I know it sounds bad, but that’s only because it might actually be that bad. Beth Jacobson, a former loan officer at Wells Fargo, sat down with the Times this weekend to get into the nitty gritty of her craft. Generally speaking, Jacobson described her work as ten years of riding “stagecoach from hell…systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages.” Okay, but specifically, how did she and her colleagues do it? I’m glad you asked.
“We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
Interesting! Sort of fucked up, sure, but before we start name-calling, let’s hear more about the process.
In 2001, former loan officer Tony Paschal states in his affidavit, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Md.
“They referred to subprime loans made in minority communities as ghetto loans and minority customers as ‘those people have bad credit’, ‘those people don’t pay their bills’ and ‘mud people,’ ” Mr. Paschal said in his affidavit.
He said a bank office in Silver Spring, Md., had an “affinity group marketing” section, which hired blacks to call on African-American churches. “The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.”
Emphasis ours, but only because we wanted to make it easier for Wells to respond to the allegations. Here’s the statement offered to the Times:
Billionaire Igor Olenicoff is suing UBS for allegedly not telling him the truth about his US tax liabilities for his Swiss bank account. However, the real case here is which of the two parties has less credibility. Olenicoff says UBS pulled a fast one when it came to his tax liabilities and,”tarred his reputation and cheated him out of millions of dollars.” While lamenting his newly shattered reputation, Olenicoff seemingly forgot that he already pleaded guilty to filing a false tax return in 2002 and failing to declare offshore accounts in four different countries from 1998 to 2004. So really this is just a case of some bitter guy trying to bring down an innocent big bank because he got busted, right?
Meet-cutes! With Andy Madoff breaking down and crying on the kitchen floor and describing daddy’s life work as a betrayal of “biblical proportions,” Bernie’s most likely not going to be named father of the year any time soon, or even get a #1 Dad mug come June 21. But he probably can expect some sort of nice note from these two ladies:
Deadline For Capital Raising Plans Looms (WSJ)
Today is the deadline for the government to approve the capital raising plans set forth by the banks. More importantly, if your name is Ken or Vikram: an “in-depth review of management.” White House Promises 600k More Jobs (CNBC)
The White House has promised 600k new jobs under the $787B stimulus plan this summer. Of those, 135k teachers and school support personnel are slated. UBS Said to Be in Talks About Repaying Swiss State Investment (Bloomberg)
The Swiss want in on the fun, too! The bank “in talks with the Swiss government about the repayment of 6 billion francs ($5.5 billion) in state aid, two people with knowledge of the matter said.” Top Three M&A Banks (Bloomberg)
Goldman Sachs reported $527MM, JP Morgan came in at $479MM, and MS came in third at $411MM. Nothing on Citi or BAC’s numbers, though several boutiques are mentioned. Supreme Court Asked To Delay Chrysler Sale (Reuters)
Some pension funds (and separately, consumer groups) in Indiana are asking the SCOTUS to slow the government led sell-off of Chrysler while they put together a legal challenge. Gordon Repeats Vow Not to Go Away (Telegraph)
“What would they (the public) think of us if ever we walked away from them at a time of need. We are sticking with them,” he said.
Remember, back in the heady days of June 2007, when Blackstone co-founder Pete Peterson’s daughter Holly wrote the barely beach readable book The Manny, which was promoted by this class-fest of a video, featuring Karen Duffy rapping about the perks of having a male nanny on staff, and included a transvestite maid and a midget?
Peterson was said to be horrified by the tome and publicly described Holly as “the most egregious self-promoter in America.” So surely he’s super-psyched to watch (or not watch) as his grandson, Peter Carey (“PC”), nephew of Holly, stars in Bravo‘s new reality series, Prep, which is of the same genre as the Real Housewives but follows a bunch of bratty New York teenagers. Let’s meet PC, who tells us “the recession is my bitch,” now.
If Ben Bernanke thought he could keep the Fed (semi)-independent of the rest of Washington, he may get a rude awakening soon. Congress is looking to provide the GAO with the authority to audit all of the Fed’s activities. The thought of greater Congressional scrutiny has to make Bernanke reach for the Pepto and hope that he doesn’t wake up in a cold sweat haunted by the vision of Maxine Waters marching down the corridors of the Fed trying to fire every ex-Goldman employee herself. Best of luck Ben. Congress seeks to open Fed actions to more scrutiny [FT]
Author William Cohan has a column out today in which he claims CNBC on-air editor-cum-Dealbreaker mascot Charlie Gasparino called him a “crook,” twice, during an appearance on the network in February. We just spoke to Chaz and he claims: not so! Sort of! Here’s the deal: Gaspo did use the c-word, but he says Cohan takes it out of context in the column. According to CG, during the show, Billy had suggested that “all bankers are crooks,” as it relates to huge bonuses not necessarily tied to their firms’ performances. So, by that logic, Charles wondered aloud if when Cohan was a banker (first at Lazard, then at JPMorgan), he himself was a crook. Obviously, CG went on.
Bank of America has named four outside directors to its executive board. According to the Journal, they are former Federal Reserve Governor Susan Bies; former Federal Deposit Insurance Corporation Chairman Donald Powell; former Compass Bancshares Inc. CEO D. Paul Jones and former Bank One Corp. executive William Boardman. BofA Taps Four Outside Directors [WSJ]
Timmy G has said multiple times that he intends/expects/prays the fiscal deficit will be reduced from its current level of around 13% of GDP to 3%. That is a massive gap to fill and the government’s math is already working against itself. This year’s budget assumed an unemployment rate of 8.1%- which it was for about 15 seconds. But it’s at 9.4% now and climbing and that isn’t good news for tax receipts. So the government needs to find somebody to pay for their ridiculously optimistic economic assumptions. One potential candidate is VC firms.
The carry VC firms make is currently taxed at the capital gains rate of 15%. Mark Hessen, the president of the National Venture Capital Association, says there is a risk of this jumping to the ordinary income rate of 38%.
Andrew, who reportedly fell to the floor, sobbing, when his father broke the news in his kitchen on Dec. 10, has called the Ponzi scheme “a father-son betrayal of biblical proportions” and claims that he and his brother were blindsided by the news. After his father broke the news–and after he presumably got up off the kitchen floor–a near-catatonic Andrew went right to bed, without even taking off his coat or crotchfish, and stayed there for four hours, completely still. Since his father went to jail, his mood has brightened some, according to his friend Alexandra Lebenthal.
