Elizabeth Warren

Tag Archives

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.

Read more: https://www.theguardian.com/us-news/2017/jan/19/steven-mnuchin-financial-disclosure-confirmation-treasury

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.

Read more: https://www.theguardian.com/us-news/2017/jan/18/steven-mnuchin-treasury-nominee-elizabeth-warren-hearing

Ex-Wells Fargo CEO John Stumpf deserves jail not a plush retirement | Nomi Prins

If the Department of Justice lived up to its name, it would move forward with John Stumpfs criminal investigation

For former Wells Fargo CEO John Stumpf, this will be his first weekend as a wealthy retiree. So it goes in a world where big banks can screw over customers and the public, and the CEO who presided over these practices can slink off into the sunset unencumbered by the kind of real retribution that plagues small-time drug users and petty thieves. They go free. We pay the price.

Two days before the banks quarterly earnings announcement, Stumpf announced his immediate resignation. That decision came about a month after the firm was slapped with a $185m settlement for a fee-stealing scam that resulted in the axing of 5,300 low-level employees. He did not resign after settlements for any of the prior wrongdoing that took place under his purview for which the firm paid about $10bn in fines.

Make no mistake. Stumpf was the captain and commander of this $1.9tn empire. Its culture, as in all Wall Street culture, was defined from the top down, not the other way around. For his penance, all Stumpf had to do was forfeit $41m in restricted stock awards (stock he didnt even fully own yet).

The figure for Stumps exit hoard is currently valued around $134m, a pretty plush parachute. That includes his vested stock and other retirement plans. But that figure can rise. The firms stock took a beating due to this latest scandal (its still down 11%). With Stumpf out and this cross-selling or sales practice scrubbed in the wake of his departure, rising share prices to pre-scandal levels could place his take closer to $160m or above. So Stumps departure holds monetary value for him. In bankster terms, its a slam dunk trade.

Massachusetts senator Elizabeth Warren and other senators have called for his resignation, a return of every nickel he made during the scam and a Department of Justice and US Securities and Exchange Commission investigation. So far, Warren pointed out in a tweet, only one of those things has happened. He shouldnt be afforded impunity (like other big bank CEOs) for running Wells during an effective crime spree.

Her request for DoJ criminal investigations into Stumpfs role, in just this scandal, has not been honored. Even if it were to be, would it get very far? There have been zero criminal indictments for any mega-bank CEO, regardless of the breadth, depth and cost of the crimes committed by their institutions under their stewardships. Stumpfs chances look pretty damn good.

Stumpfs number two man, 29-year Wells veteran Timothy Sloan, is being touted as the anti-Stumpf; clean, not of the retail unit that swindled the banks average customers. Only it wasnt just the retail unit implicated in settlements. Wellss fines included $1.4bn for allegations of misleading investors in securities auctions, $5bn for loan services and foreclosure abuses, and $1.2bn for defrauding the US government regarding mortgages eligible for federal insurance.

Sloans roles spanned wholesale and commercial banking operations (areas implicated by these settlements.) Plus, as chief operating officer since November 2015, Sloan was responsible for ensuring good practices for that retail unit. Clean is relative. And meaningless.

The new board chairman, Stephen Sanger, said Stumpf believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the Company forward. Current challenges. Thats the kind of terminology that whitewashes the gravity of what he did. If the Department of Justice had the balls, it would move forward with Stumpfs criminal investigation and minimally slap him with an indictment. So far, it has not shown such aptitude.

Read more: https://www.theguardian.com/commentisfree/2016/oct/14/john-stumpf-retirement-wells-fargo-ceo-jail-time

Wells Fargo announces profit drop after CEO exits in fake accounts scandal

The bank said on Friday, days after John Stumpf announced his retirement, that earnings slipped in the third quarter, though the results beat expectations

Wells Fargo profits dropped by 2.6% as earnings slipped in the third quarter, the bank said on Friday, days after its chief executive and chairman, John Stumpf, announced his retirement in the wake of a scandal over sales practices.

In early September, Wells Fargo reached a $185m settlement with regulators following allegations that employees opened up to 2m bank and credit card accounts without customers authorization, in order to meet sales goals.

In the quarter ending on 30 September, the banksaid, it earned $5.6bn or $1.03 per share, compared with $5.8bn or $1.05 per share in the same period a year earlier. The results beat analysts expectations, of $1.01 per share.

Under pressure from politicians and investors, Stumpf retired on Wednesday. John will not receive any severance payment. His retirement benefits are disclosed in our proxy statement, a spokeswoman told the Guardian.

Stumpf could however leave with as much as $130m, according to CNN Money analysis. Stumpf owns 2.4m shares of stock, worth $107m.

If Wells Fargos John Stumpf is leaving with all of his ill-gotten millions, thats still not real accountability, Massachusetts senator Elizabeth Warren tweeted after Stumpf announced his retirement.

