A new report by undercover government investigators bolsters longstanding concerns that companies promising to help consumers overwhelmed by credit card and other debts often turn out to be financial predators that charge high fees but deliver little or nothing in return.

When investigators for the Government Accountability Office posed as distressed consumers seeking help, so-called debt management companies gave them wildly exaggerated descriptions of the firms’ success rates and sometimes promised savings of as much as 50 cents on the dollar, Gregory Kutz, the GAO official who ran the investigation, told Congress on Thursday.

But after paying big up-front fees, often running to several thousand dollars, many consumers end up deeper in debt than they were before seeking help, Kutz said.

Such practices — deemed “fraudulent, deceptive and abusive” by the GAO — have caused complaints about debt relief companies to more than double since 2007, according to the National Assn. of Attorneys General.

Also “particularly despicable,” Kutz said, was that three of the companies used Christianity to target customers. Investigators visited one of those companies, A New Beginning Financial located in a strip mall in Orange, where an agent told them that it was a nonprofit ministry, with profit funding missionary trips overseas.

The Federal Trade Commission is considering new rules to prevent debt settlement companies from charging up-front fees and giving inaccurate information about their programs.

Sen. John D. Rockefeller IV (D-W.V.), who ordered the GAO investigation, called the practice “appalling beyond words.”

“These debt settlement companies are kicking people when they are down,” Rockefeller said Thursday at a hearing of the Senate Commerce, Science and Transportation Committee, which he chairs.

Read more here: http://www.latimes.com/business/la-fi-debt-scams-20100423,0,955289.story

Anne Schieber, WOOD-TV, Grand Rapids, MI

Renters who lose their utilities because their landlords went into foreclosure may have little recourse other than to move.

Compelling a landlord to pay utility bills could be nothing but a headache, and much of what happens depends on the lease and a renter’s ability to check out the landlord before they sign the lease.

But it might be difficult for prospective tenants to check utility payments. The city water department said a person must file a request for a specific landlord under the Freedom of Information Act.

The case of Todd Bialis is an example. He and his wife, Christine, own multiple properties. At two of them, his tenants have been without water because he hadn’t paid the water bill .

Official with the city water department told 24 Hour News 8 water will be shut off three months after an unpaid quarterly bill. The city said it sends plenty of warnings to the property owner, and a notice to tenants. If the owner doesn’t respond and the water is shut off, the next step is up to the tenant.

“That may be paying the bills themselves and then deducting the money from the rent or if that’s not going to cover it, maybe a small claims action against the landlord,” said Karen Merill Tjapkes of Legal Aid of Western Michigan .

But property owners aren’t totally off the hook. The city can condemn an occupied property with no water and undoing that action will take more than simply paying the bill.

“We require that that property be brought up to, once it’s condemned, brought completely 100% up to code before it can be occupied again,” said Virginia Million with the Grand Rapids Housing Commission.

That means everything up to code, from electricity to structure, often a tall task on an older property. Because violating the housing code is a crime, landlords could find themselves “paying fines and even jail time,” she said.

Property owners may also have to pay tenant relocation fees if the property is condemned.

Lawyers who represent tenants say the best solution is to avoid the problem in the first place.

Read leases carefully.
Check payment history of utilities if the property owner promises to pay those bills.
Opt for a month to month lease.

Be on the alert for red flags, such as outsiders taking pictures of the building, or a property owner seeking early payment of rent and coming in person to pick it up.

Lawyers say unscrupulous landlords may call your bluff, hoping the stakes will be too small for tenants to seek court action.

“If your instincts are telling you there’s a problem,” Tjapkes said, “then it’s probably best to walk away.”

Listening to US officials, talking to legal experts, and waiting for an intense Senate debate on financial reform to begin, you can easily form the impression that “too big to fail” adequately describes our most serious future systemic banking problems. It does not.

In September 2008, the large banks and quasi-banks at the heart of our financial system faced failure — and they were saved in the most immediate sense through actions taken by the Federal Reserve, but TARP (passed by Congress and run Treasury) also played a significant supporting role.

The Bush administration threw a small fiscal stimulus into the mix in early 2008, hoping to stave off recession; the Obama administration committed a much larger package at the start of 2009, aiming to prevent anything like a Second Great Depression. This fiscal policy response was in direct reaction to problems caused by the overextension and near failure of the financial system

Do not make the mistake — for example of Secretary Geithner, talking to the New Yorker — of thinking (or implying) that “saving the financial system” did not involve spending a lot of taxpayer money to support the real economy. Remember that if the economy crashes, asset prices fall, and banks’ problems become even more severe.

And try to avoid three further mistakes that are currently common.

Read more hear: http://www.huffingtonpost.com/simon-johnson/way-too-big-to-save_b_491325.html

Commentary by Roger Lowenstein, Bloomberg

March 8 (Bloomberg) — Republicans and Democrats in Congress have been squabbling about whether the new financial consumer-protection agency should be housed within the Federal Reserve or as part of an independent body.

