Bank of America Near $16 Billion to $17 Billion Settlement

from wsj

By 

ANDREW GROSSMAN, 

CHRISTINA REXRODE and 

DAN FITZPATRICK 

CONNECT

Updated Aug. 6, 2014 8:06 p.m. ET

Accord with Justice Department to Resolve Mortgage Probes


Brian Moynihan, president and chief executive officer of Bank of America. Bloomberg News

Bank of America Corp. and the Justice Department are closing in on a landmark deal in which the bank will pay $16 billion to $17 billion to resolve allegations of mortgage-related misconduct in the run-up to the financial crisis, according to people familiar with the matter.

The bank has agreed to pay roughly $9 billion in cash to the federal government, states and other government entities, these people said, as part of an overall pact that could be finalized this month. Additional money would be aimed at consumer relief, such as reducing mortgage balances for struggling homeowners.

If finalized, the agreement would set a record for fines and damages in a civil settlement between the U.S. government and a company. It would eclipse a $13 billion deal struck less than nine months ago between the Justice Department and J.P. Morgan ChaseJPM +0.30% & Co. over similar issues, alleging the banks knowingly sold investors shoddy mortgages.

Separately, Bank of America on Wednesday received approval from the Federal Reserve to raise its quarterly dividend to 5 cents from 1 cent.

More

• Regulators: Banks' Optimism Killed 'Living Wills'
• BofA to Raise Dividend for First Time Since Crisis

Including a settlement Bank of America agreed to pay to the Federal Housing Finance Agency earlier this year over similar mortgage issues, the total government-related legal tab for the Charlotte, N.C., bank could go as high as $23 billion. The Justice Department calculates Bank of America's FHFA settlement at roughly $6 billion.

Just a few weeks ago, Bank of America had been arguing with the Justice Department for a penalty of at least $3 billion less than it is now resigned to, saying it was being unfairly punished for misdeeds of two companies it bought with the government's blessing in the midst of the financial crisis, Merrill Lynch & Co. and Countrywide Financial Corp. Bank of America also ended up retreating on another request: It had lobbied for more than half of its total payment to be in consumer assistance instead of cash.

This year, the Justice Department and other government officials have accelerated their resolutions of big cases against the world's largest banks. The moves have come after criticism that prosecutors were too soft on big banks whose actions helped lead to the financial crisis. In July, the Justice Department announced a $7 billion settlement withCitigroup C +0.52% over troubled mortgage-backed securities similar to the one Bank of America is finalizing.

For Bank of America, the price tag would represent a painful reminder of the decision to buy Merrill Lynch and Countrywide, two firms that saddled it with billions of dollars in continuing legal exposure.

But a settlement would also represent a long-awaited turning of the page for Bank of America Chief Executive Brian Moynihan, who has worked to slim down the bank and put its legal problems in the past during a 4½-year tenure running the company.

Mr. Moynihan has told shareholders that the Justice Department settlement is the last big crisis-era issue the bank has to work through. The bank has already shelled out about $60 billion since the financial crisis to settle lawsuits and buy back mortgage securities—more than any of its closest rivals.

Bank of America agreed to the outlines of a deal after a night-time phone call on July 30 between Mr. Moynihan and Attorney General Eric Holder, people familiar with the matter said. For weeks, the bank refused to offer more than $13 billion, including cash and consumer relief, while the Justice Department was seeking $17 billion. That morning, at a meeting in Washington, the bank had offered to raise the cash portion of its payment from $4 billion to $7 billion.

But hours later, Mr. Holder told Mr. Moynihan that if the bank didn't bring its offer closer to the government's demand, Justice Department lawyers could file a lawsuit the next day that had been prepared by New Jersey U.S. Attorney Paul Fishman, these people said. That threatened suit dealt primarily with precrisis conduct by Merrill Lynch.

Enlarge Image

A Bank of America Corp. branch in New YorkBloomberg News

The phone call between Mr. Moynihan and Mr. Holder came the same day a federal judge in New York ordered the bank to pay $1.27 billion over an old Countrywide mortgage program called the Hustle, which rewarded employees based on the number of mortgages they could churn out. Bank of America had argued it should pay far less—if anything—given the Hustle ended before Bank of America's purchase.

