The Huffington Post | BySamantha Lachman Posted: 03/31/2015 8:01 am EDT Updated: 03/31/2015 9:59 am EDT
WASHINGTON -- A meeting between Sen. Elizabeth Warren (D-Mass.) and Jamie Dimon deteriorated almost immediately after the JPMorgan Chase & Co. CEO visited the recently elected senator and consumer advocate at her Capitol Hill office in 2013.
In a new afterword for the release of the paperback version of her book A Fighting Chance, Warren recalls that the tenor of the conversation between the two policy adversaries soured when Dimon complained about financial regulations that she has supported:
When the conversation turned to financial regulation and Dimon began complaining about all the burdensome rules his bank had to follow, I finally interrupted. I was polite, but definite. No, I didn’t think the biggest banks were overregulated. In fact, I couldn’t believe he was complaining about regulatory constraints less than a year after his bank had lost billions in the infamous London Whale high-risk trading episode. I said I thought the banks were still taking on too much risk and that they seemed to believe the taxpayers would bail them out -- again -- if something went wrong.
Our exchange heated up quickly. By the time we got to the Consumer Financial Protection Bureau, we weren’t quite shouting, but we were definitely raising our voices. At this point -- early in 2013 -- Rich Cordray was still serving as director of the consumer agency under a recess appointment; he hadn’t yet been confirmed by the Senate, which meant that the agency was vulnerable to legal challenges over its work. Dimon told me what he thought it would take to get Congress to confirm a director, terms that included gutting the agency’s power to regulate banks like his. By this point I was furious. Dodd-Frank had created default provisions that would automatically go into effect if there was no confirmed director, and his bank was almost certainly not in compliance with the those rules. I told him that if that happened, “I think you guys are breaking the law.”
Suddenly Dimon got quiet. He leaned back and slowly smiled. “So hit me with a fine. We can afford it.”
As Warren noted in a 2014 Senate Banking Committee hearing, Dimon was proved correct: Though his bank was forced to pay $20 billion in fines, he still received a significant raise at the end of 2013.
Now, banks like JPMorgan are directing their anger toward Warren, threatening to withhold campaign donations to her fellow Senate Democrats in protest of her advocacy for Wall Street accountability and greater oversight and regulation of financial services institutions.
CORRECTION: An earlier version of this article said Warren was re-elected. She was elected to the Senate for the first time in November 2012 and is serving her first term.
PARIS – Lufthansa knew six years ago that the co-pilot of the passenger plane that crashed in the French Alps last week had suffered from a "serious depressive episode," the German airline said Tuesday.
The airline said that as part of its internal research it found emails that Andreas Lubitz sent to the Lufthansa flight school in Bremen when he resumed his training there after an interruption of several months.
In them, he informed the school that he had suffered a "serious depressive episode," which had since subsided.
The airline said Lubitz subsequently passed all medical checks and that it has provided the documents to prosecutors. It declined to make any further comment.
The revelation that officials Lufthansa had been informed of Lubitz's psychological problems raises further questions about why he was allowed to become a pilot for its subsidiary, Germanwings, in September 2013.
Authorities say the 27-year-old Lubitz, who in the past had been treated for suicidal tendencies, locked his captain out of the cockpit before deliberately crashing the Airbus 320 into a mountain in the French Alps on March 24. All 150 people aboard Flight 9525 from Barcelona to Duesseldorf were killed.
Earlier Tuesday, Lufthansa said it had set aside $300 million to deal with possible costs from the crash as French aviation investigators said they were examining "systemic weaknesses" like cockpit entry rules and psychological screening procedures that could have led to the Germanwings plane crash -- issues that could eventually change worldwide aviation practices.
French aviation agency BEA signaled the latest re-think about airline procedures in the wake of the Germanwings crash, which jolted an aviation industry already reeling after one passenger plane disappeared into an ocean and another was shot out of the sky over war-torn eastern Ukraine.
The goal of the BEA investigation is to make recommendations to aviation authorities, not just in France but anywhere, about what can be done to prevent similar crashes. French prosecutors are carrying out a separate crash probe to pinpoint possible criminal wrongdoing.
