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Foreign billionaires in London choosing to rent to avoid stamp duty

Number of lettings costing more than 3,000 a week increased by 28% in the last three months of 2016, research shows

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Trump orders Dodd-Frank review in effort to roll back financial regulation

President says bill meant to prevent another financial crisis is crippling the economy as critics charge that Trump is caving in to Wall Street

Donald Trump moved to roll back the financial regulations brought in after the last financial crisis on Friday, directing a review of the Dodd-Frank Act, which was enacted to ensure there would never be another 2008-style meltdown.

The US president said his latest executive order was necessary because the regulations were too onerous on business and hurting the economy. But the move was largely symbolic only Congress can rewrite the legislation.

A second directive is expected to halt the implementation of an Obama-era rule that would have required brokers to act in a clients best interest when providing retirement advice, rather than seek the highest profits for themselves.

We desperately need to overhaul how we approach financial regulation, said the White House press secretary, Sean Spicer. He said Dodd-Frank was a disastrous policy that was crippling the US economy.

Opponents of reform immediately accused Trump of caving in to Wall Street after a campaign pledge to hold banks accountable.

Donald Trump talked a big game about Wall Street during his campaign but as president, were finding out whose side hes really on, said Senator Elizabeth Warren, one of Trumps fiercest critics.

The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis and they will not forget what happened today.

Before signing the order, Trump met with his business advisory panel, which includes 18 executives from large US companies including GE, Citigroup, General Motors, Tesla and Disney.

We expect to be cutting a lot out of Dodd-Frank, because frankly I have so many people, friends of mine, that have nice businesses and they cant borrow money They just cant get any money because the banks just wont let them borrow because of the rules and regulations in Dodd-Frank. So well be talking about that in terms of the banking industry, Trump said.

The president was backed by Gary Cohn, director of the national economic council and a former Goldman Sachs banker. Americans are going to have better choices and Americans are going to have better products because were not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year, Cohn said in an interview with the Wall Street Journal. The banks are going to be able to price product more efficiently and more effectively to consumers.

Cohn, formerly the chief operating officer at Goldman, said the executive order was a table-setter for a bunch of stuff that is coming.

On the campaign trail, Trump accused Hillary Clinton and his Republican rival Ted Cruz of being in bed with Goldman Sachs. He also said hedge funds were getting away with murder.

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Trumps honeymoon with the stock market will soon be over | Nouriel Roubini

His promises have rallied the Dow Jones but his inconsistent, erratic and destructive policies will take a toll on growth

When Donald Trump was elected president of the US, stock markets rallied impressively. Investors were initially giddy about Trumps promises of fiscal stimulus, deregulation of energy, health care and financial services, and steep cuts in corporate, personal, estate, and capital-gains taxes. But will the reality of Trumponomics sustain a continued rise in equity prices?

It is little wonder that corporations and investors have been happy. This traditional Republican embrace of trickle-down supply-side economics will mostly favour corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers incomes. According to the non-partisan Tax Policy Center, almost half of the benefits from Trumps proposed tax cuts would go to the top 1% of income earners.

Yet the corporate sectors animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trumps honeymoon with investors might be coming to an end. There are several reasons for this.

For starters, the anticipation of fiscal stimulus may have pushed stock prices up, but it also led to higher long-term interest rates, which hurts capital spending and interest-sensitive sectors such as real estate. Meanwhile, the strengthening dollar will destroy more of the jobs typically held by Trumps blue-collar base. The president may have saved 1,000 jobs in Indiana by bullying and cajoling the air-conditioner manufacturer Carrier; but the US dollars appreciation since the election could destroy almost 400,000 manufacturing jobs over time.

Moreover, Trumps fiscal stimulus package might end up being much larger than the markets current pricing suggests. As Ronald Reagan and George W Bush showed, Republicans can rarely resist the temptation to cut corporate, income and other taxes, even when they have no way to make up for the lost revenue and no desire to cut spending. If this happens again under Trump, fiscal deficits will push up interest rates and the dollar even further, and hurt the economy in the long term.

