What Does WikiLeaks Have on Bank of America?
Thursday 13 January 2011
WikiLeaks founder Julian Assange is promising to unleash a cache of secret documents from the hard drive of a U.S. megabank executive. In 2009, he told Computer World that the bank was Bank of America (BofA). In 2010, he told Forbes that the information was significant enough to "take down a bank or two," but that he needed time to lay out the information in a more user-friendly format.
Recent new reports suggest that BofA is now moving into high gear on damage control, creating a "war room" and buying up hundreds of derogatory Internet domain names including BankofAmericaSucks.com and BrianMoynihanblows.com (BofA's CEO).
Before the big banks start calling for Assange's internment at Guantanamo, the question worth considering is what does Wikileaks have on America's largest bank?
Legal Liability for Toxic Mortgages
BofA is already under the gun, defending itself from multiple lawsuits from private investors as well as Fannie and Freddie demanding that the bank buy back billions worth of toxic mortgages-backed securities. The firm stopped issuing subprime mortgages in 2001, but it kept underwriting subprime mortgage-backed securities for many years. In September 2009, for example, BofA underwrote $239 million worth of securities backed by subprime loans. BofA has reserved $4.4 billion for these "put back" lawsuits. If Assange has emails showing that top executives at BofA knew they were peddling toxic dreck to investors, it would rock the firm and give tremendous ammunition to the army of lawyers already knocking on BofA's door.
Reckless and Illegal Foreclosures
BofA is at the heart of the robo-signing scandal and has wrongfully foreclosed on countless American families. One poor woman returned to a vacation home to find it locked, all her possessions gone -- including the ashes of her late husband. How could such a mistake be made? A BofA employee deposed in February 2010 said that she signed as many as 8,000 foreclosure documents a month without reviewing them, in violation of the law. Mounting questions about the fraudulent and illegal foreclosure practices at the big banks and mortgage service companies prompted BofA to temporarily halt foreclosures nationwide in October 2010. If Wikileaks can document that top BofA officials have a callous disregard for legal processes and constitutionally protected property rights, BofA's mounting legal liability may not be sustainable.
Countrywide Headaches
In 2008, BofA acquired Countrywide, one of the most aggressive and fraudulent lenders during the housing bubble. The result has been a trainwreck of liability and lawsuits for the megabank that now has over 1.3 million customers in foreclosure. To settle the lawsuits with Illinois, California and eight other states over predatory lending, BofA came up with an $8.4 billion loan relief plan for those holding Countrywide mortgages. In June, 2010 BofA paid $108 million to settle a Federal Trade Commission case that charged Countrywide with having extracted excessive fees out of borrowers facing foreclosure. BofA paid $600 million in August 2010 to settle shareholder claims that Countrywide had concealed the riskiness of its lending standards. There is no end in sight for these suits. In June 2010 the State of Illinois sued Countrywide again, this time over racial discrimination in its lending practices. Wikileaks could have further documentation of Countrywide's illegal and reckless underwriting practices or ongoing fraud at BofA.
Taxpayer Paid Bonuses
BofA acquired the brokerage firm Merrill Lynch for $50 billion in January 2009. The U.S. government blessed the merger with a $20 billion bailout loan to aid BofA. After the acquisition went through, it was revealed that Merrill Lynch had lost $15.8 billion in the last quarter of 2008 and that $3.6 billion in bonuses were paid ahead of schedule to top executives at Merrill. Among beneficiaries of the bonus bonanza was Merrill's CEO John Thain, who famously spent a million redecorating his office at the height of the crisis. About the deal New York Attorney General Andrew Cuomo said: "One disturbing question that must be answered is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding." If Wikileaks has emails showing top executives knowingly used bailout bucks for bonuses, this ugly chapter in history could be reopened, prompting Congressional investigations and further bailout backlash.
Still Too Big To Fail
In addition to the $25 billion in TARP bailout money and the $20 billion for purchasing Merrill, America recently learned of the extraordinary actions taken by the Federal Reserve to prop up BofA at the height of the crisis, details that were kept secret from the public. When the Fed was forced to release data about its emergency loan programs in December 2010, we found that BofA tapped an estimated $931 billion from the Fed in short term loans and government subsidies. If Wikileaks has information showing that America's biggest bank is only being kept alive by accounting tricks and ongoing government subsidies, the result could be another government bailout. Or is it possible we might see the first orderly dissolution of a of a "too big to fail" under the new Wall Street reform law?
"We Don't Suck"
BofA doesn't just want you to know that their CEO Brian Moynihan doesn't suck, they want you to know that their top staff does not suck either. The bank has started buying damaging domain names for a long list of executives, prompting many to wonder: just what have those executives been up to over there at BofA?