The Germanwings crash has already produced some changes in aviation procedures. Europe's aviation regulator now says all airlines in Europe should require two people in the cockpit at all times during a flight. Many airlines have already imposed the new rule, which has been in place in the U.S. since the Sept. 11 attacks.
The International Civil Aviation Organization, which brings together 191 nations, said state agencies like the BEA must officially determine the causes and contributing factors of crashes and give recommendations on ways to avoid recurrences. ICAO could then bring such recommendations to its member states -- possibly leading to changes in international aviation standards.
BEA said it aims to provide a "detailed analysis" of the Germanwings cockpit voice recorder and any other flight data -- but it also plans to widen its search, to examine issues that could be problematic for all airlines.
"(We will study) systemic weaknesses (that) might possibly have led to this aviation disaster," BEA said in its first statement since prosecutors detailed the co-pilot's suspected role in the crash.
The agency is studying both psychological screening procedures and rules applied to entering and leaving the cockpit, as well as cockpit door locking systems.
German prosecutors say Lubitz received psychotherapy before obtaining his pilot's license and that medical records from that time referred to "suicidal tendencies." They have given no dates for his treatment, but said visits to doctors since then showed no record of any suicidal tendencies or aggression against others.
They also have found torn-up sick notes from doctors, including one that would have kept Lubitz off work on the day of the crash.
At the crash site in the French Alps, investigators said they hope to have found DNA samples for everyone killed on the flight in the next 24 hours. Lt. Col. Jean-Marc Menichini, speaking in the town of Le Vernet, said the search was still on for the plane's second black box -- its data recorder.
"By the end of the week at the latest, it will be possible to identify all the victims thanks to the DNA samples taken," French President Francois Hollande told reporters during a trip to Germany.
Hollande said German and French ministers also discussed the need to improve checks of air passengers within Europe's visa-free Schengen travel zone and to "ensure that we can also strengthen our safety rules for piloting planes."
Construction workers have cut a road up to the steep, mountainous crash site to speed up recovery efforts. Previously, emergency workers had to rely on helicopters. German investigators tasked with identifying the victims and determining their cause of death are expected Wednesday at the crash site.
In Frankfurt, Lufthansa spokeswoman Kerstin Lau said insurers have reserved $300 million to deal with "all costs arising in connection with the case."
Lufthansa -- Germanwings' parent company -- offered immediate aid last week of up to 50,000 euros ($54,250) per passenger to relatives of the victims. Those payments are separate from eventual compensation payments.
Airlines on international flights are required to compensate relatives of victims for proven damages of up to a limit of about $157,000 -- regardless of what caused the crash. However, higher compensation is possible if a carrier is held liable.
Lufthansa has canceled plans to celebrate its 60th anniversary on April 15 "out of respect for the victims of the crash."
MIAMI — In September, Susan Rodolfi celebrated an unusual anniversary: five years of missed mortgage payments.
She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.
Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.
The reason, lawyers for homeowners argue, is that the cases have dragged on too long.
There are tens of thousands of homeowners who have missed more than five years of mortgage payments, many of them clustered in states like Florida, New Jersey and New York, where lenders must get judges to sign off on foreclosures.
However, in a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.
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Documents related to the protracted legal battle that began in 2009 when a mortgage servicer filed to foreclose on Ms. Rodolfi’s house.CreditRyan Stone for The New York Times
“No one gets a free house,” Judge Michael B. Kaplan of the United States Bankruptcy Court in Trenton wrote in an opinion late last year, reflecting what he characterized as a longstanding “admonition” he and others made during the foreclosure crisis. But after effectively ending a New Jersey homeowner’s foreclosure case in November because the state’s six-year statute of limitations had expired, he wrote in his opinion, “With a proper measure of disquiet and chagrin, the court now must retreat from this position.”
It is difficult to know for sure how many foreclosure cases are still grinding through the court systems since the financial crisis. It is even harder to say how many of those borrowers are still living in their homes.
Bank of America, for example, has initiated the foreclosure process on roughly 20,000 mortgages that have not been paid in at least five years. The bank estimates that 90 percent of those homes are still occupied.
