing to service clients in disfavored lines of business they will shoulder distinctive (maybe decisive) compliance costs from “manag[ing] these relationships and risks,” engaging in due diligence, etc. Also, lawmakers like Sens. Jeff Merkley (D-Ore.) and Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.) back the program; besides, this isn’t “the first time that feds have asked banks to keep an eye on their customers” since the Know Your Customer program goes back some years. So that’s comforting!
- “Court: Standard & Poor’s is entitled to discovery supporting its ‘selective prosecution’ claim” [Volokh, earlier here and here]
- “Plaintiff? Is That Really Necessary In A Class Action?” [Daniel Fisher on ZymoGenetics case]
- Backed by hedge fund, lawyers exploit anti-terror law to squeeze global banks [Norman Lamont, New York Post]
- “CEO facial masculinity predicts firm’s likelihood of being subject to SEC enforcement action” [Jia, Van Lent, and Zeng, SSRN via @brucecarton]
- “Reflections on High Frequency Trading” [Robert Levy, Cato]
- Banks finally lay to rest long-running litigation under Missouri second-mortgage law (MSMLA), though only after one Kansas City law firm ran up more than $600 million in settlements [Litigation Daily]
A big source of frivolous litigation these days, the “sovereign citizen” cult originated on the political right but has now spread more widely [Lorelei Laird, ABA Journal]:
When involved in any legal matter, from pet licensing to serious criminal charges, sovereigns are known for filing legal-sounding gibberish, usually pro se, learned from other sovereigns who sell lessons in “law” online. Frequently, they cite the Uniform Commercial Code, maritime law and the Bible.
They’re also known for the sheer volume of their filings, which can double the size of a normal docket. …
Some sovereigns hold trials in their own “common-law courts,” convicting public officials in absentia and sentencing them to death for “treason.” …Sovereigns sometimes say they are subject only to “God’s law” or to “common law,” meaning the U.S. legal system as they believe it existed before the conspiracy. They may declare themselves independent nations, join fictional American Indian tribes or attempt to create a replacement government within the sovereign community.
Don’t assume that public officials and public employees are the only ones swept in:
The Atta family locked up their Temecula, Calif., home and went on vacation in 2012. While they were gone, Victor Cheng moved in.
Cheng had owned the home before the Attas, but he lost it in foreclosure. Nonetheless, he filed a fraudulent deed with the county recorder’s office, transferred the utilities into his name and even tried to evict the Attas after their return. During his prosecution for burglary, trespassing and filing a false document, he insisted that he was not the person being prosecuted because the indictment spelled his name in all capital letters.
Full story here.
- Reminder: SB 353, which would ban bringing of knives and other weapons onto private school property whatever the school’s wishes, up for hearing at 1 p.m. Wed. Feb. 26 [text, Senate, related Virginia] With Ninth Circuit’s Peruta decision, Maryland now one of only six holdout states to resist any recognition of gun carry rights [David Kopel]
- Slew of labor proposals moving through Annapolis would require employers to offer paid sick leave, push unionization on community college employees, and require employers to pay interns’ transportation costs. Study finds boosting state’s minimum wage would cost jobs [WaPo]
- Supremely irresponsible: state already hobbled by nation’s slowest foreclosure process, but NAACP, Casa de Maryland and Legislative Black Caucus demand six-month foreclosure moratorium on top of that [Washington Post; earlier on Maryland foreclosure law here, here (couple spends five years in million-dollar home without making mortgage payment), here, etc.]
