Wells Fargo 'Nightmare' For Homeowner Applying For Help Under Administration's Anti-Foreclosure Program

As stories of the troubled HAMP program roll in, more and more mortgage lenders are being named and shamed. Bank of America has had a number of issues, and you can add Wells Fargo to the list.

From HuffingtonPost.com:

Wells Fargo put an Illinois woman though a "nightmare of harassment, frustration, and relentless stress" when she tried to apply for a mortgage modification under the Obama administrations' Home Affordable Modification Program, according to a lawsuit filed in federal court this week.

It's a familiar nightmare to many lured by HAMP's promise of reduced monthly payments. More people have been bounced from the program than have received "permanent" five-year modifications, and federal auditors say the program sometimes actually causes borrowers to lose their homes.

Therese Crowley of Deerfield, Ill., facing reduced income because of health problems and less demand for her broker services, first asked for a HAMP application in April 2009. Wells Fargo allegedly dragged its feet for four months before it sent one along, then denied the application in October and gave her bogus explanations when she called to complain.

In November, Wells Fargo told Crowley to apply again, then denied her again the following month. A week later she called the bank and spoke to a woman named Paula, who "determined that Wells Fargo had erroneously overstated Crowley's income by $2,800," the complaint alleges. "Also, the file erroneously indicated that Crowley owed $2,381.07 per month on a credit card debt which in fact had been paid off in 2002. Paula agreed that with the correct information (information that Wells Fargo had during this entire process), in her opinion Crowley qualified for a HAMP loan modification."

Read more here

A Scramble to Finish Bank Rules This Week

President Obama is meeting with world leaders at the Group of 20 Summit this weekend in Korea. Our financial overhaul regulations need to be completed before the President’s trip and Lawmakers are scrambling to sort out their differences on a range of certain provisions. According to the Wall Street Journal, in their debate they are are discussing everything from bank regulations to consumer protection. If they don’t complete their work this week, Obama will go to the Group of 20 Summit without a bill and Congress might not be able to pass a law before their July 4th recess, which is what they have been pushing for.

One provision under debate is the Volcker Rule (originated by former Federal Reserve Chairman, Paul Volcker) which had originally imposed a ban on banks making investments with their own money—a practice called proprietary trading. Lawmakers are looking to compromise with allowing large banks to invest a small amount, like 2%, into certain privately managed funds. "Mr. Volcker wants and expects a really strong bill," said the former Fed chairman's assistant, Tony Dowd. "He doesn't want it to look like Swiss cheese."

They were also divided about how to set up stricter capital rules for banks with more than $10 billion of assets, as required by an amendment Senator Susan Collins (R., Maine) attached to the Senate bill last month. Banks are saying the new rules would restrict their ability to lend. Lawmakers on Monday did reach a deal that would limit the amount of fees banks are allowed to charge retailers for processing debit cards.

The conference committee of congressional negotiators seeking to resolve differences between the House and Senate versions of the bill plans to work through the consumer-protection issues on Tuesday, the Volcker Rule on Wednesday, and derivatives regulation on Thursday. The timing could slip if lawmakers need more time to resolve disputes. The very reason for the Summit is to discuss measures to promote the financial stability of the world—having our domestic issues worked out would sure look better for the President during the Summit.

U.S. banks may end free checking accounts: report

Banks seem to be tightening up their financial purse strings lately. The latest report from Reuters.com states banks are doing away with free checking accounts. It further explains that this move is expected primarily to hurt retail businesses who could be asked to pay new monthly maintenance fees on their basic accounts that do not generate a lot of activity. According to Reuters banks are incurring expenses of $250-$300 a year to maintain each of the approximately 200 million checking accounts. However, some people disagree with this assessment. Don’t banks borrow against the money in checking accounts? And aren’t they already charging customer’s overdraft fees, ATM fees, and dozens of other outrageous fees? What do you think? Are you with a large bank or do you prefer a credit union instead? Let me know your thoughts on my Facebook or Twitter.

Obama to Wall Street: 'Join Us' In Reform

Later today, President Obama is scheduled to give a highly anticipated speech on the topic of banking reform. According to the White House, the President wants Wall Street to know that he is not hoping to fight them, but work with them to reform the banking industry.

Obama will give the speech at Cooper Union in New York, and as this CNN Money article explains, he is going to proclaim his support for legislation in both houses of Congress aimed at reforming the banking industry. The President will reportedly claim the bills represent "significant improvement on the flawed rules we have in place today."