A second reason for investors to curb their enthusiasm is the spectre of inflation. With the US economy already close to full employment, Trumps fiscal stimulus will fuel inflation more than it does growth. Inflation will then force even Janet Yellens dovish Federal Reserve to hike up interest rates sooner and faster than it otherwise would have done, which will drive up long-term interest rates and the value of the dollar still more.

Third, this undesirable policy mix of excessively loose fiscal policy and tight monetary policy will tighten financial conditions, hurting blue-collar workers incomes and employment prospects. An already protectionist Trump administration will then have to pursue additional protectionist measures to maintain these workers support, thereby further hampering economic growth and diminishing corporate profits.

If Trump takes his protectionism too far, he will undoubtedly spark trade wars. Americas trading partners will have little choice but to respond to US import restrictions by imposing their own tariffs on US exports. The ensuing tit-for-tat will hinder global economic growth and damage economies and markets everywhere. It is worth remembering how Americas 1930 Smoot-Hawley Tariff Act triggered global trade wars that exacerbated the Great Depression.

Fourth, Trumps actions suggest that his administrations economic interventionism will go beyond traditional protectionism. Trump has already shown his willingness to target firms foreign operations with the threat of import levies, public accusations of price gouging and immigration restrictions (which make it harder to attract talent).

The Nobel laureate economist Edmund S Phelps has described Trumps direct interference in the corporate sector as reminiscent of corporatist Nazi Germany and fascist Italy. Indeed, if Barack Obama had treated the corporate sector in the way that Trump has, he would have been smeared as a communist; but for some reason when Trump does it, corporate America puts its tail between its legs.

Fifth, Trump is questioning US alliances, cosying up to American rivals such as Russia, and antagonizing important global powers such as China. His erratic foreign policies are spooking world leaders, multinational corporations and global markets generally.

Finally, Trump may pursue damage-control methods that only make matters worse. For example, he and his advisers have already made verbal pronouncements intended to weaken the dollar. But talk is cheap, and open-mouth operations have only a temporary effect on the currency.

This means that Trump might take a more radical and heterodox approach. During the campaign, he bashed the Fed for being too dovish, and creating a false economy. And yet he may now be tempted to appoint new members to the Fed board who are even more dovish, and less independent, than Yellen in order to boost credit to the private sector.

If that fails, Trump could unilaterally intervene to weaken the dollar, or impose capital controls to limit dollar-strengthening capital inflows. Markets are already becoming wary; full-blown panic is likely if protectionism and reckless, politicised monetary policy precipitate trade, currency, and capital-control wars.

To be sure, expectations of stimulus, lower taxes and deregulation could still boost the economy and the markets performance in the short term. But, as the vacillation in financial markets since Trumps inauguration indicates, the presidents inconsistent, erratic, and destructive policies will take their toll on domestic and global economic growth in the long run.

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Brad Stone: We should watch Uber and Airbnb closely

The author of new book The Upstarts on how the new breed of tech startups changed the rules of the game

At the start of the book you note that the dictionary definition of an upstart is either a newly successful person or someone who does not show proper respect to the established way of doing things
I wanted to frame the defining question of the book for the reader. Are these brilliant entrepreneurs who have built tremendous businesses through sheer creativity and ingenuity? Or are they renegades that grew in large part through contempt for the status quo? Theres an ambivalence that surrounds companies like Uber and Airbnb, and I think this question over their identity and the dual meanings of the word upstart gets to the heart of it. My own squishy answer, of course, is that they are a little bit of both.

Youve written about Silicon Valley for more than 20 years have we reached peak Valley yet?
In terms of the business impact, I dont think so. Theres a new set of transformative technologies such as machine learning, AI and virtual reality that will spawn another set of big tech franchises. But in terms of cultural impact, perhaps we are at peak Valley. For decades, technology entrepreneurship has been revered, and people like Steve Jobs and Elon Musk were heroes. Now we have to contend with lost jobs due to automation, the effects of digital addiction and simple fatigue with all this constant change. So perhaps our feelings toward Silicon Valley are about to get a lot more complicated.

