The single most incontrovertible—and inexcusable—failure of the Obama Administration was its phantom response to the self-evident fact that the entire Wall Street business model that nearly vaporized the world economy was simple fraud. It wasn’t “bad judgment,” or “unfortunate lapses in oversight.” These people were crooks, plain and simple, the same way a kid who sticks up a bodega is a crook, or the way the guy who sells you aluminum siding made of Styrofoam is a crook. They were crooks the way Bernie Madoff was a crook, or Charles Ponzi, or Murph The Surf. These people were addicted to fraud the way Dylan Thomas was addicted to booze. They were crooks then and they’re crooks now, and the way we know that at the moment is that the invaluable David Dayen is still on the case.
Remember back in 2012, when then-Attorney General Eric Holder announced that whopping big settlement with J. P. Morgan because that and various other nests of thieves had swindled the mortgage markets and then swindled people out of their homes? You didn’t think that Jamie Dimon and the rest of those crooks were going actually to pay that $25 billion, did you? Oh, hell
Here’s how the alleged scam worked. JPMorgan moved to forgive the mortgages of tens of thousands of homeowners; the feds, in turn, credited these canceled loans against the penalties due under the 2012 and 2013 settlements. But here’s the rub: In many instances, JPMorgan was forgiving loans on properties it no longer owned. The alleged fraud is described in internal JPMorgan documents, public records, testimony from homeowners and investors burned in the scam, and other evidence presented in a blockbuster lawsuit against JPMorgan, now being heard in US District Court in New York City. JPMorgan no longer owned the properties because it had sold the mortgages years earlier to 21 third-party investors, including three companies owned by Larry Schneider. Those companies are the plaintiffs in the lawsuit; Schneider is also aiding the federal government in a related case against the bank. In a bizarre twist, a company associated with the Church of Scientology facilitated the apparent scheme. Nationwide Title Clearing, a document-processing company with close ties to the church, produced and filed the documents that JPMorgan needed to claim ownership and cancel the loans.
(That the Scientologists are allegedly involved here makes this not only art, but high art.)
In other words: Morgan forgave debts it no longer had on properties it no longer owned and used that to pay off the fine accrued for its previous acts of arrant criminality. This is like murdering a guy and then bailing yourself out with the money you got from pawning his watch and selling his
JPMorgan, it appears, was running an elaborate shell game. In the depths of the financial collapse, the bank had unloaded tens of thousands of toxic loans when they were worth next to nothing. Then, when it needed to provide customer relief under the settlements, the bank had paperwork created asserting that it still owned the properties. In the process, homeowners were exploited, investors were defrauded, and communities were left to battle the blight caused by abandoned properties. JPMorgan, however, came out hundreds of millions of dollars ahead, thanks to using other people’s money.
Is there a villain in the piece? Come on down, Jamie Dimon, friend to Barack
In an unusual departure from most allegations of financial bad behavior, there is strong evidence that Jamie Dimon, JPMorgan’s CEO and chairman, knew about and helped to implement the mass loan-forgiveness project. In two separate meetings in 2013 and 2014, JPMorgan employees working on the project were specifically instructed not to release mortgages in Detroit under orders from Dimon himself, according to internal bank communications. In an apparent public-relations ploy, JPMorgan was about to invest $100 million in Detroit’s revival. Dimon’s order to delay forgiving the mortgages in Detroit appears to have been motivated by a fear of reputational risk. An internal JPMorgan report warned that hard-hit cities might take issue with bulk loan forgiveness, which would deprive municipal governments of property taxes on abandoned properties while further destabilizing the housing market.
And, of course, as is always the case, people whom Jamie Dimon wouldn’t know if they sat in his lap got seriously chewed up because free markets, that’s why.
Then, one day, the hounding stopped. In October 2009, the Warwicks received a letter from 1st Fidelity Loan Services, welcoming them as new customers. The letter explained that 1st Fidelity had purchased the Warwicks’ mortgage from Chase, and that they should henceforth be making an adjusted mortgage payment to this new owner…On September 13, 2012, Chase Home Finance mailed 33,456 forgiveness letters informing borrowers of the debt cancellation. Schneider immediately started hearing from people who said that they wouldn’t be making further payments to him because Chase had forgiven the loan. Some even sued Schneider for illegally charging them for mortgages that he (supposedly) didn’t own. When Lauren and Robert Warwick got their forgiveness letter from Chase, Lauren almost passed out. “You will owe nothing more on the loan and your debt with be cancelled,” the letter stated, calling this “a result of a recent mortgage servicing settlement reached with the states and federal government.” But for the past three years, the Warwicks had been paying 1st Fidelity Loan Servicing—not Chase. Lauren said she called 1st Fidelity, only to be told: “Sorry, no, I don’t care what they said to
In letters signed by vice president Patrick Boyle, JPMorgan Chase forgave at least 49,355 mortgages in three separate increments. The bank also forgave additional mortgages, but the exact number is unknown because the bank stopped sending homeowners notification letters. Nor is it known how many of these forgiven mortgages didn’t actually belong to JPMorgan; the bank refused The Nation’s request for clarification. Through title searches and the discovery process, Schneider ascertained that the bank forgave 607 loans that belonged to one of his three companies. The lien-release project overall allowed JPMorgan to take hundreds of millions of dollars in settlement credit.
How is this not fraud? How is Jamie Dimon and half that company not enjoying federal institutional dining at the moment? How in the hell did this country elect Donald Trump president?
Don’t answer the last question without answering the others.
Jesus, President Obama.
Originally published at Esquire.com – BY CHARLES P. PIERCEOCT 5, 2017
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