Trump and Dodd-Frank – What You Don’t Know

In 2009, I began working for several financial sites –  mostly keeping up with their blogs and some white papers. It wasn’t too long before the 2009 CARD Act was signed into law and within a year after that, so was Dodd-Frank Act.  I had to immerse myself in a crash course as to what these laws meant for consumers. Both were straight out of the Obama Administration.

It wouldn’t take long to realize the Consumer Financial Protection Bureau, which was founded under Dodd-Frank, was a different regulatory agency. Under the guidance of Director Richard Cordray, many Americans saw there were government agencies that really had no ulterior motives. Let me say this: most of those who drive the financial sector machine in this country are reliable, honest and truly work to do good each day. It’s the ones who don’t, the ones who can’t see past the dollar signs, who cause so many problems.

This week, less than a month into his term, President Trump has effectively unraveled every protection Americans had against everythingcapture-20170215-182226 from “too big to fail” banks (JP Morgan Chase, Citigroup, Wells Fargo and Bank of America), predatory college loans, insane interest rates on mortgages, and much more. By repealing Dodd-Frank, he’s also eliminating all of those financial protections the average American relies on. By the way, it’s important to note, this was the solution to ensure we would never see another mortgage meltdown that we saw in 2008 with the record number of foreclosures for millions of American families.

Here’s what you might not know:

February 5, when asked by a reporter what his intentions were, President Trump said “We expect to be cutting a lot out of Dodd-Frank.”  He said this during a White House meeting with big business leaders and bank presidents, including JPMorgan Chase CEO Jamie Dimon. That’s a problem.

It’s interesting that the president would say something like this during a meeting with Dimon and his counterparts, mostly because of the headache CFPB has been for many of these CEOs – and most certainly JPMorgan’s leader. Here are just a few of the clashes JPMorgan Chase has had with CFPB.

CFPB Orders Chase and JPMorgan Chase to Pay $309 Million Refund for Illegal Credit Card Practices

SEP 19, 2013

CFPB Takes Action Against Wells Fargo and JPMorgan Chase for Illegal Mortgage Kickbacks

JAN 22, 2015

CFPB, 47 States and D.C. Take Action Against JPMorgan Chase for Selling Bad Credit Card Debt and Robo-Signing Court Documents

JUL 08, 2015

CFPB isn’t reserved just for the banks. It has also focused on predatory lending on everything from payday loans to mortgages to aggressive collection actions:

CFPB Takes Action Against Two Law Firms for Misrepresenting Attorney Involvement to Collect on Medical Debts This one ordered medical debt collection law firms to refund $577,135 to consumers.

JAN 09, 2017

CFPB Takes Action Against NewDay Financial for Deceptive Mortgage Advertising and Kickbacks

FEB 10, 2015

CFPB Takes Action Against ACE Cash Express for Pushing Payday Borrowers Into Cycle of Debt

JUL 10, 2014

This agency has sought to protect consumers on all things financial, including student loans and the aggressive manner in which collection agencies collect debts. Imagine your parents filing for social security and being told they couldn’t until YOUR student loans from thirty years ago were paid back. That’s what this agency does – takes these kinds of disturbing companies down. Well,  maybe not so much now.

The reality is Trump had an opportunity to fix what wasn’t working with Dodd-Frank. In all honestly, the accounting and different regulations are confusing. I’m sure there are analysts who can dissect the law far better than I could begin to understand. I’ll leave that to them. In terms of the every day family with typical challenges and not knowing who to trust in the financial sector, this is a real disappointment – even if no one realizes it right away. Mark my words – you’ll soon see the next time you apply for a college loan or a mortgage and feel like a loan officer is playing fast and loose on your unfamiliarity of contracts or if an unethical debt collector begins seeking you out on social media.

Multi-Millionaire Congressmen Subject to IRS GHWI?