You met some of the individuals who had similar startup ideas to Uber and Airbnb but didnt become billionaires. Have these people been able to move on and were they reluctant to be featured?
I call these companies the non-starters. They had the same ideas but were too early, or too nice, or too idealistic. They all shared a strain of wistful regret; it is difficult to see someone else execute the same idea and win unimaginable success and riches. The best story was the founder of a company called Seamless Wheels a pre-Uber limo service who abandoned the business after getting a death threat on his voice mail, probably from a limo fleet owner.

Whats the best call Travis Kalanick has ever made?
Surrendering in China in an expensive battle with local rival, Didi Chuxing. Last year Uber lost $2bn trying to win that market; Kalanick couldnt bring himself to sacrifice his dream of building a truly global network. But the rules of competition in China will always favour the local champion and Didi, it turned out, had the same access to capital as Uber. By stepping away from the fight, Uber not only saved its balance sheet from more destruction but negotiated an impressive 17% stake in its rival.

And the best call Brian Chesky has made?
Branding the Airbnb user base as a community. For years before Airbnb, people posted their homes and spare rooms on the internet (via sites like Craigslist and Chesky and his colleagues drummed up an evangelical spirit to their endeavour and held meet-ups and, in later years, global conferences of hosts. It got Airbnb users to feel part of something larger and strengthened their ties to the company, even when it meant that they were violating provincial laws.

In most territories these firms operate outside of laws and regulations around minimum wages, health and safety, and tax collection has exploiting these loopholes been key to their success?
Absolutely just as Amazons navigation of its sales tax obligations was key to its success over its first decade. With tough interpretation of taxi and zoning regulations, neither Uber nor Airbnb would have gotten started. By the time many cities recognized their existence, both were fairly large and had the political support of their customers.

Black cab and licensed taxi drivers protest the introduction of Uber in London, June 2014. Photograph: Gareth Fuller/PA

After publication of your book about Jeff Bezos and Amazon, Bezoss wife gave the book a one-star review on Amazon Were you surprised?
I can still remember the moment I saw it my coffee cup froze midair in my hand, my mouth configured itself into an expression conveying shock and confusion. Jeffs wife had never made such a public statement before related to the depiction of Amazon. And she was alleging serious mistakes in the book yet listed only one relatively trivial one. I think it might be the most prominent product review in the grand history of Amazon! Of course in the long run, perversely, it did nothing but boost the books prominence and turbo-charge sales.

Did you witness much sharing in the sharing economy?
Certainly some hosts on Airbnb are opening up their spare bedrooms to meet new people; and some drivers use Uber to carpool with strangers for the companionship. But the most productive members of each community are professional operators, making available their homes or cars as a way to earn or supplement a living. Its not the sharing economy at all, though that phrase has been useful for the companies to bolster their image.

Which sectors have been able to embrace upstarts disruption with any success?
The auto industry. Upstarts like Tesla have achieved enormous success but havent slowed down the car companies 2015 was their best year ever. The auto giants are all researching autonomous vehicles alongside the likes of Google and Uber and they could conceivably get there first. The real estate market has also remained fairly impervious to disruption, as well as (to everyones consternation) the airline industry. Perhaps an industrys immunity is related to the size of each individual transaction.

You state that the founders of Airbnb and Uber are very different from Bill Gates, Larry Page and Mark Zuckerberg How?
For all their strengths, Gates, Page and Zuckerberg are not charismatic communicators or storytellers. They generally avoided the press and focused their attentions inward. Chesky and Kalanick couldnt get away with that. Early on, they faced regulatory fights that their predecessors never encountered until much later. This took skills like mustering political coalitions, enlisting the support of customers and testifying publicly. They had to be politicians, as well as innovators and managers.

Are the fortunes and efficiencies created by these companies worth the price paid by the disrupted?
I think so as long as they follow on their promises. Uber has pledged to reduce or eliminate traffic in major cities within five years and to treat drivers more equitably. Airbnb thinks it can create a new industry where people are paid to provide authentic travel experiences. It has also set out to eradicate racial bias from its platform. Lets watch these companies closely and make sure they achieve their goals, instead of replacing one set of distant, dominant companies with another.

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Will New York get a Brexit boost to cancel out feared ‘Trump slump’?

