- NAUGHTY:
When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks.
When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert.
The culprit, Ms. Ash soon learned, was not a burglar but her bank.
This sort of thing has sadly become somewhat common, although stealing the ashes of this poor woman's husband was a novel touch that I'm sure had the bank's public relations staff running for the hills.
Even so, some bank representative did their best to put a happy face on this fiasco:
[B]anks and their representatives insist that situations like Ms. Ash’s represent just a tiny percentage of foreclosures.
That reminds me of the time I got wasted, broke into a nearby army base, hot-wired a tank and drove it straight into a nearby orphanage. And when the judge at my trial asked me if I had anything to say for myself I replied, "But, Your Honor! This incident only represents a tiny percentage of my overall driving record!"
Because, like, here's the thing: This kind of crap shouldn't happen at all. Period. The fact that it happened even once is a scandal but the fact that it's happened to multiple people throughout the country shows that the banks simply have no idea what mortgages are and are not on their books anymore. The entire foreclosure process -- which was designed very carefully to protect property rights -- has become a lawless mess. If we had a smart center-left party in this country, we'd have Democratic representatives and senators scouring the airwaves shrieking at the top of their lungs about banks stealing deceased loved ones' ashes -- you know, the same way GOP congressfolk go on Fox News every night and shriek about some school somewhere in the middle of Nebraska that's hosting a "Holiday Concert" rather than a Christmas concert. But we don't so that's that.
- NAUGHTY:
A lawsuit filed against accounting giant Ernst & Young marks one of the biggest government efforts to date to assign blame for the financial crisis.
The suit by Andrew Cuomo, the outgoing New York state attorney general, accuses Ernst & Young of helping Lehman Bros. cover up its declining health in the months before the investment bank's collapse in September 2008.
Cuomo's complaint, filed in state court, focuses on a set of short-term transactions, begun in 2001, that allowed Lehman to look healthier and less risky when it reported quarterly financial data.
The suit accuses Ernst & Young of approving the so-called Repo 105 transactions and signing off on financial reports that did not disclose them.
Ernst & Young "sat by silently while Lehman deceived the public," the complaint says.
For those of you who don't know, Repo 105 is a neat little accounting trick where short-term loans are recorded on the books as "sales." The money from this "sale" is then used to pay down the company's debt, making the firm appear less leveraged than it actually is, even though it actually has to repay the debt from the "sale" in very short order. If you perform enough of these transactions close to the end of a given quarter, you can make billions of dollars in liabilities magically vanish for a very short period of time. This is what Cuomo is alleging Ernst & Young helped Lehman do in the lead up to its spectacular crash in 2008. This is definitely a good one to watch.
- NAUGHTY:
As the housing market came crashing down in 2008, the giant mortgage company Fannie Mae took an unprecedented step to help tackle the rising tide of foreclosures. It named an exclusive group of law firms that would help rapidly carry out the unsavory task of filing legal paperwork to remove homeowners from their homes.
Today, problems with documents handled by firms on Fannie's list - and a similar one created by its smaller rival Freddie Mac - are at the heart of federal and state probes over faulty foreclosure practices that now threaten to further undermine the housing market.
Fannie and Freddie, the largest mortgage companies, shaped the practices being challenged in courtrooms around the country. They picked law firms that could foreclose fast and paid them based on how many foreclosures they could process. Speed was essential because delays cost the companies money - and, after they were taken over by the government two years ago, meant losses for taxpayers, too.
Not only did the companies urge swift foreclosures, but in at least one case Fannie executives also greenlighted working with a firm that they knew firsthand had engaged in legally questionable practices, according to documents and interviews with lawyers and industry officials.
Even though conservatives love to blame Fannie and Freddie for everything regarding the 2008 financial crash -- after all, completely private companies can't possibly do anything wrong -- that doesn't mean the two GSEs (and now to GOEs if you want to be precise) are blameless. In this case it seems as though they set the template for how other firms would handle their foreclosures in the wake of the housing crash. The result has been banks breaking into houses and stealing late relatives' ashes. It would be nice if someone within the government would try to put the people at Frannie who initiated these sorts of practices in jail. You know, rule of law and other quaint notions like that.
- NAUGHTY:
Deutsche Bank agreed to pay $553 million and admit to criminal wrongdoing on Tuesday, settling a long-running investigation into tax shelter fraud that prosecutors say generated billions of dollars in bogus tax benefits.
In an agreement with the United States Attorney’s Office in Manhattan, Deutsche Bank will avoid prosecution for helping 2,100 customers evade taxes through 2,300 financial transactions. The arrangements, which took place between 1996 and 2002, helped wealthy Americans report more than $29 billion in fraudulent tax losses, according to the Justice Department.
“This settlement marks another victory in the long effort to stop financial institutions, law firms and accounting firms from designing and marketing abusive tax shelters, and facilitating those who use them,” said Senator Carl Levin, chairman of the Permanent Subcommittee on Investigations, which has been investigating tax shelters for nearly a decade.
What always amazes me about stuff like this is that rich people bother resorting to illegal methods to avoid paying taxes when in reality there are many perfectly legal ways to do it. I'm actually sorta surprised that the government bothered to clamp down on these sorts of practices at all since we've heard time and again that forcing rich people to pay any extra in taxes will make them cry and they'll feel too sad to create jobs and all of Western Civilization will collapse. But good on the U.S. Attorney's Office for doing its job. It makes me happy to see the government do useful things that don't involve giving Paris Hilton a tax cut.
That's all I got for today, kids! I'll see you next week - have a Merry Christmas!*
*Yes, Fox News, I said it! Now stop hounding those poor school teachers throwing holiday parties!