Hopefully Wikileaks and Julian Assange will soon let us know.
Recent new reports suggest that BofA is now moving into high gear on damage control, creating a "war room" and buying up hundreds of derogatory Internet domain names including BankofAmericaSucks.com and BrianMoynihanblows.com (BofA's CEO).
Before the big banks start calling for Assange's internment at Guantanamo, the question worth considering is what does Wikileaks have on America's largest bank?
Legal Liability for Toxic Mortgages
BofA is already under the gun, defending itself from multiple lawsuits from private investors as well as Fannie and Freddie demanding that the bank buy back billions worth of toxic mortgages-backed securities. The firm stopped issuing subprime mortgages in 2001, but it kept underwriting subprime mortgage-backed securities for many years. In September 2009, for example, BofA underwrote $239 million worth of securities backed by subprime loans. BofA has reserved $4.4 billion for these "put back" lawsuits. If Assange has emails showing that top executives at BofA knew they were peddling toxic dreck to investors, it would rock the firm and give tremendous ammunition to the army of lawyers already knocking on BofA's door.
Reckless and Illegal Foreclosures
BofA is at the heart of the robo-signing scandal and has wrongfully foreclosed on countless American families. One poor woman returned to a vacation home to find it locked, all her possessions gone -- including the ashes of her late husband. How could such a mistake be made? A BofA employee deposed in February 2010 said that she signed as many as 8,000 foreclosure documents a month without reviewing them, in violation of the law. Mounting questions about the fraudulent and illegal foreclosure practices at the big banks and mortgage service companies prompted BofA to temporarily halt foreclosures nationwide in October 2010. If Wikileaks can document that top BofA officials have a callous disregard for legal processes and constitutionally protected property rights, BofA's mounting legal liability may not be sustainable.
Countrywide Headaches
In 2008, BofA acquired Countrywide, one of the most aggressive and fraudulent lenders during the housing bubble. The result has been a trainwreck of liability and lawsuits for the megabank that now has over 1.3 million customers in foreclosure. To settle the lawsuits with Illinois, California and eight other states over predatory lending, BofA came up with an $8.4 billion loan relief plan for those holding Countrywide mortgages. In June, 2010 BofA paid $108 million to settle a Federal Trade Commission case that charged Countrywide with having extracted excessive fees out of borrowers facing foreclosure. BofA paid $600 million in August 2010 to settle shareholder claims that Countrywide had concealed the riskiness of its lending standards. There is no end in sight for these suits. In June 2010 the State of Illinois sued Countrywide again, this time over racial discrimination in its lending practices. Wikileaks could have further documentation of Countrywide's illegal and reckless underwriting practices or ongoing fraud at BofA.
Taxpayer Paid Bonuses
BofA acquired the brokerage firm Merrill Lynch for $50 billion in January 2009. The U.S. government blessed the merger with a $20 billion bailout loan to aid BofA. After the acquisition went through, it was revealed that Merrill Lynch had lost $15.8 billion in the last quarter of 2008 and that $3.6 billion in bonuses were paid ahead of schedule to top executives at Merrill. Among beneficiaries of the bonus bonanza was Merrill's CEO John Thain, who famously spent a million redecorating his office at the height of the crisis. About the deal New York Attorney General Andrew Cuomo said: "One disturbing question that must be answered is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding." If Wikileaks has emails showing top executives knowingly used bailout bucks for bonuses, this ugly chapter in history could be reopened, prompting Congressional investigations and further bailout backlash.
Still Too Big To Fail
In addition to the $25 billion in TARP bailout money and the $20 billion for purchasing Merrill, America recently learned of the extraordinary actions taken by the Federal Reserve to prop up BofA at the height of the crisis, details that were kept secret from the public. When the Fed was forced to release data about its emergency loan programs in December 2010, we found that BofA tapped an estimated $931 billion from the Fed in short term loans and government subsidies. If Wikileaks has information showing that America's biggest bank is only being kept alive by accounting tricks and ongoing government subsidies, the result could be another government bailout. Or is it possible we might see the first orderly dissolution of a of a "too big to fail" under the new Wall Street reform law?
"We Don't Suck"
BofA doesn't just want you to know that their CEO Brian Moynihan doesn't suck, they want you to know that their top staff does not suck either. The bank has started buying damaging domain names for a long list of executives, prompting many to wonder: just what have those executives been up to over there at BofA?
Hopefully Wikileaks and Julian Assange will soon let us know.
All republished content that appears on Truthout has been obtained by permission or license.
EXCERPT from page 3 of following article.