While European cities led by Paris and Frankfurt wage campaigns for Londons financial business, some experts predict New York could benefit most of all from the fallout of Brexit on the UK capital

New York and London function as two prongs of one global economy. Banks and other financial companies headquartered in New York usually have their second biggest offices in the British capital, and vice versa.

For years, thats made economic sense. For London-based companies, New York provides an unparalleled density of financial firms, a regulatory framework in which to do business, and access to non-European markets. London provides much of the same for New York-based companies who need access to European markets.

Unfortunately for London, at least Brexit could change all of that: an isolated UK could mean financial firms would have a hard time accessing and doing business with other European markets. And while several EU rivals, from Frankfurt to Paris to Madrid to Amsterdam, are waging campaigns for Londons financial businesses, New York with its already established financial sector and finance-friendly regulatory environment could get the majority of Brexits financial runoff, according to some experts.

And this has New Yorkers bracing for a wave of British capital that could affect not only the financial industry but the entire city, from cultural production to housing.

People financial people, consultants, bankers already started calling looking for apartments two or three months ago, says Gennady Perepada, a real estate consultant who specialises in helping foreign millionaires and billionaires buy apartments in New York. Any problem thats not in New York is good for New York.

London and New Yorks financial industry rivalry goes back decades, and the two cities jockey for the title of biggest financial centre each year. According to Z/Yen, a London-based business think tank, London currently outranks New York by just one point on their scale. The next financial centre, Singapore, is 42 points behind New York.

The New York Stock Exchange on Wall Street. Photograph: Spencer Platt/Getty Images

In other words, New York and London stand alone as centres for global finance, far ahead of the competition. Thats for a few simple reasons: both have a tremendous density of talent, they house large groups of ancillary financial service professionals lawyers, accountants, consultants and, most importantly, their clearing houses (the places where investors and sellers can trade in complex financial instruments) are the worlds most developed, meaning London and New York are the only places where all of the worlds major currencies can be traded.

The UK has over one million people employed in finance, says Vincenzo Scarpetta, a senior policy analyst at the think tank Open Europe. The whole city of Frankfurt, by comparison, has 725,000 inhabitants. So there are only a few global centres where the industry can really go.

Indeed, New York is such an obvious choice for capital fleeing from London post-Brexit that it seems, unlike other European cities, it hasnt had to move a finger to convince British investors to consider taking the leap.

Ive talked to CEOs who are being heavily wooed by Paris, Amsterdam, Dublin, Frankfurt. Theyve sent out delegations, had formal presentations, says Kathryn Wylde, CEO of the Partnership for New York City, which represents and lobbies for the financial industry and other corporations here. Is New York doing anything similar? No.

Wylde and others say its because New York already has more immediate advantages: a larger talent pool than any of those cities plus more English speakers, and a pre-existing regulatory system for complex financial transactions such as derivatives.

But its also because any benefit for New York will take a while to materialise, so theres no rush to woo financial firms. Wylde envisions a slow bleed from Britain, not a flood: the majority of jobs in financial services are mid-level jobs, she points out, and the expensiveness of New York makes it unlikely companies would uproot their support and administrative staff for its shores.

Rents have already skyrocketed in New York. Photograph: Pacific Press/LightRocket via Getty Images

Instead, she says, headquarters of financial institutions that need to attract top international talent would be the ones relocating but slowly. These are long-term implications that really depend on how Brexit shakes out.

In New York, however, nearly every industry is tied into finance, and the industries most closely associated with it such as real estate are already feeling impacts post-Brexit, albeit at a low level.

Money-seeking New York or London will now fall in New York instead, says Will Silverman, managing director of investment sales at Hodges Ward Elliott, a commercial real estate investment firm based in London which recently opened offices in New York. But its probably actually less impactful than people thought it would be, especially if Brexit takes forever, and is walked back at all.

Still, some New Yorkers are worried about what global market fluctuations will do to the city. New Yorks theatre scene, for example, is heavily reliant on British and other foreign capital.

Whenever theres a global event, investors and consumers freeze up and stop reaching for their wallets, says Ken Davenport, a long-time Broadway producer. But there hasnt been a freeze yet, and he says that even with Brexit, people need to be entertained, so hes not too worried.

Im more worried about what Brexit will do to the West End than to Broadway, he adds.