The courts are not the only source of delay. Over the years, the federal government has made 69 changes to its mortgage modification programs, forcing lenders repeatedly to scrap previous offers to homeowners and extend new terms.
Of course, the banks have also dragged out this reckoning through shoddy paperwork, botched modifications and general dysfunction as they struggled to cope with a flood of soured mortgages. Many cases were passed among lawyers like hot potatoes and lay dormant on court dockets.
Since housing prices peaked in 2006, roughly 6.7 million Americans have lost their homes to foreclosure. An additional 800,000 people could share that fate by the time all the delinquent mortgages from the crisis are settled, according to a Moody’s Analytics estimate.
“This whole event is going to take 10 years to sort out,” said Mark Zandi, chief economist at Moody’s Analytics. “So we probably have one or maybe two more years to go until it is all over.”
But the laws in places like Florida could prove to be a wild card. In a state where “hanging chads” helped decide the 2000 presidential election, a legal technicality could help settle the state’s foreclosure crisis.
Lawyers for homeowners in Florida contend that lenders have five years to file for foreclosure after a homeowner defaults, normally after several months of missed payments, and the mortgage is “accelerated,” meaning that the bank says that the debt is due all at once. Banks say they have many more years to file for foreclosure, arguing that the five-year clock resets every time a homeowner misses a monthly payment — regardless of when the mortgage was accelerated. Some Florida judges have agreed.
The statute of limitations does not halt a foreclosure case that is continuing in court. But in some Florida courts, homeowners’ lawyers have argued that once a foreclosure is dismissed even for technical reasons, the lender cannot refile a new foreclosure to seize the home if the statute of limitations has passed. Still, the lender has some recourse: It can keep a lien on the house that must be paid off if the property is ever sold.
The issue is now before the Florida Supreme Court.
The lenders’ lawyers have warned in court papers that if the state’s high court sides with the homeowners, “it would spawn a public policy hazard” and dissuade banks from extending mortgages in Florida in the future.
In New Jersey, where the statute of limitations on foreclosures is six years, the issue has just started being argued in the courts. In November, a bankruptcy judge in Trenton grudgingly allowed a Madison, N.J., man to walk away from a $520,000 mortgage that had been in default since 2007.
In concluding his opinion, Judge Kaplan wrote, “the court will proceed to gargle in an effort to remove the lingering bad taste.”
The lender has appealed.
The statute of limitations issue is also coming up in the New York courts.
“It’s becoming a more common way to get out from under these cases,” said Linda Tirelli, a lawyer in White Plains who represents homeowners facing foreclosure.
In June, it also appeared that Ms. Rodolfi was quite literally home free.
When a lawyer then working for her mortgage servicer did not show up for a routine hearing, the judge dismissed her foreclosure case.
But her servicer, Nationstar Mortgage, recently won a reversal of the dismissal, saying the lawyer had missed the hearing because of “inadvertence, mistake and excusable neglect.” Ms. Rodolfi’s lawyers plan to appeal.
“People who are paying their mortgage might see this as a windfall for the homeowner,” said one of her lawyers, Martin G. McCarthy. “But the lenders are more than partly to blame, and in Susan’s case, I wouldn’t feel bad for them.”
For her part, Ms. Rodolfi, 47, said, “If they had just agreed to modify my loan, I would be paying my mortgage, and we wouldn’t be at this point.”
It is easy to see why she has been fighting all these years to keep her home, which Nationstar says is worth $272,000.
Her working-class neighborhood is a short drive from Coconut Grove, a wealthy waterfront enclave of Miami. Her bedroom opens up onto a pool, shaded by palm trees. Outside her house, she parks a small motorboat she named Mermaid. The property includes an adjoining house that she rents out.
She bought the property in 2002 with her husband at the time. The couple amassed a small portfolio of properties in addition to the house she now occupies.
As Florida’s housing market was crumbling, she sold most of her properties. She took a job in a hotel, worked in her father’s luggage shop and chartered boat trips. Still, she could not keep up with her mortgage.
In November 2009, her mortgage servicer at the time, Aurora Loan Services, a unit of the now-defunct Lehman Brothers, filed to foreclose on her house.