Warren, a leading voice for accountability and reform in the financial sector, previously called on Stumpf to resign, return every nickel he made during the scam and submit to inquiry from Securities and Exchange Commission and the US Department of Justice.

A bank teller would face criminal charges and a prison sentence for stealing a handful of twenties from the cash drawer, she said.

Elizabeth Warren (@SenWarren)

A bank CEO should not be able to oversee a massive fraud & simply walk away to enjoy his millions in retirement.

October 12, 2016

Stumpf has forfeited stock awards worth $41m; had he stayed on, he was to forgo any salary while an independent investigation into sales practices was ongoing.

Carrie Tolstedt, who oversaw the retail banking business when the unauthorized accounts were created, retired earlier this year. According to Wells Fargo, Tolstedt will not receive severance and has waived about $19m in unvested stocks.

However, she is still to walk away with about $77m. In mid-September, the bank told US lawmakers Tolstedt owned 960,017 shares, then worth about $43.6m, and $34.1m worth of vested stock options.

Chief operating officer Tim Sloan was named to replace Stumpf as chief executive. In a statement, he said: I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders, and community partners.

We know that it will take time and a lot of hard work to earn back our reputation, but I am confident because of the incredible caliber of our team members. We will work tirelessly to build a stronger and better Wells Fargo for generations to come.

Asked in a call with investors on Friday if Wells Fargo should consider bringing in someone new to lead the bank, Sloan said that was a fair question but said the board was comfortable with and supportive of the current management team.

Sloan also said it was disturbing to hear claims of retaliation against staff members who tried to flag the practice of opening unauthorized accounts. Wells Fargo, he said, had reached out to staff members who were let go for not meeting their sales quotas and might be eligible for rehire. As of 1 October, the bank has eliminated sales quotas in its retail banking business.

Employees are the banks most important asset, Sloan said.

From 2011, more than 5,300 such employees were fired for creating unauthorized accounts. Stumpf said those firings were not part of an orchestrated effort.

Matt Moscardi, head of financial sector research at MSCI, said scapegoating former employees and firing those who did not meet quotas could hurt Wells Fargo. A significant drop in productivity, he said, would lead to a drop in revenue.

Fridays results do not reveal the long-term impact of the sales-practice scandal, which broke in mid-September, when the quarter was nearly over. The bank had noticeably higher non-interest expenses in the quarter, due partly to the $185m settlement.

In a presentation to investors released on Friday, Wells Fargoreported a drop in what it called banker and teller interactions in September, from both a year previously and from August, before the scandal broke.

Consumer checking account openings dropped by 25% from September 2015 and 30% from August 2016. Applications for Wells Fargo credit cards also fell sharply in September.

The bank said referrals for mortgages from retail branches were down 24% from August. Retail branch referrals account for 10% of all mortgage originations at what is the nations largest mortgage lender.

Wells Fargo revenue in the quarter was $22.33bn, up 2% from a year earlier.

  • The Associated Press contributed to this report

Read more: https://www.theguardian.com/business/2016/oct/14/wells-fargo-profits-down-third-quarter-john-stumpf

All hail the CFPB: banking watchdog hangs in balance as election nears

The Consumer Financial Protection Bureau, a brainchild of Elizabeth Warren, celebrates its fifth birthday as it faces a Republican threat

Almost, but not quite, lost in all of the noise surrounding the back-to-back presidential nominating conventions in Cleveland and Philadelphia in July was the fact that the Consumer Financial Protection Bureau (CFPB) celebrated its fifth birthday.

What does this have to do with election day? Well, depending on who wins, it might not get a sixth.

The CFPB, the watchdog agency charged with ensuring that the financial markets work for ordinary consumers and to police financial institutions, was the brainchild of Elizabeth Warren, then a law professor at Harvard.

Her advocacy of the financial interests of ordinary, middle-class Americans, and her understanding of the situation in which they found themselves even before the financial crisis wreaked further havoc on their personal balance sheets, catapulted her to political stardom, even as it won her a host of enemies among bankers.

Today, a sizable group of Democrats still quietly mourn the fact that Warren, now a Massachusetts senator, wont be their standard bearer in Novembers election, and wasnt chosen as Clintons vice-presidential candidate. Regardless of her official status, she may wield as much influence as the Vermont senator Bernie Sanders.

But while most Democrats celebrate Warren and her accomplishments, the Republicans deplore both the senator and the CFPB. Warren seems to have gotten under the skin of the Republican presidential nominee, Donald Trump. The two have traded barbs on Twitter.

Donald J. Trump (@realDonaldTrump) June 11, 2016

Goofy Elizabeth Warren, sometimes referred to as Pocahontas, pretended to be a Native American in order to advance her career. Very racist!

Elizabeth Warren (@elizabethforma) May 7, 2016

.@realDonaldTrump spews insults and lies because he cant have an honest conversation about his dangerous vision for America.