The biggest concern, it seems, comes from New Yorks most vulnerable, who have been increasingly destabilised by the citys globalised economy. Rents in New York have skyrocketed in the last decade, and that means any new wave of capital fleeing Britain and entering New York could put further pressure on previously poor neighbourhoods already feeling a housing crunch, leading to even more evictions and rent increases.

In Brooklyn for example, many condo projects rely on billions of dollars from foreign investors seeking to place their money in economies more stable than those of their home countries. If the UKs economy destabilises because of Brexit, there could be even more capital finding its way into buildings in vulnerable neighbourhoods.

A lot of the rent-stabilised buildings here are being bought up by foreign investors, says Imani Henry, an anti-gentrification activist in the Flatbush neighbourhood of Brooklyn. Theyre being wooed with citizenship and tax breaks, and meanwhile we have entire blocks of businesses closing because of high rents.

Ironically, for those nervous about the effects of Brexit, Donald Trump may yet prove their saving grace. His election as the 45th US president may destabilise its economy enough to overwhelm any effect that capital from the UK could have on New York.

If the UK has excluded itself from the world economy, New York will gain. That was my first thought, until Trump was elected, says Richard Florida, director of cities at the Martin Prosperity Institute at the University of Toronto. Trump is worse for the global economy than Brexit, so they kind of balance each other out.

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The Founder review: Michael Keaton supersizes McDonald’s and births Trump’s US

Fascinating, subtle film on the machinations of Ray Kroc, the man who made a burger stop an empire, sold out its originators and birthed Trump America

All this films irony and ambiguity are showcased in the title, though Birth of a Salesman was an alternative that occurred to me. The Founder is an absorbing and unexpectedly subtle movie about the genesis of the McDonalds burger empire. There is an avoiding of obviousness that resides in its clever casting of not-immediately-dislikable Michael Keaton as Ray Kroc, the needy, driven, insecure marketing type with the predatory surname who masterminded a nationwide franchising for the original California hamburger restaurant in the 1950s; finally taking it away from its owners and revolutionary fast-food pioneers, Dick and Mac McDonald, played by Nick Offerman and John Carroll Lynch.

Keaton is never the cartoon bad guy, not even at the very end. His moonfaced openness makes him look like a giant, middle-aged baby, wide-eyed with optimism about the world. He looks like the kind of unemployed comedian who might earn a buck playing scary clown Ronald McDonald who is not in fact mentioned in the film.

The films first act is careful to show Kroc sympathetically; screenwriter Robert D Siegel and director John Lee Hancock cleverly set up Rays early struggle, his genuine ecstasy on discovering the McDonald brothers and his acumen in seeing the global potential of their little burger joint. And is it so wrong to call him the Founder? After all, the corporate-franchised experience of going into McDonalds anywhere in the world is what Kroc envisioned and effectively founded. Along the way, the film shows us something about postwar entrepreneurial capitalism, innovation, corporate expansion and intellectual property rights. It even casts an oblique light on the new age of Trump.

Keatons Kroc is a hardworking man whos always on the road, driving from town to town, exasperated by slow and erratic service at the drive-ins where he gets lunch, while his bored wife (a thankless role for Laura Dern) stays at home. Ray is trying to sell restaurant managers a new five-spindled milkshake machine which makes five times as much as the usual single-spindle model and crucially sell them on the concept that an increase in supply creates its own demand through market stimulus. The poor guy gets doors slammed in his face all over the country. But not in California, where a couple of bright, cheery brothers, Dick and Mac McDonald, have created an extraordinarily efficient fast-food system in their burger restaurant with no plates, no cutlery, no tedious wait times. They want six or eight of Krocs five-spindle milkshake machines. They dont have to create demand. Theyve already got more than they can handle.

Ray listens to their story and is electrified by their innovative genius and American can-do. He positively insists on setting up a franchise operation for them. Too late, the poor McDonald brothers realise that this pushy fellow has pulled off what might be Americas first corporate takeover.