The new watchdog, wherever it goes, is the linchpin of the emerging financial-reform bill, and its premise is that greedy bankers exploiting dumb consumers essentially caused the credit crisis. Stop bankers from selling toxic mortgages and other harmful loans and we won’t have any more meltdowns.

Even though bankers were greedy, and many borrowers were naive, this is a simplistic way of viewing the financial crisis and one that misses its underlying cause. Since mortgage bankers make money from loans, it’s tempting to think of them as parasites that prey on customers. But there is no such thing as a smart bank with a dumb customer; if the loan turns sour, the banker was dumb, too. And in the mid-2000s, scads of them were.

Foreclosures by consumers heavily weighed on the economy, but what triggered the credit crunch was the failure (or near- failure) of the banks that issued (or acquired) the mortgages. In short, the root cause of the meltdown wasn’t that customers borrowed too much; it’s that banks lent too much.

This isn’t to deny that many subprime loans were exploitative, and that customers often didn’t understand repayment terms. Nor is it a bad idea to police banks, preventing them, for instance, from charging unreasonable fees.

Bank Self-Harm

Yet a sound economy needs healthy financial institutions. Rather than stop lenders from hurting consumers, the first priority should be to keep the banks from harming themselves. In the short run, solvency is often at odds with what consumers want (or with what they think they want). We should remember that for every mortgage customer that was hosed, others were willingly grabbing all the unsound mortgages they could get.

Before the bust, champions of the new consumer agency, such as Representative Barney Frank, were consistent advocates of more loans to subprime borrowers. That’s hardly surprising; it’s in the nature of folks to want more credit. As Warren Buffett once reminded a person in his employ, it’s the job of the banker to screen out loans with a low probability of repayment.

The aim of regulators should be to force banks to do what is in their own and society’s interests: to practice sound banking. No consumer watchdog can do this because systemic risk aggregates at the level of the lender. The surest solution is to limit the leverage of financial institutions. Regulators have already moved against dicey products such as no-documentation mortgages (“liar loans”), and ones in which borrowers get 100 percent financing. And well they should.

Read more here: http://www.bloomberg.com/apps/news?pid=20601039&sid=a2y1wcOYyFQc

Pressure is growing on U.S. banks to ease terms for distressed homeowners on home-equity loans and other second-lien mortgages.

Rep. Barney Frank, chairman of the House Financial Services Committee, last week sent a letter to the four biggest U.S. banks demanding “immediate steps to write down second mortgages.” The Massachusetts Democrat sent the letter to the chief executive officers of Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Meanwhile, the Obama administration is preparing to launch long-planned initiatives aimed at addressing these obstacles.

Rep. Frank said banks’ reluctance to write down second mortgages is blocking efforts to reduce the first-lien mortgage balances of many borrowers who owe far more on their loans than the current values of their homes. Because such “underwater” borrowers often feel little incentive to keep paying, “homeowners are increasingly deciding to walk away and thus foreclosures continue to mount,” he said.

Read more here: http://online.wsj.com/article/SB10001424052748704706304575107770265900644.html?mod=wsj_share_twitter

FOR decades, the federal government has subsidized housing — particularly owner-occupied housing. This has been especially true during the continuing financial crisis, with Fannie Mae, Freddie Mac and the Federal Housing Administration propping up the housing market by issuing guarantees for investors on most new mortgages.

But what is the long-term justification for putting taxpayers on the line to subsidize homeownership? Is this nothing more than a sacred cow in American society — a political necessity because so many voters own homes and are mindful of their resale value?

In fact, there is much more to the history of subsidizing housing. While the crisis in the housing market shows that our current approach is far from perfect, there is a certain wisdom behind it, related not only to economic stimulus but also to the preservation of a sense of national identity. It’s important to remember this as we consider re-engineering our institutions as the crisis ebbs.

Federal subsidies for housing essentially began in the Great Depression with, among other things, the creation of the F.H.A. in 1934 and Fannie Mae in 1938. It all started for a simple reason: more than a third of all the unemployed were identified, directly or indirectly, with the building trades. At the time, there seemed to be no way to reduce unemployment without stimulating housing, and much the same is true today.

But consider what will happen once the economy is again operating at full capacity. Basic economics tells us that when Americans, over all, spend more on housing, they must ultimately spend less on something else. Why should housing consumption be better than other consumption, or investments that people might choose?

Read more here: http://www.nytimes.com/2010/03/07/business/07view.html

Sun American Bank, Boca Raton, Florida, became the 23rd FDIC-insured institution to fail in 2010,at an estimated cost to the Deposit Insurance Fund (DIF) will be $103.8 million.

Sun American Bank, Boca Raton, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits of Sun American Bank.
The 12 branches of Sun American Bank will reopen on Monday as branches of First-Citizens Bank & Trust Company. Depositors of Sun American Bank will automatically become depositors of First-Citizens Bank & Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from First-Citizens Bank & Trust Company that it has completed systems changes to allow other First-Citizens Bank & Trust Company branches to process their accounts as well.