And as for the CFPB, well, Republican language turns downright Trumpian. Ted Cruz dubbed it a runaway agency that doesnt do much to protect consumers; the Republican partys platform described it as a rogue agency that should be abolished or overhauled if those consumers are really going to be protected.

I interviewed Warren in July 2009, when the CFPB was still merely a proposal, and I doubt that any of these reactions or overreactions would come as much of a surprise to her today.

The big banks want things to go back to the way they were, she said then, in the immediate aftermath of the financial crisis, and only a few months after the stock market had begun to struggle back to life. They made billions of dollars from consumers who didnt fully understand the products these banks were selling. That whole process brought this economy to the brink of collapse and must be changed. We all have an interest in a safer consumer credit market.

And while hardball Washington politics meant that when it came time for Barack Obama to nominate the first head of the CFPB, he tapped Richard Cordray, the former attorney general of Ohio, rather than Warren, who stood beside the president and Cordray at the Rose Garden ceremony. It had been made very clear that, if Obama had nominated her, the Senate would never have confirmed her in the role.

That didnt stop the CFPB from becoming what Jennifer Lee, a partner in the banking and financial services practice of Dorsey and Whitney (and herself a former CFPB enforcement attorney) describes as one of the most powerful and aggressive agencies in the country. Its accomplishments, she argues, are voluminous for a baby agency.

Lee says one of the reasons the CFPB has been successful is the way it has responded to its track record. With each successive new development, the agency gets emboldened to do more, she explains. The current appetite for increased enforcement is not going to change.

Thats clearly true. Even as the Republicans were rattling their freshly sharpened sabers, the agency announced a new line of attack. This time, it plans to crack down on abusive debt collection practices, tightening the rules that govern the industry. The goal is to ensure that debt collectors are pursuing those who actually owe the debt, that they arent harassing debtors, and that they abide by statutes of limitations barring them from trying to collect on older debt. That would make a significant difference to the estimated one in three Americans who have an a debt that has reached the stage where its in the hands of a collection agency.

So far, the CFPBs pursuit of financial institutions, from banks to payday lenders, that have relied on a lack of financial sophistication or understanding on the part of consumers to take advantage of them has resulted in the payment of about $11.7bn to more than 27 million of those consumers directly. Another $500m or so has been generated in penalties. The largest of those settlements was with Ocwen, the countrys biggest nonbank mortgage loan servicer, under the terms of which the company refunded $2bn to 185,000 borrowers whose mortgages were underwater. Ocwen took advantage of borrowers at every stage of the (mortgage) process, Cordray said at the time.

This is pretty much what Warren hoped the agency would accomplish when she drew up the blueprint for it following the financial crisis.

Any market in which a credit card agreement is more than 30 pages long and mortgage documentation runs into the hundreds of pages none of which is designed to be easily read and understood by the consumer is a broken market, she said. Not all banks suffer from this: smaller banks, for instance, that offer more straightforward products get drowned out by multimillion dollar advertising campaigns for credit cards and mortgages by bigger institutions that may not offer consumers such favorable terms. She saw part of her mission as levelling the playing field. Its not a surprise that the biggest banks with the most powerful lobbyists seem ready to declare all-out war on a readable contract and other minimal consumer protections.

Unsurprisingly, the same groups are still at war today with the CFPB, which carries on Warrens mission.

Even before the November election, warning lights were flashing. Jeb Hensarling, the Republican member of Congress who chairs the House financial services committee, has declared he wont rest until he tosses post-financial crisis reforms like the Dodd-Frank Act on to the trash heap of history. Hensarling is also a fierce opponent of the CFPB, which has calls a dangerously out-of-control agency.

Hensarlings plan to repeal Dodd-Frank and replace it with a patchwork quilt of lightweight, bank-friendly rules, unveiled in June, would gut the CFPB. It would deprive the agency of the right to scrutinize some kinds of lending altogether (such as auto loans), and it would politicize the entire process. Right now, the CFPB is about as independent as any Wall Street agency can be: its head is appointed by the president and left to get on with his job, with independent funding received from the Federal Reserve.

If Hensarling gets his way, the CFPB would become completely accountable to Congress, having five commissioners appointed by party leaders, and having to fight for an annual budget. In other words, the same politicians who receive lobbying funds from Wall Street would be deciding who runs the agency that protects consumers from Wall Street and how much money that agency should get. That hasnt always worked out terribly well for the SEC, which has battled for its budget, and which is still waiting for the Senate to confirm two nominees to its five-member commission.

So lets celebrate the CFPBs fifth birthday, and its success in fighting for the interests of the ordinary borrowers and debtors against the big financial institutions that seem to have the decks stacked in their favor.

Lets also hope that the Republicans remember that there is tremendous bipartisan support for financial regulation, and for the agency in particular. Turning it into a scapegoat to make the banks happy could prove to be a very costly error for all concerned.

Read more: https://www.theguardian.com/business/us-money-blog/2016/jul/31/consumer-financial-protection-bureau-election-2016

Recent Tweets

Call Now Button