Judge Jed Rakoff's ruling may have reinforced for the bank the difficulty of litigating with the government—and that the government is adamant about holding Bank of America accountable for the misdeeds of Countrywide and Merrill Lynch.

Large banks are already paying more than $100 billion for cases related to the 2008 credit crisis.

The majority of mortgage-backed securities now credited to Bank of America were issued by Countrywide. Bank of America, Countrywide and Merrill Lynch together issued $965 billion of mortgage securities to private investors from 2004 to 2008—far more than any big-bank competitors—but nearly three-quarters came from Countrywide. Of the $245 billion of securities that have since defaulted or become severely delinquent, Bank of America itself issued just 4%.

By comparison, J.P. Morgan—together with two companies it bought, Bear Stearns Cos. and the banking operations of Washington Mutual Inc.—issued about $450 billion in mortgage securities.

Bank of America and the Justice Department are continuing to hash out details and the deal could still fall apart, one person familiar with the matter said. An announcement isn't expected this week. On Wednesday, Bank of America General Counsel Gary Lynch met in Washington with Tony West, the Justice Department official responsible for negotiating with banks over mortgage securities, in hopes of ironing out some details.

Previously

• Judge Orders Bank of America to Pay $1.27 Billion in 'Hustle' Case
• Bank of America to Pay $650 Million to AIG in Mortgage Disputes
• BofA in Talks to Pay at Least $12 Billion Over Probes
• Behind $12 Billion Deal: The Short Answer
• Talks Renew Spotlight on Tax Deductions
• BofA Haunted by Countrywide Deal
• BofA Takes a Mortgage Mulligan
• Citigroup to Pay $7 Billion in Mortgage Probe
• J.P. Morgan, U.S. Settle for $13 Billion

Write to Andrew Grossman at andrew.grossman@wsj.com, Christina Rexrode atchristina.rexrode@wsj.com and Dan Fitzpatrick at dan.fitzpatrick@wsj.com

Robert Reich: The Ivy Leagues are a ludicrous waste of resources

from salon.com


ROBERT REICH, ROBERTREICH.ORGTUESDAY, AUG 5, 2014 04:45 AM PDT

The former secretary of labor on the myth of "paid-what-you're-worth" and how our money can be better spent

Robert Reich

What someone is paid has little or no relationship to what their work is worth to society.

Does anyone seriously believe hedge-fund mogul Steven A. Cohen is worth the $2.3 billion he raked in last year, despite being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?

On the other hand, what’s the worth to society of social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse? Probably higher than their average pay of $18.14 an hour, which translates into less than $38,000 a year.

How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year.

What’s the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year.

Or of child care workers, who get $10.33 an hour, $21.490 a year? And preschool teachers, who earn $13.26 an hour, $27,570 a year?

Yet what would the rest of us do without these dedicated people?

Or consider kindergarten teachers, who make an average of $53,590 a year.

Before you conclude that’s generous, consider that a good kindergarten teacher is worth his or her weight in gold, almost.

One study found that children with outstanding kindergarten teachers are more likely to go to college and less likely to become single parents than a random set of children similar to them in every way other than being assigned a superb teacher.

And what of writers, actors, painters, and poets? Only a tiny fraction ever become rich and famous. Most barely make enough to live on (many don’t, and are forced to take paying jobs to pursue their art). But society is surely all the richer for their efforts.

At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists.

They’re getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.

I don’t mean to sound unduly harsh, but I’ve never heard of a hedge-fund manager whose jobs entails attending to basic human needs (unless you consider having more money as basic human need) or enriching our culture (except through the myriad novels, exposes, and movies made about greedy hedge-fund managers and investment bankers).

They don’t even build the economy.

Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.

They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.

It’s said that by moving money to where it can make more money, these games make the economy more efficient.

In fact, the games amount to a mammoth waste of societal resources.

They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.

Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society — if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.

Graduates of Ivy League universities are more likely to enter finance and consulting than any other career.

For example, in 2010 (the most recent date for which we have data) close to 36 percent of Princeton graduates went into finance (down from the pre-financial crisis high of 46 percent in 2006). Add in management consulting, and it was close to 60 percent.