Like the young Donald Trump, Kroc is a huge fan of self-help and how-to-win-friends-and-influence-people type stuff. Alone in his scuzzy hotel rooms, he listens to a motivational LP which intones the words of Calvin Coolidge: Nothing in the world can take the place of persistence, talent will not, nothing is more common than unsuccessful men with talent It was the McDonald brothers who had the talent. Kroc was the one with the persistence. Yet that, after all, is a kind of talent.

Sold out? John Carroll Lynch, left, and Nick Offerman as the McDonald brothers in The Founder. Photograph: Daniel McFadden/AP

Also like Trump, Krocs wealth is to be founded on land and real estate, not burgers. He finally understands the importance of buying the land for his franchise outlets. And like Trump, he becomes an early connoisseur of branding and market identity. To the brothers astonishment, he takes out a copyright on their solidly reassuring name. And he finally returns to his supply-over-demand theory: America didnt know it wanted or needed an identikit burger joint until he gave it to them.

Yet for all this, The Founder has a very different effect to, say, Morgan Spurlocks gonzo documentary Super Size Me from 2004, which set out to show Americas Big Mac habit as nasty and damaging. However bad Krocs behaviour in this film, and however poignant the innocence of poor Mac and Dick, the actual customers of the restaurant are never shown as anything other than happy. Perhaps we are invited to see all this as the inevitable, rough business of market forces.

Crucially, Keatons Ray does not see himself as a sociopath or a narcissist but as the Capraesque hero of a feelgood underdog drama. He thinks he is the little guy making good. Yet by the end, we have seen quite another side to him.

The Founder is released on 20 January in the US and 17 February in the UK.

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Trump’s treasury secretary pick failed to disclose nearly $100m in assets

Steven Mnuchin didnt tell the Senate finance committee that he was a director of an investment fund incorporated in a tax haven and omitted other assets

Steven Mnuchin, the hedge fund millionaire Donald Trump has picked to run the US treasury, failed to disclose nearly $100m in assets to Congress, including his role as a director of offshore funds and close to $1m in art owned by his children.

The error was disclosed hours before Mnuchin was grilled by the Senate finance committee on Thursday over his role at a California bank that foreclosed on thousands of vulnerable borrowers, his attitude to tax havens and the future regulation of the US financial system.

On Wednesday night the committee learned Mnuchin had initially failed to disclose he was a director of Dune Capital International, an investment fund incorporated in the Cayman Islands, a tax haven. He also omitted other assets, including $95m in real estate and $906,556 worth of artwork held by his children.

Mr. Mnuchin has claimed these omissions were due to a misunderstanding of the questionnaire he does not consider these assets to be investment assets and thus did not disclose them, even though the committee directs the nominee to list all real estate assets, according to documents filed with the committee.

Mnuchin was questioned by the Democratic senator Bob Menendez who asked how he had failed to disclose the assets when he signed a statement listing his holdings on 19 December.

I have a ton of other questions on policy but first and foremost is truth and veracity, what Americans need in their treasury secretary said Menedez. In essence isnt it true that what you did here is take these companies, put them offshore so you could help your clients, who you were making money from, to avoid US taxation.

Mnuchin said that was not true at all.

I assure you that these forms were very complicated, he said. When I certified those forms I thought it was correct. Mnuchin said he may have erred in giving the forms in early and should have waited and that his lawyer had assured him he had filled the forms in correctly.

It doesnt take a rocket scientist to understand list all entities, said Menendez.

Mnuchin said his decision to move his investment vehicles offshore was not always about taxes but about making investments eligible for pensions and other non-profits. These are very complicated issues. We need tax code simplification, he said. Mnuchin said he was in favor of changing the tax code and to make sure we dont let anybody avoid taxes.

Over five hours the treasury secretary nominee remained composed as he faced tough questions over his management of OneWest, a California bank created after he took over IndyMac in 2009 after it collapsed during the financial crisis, dragged down by a portfolio of bad loans.

OneWest foreclosed on more than 36,000 homeowners under Mnuchin. including one 90-year-old woman over a 27-cent payment error. Under Mnuchin, OneWest churned out foreclosures like Chinese factories churned out Trump suits and ties, Senator Ron Wyden told the hearing.

