You have to hand it to our nasty new governor: He certainly knows how to abuse power!

UPDATE: Oh, here’s another one!

Remember when I wrote last month about that Philadelphia music promoter who sued Wells Fargo — and won the right to auction off their property?

I couldn’t figure out why Wells Fargo was forcing this replacement-value insurance policy on the guy:

Rodgers made all his mortgage payments on time, but Wells decided out of the blue that he had to carry insurance for the full replacement value of his home — $1 million — and started to charge him an extra $500 a month in premiums. When Rodgers sent a formal letter to the lender questioning this, they did not answer in good time, so a court awarded him $1,000 in damages, which Wells wouldn’t pay. So the court is allowing him to sell the contents of the lender’s office to make good on the bill.

[…] “It’s a completely unreasonable demand,” says Irv Ackelsberg, a mortgage expert at the Philadelphia law firm Langer, Grogan & Diver. “Their interest is in protecting their mortgage, not ensuring that the house is rebuilt.”

Rodgers’ next step put him at some risk, he concedes now. He refused to renew the higher-cost policy. Instead, Wells Fargo bought him so-called forced-placement insurance – a policy that typically costs much more than ordinary coverage and only protects the mortgage-holder’s interests.

It took a couple of days after the Anonymous leak for the contents to sink in, but I finally connected the dots. Rodgers was more than a victim of bank abuse — this was systematic outright fraud throughout the mortgage and banking industry. It wasn’t just Wells Fargo.

Here’s what Jeff Horwitz points out in the November 2010 issue of American Banker:

• Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors’ and borrowers’ behalf.

• Court documents show that a subsidiary of the country’s largest specialty insurer paid undisclosed “commissions” for the rights to a servicer’s force-placed business.

• State court filings show alleged abuse in which banks charged borrowers for unnecessary insurance and backdated policies providing coverage retroactively. Often the insurance was acquired only after banks stopped advancing the premiums of delinquent borrowers’ escrowed policies, causing those cheaper and more comprehensive policies to expire. In response to questions from American Banker, federal and state officials said that some practices that industry trade groups defend may not be legal.

• Foreclosure defense and legal aid attorneys say force-placed insurance is found on most of the severely delinquent loans in this country. If so, the cost to investors may well be in the billions of dollars.

• With little regulatory oversight or even private investor awareness, force-placed insurance has helped make drawn-out foreclosures lucrative for servicers — far more so, in some cases, than helping a borrower return to performing status. As the intermediary between borrower and investor, servicers appear to be benefiting themselves at the expense of both.

Horwitz says JPMorgan Chase wouldn’t tell him what insurance company they used for reinsurance, but figured out that Assurant’s annual report “describes precisely such a relationship from an insurer’s perspective.”
Continue reading “The Bank of America leaks” →

It’s not just the nuclear power industry. Virtually anything of significance to our national safety (or anyone else’s) gets fucked up once you add in the profit motive. It’s just that the nuclear power lobby has the capacity to harm so many more people than the average crooked contractor.

I caught some of the news this morning, and they were following a nuclear power lobbyist on his Capitol Hill rounds as he “reassured” members that “we have all kinds of safety procedures” in place, and it “couldn’t happen here.”

ARE YOU FUCKING KIDDING ME? REALLY?

Look: Nothing is safe when there’s a buck to be made. And while I’d rather be someone who doesn’t see the worst-case scenario all the time, it would help if I wasn’t right so often. (As my therapist points out, pessimism tends to bleed into the rest of my life. I’d much rather be serene, but oh well.)

There were more than 200 safety violations covered up at this plant. Two years ago, the plant owners were informed they couldn’t handle anything more than a 7.0 earthquake; it would cost $1 billion to protect it.

Guess what happened.

Now tell me why it won’t happen here.

People have such touching faith in order, and logic. “We put all these rules in place, and they inspect it regularly.” “No one would ever put everything at risk by cutting corners.” Uh huh. Right. Worked for the banks, right?

The one good thing I can say about this is the international moneyed community, the ones who cared so little about what they’ve done to soil their nests here, who assumed they could always move somewhere else, might finally be getting at least a glimmer of understanding about this very basic truth: Once you’ve destroyed the social contract, you have no place left to hide.

And so, to the bankers who hired private jets and left Japan last night like rats deserting a sinking ship, I’d like to remind them that they’re only postponing the inevitable. Because the karma, man, she is a bitch.