- Review of recent developments in asbestos litigation in the state [Lisa Rickard, Chamber Institute for Legal Reform]
- Goodbye to another Free State tradition? Senate votes ban on sale of grain alcohol, with urging from Johns Hopkins Bloomberg nanny crew [Washington Post]
- Just say no to the Maryland Small Business Development Financing Authority [Mark Newgent, Baltimore Sun]
- Sen. Zirkin “litigates dog-bite cases on behalf of plaintiffs” and is player on dog bite bill [Insurance Journal]
- Presumed-reliance (“fraud on the market”) theories, which SCOTUS is likely to reconsider in Halliburton, aren’t just confined to securities litigation, but crop up in various other areas of litigation including third-party payer drug suits [Beck, Drug and Device Law; more background]
- Why restrict alienability?, pt. CLXXI: Neil Sobol, “Protecting Consumers from Zombie-Debt Collectors” [NMLR/SSRN]
- Will Congress step in to curtail fad for eminent domain municipal seizure of mortgages? [Kevin Funnell, earlier here and here]
- More commentary on J.P. Morgan settlement [Daniel Fisher, Michael Greve, earlier here, here, and here]
- Judge Jed Rakoff: Why have no high level execs been prosecuted over financial crisis? [Columbia Law School Blue Sky Blog]
- Treasury Department’s Financial Stability Oversight Council (FSOC) turns its sights to investment advisers. The logic being…? [Louise Bennetts, Cato/PJ Media]
- Property-casualty insurer association challenges new HUD disparate-impact rules [Cook County Record]
A group called the National Fair Housing Alliance has taken the lead in levying sensational bias charges against mortgage lenders, claiming that neglect of REO (real-estate-owned) properties following foreclosure has followed racially discriminatory patterns. It helped negotiate the extraction of $42 million from Wells Fargo, and is pursuing tens of millions in claims against Bank of America and other lenders. NFHA’s claims have routinely been given unskeptical circulation in the press, but now an investigation by Kate Berry and Jeff Horwitz in the American Banker is bringing overdue scrutiny:
The group has disclosed addresses for only a fraction of the properties it alleges the banks have neglected, but a review of those it has released indicates that NFHA regularly misidentified the institution legally responsible for maintaining specific homes. In some cases, it conflated the banks responsible for maintaining properties with those that were simply serving as trustees for mortgage-bond investors. In others, it faulted banks for damage that occurred before they took possession of properties.
Not in dispute is the leverage the NFHA has gained in its dealings with banks from its close ties to supporters in the federal government. Unusual among Washington agencies, the Department of Housing and Urban Development both funds housing discrimination investigations by nonprofits, including by the NFHA, and provides the venue for them to negotiate their claims.
Grants from HUD and Fannie Mae helped get the NFHA and its leader, Shanna Smith, into the profitable business of investigations in the first place. Banks complain without success about Smith’s practice of demanding a deal while withholding the actual identities and addresses of the properties said to be suffering from bank neglect. Now the HUD-brokered Wells Fargo settlement has paid off richly with $30 million+ for the NFHA and its affiliates, the better with which to stir up more complaints. And watch the revolving door spin, amid few qualms arising from conflicts of interest: “Sara Pratt, the HUD official responsible for investigating and resolving the NFHA’s complaints, and who oversaw its settlement with Wells Fargo, is a former NFHA staffer and consultant.” (cross-posted at Cato at Liberty).
- J.P. Morgan and the Dodd-Frank system: “With Wall Street’s capable assistance, government has managed to institutionalize and monetize the perp walk.” [Michael Greve, related from Greve on the self-financing regulatory state]
- Harvard needs to worry about being seen as endorsing its affiliated Shareholder Rights Project [Richard Painter]
- Under regulatory pressure, J.P. Morgan “looking to pull back from lending to politically incorrect operations like pawn shops, payday lenders, check cashers” [Seeking Alpha]
- Rare securities class action goes to trial against Household lending firm, HSBC; $2.46 billion judgment [Reuters]
- Car dealers only thought they were winning a Dodd-Frank exemption from CFPB. Surprise! [Carter Dougherty/Bloomberg, Funnell]
- “Memo to the Swiss: Capping CEO Pay is not an Intelligent Way of dealing with Income Inequality” [Bainbridge]
- American Bankers Association vs. blogger who compiled online list of banks’ routing numbers [Popehat]