Instead of making her roughly $1,300 monthly mortgage payment, she pays her lawyer $500 a month to represent her in court.
In June 2010, Aurora agreed to modify her loan on a trial basis, she said, but waited months to send her the modification deal. When she received the contract in the mail, she refused to sign it, saying that documents had arrived too late.
For months, she heard nothing about her case. It turned out that the law firm that negotiated her modification deal on behalf of Aurora had been shut down after complaints about improper foreclosures, including backdated documents. Nationstar, meanwhile, took over the servicing duties of many of Aurora’s mortgages.
In August 2012, Nationstar made contact with Ms. Rodolfi for the first time, saying it was now servicing her loan.
Nationstar declined to comment for this article, citing the continuing litigation.
Ms. Rodolfi, who now drives a shuttle boat at a local marina, applied for another modification, but Nationstar denied the request.
Again, she applied and was rejected. One reason: “excessive forbearance,” which suggests she was too far behind on her mortgage to ever catch up.
Ms. Rodolfi says she accepts responsibility for falling behind on her mortgage, but she blames her lenders for delaying the modification process. She does not relish the idea of keeping her home through a legal maneuver. She is still seeking a modification, hoping to rebuild her damaged credit and begin a business.
“I screwed up and they screwed up, so now what?” she said.
Sen. Elizabeth Warren (D-Mass.) has delivered a sharp rebuke to Wall Street megabanks threatening to cut off campaign donations to Senate Democrats. According to a Reuters report published Friday, the financial industry iswithholding contributions in an effort to compel party leaders to "soften" criticism from Warren and others, who have repeatedly demanded that firms like Citigroup be more heavily regulated or broken up.
"The biggest banks on Wall Street have made it clear that they expect a return on their investment in Washington," Warren wrote in a response posted to Facebook. "They have reached a new level of brazenness, demanding that Senate Democrats grovel before them. Well forget it. They can threaten or bully or say whatever they want, but we aren't going to change our game plan. It's up to us to fight back."
A hero to many on the liberal left, Warren has emerged as one of the most powerful opponents of Wall Street's excess and influence on Capitol Hill lawmakers. After Citigroup successfully lobbied to roll back a key regulatory tool from the 2010 Dodd-Frank reform law during a December spending bill negotiation, Warren took to the floor of the Senate to deliver a stem-winding speech in which she declared Citigroup — whose own employees drafted the language in the provision — had been granted a "grip over economic policymaking in the executive branch [that] is unprecedented."
"So let me say this to anyone who is listening at Citi: I agree with you. Dodd-Frank isn't perfect," she said, pausing for effect.
Democratic divide: A month earlier, in effort to keep Warren and her allies more tightly aligned with the party establishment, top Senate Democrats opened up a new position in their leadership. Called the "Strategic Policy Adviser" to the Democratic Policy and Communications Center, it was created solely for Warren, who was supposed to help manage growing friction inside the Democratic caucus.
But the ploy has mostly failed. In January, Warren played the lead role in defeating a White House nominee to the third-ranking position at the Treasury Department. Wall Street banker Antonio Weiss had been the administration's choice, but his dubious record in the financial services industry invited concern on the left, and a threat from Warren that she would hold up his confirmation. On Jan. 12, Weiss formally withdrew himself and took a different, less-powerful job that did not require congressional approval.
Will it work? Don't expect Warren or top liberals in the House of Representatives to lower their voices anytime soon. Stories like this will only incite Warren's growing power base into further calls to action against the influence of Wall Street money on lawmakers from both parties.
But for party leaders who understand how important corporate cash is when it comes time to fund increasingly expensive campaigns, the message from the financial industry cannot be ignored. Though they've only withheld or threatened to back off small donations this time around, consider it something like a warning shot. And with Wall Street-friendly Sen. Chuck Schumer (N.Y.) the early favorite to replace outgoing Minority Leader Harry Reid (Nev.) as the Senate's top Democrat in 2017, there is no reason to expect the party to stiffen its back.
For Warren, the line she has long sought to draw in the sand between the big banks and Washington could soon divide her from leaders inside her own party.