The hefty endowments of such elite institutions are swollen with tax-subsidized donations from wealthy alumni, many of whom are seeking to guarantee their own kids’ admissions so they too can become enormously rich financiers and management consultants.

But I can think of a better way for taxpayers to subsidize occupations with more social merit: Forgive the student debts of graduates who choose social work, child care, elder care, nursing, and teaching.

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His new movie "Inequality for All" is in Theaters. His widely-read blog can be found at www.robertreich.org.

  Follow

Robert Reich: Just Imagine If People Were Paid What Their Work Is Really Worth to Society

from alternet.org 


August 4, 2014  


Social workers, teachers, healthcare workers would make a lot more than hedge fund managers and lobbyists.

August 4, 2014  |  

 

What someone is paid has little or no relationship to what their work is worth to society. 

Does anyone seriously believe hedge-fund mogul Steven A. Cohen is worth the $2.3 billion he raked in last year, despite being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?

On the other hand, what’s the worth to society of social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse? Probably higher than their average pay of $18.14 an hour, which translates into less than $38,000 a year.

How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year.

What’s the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their bed pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year.

Or of child care workers, who get $10.33 an hour, $21.490 a year? And preschool teachers, who earn $13.26 an hour, $27,570 a year?

Yet what would the rest of us do without these dedicated people?

Or consider kindergarten teachers, who make an average of $53,590 a year.

Before you conclude that’s generous, consider that a good kindergarten teacher is worth his or her weight in gold, almost.

One study found that children with outstanding kindergarten teachers are more likely to go to college and less likely to become single parents than a random set of children similar to them in every way other than being assigned a superb teacher.

And what of writers, actors, painters, and poets? Only a tiny fraction ever become rich and famous. Most barely make enough to live on (many don’t, and are forced to take paying jobs to pursue their art). But society is surely all the richer for their efforts.

At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists.

They’re getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.

I don’t mean to sound unduly harsh, but I’ve never heard of a hedge-fund manager whose jobs entails attending to basic human needs (unless you consider having more money as basic human need) or enriching our culture (except through the myriad novels, exposes, and movies made about greedy hedge-fund managers and investment bankers).

They don’t even build the economy. 

Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.

They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.

It’s said that by moving money to where it can make more money, these games make the economy more efficient.

In fact, the games amount to a mammoth waste of societal resources.

They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.

Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society — if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.  

Graduates of Ivy League universities are more likely to enter finance and consulting than any other career. 

For example, in 2010 (the most recent date for which we have data) close to 36 percent of Princeton graduates went into finance (down from the pre-financial crisis high of 46 percent in 2006). Add in management consulting, and it was close to 60 percent.

The hefty endowments of such elite institutions are swollen with tax-subsidized donations from wealthy alumni, many of whom are seeking to guarantee their own kids’ admissions so they too can become enormously rich financiers and management consultants.

But I can think of a better way for taxpayers to subsidize occupations with more social merit: Forgive the student debts of graduates who choose social work, child care, elder care, nursing, and teaching.  

Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is "Aftershock: The Next Economy and America's Future." His homepage is www.robertreich.org.

Bill Maher On Gaza Conflict: "It's A War That Hamas Started;" "People Die In Wars"

from realclearpolitics.com

BILL MAHER: I saw in the news today that not only did Republicans block the immigration law, they blocked aide for wildfire relief out here in the West because they said it would add to the deficit. And I couldn't help but notice, you know, we give Israel $3 billion a year and we pay three-quarters of the tab for NATO, who is supposedly fighting Putin. You know what? Putin is Europe's problem. Israel can take off the training wheels. We've got Guatemalan kids and Ebola on our border. We just can't afford this shit anymore.

I always hear from Republicans about the culture of dependency. We shouldn't be giving money to poor kids and widows and sick children and ladies who are pregnant. You know what, what about Germany? That's the real culture of dependency. Germany and Israel and Japan and Korea and all these countries. They don't need our money. They can handle it themselves.

REZA ASLAN: It's not like we're giving them money to build schools; we're giving the money to buy weapons.

MAHER: From us.

ASLAN: Which is the worst business plan ever, by the way. What business gives its customers money to buy its stuff?

MAHER: Right, yeah. We're like a Polish protection racket. We pay.