Obama said he's sure many of the lobbyists working to defeat the measure are acting on behalf of the Wall Street firms represented by members of the audience.

"But I am here today because I want to urge you to join us, instead of fighting us in this effort," said the president. "I am here because I believe these reforms are, in the end, not only in the best interest of our country, but in the best interest of our financial sector."

The speech has prompted some hand-wringing in the investment world this week. Senior officials in the Obama administration told CNN that top bankers have called the White House recently to express concerns about "how bad" the speech would be for Wall Street.

Watchdog Says Bad Assets Still Threaten Banks

Despite numerous reports that the TARP program had stabled U.S. financial institutions, a new congressional watchdog report has been published asserting that many banks are still holding onto billions of dollars in bad loans. The report claims that a sharp rise in unemployment or a drop in the real estate values could cause the entire banking system to loose its footing once again.

“In its latest assessment of the $700 billion financial system bailout, the Congressional Oversight Panel warns that banks still hold many risky loans of uncertain value. If unemployment rises sharply or the commercial real estate market collapses - as many economists fear - the banking system could again lose its footing, the panel says in a report to be released Tuesday.”

"The financial system (remains) vulnerable to the crisis conditions that (the bailout) was meant to fix," the panel wrote in a draft copy of Tuesday's report.

The Congressional Oversight Panel was created as part of the Troubled Asset Relief Program, or TARP. It is designed to provide an additional layer of oversight, beyond the Special Inspector General for the TARP and regular audits by the Government Accountability Office.

The report says many of the Obama administration's financial stability efforts are working - including infusions of new capital for banks, heightened scrutiny of capital ratios, "stress-testing" of large financial firms. It also pointed to a public-private investment plan designed to buy up bad assets that has yet to get off the ground.

Continued here…

Ten Banks Allowed To Pay Back TARP

Ten banks have been allowed to pay back their TARP (Toxic Asset Relief Program) funds, reports CNNMoney.com. The decision will return an expected $68 billion of federal money to taxpayers. Check out a segment of their story below.

Ten leading banks won approval to repay money from the government's controversial TARP program, regulators said Tuesday, which could represent approximately $68 billion in bailout funds returned to taxpayers.

The Treasury Department, which has overseen the $700 billion Troubled Asset Relief Program, did not indicate which banks were included in that group, although most lenders confirmed the news separately.

Eight of the nine banks that were found to not need new capital following the government's bank stress tests last month made the list. JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500), American Express (AXP, Fortune 500), Bank of New York Mellon (BK, Fortune 500), State Street (STT, Fortune 500) as well as regional banking giants Capital One (COF, Fortune 500), BB&T (BBT, Fortune 500) and U.S. Bancorp (USB, Fortune 500) all said they will pay back TARP funds. (Insurer MetLife also was not required to raise capital but it did not receive any TARP money.)

Investment bank Morgan Stanley (MS, Fortune 500), which was the only financial firm that regulators did ask to raise money after the stress tests, confirmed it also won approval from the Treasury Department to pay back $10 billion.

Chicago-based Northern Trust (NTRS, Fortune 500), which took in $1.576 billion under the program but was not part of the bank stress tests, also announced Tuesday it is paying back TARP funds.

So far, the Treasury Department has allowed nearly two dozen small, mostly community-based lenders to redeem the government's preferred shares, representing nearly $1.9 billion in taxpayer money.

Should the latest banks agree to redeem the company's preferred-shares the government acquired last fall, that would represent approximately another $68 billion in TARP repayments.

"These repayments are an encouraging sign of financial repair, but we still have work to do," Treasury Secretary Tim Geithner said in a statement.

Proceeds received from those 10 banks will be applied to the Treasury Department's general account, the agency said Tuesday, some of which be will used to promote financial stability should the economy take a turn for the worse. A portion of those funds will also be used to reduce Treasury's borrowing and the nation's rapidly rising level of debt.

The banks that buy back the government's stake will also be able to repurchase the warrants, or rights to purchase shares at a future date, the government acquired when it injected capital into many of these banks late last year.

Treasury said those obligations could be purchased at "fair market value", but did not offer details on how that would be determined.

There has been talk that the government may auction those warrants on the open market in order to quell criticism about their pricing. Some have charged that allowing banks to redeem warrants at too cheap of a price would be to the disadvantage of U.S. taxpayers who stand to make significant gains should bank stocks continue to move higher in the months and years ahead.

Large lenders have been working particularly hard to break free from the TARP program for several months. Many have raised billions of dollars in fresh capital in recent weeks and issued debt without government backing.