The last of the UBS Libor settlements to come out was the U.S. one and it has some of the best quotes. There’s the yen swaps trader who said “I live and die by these libors, even dream about them.” There’s … I mean, there is the life and career of Bart Chilton, in toto; here is a thing he said:
“A Conscience Isn’t Nonsense”
Statement of Commissioner Bart Chilton on UBS Settlement
December 19, 2012
Every so often, folks wonder if some in the financial sector believe that having a business conscience is nonsense. Financial sector violations are hurtling toward us like a spaceship moving through the stars. All too often, penalties have been a simple cost of doing business. That needs to change.
Particularly good are the exhibits to the criminal complaint against Tom Hayes and Roger Darin. We’ve previously met Hayes, cleverly disguised as Trader A; he was the senior yen swaps trader at UBS in Tokyo. Darin was the short-term rates trader “in Singapore, Tokyo, and Zurich,” though probably not all at once; he and his team submitted yen Libors for UBS. You can guess what happened when they got together!
But you don’t have to guess because there are lots of transcripts of their chats in the exhibits.1 Here is a problematic one: Read more »
Ooh so Wells Fargo screwed the government out of hundreds of millions of dollars of mortgage insurance by fraudulent underwriting, allegedly. We’ve all heard big-bank mortgage fraud stories by now and they’re usually pretty juicy and smoking-gun-tastic: “shit breathers,” etc. And the government claims that WFC submitted somewhere between 6,000 and 50,000 bad loans, while specifically describing a dozen or so in the complaint, presumably cherry-picked for maximum offensiveness. Let’s look at one:
92. FHA case number 352-4948464 relates to a property on Martin Luther King Blvd. in Newark, NJ (the “King Blvd. Property”). Wells Fargo underwrote the mortgage for the King Blvd. Property, reviewed and approved it for FHA insurance, and certified that a DE underwriter had conducted the required due diligence on the loan application and that the loan was eligible for HUD mortgage insurance. The mortgage closed on or about July 23, 2003.
93. Contrary to Wells Fargo’s certification, Wells Fargo did not comply with HUD rules in reviewing and approving this loan for FHA insurance, and did not exercise due diligence in underwriting the mortgage. Instead, Wells Fargo violated multiple HUD rules, including HUD Handbook 4155.1 ¶¶ 2-3 and 3-1, HUD Handbook 4000.4 ¶ 2-4(c)(5), and Mortgagee Letters 1992-5 and 2001-01.
94. Wells Fargo’s violation of HUD Handbook 4155.1 ¶ 2-3 is illustrative of the multiple rules that Wells Fargo violated in approving the King Blvd. Property. HUD underwriting guidelines state that lenders must analyze a mortgage applicant’s credit and determine the creditworthiness of the applicant. Specifically, lenders must verify and analyze the borrower’s payment history of housing obligations, and obtain written explanations from the borrower of past derogatory credit. HUD Handbook 4155.1 ¶ 2-3. Contrary to this clear requirement, Wells Fargo failed to verify the borrower’s history of housing obligations or obtain explanations from the borrower for past derogatory credit. In violating HUD Handbook 4155.1 ¶ 2-3, Wells Fargo endorsed the King Blvd. Property for FHA insurance without sufficiently analyzing the borrower’s creditworthiness.
Gosh! Failure to verify history of housing obligations! Unobtained explanations for past derogatory credit! INSUFFICIENT ANALYSIS!
What? Read more »