Duesseldorf (Germany) (AFP) - The co-pilot who investigators believe crashed a passenger jet into the French Alps, killing all 150 aboard, worried "health problems" would dash his dreams and vowed one day to do something to "change the whole system", an ex-girlfriend told a German newspaper.
The 26-year-old woman, identified only as Maria W., recalled in an interview with the mass-circulation Bild daily how Andreas Lubitz told her: "One day I'm going to do something that will change the whole system, and everyone will know my name and remember."
"I never knew what he meant by that but now it makes sense," it quoted the "shocked" flight attendant as saying.
The black box voice recorder indicates that Lubitz, 27, locked the captain out of the cockpit of the Germanwings jet and deliberately flew Flight 4U 9525 into a mountainside as the more senior pilot tried desperately to reopen the door during its eight-minute descent, French officials say.
As investigators race to build up a picture of Lubitz and any possible motives, new media reports emerged saying he had suffered from vision problems, adding to earlier reports he was severely depressed.
German prosecutors believe he hid an illness from his airline but have not specfied the ailment, and said he had apparently been written off sick on the day the Airbus crashed on its route from Barcelona to Duesseldorf.
- 'Health problems' -
Bild, which showed a photo of the ex-girlfriend from behind to conceal her face, said she had flown with Lubitz on European flights for five months last year and that he had had another girlfriend since her.
She said he could be "sweet" and would give her flowers but got agitated talking about work conditions, such as pay or the pressure of the job, and was plagued by nightmares. "At night he woke up and screamed 'We're going down!'," she recalled.
If Lubitz did deliberately crash the plane, it was "because he understood that because of his health problems, his big dream of a job at Lufthansa, of a job as captain and as a long-haul pilot was practically impossible," she told Bild.
She split up with him because it became "increasingly clear that he had problems", she said.
German police found a number "of medicines for the treatment of psychological illness" during a search at his Duesseldorf home, newspaper Welt am Sonntag weekly said, quoting an unnamed high-ranking investigator as saying he'd been treated by several neurologists and psychiatrists.
Sunday's Bild weekly and the New York Times, which cited two officials with knowledge of the investigation, said Lubitz had sought treatment for problems with his sight.
- 'Alone in cockpit' -
Germanwings pilot Frank Woiton was quoted by Saturday's edition of Bild as saying he had flown with Lubitz who had spoken about his ambitions to become a captain and fly long-distance routes.
He said he handled the plane well and "therefore I also left him alone in the cockpit to go to the toilet," he told the newspaper.
French police investigator Jean-Pierre Michel, who was in Duesseldorf Saturday, told AFP that Lubitz's personality was a "serious lead" in the inquiry but not the only one.
The investigation has so far not turned up a "particular element" in the co-pilot's life which could explain his alleged action in the ill-fated Airbus plane, he said.
German prosecutors revealed Friday that searches of Lubitz's homes netted "medical documents that suggest an existing illness and appropriate medical treatment", including "torn-up and current sick leave notes, among them one covering the day of the crash".
Lufthansa CEO Carsten Spohr has said that Lubitz had suspended his pilot training, which began in 2008, "for a certain period", before restarting and qualifying for the Airbus A320 in 2013.
The second-in-command had passed all psychological tests required for training, he told reporters Thursday.
Several German newspapers Saturday questioned whether doctor-patient confidentiality should always apply.
"The case of Andreas Lubitz has already sparked a debate on whether medical confidentiality for professions like pilots must be limited," said the Sueddeutsche Zeitung newspaper.
- National ceremony -
Germany is to hold a national memorial ceremony and service on April 17 for the victims of Tuesday's disaster, half of whom were German, with Spain accounting for at least 50 and the remainder composed of more than a dozen other nationalities.
Around 500 people earlier Saturday attended a religious ceremony in the town of Digne-les-Bains, about 40 kilometres (25 miles) south of the remote Alpine crash zone where searchers are recovering the victims' remains and evidence.
Candles for each of the victims were placed in front of the cathedral's altar.
Lufthansa and Germanwings -- which has offered victims' families up to 50,000 euros ($54,806) per passenger towards their immediate costs -- placed a full-page condolence notice in several European newspapers Saturday.