On Wednesday, Senator Elizabeth Warren accused Mnuchin of making millions at OneWest by grinding families into the dirt. Warren held a press conferences with four women who had loans with Mnuchins former firm and who had either lost their home or were in danger of being evicted.

In his prepared testimony for his confirmation Mnuchin denied accusations that OneWest Bank was a foreclosure machine designed to profit from the bursting of the housing bubble.

Since I was first nominated to serve as treasury secretary, I have been maligned as taking advantage of others hardships in order to earn a buck. Nothing could be further from the truth, Mnuchin wrote in his opening statement.

Mnuchin said he could not talk about specific loans because of privacy but that some had been in the public eye. The most troubling was to the octomum [Natalie Suleman, who became a media celebrity after she gave birth to octuplets in January 2009]. We worked very, very hard, that was a terrible situation, to move her to another home that they could afford, he said.

There were mistakes, we regret those, said Mnuchin. He said banks would prefer to make a loan modification than to foreclose which is very costly to the bank.

Senator Orrin Hatch, Republican chairman of the committee, said it was disappointing that Democrats were unfairly objecting to Trumps nominees and that if the Senate concentrated on Mnuchins qualifications there would be little if any opposition to Mr Mnuchins nomination.

Hatch dismissed Warrens conference as a mock hearing that was essentially unrelated to Mr Mnuchins qualification for the job.

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JP Morgan Chase to pay $55m to settle racial discrimination charges

Bank allegedly charged black and Hispanic mortgage customers more; JP Morgan denied wrongdoing, saying prices were set by independent brokers

JP Morgan Chase agreed to pay $55m to settle charges that the bank discriminated against thousands of minorities seeking home loans by charging them higher rates and fees.

The decision came after US attorney Preet Bharara filed a complaint on Wednesday alleging that the USs biggest bank discriminated against at least 53,000 African American and Hispanic mortgage seekers between 2006 and 2009 in violation of the Fair Housing Act.

Minority borrowers were owed tens of millions of dollars in damages, the government said, because JP Morgan allowed them to be charged higher rates and fees than similarly situated white borrowers.

Until 2009, JP Morgan used a network of wholesale mortgage brokers to sell its loan applications. The bank could have, but failed, to better monitor its wholesale brokers to discourage discrimination, according to the complaint. Brokers were given the discretion to adjust pricing based on factors unrelated to borrower risk, the government alleged.

As a result, the average black borrower paid about $1,126 more over the first five years of an average loan of $191,100, while the average Hispanic borrower paid about $968 more on an average loan of $236,800.

Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers, the government charged in the lawsuit.

JP Morgan denied wrongdoing. Weve agreed to settle these legacy allegations that relate to pricing set by independent brokers, said the bank in a statement. We deny any wrongdoing and remain committed to providing equal access to credit.

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Elizabeth Warren: Trump’s treasury secretary pick ‘grinds families into the dirt’

Homeowners who lost homes or face eviction after dealing with bank previously run by Steven Mnuchin call on Senate to reject his nomination

Homeowners who lost their homes or face eviction after running into difficulties with a bank previously run by treasury secretary nominee Steven Mnuchin urged the Senate on Wednesday to reject his nomination.

Donald Trumps pick for treasury secretary had made millions grinding families into the dirt, the conferences organizer, Senator Elisabeth Warren, said while introducing four women who had loans with Mnuchins former firm, OneWest.

Mnuchin, a former Goldman Sachs banker, hedge fund manager, film financier and CEO of OneWest, will appear before the Senate finance committee on Thursday. Warren has been blocked from allowing the unhappy OneWest borrowers to testify at the hearing. The secretary of treasury will personally touch the lives of every single person in the US, Warren said. We have had a chance to hear about the lives of four people [Mnuchin] has touched, and the results were devastating.

Mnuchin led a team of investors that took over California-based lender IndyMac in 2009 after the bank was undone by its portfolio of risky loans. The entity was renamed OneWest and, according to critics, embarked on a concerted effort to foreclose on loans and seize borrowers properties.

Among those who spoke at the meeting was Colleen Ison-Hodroff, from Minneapolis, Minnesota. The 84-year-old and her husband, Monroe, bought a reverse mortgage on their fully paid-off home through OneWest subsidiary Financial Freedom. Reverse mortgages are typically bought by retirees looking to supplement their retirement income.

