Citigroup to Pay $285 Million (to Its Investors)

Citigroup agreed to pay $285 million to settle a fraud lawsuit filed by its investors, who were understandably irate that Citigroup was selling them toxic assets while betting against those same assets. The lawsuit was not related to all the damage Citigroup did to honest, hardworking Americans with that same fraud. Nobody sues for that kind of thing in this country.

Countrywide Covered Up Fraud, Bank of America Still Corrupt

In not-surprising-but-still-enraging news, it turns out that Countrywide kept its mortgage fraud racket alive by silencing whistleblowers. Like I said, not surprising. What is (a little) surprising is that this “legacy of corruption” still goes on at Bank of America, which bought Countrywide after it collapsed.

The pair of articles by mortgage industry watchdog and investigative journalist, Michael Hudson, exposes the past and present fraud in the Countrywide-Bank of America mega lender.

Does An Unread Disclosure Somehow Lead to Consumer Justice?

Most consumer law and regulations are—basically—an attempt to level the playing field between those with knowledge and power and those without knowledge, or power, or both.

I mean corporations and consumers, of course. The general idea is that since consumers are generally clueless about things like amortization, APR, and most financial jibber jabber, they can still make intelligent decisions as long as corporations make disclosures that consumers can understand.

The dirty little secret, however, is that nobody reads disclosures, not even distinguished, well-respected federal appellate judges like Frank Easterbrook and Richard Posner. And really, how many contracts have you ever read?

So if the foundation of the common law of fraud, along with the foundation of the U.S. consumer regulatory scheme, is that disclosing stuff about cars, loans, credit cards, houses, etc., render the marketplace fair, then our system of consumer justice is just an exercise in self-deception, isn’t it?

The Monster: the Subprime Mortgage Meltdown and the Jerks Who Caused It

The subprime mortgage meltdown, it turns out, makes for riveting reading. I was up until 4 a.m. reading The Monster, a page-turning account of the subprime lending binge that precipitated the collapse of the world economy.

The Monster would make a great heist movie, except that, instead of stealing piles of money from a casino, the subprime lending industry, lead by Ameriquest, Lehman Brothers, and countless others, scammed millions of Americans out of their savings.

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The Affidavit Faking Continues: Chase Suspends 56,000 Foreclosures

While judges were looking the other way, a new fad was apparently sweeping the mortgage lending industry: robo-signers. A robo-signer is a person whose job is to put their signature on an affidavit, regardless whether they know what they are signing or whether it is true.

First GMAC/Ally Bank “discovered” that their representatives were signing affidavits without checking their facts. It stopped its foreclosures, as a result (probably a wise move when perpetrating a fraud on the courts). Now, it looks like Chase bank has the same robo-signer problem. In fact, this is a problem in many areas of law where lawyers try to turn the courts into a rubber stamp or assembly line.

That this is happening is no surprise to anyone with any knowledge of the debt collection industry. The interesting question, though, is this: will the scandal spread to other industries where robo-signing is common?

Elizabeth Warren Wants CFPB to Level the Playing Field for Consumers

The Consumer Financial Protection Bureau will be a success if it accomplishes nothing more than this:

The time for hiding tricks and traps in the fine print is over.

That, in a nutshell, is Elizabeth Warren’s vision for the CFPB, the formation of which she will supervize, at President Obama’s direction.

(Thanks, Consumerist!)

Debt Settlement Companies Made (Slightly) Better by the FTC

Many consumers who end up drowning in debt turn to debt settlement companies for help. The problem is, many debt settlement companies don’t really help; they just take the money and run. I guess they figure poor consumers are unlikely to complaint. But they do, and the FTC has heard. It recently issued new rules designed to reign in debt settlement abuses.

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FTC: Watch Out for Job Scammers

From the Federal Trade Commission:

If you’re looking for a job, you may see ads for firms that promise results. Many of these firms may be legitimate and helpful, but others may misrepresent their services, promote out-dated or fictitious job offerings, or charge high fees in advance for services that may not lead to a job.

Job-Hunting/Job Scams | FTC