In a final ruling, Italy's highest court on Friday overturned the convictions of American Amanda Knox and her former Italian boyfriend in the sensational murder case of Knox's British roommate.
The six judges of the Court of Cassation announced their decision about 10:30 p.m. in Rome (5:30 p.m. ET). They began deliberating at noon after closing arguments by a lawyer for Raffaele Sollecito, Knox's boyfriend when 21-year-old Meredith Kercher was stabbed to death in late 2007.
"I am tremendously relieved and grateful for the decision of the Supreme Court of Italy," the 27-year-old Knox said in a statement from her home in Seattle. "The knowledge of my innocence has given me strength in the darkest times of this ordeal."
She thanked everyone who supported her. "Your kindness has sustained me."
Her Italian lawyer, Carlo Dalla Vedova, said she "was crying because she was so happy" when he called to deliver the news.
The ruling, which struck down last year's guilty verdicts by a Florence appeals court, brings the eight-year case to a close. The judges concluded that the evidence did not support a conviction, and they declined to order another trial. Their reasoning will be released within 90 days.
Knox and Sollecito had served four years in Italian prisons before a lower court overturned their convictions and set them free in 2011. But the Cassation Court reversed that decision in 2013 and sent the case to the lower Florence court.
Knox had consistently maintained her innocence and did not return to Italy for the final hearing. Her Italian lawyer, Carlo Dalla Vedova, said she was "very worried" in the days before the ruling, and vowed to never willingly return to Italy if the conviction was upheld.
Sollecito's lawyer made a final appeal to the court Friday, saying there were "colossal" errors in the Florence appeals court verdict.
In her two-hour argument, Giulia Bongiorno compared Sollecito to Forrest Gump, the naive, dim-witted-but-earnest fictional hero of the book and 1994 movie starring Tom Hanks.
"He is an innocent who became wrapped up in spectacular and gigantic events that, like Forrest Gump, he did not fully realize," she said, saying her client was "was watching cartoons" at home when Kercher was killed.
Amanda Knox was convicted in 2009 for the murder of her housemate, Meredith Kercher, in Perugia, Umbria, Italy, where they were both students. She served four years of a 26-year sentence before the murder conviction was overturned in October 2011. Now she is working to move on with her life. (Photo: Scott Eklund, Red Box Pictures, for USA TODAY)
When the verdict was announced, shocked Bongiorno shouted, "Yes! Yes! Yes" and leaped into the arms of a defense colleague.
"You never saw Raffaele pleading, or praying. He has been a rock," she said, the AFP news agency reported. "He is at home with his father and he is very happy. The verdict has proved him completely right."
Knox was 20 and studying in Italy in November 2007 when Kercher was found dead of multiple knife wounds in the flat they shared in the picturesque hillside town of Peruggia. Authorities determined she had been sexually assaulted and her throat had been slashed.
Under police questioning, Knox said she was in the flat and heard the murder but did not participate. She later recanted, saying she gave the statement under duress.
Knox, then-boyfriend Sollecito and another man, Rudy Guede, were charged with the murder. Guede, whose DNA was found on Kercher's body, agreed to a fast-track trial and was convicted of murder in 2008. The native of the Ivory Coast is serving 16 years in an Italian prison.
In 2009, an Italian court convicted Knox and Sollecito, now 30, of murder. Knox was sentenced to 28½ years in prison, Sollecito to 25. Both served four years before an appeals court overturned their convictions and acquitted them in 2011. Knox returned to Seattle.
But Italy's highest court threw out the acquittals in March 2013 and sent the case to a Florence appeals court, which convicted them again last year. Knox, who did not return to Italy for the trial, was sentenced to 28 ½ years in prison and Sollecito to 25 years.
The Florence court cited "reliable" evidence placing Knox, Sollecito and Guede in the flat when Kercher was killed. The Florence court found Kercher was killed after a "mounting quarrel" with Knox — rejecting the initial prosecution theory that Kercher was killed after a drug-fueled sex game gone wrong.
Contributing: KING-TV, Seattle; Michael Winter in San Francisco.