More surprising is that Thain’s achievement has been hailed in less naturally sympathetic quarters. Frank Christensen is a member of the “Buttonwood Group,” a fraternity of seat owners who’ve spent decades on the floor. Christensen says there was genuine queasiness over the Hybrid plan, but Thain convinced the group it was the only way to ensure the exchange’s survival. “He put everybody at ease,” Christensen says. Thain even won converts among the brokers who had no ownership stake—which is to say, the people who had nothing to gain, and everything to lose, from the merger and IPO.
http://nymag.com/news/businessfinance/25991/
http://nymag.com/news/businessfinance/25991/
EXCERPT: (1 of 6 pages)
The Brain in Thain
The man who’s revolutionizing the New York Stock Exchange is a shrewd, calculating technocrat who turned its iconic trading floor into a machine—but he’s also the affable mensch who is managing to persuade the traders to go along with their own extinction.
In the Azekka Room at Le Parker Meridien in October, the elegant face of global capitalism was on display—svelte women who speak flawless but foreign-sounding English, men in tailored suits and plastic-framed glasses with fashionably disheveled hair. They were here to take the measure of John Thain, CEO of the New York Stock Exchange, and Jean-François Theodore, head of Euronext, an agglomeration of European exchanges with which Thain was hoping to merge the NYSE. The event evoked a kind of raceless, classless, genderless Utopia, like Star Trek, but with accents. It was, perhaps, a glimpse at the global future into which Thain is leading his exchange.
Then, after the panel, the past, hefty and bald, stood up. “I have a question for Mr. Thain,” said a man named Stephen Sax. “I represent many brokers on the floor of the New York Stock Exchange,” Sax continued, before launching into a passionate monologue about how the proposed merger, along with Thain’s efforts to automate trading, could put him and his colleagues out of work. This, he said, would be a loss not just to the brokers but to all of international finance.
About 90 seconds in, the moderator interrupted to ask if there was a question embedded in his comments. The room full of bankers began to titter.
“The question is,” Sax said over the din, “with the costs going up on the floor of the exchange for the floor brokers, and a number of people being laid off on the floor, the question is, will that, you know, be a concern maybe that can be addressed?”
This was capitalist comedy; the crowd was now in full-throated guffaws. This guy who looked like he stepped right out of a David Mamet play wants to know if John Thain will save his job. And he’s not the least bit embarrassed about it!
Thain’s earnest reply silenced the laughter. “Well, first of all, I believe the answer is absolutely yes. Because I also believe there is value to the floor, to the auction process … ”
Thain was polite, amiable, and validating, but there was not a person in the room who didn’t think Sax and his brethren would eventually lose their jobs. It was entirely in keeping with Thain’s modus operandi, which has always been to give the coming technocracy a human face. During his tenure at Goldman Sachs, where he rose to the company’s second-ranking position, colleagues took to calling him “Thain the Humane.”
Since taking over for his scandal-racked predecessor, Dick Grasso, in 2003, Thain has transformed what was once an insular, semi-private club into a modern, public corporation. He’s introduced technology that allows investors to trade stocks with zero human intervention, dropping the average execution time from about fifteen seconds to as little as 300 milliseconds. And thanks to a recent vote of confidence from the shareholders of Euronext, he’s on his way to taking the operation abroad.
Wall Street had come to regard Grasso as a fast-talking Luddite who was rapidly turning the NYSE into a 46,000-square-foot museum, but his successor has reversed course. Thain has introduced more major changes in his three years as CEO than the Big Board underwent during its previous 211 years combined.
It is difficult to overstate the sense of crisis that prevailed at 11 Wall Street when Thain came aboard in 2004. Most obvious was the scandal surrounding Grasso’s outsize pay package, but the problem was bigger than that. Investors had begun to see the exchange as a black box into which various middlemen stepped to line their pockets. Grasso, who had a reserve of credibility, having worked his way up from clerk to CEO over a period of 35 years, had never been able to bring himself to confront the floor traders in the interest of modernization. It didn’t help that in the midst of this the Securities and Exchange Commission had announced it was investigating seven of the NYSE’s specialist firms. Specialists are the floor traders whose job it is to ensure that stocks trade smoothly, which means they buy when no one else is buying and sell when no one else is selling. The SEC suspected the specialists of trading on privileged information at the expense of less-connected investors.
This was bad news not just for the exchange but for the city itself. The exchange is still the largest, most-liquid stock market in the world, which confers enormous advantages on the local economy. Many of the city’s roughly 200,000 securities-industry jobs wouldn’t exist but for the prominence of the local stock market. Neither, in turn, would hundreds of thousands of other jobs: A 2005 report by the state comptroller’s office found that each new Wall Street hire creates three additional jobs in the New York metro area.
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