ASLAN: And you know, I think in the case of Israel, $3.5 billion, that's $750 per Israeli per year. And Israel is not a third-world country, it's the 50th richest country in the world. It's got a GDP growing faster than America's GDP.

MAHER: It doesn't need our money.

ASLAN: And these weapons aren't being used to protect it from Syria or Iran, these weapons are been used to enforce an illegal military occupation and we're paying for it.

MAHER: Well...

###

MAHER: There was an article in the paper, it was also in the New York Times, two weeks ago, it was called: Jihadis Tug at Edges of Staunch American Ally. What it said was that in a city called Amman, Jordan -- where there is no ISIS presence -- they held a parade to congratulate ISIS for their conquests in Iraq and Syria. And it said, even though there was no ISIS presence in the area the event demonstrated an appeal extending upon those who would take up arms and don suicide vests. In other words, we're not terrorists ourselves but we love your work.

ASLAN: Sure, look, these guys address a lot of grievances that aren't being addressed by governments.

MAHER: They're crucifying people on the side of the road.

Where are the protests about that? I know that Israel's horrible, but where are the protests about crucifying people? Boko Haram has killed more people than Israel this year, with the war going on.

ASLAN: But not with American weapons, and I think that is why you're seeing a lot more emphasis in the United States.

ANDREW ROSS SORKIN: You're going to defend Hamas?

ASLAN: I'm not defending Hamas. All I am saying is that if you are going to have a situation where 1,600 people, 85% of them civilians, hundreds of children are being killed every day that you paid for --

ROSS SORKIN: That's because they are putting them in front of them!

ASLAN: That is nonsense!

MAHER: That is not nonsense.

DOUG HEYE, REPUBLICAN STRATEGIST: That is the absolute truth.

ASLAN: You can say that all day --

ROSS SORKIN: They have a two-front war going against Israel and their own people!

ASLAN: First of all, Amnesty International, which is on the ground right there, did a month-long review of this. They have found no evidence whatsoever of any kind of human shield being used. They did say that Hamas leaders --

HEYE: Then why are weapons in schools?

MAHER: It's a war. It's a war that Hamas started and somehow when Israel reacts to this they have to do everything that doesn't kill any civilians. People die in wars. Now, I've said this before on this show, if the situation was reversed, Hamas would kill every single person in Israel. The reason why that is not happening is because they can't. Because they can't doesn't make them good, it makes them weak.

ASLAN: You know, last time I checked 'we're better than Hamas' is not Israel's national motto. If this idea that somehow because Hamas is a terrorist organization and Israel is a democracy that there is no moral equivalence -- you're absolutely right, there is no moral equivalence. It's the democracy that requires greater criticism. It's the democracy that has to live up to the values that it ascribes for itself. (HBO'S Real Time, August 1, 2014)

Related Videos:

Coulter on Border Crisis: "I Wish We Could Have Netanyahu As Our President" Obama: John Kerry Has Endured "Unfair Criticism" CBS Reporter to Obama: Has The United States Lost Influence Under Your Leadership?

Air New Zealand's new 787-9 touches down in Auckland

from usatoday

My Best Friend

August 1, 2014


A big shout out today for best friend, Bob Trimborn and his beautiful wife, Joanne.  

I met Bob in a teen age flying club based out of Rose Aviation at the Hawthorne Airport.

We both successfully surfed  the waves of change, that occurred in the late 1960's and early 1970's.  We both got jobs as computer operators. When an opportunity became available to become the Hawthorne Airport  Manager, he threw his hat into the ring, and was selected , Airport Manager,, replacing Richard 'Dick' Kessler, World War II veteran who had ruled the airport for decades.  

Later, he accepted promotions to manage the Reno 'Stead' Airport , home of the world famous National Championship Air Races each September, and lastly the Santa Monica Airport, where he worked for over a decade, and concluded his service last year.

The couples progeny, beautiful Claire and intuitive Douglas, have been a source of pride for their parents, and round out the whole picture. Remarkably similar to my favorite youthful TV shows, such as 'Ozzie and Harriet' and 'Father know Best'.  A long human partnership such as theirs is becoming less common.  

So here is to you, Bob and Joanne,

Love you guys,, have fun  


Gary 










The wedding reception rocked all night with such hits as the Doors