Ison-Hodroff told the hearing that a broker assured the couple that Colleen could remain in the house that had been their home for 54 years even if her husband died. But days after her husbands funeral in 2014, she received a notice that she had to immediately pay off the full balance of her loan or face foreclosure. She is still fighting to keep her home.

I do not think a man like that should be treasury secretary and be in charge of the economy, said Ison-Hodroff.

According to an analysis of public data by the California Reinvestment Coalition, OneWests reverse mortgage servicing subsidiary, Financial Freedom, was responsible for 40% of reverse mortgage foreclosures nationwide, more than twice its 17% share of the market.

A disproportionately high number of OneWest Bank foreclosures occurred in minority communities in California, according to an analysis by Urban Strategies Council and released by the California Reinvestment Coalition.

Warren has called OneWest a foreclosure machine and Mnuchin the Forrest Gump of the financial crisis he managed to participate in all the worst practices on Wall Street.

Another witness, Heather McCreary, from Sparks, Nevada, said her family was made homeless by OneWest after that the company refused to renegotiate their home loan. Sylvia Oliver, from Scotch Plains, New Jersey, claimed OneWest repeatedly refused to work with her to modify a loan. I dont think this is a track record anyone should be proud of, she told the hearing.

Mnuchin is expected to robustly defend his record at the hearing Thursday. According to prepared remarks obtained by Bloomberg, Mnuchin will tell the committee: Since I was first nominated to serve as treasury secretary, I have been maligned as taking advantage of others hardships in order to earn a buck. Nothing could be further from the truth.

If we had not bought IndyMac, the bank would likely have been broken up and sold in pieces to private investors, where the outcome for consumers could have been much bleaker, Mnuchin said. My group had nothing to do with the creation of risky loans in the IndyMac loan portfolios.

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Moody’s $864m penalty for ratings in run-up to 2008 financial crisis

Payout to US justice department, 21 states and District of Columbia for risky mortgage securities ratings before stock market crash

The credit rating agency Moodys has agreed to pay nearly $864m to settle with US federal and state authorities over its ratings of risky mortgage securities in the run-up to the 2008 financial crisis, the department of justice said on Friday.

Moodys reached the deal with the justice department, 21 states and the District of Columbia, resolving allegations that the firm contributed to the worst financial crisis since the Great Depression, the department said in a statement.

Moodys failed to adhere to its own credit-rating standards and fell short on its pledge of transparency in the run-up to the great recession, principal deputy associate attorney general Bill Baer said in the statement.

S&P Globals Standard & Poors entered into a similar accord in 2015 paying out $1.375bn. Standard and Poors is the worlds largest ratings firm, followed by Moodys.

Moodys said it would pay a $437.5m penalty to the justice department, and the remaining $426.3m would be split among the states and Washington DC.

As part of its settlement, Moodys also agreed to measures designed to ensure the integrity of credit ratings going forward, including keeping analytic employees out of commercial-related discussions.

The rating agencys chief executive also must certify compliance with the measures for at least five years.

Moodys said that it stands behind the integrity of its ratings and noted that the settlement contains no finding of a violation of law or admission of liability.

Moodys said it already has implemented some of the compliance measures in the agreement.

Moodys shares closed at $96.96 on Friday. The stock plummeted more than 5% on 21 October, the day it disclosed the justice department had notified the firm it was planning to sue over the ratings.

Moodys settlement on Friday resolved the justice department probe without a federal lawsuit. In the Standard & Poors case, resolution was reached after the US filed a $5bn fraud suit.

Connecticut, whose attorney general helped lead negotiations, filed a lawsuit against Moodys in 2010. Mississippi and South Carolina later sued, and other states had potential claims.

Connecticuts law suit claimed that Moodys ratings were influenced by its desire for fees, despite claims of independence and objectivity. It also accused Moodys of knowingly inflating ratings on toxic mortgage securities.

Moodys ratings were directly influenced by the demands of the powerful investment banking clients who issued the securities and paid Moodys to rate them, Connecticut attorney general, George Jepsen, said in a statement on Friday.

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