This evening and over the weekend, depositors of Sun American Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual
As of December 31, 2009, Sun American Bank had approximately $535.7 million in total assets and $443.5 million in total deposits. First-Citizens Bank & Trust Company did not pay a premium to acquire the deposits of Sun American Bank. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank & Trust Company agreed to purchase essentially all of the assets.

The FDIC and First-Citizens Bank & Trust Company entered into a loss-share transaction on $433.0 million of Sun American Bank’s assets. First-Citizens Bank & Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit:http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-866-954-9532. The phone number will be operational this evening until 9:00 p.m., Eastern Standard Time (EST); on Saturday from 9:00 a.m. to 6:00 p.m., EST; on Sunday from noon to 6:00 p.m., EST; and thereafter from 8:00 a.m. to 8:00 p.m., EST.

If you should have any further questions please do not hesitate to visit the FDIC webpage for Sun American Bank.

Jim Willie, Market Oracle

The tag team of JPMorgan as the monster and Goldman Sachs as its harlot represent a powerful pair that is more responsible for destroying the entire US financial system than 95% of the American public has any awareness. The colossus of JPMorgan is a monster, a predator, nurtured by pond scum. It has gobbled up Chase Manhattan, Manufacturers Hanover, Chemical Bank, Bank One, and more over the past two decades. Their profound presence in keeping the USTreasury Bond yields down can never be understated. They do so by managing 85% of the credit derivatives on the planet. They distorted usury prices, as in price of borrowed money, thus aggravating the LIBOR (London InterBank Offered Rate) market in a very visible manner.

The oblong usury prices have contributed mightily to the destruction of the US Economy itself, created bubbles, killed jobs, and wrecked savings. The ugliest hidden activity for the JPMorgan monster is to manage the Bank of Baghdad, where they manipulate the crude oil price, where drug trafficking money is funneled from Afghan sales, under management by the US Military aegis (guys with no uniform stripes or markings). Maybe such illicit money offsets Credit Default Swap losses, making America strong for freedom and liberty. Goldman Sachs is clearly the investment banking agent for the USGovt, given the privilege of insider trading in unspeakable proportions.

They manage the Plunge Protection Team efforts to intervene in financial markets, making America strong for freedom and liberty. The new kid on the block is the FDIC. The Federal Deposit Insurance Corp is steering fresh meat into the corralled JPMorgan stockyards for slaughterhouse feeding. The label of harlot might be too kind, especially from the perspective of senior bond holders. But JPMorgan requires fresh meat (capital) periodically, thus making America strong for freedom and liberty. Never mind the fires caused after its hearty meals and flatulence.

This article discusses the JPMorgan monster, its behaviour, and teeth revealed. Robb Kirby (see his website, click HERE ) often covers JPMorgan illicit behaviour This article discusses banking system realignments to destroy savings accounts owned by the people, and the Coup d’Etat just completed. The criminals on Wall Street have taken full control of the USGovt financial management, with blank check written by a thoroughly intimidated US Congress, deceived steadily and easily. Threats and intimidation are central to the successful coup. The Ponzi Scheme has been revealed, even as the frail and tattered Shadow Banking System has been revealed. The key to the bailouts is its continued Top Down approach, which favors the Ruling Elite and denies all but crumbs to the people, who have been subjected to a foreclosure revolving door on mortgage loan assistance.

Since nothing has been solved from this approach, a total systemic breakdown is assured, whose climax will be the current Administration and the Wall Street executives in charge of the criminal syndicate riding off into the sunset in retirement. Rome burns. Much more detail is provided in the upcoming October report due this weekend. The theme is this subset synopsis article is of criminality, deception, monster exploitation, market corruption, and the collapse of a failed system, whose crescendo represents the greatest financial crimes ever witnessed in modern history. Americans do it big! The proprietary Hat Trick Letter covers much more of recent events, interpretation, and analysis, but here, focus on impropriety.

The Monster, Its Broker & Harlot

JPMorgan will require fresh asset meat every several weeks in order to survive, but the process will result in a sequence of severely damaging CDSwap fires. Perversely, the FDIC is their investment banker agent. Two mergers of questionable nature highlight the altered role of the Federal Deposit Insurance Corp (FDIC), which no longer protects bank depositors or their investors, but rather serves JPMorgan Chase. When Bank of America merged with Merrill Lynch, a trend started, one that exposed private stock brokerage accounts. Officially they can be legally borrowed across subsidiary lines. The FDIC averted a failure of Merrill Lynch without the credit default implications.

The other event was more blatant, as the FDIC steered Washington Mutual out of bankruptcy failure and into the JPMorgan slaughterhouse. Inside its chambers, JPM gobbled up the WaMu deposits and benefited from ratio improvements. Senior bond holders were crushed, fully denied due process from bankruptcy. The FDIC has become an ugly investment banker lookalike, serving JPM and not the US public. The FDIC owns a pitifully small $45 billion in funds available for bank bailouts, at June count. When the dust clears a year or more from now, many multiples more will be necessary for many bank failures.

Read more here: http://www.marketoracle.co.uk/Article6826.html