Last week, we learned that most members of Congress are multi-millionaires. While it’s not surprising, it’s definitely frustrating. There’s a new twist, though, and if this plays out like many are hoping, things could get a bit sticky for many of those wealthy career politicians.

As you read this, remember one very important fact: Only 11% of bills made it past a congressional committee and only about 3% of new laws across the board were enacted between 2011 and 2013. This will be important a bit later.

Congress by the Numbers

The Center for Responsive Politics announced last week that it had analyzed the personal finances of the 534 current members of Congress. It found for the first time the average net worth of those resting easy in their ivory towers is just more than $1 million.

But don’t let that tiny “1” ahead of the word “million” fool you: the reason that average is not higher is due to several of those in Congress who have no concept of budgeting their money. Many are in the red, including Rep. David Valadao (R-Calif.), who has an average net worth of negative $12.1 million. It’s said that the reasons are due to the many loans his family’s dairy farm owes.

Meanwhile, Darrell Issa (R-Calif.), chairman of the House Oversight Committee, made millions in the automobile industry. He’s the wealthiest with a net worth of a whopping $464 million. Many Congress members have similar net worth amounts.

Stay with me – this all links together…

GHWI

In 2009, the IRS formed what it refers to as the Global High Wealth Industry, or GHWI. Its sole purpose was to increase the focus on those considered “high income earners”. The Commissioner of Internal Revenue was clear and his line drawn in the sand was definitive at that time, “Many high wealth individuals make use of sophisticated financial, business, and investment arrangements with complicated legal structures and tax consequences. Many of these arrangements are above board. Others mask aggressive tax strategies.”

According to Pricewaterhouse Coopers:

The focus of this group is primarily the IRS targeting hedge funds, private equity firms, real estate funds and venture capital funds (collectively, “Managed Funds”).

One guess as to what the investment of choice is for most of our elected officials. Turns out, the politicians are dropping big money back into the stock market. Their focus is mutual funds and managed portfolios, according to The Center for Responsive Politics.

Here’s the kicker – remember all of those banking scandals that dominated the news in recent years? We’ve not heard much about them or their unethical CEOs and other financial leaders for one reason: the president’s healthcare reform was the priority. As such, that’s what the media focused on. You can be sure none of those scandals have been resolved; they’re quietly simmering in the background. Or maybe not. Take a look at this chart (which you can see in its entirety here):

capture-20140111-170104

As you can see, the three biggest banks in the nation, Wells Fargo, Bank of America and JPMorgan Chase, all make the top ten most popular assets for those in Congress.

It’s not illegal, but it’s troublesome, especially when you consider:

JPMorgan Chase

Has there been a single week in the past few years that didn’t include news of yet another lawsuit against JPM? There are civil and criminal investigations that continue in the London Whale scandal. There’s another investigation into illegal energy trading in California, still another one in China over bribery accusations and, of course, the huge mortgage scandal that continues.

Don’t forget the harm done directly to its credit card customers. The bank was ordered to refund close to $310 million to those customers along with having to pay $80 million in fines due to identity theft protection that its card customers did not want. Just last week, the bank was ordered to pay a whopping $2 billion in its role with the Bernie Madoff scandal. These examples are the ones off the top of my head; you can be sure there are many more. See my infograph on JPMorgan and Jamie Dimon here.

Bank of America

Not to be outdone by its competitor, BoA has its own list. It includes big fines for minority discrimination. This was ordered when it was proven the bank charged higher fees and forced minorities into subprime loans when they might have qualified for better rates.

In 2009, it was fined nearly $3 million for overbilling its credit card customers. It then attempted to mislead an investigation into its contracting processes and was fined $137 million. Again, this is just a few of the recent scandals for BoA.

Wells Fargo

WF was hit with its own $85 million fine for “pushing subprime loans” to minorities. It was also fined for “selling complex investments without disclosing the risks”.  The judge in another suit ruled “Wells Fargo engaged in reprehensible systemic accounting abuses in its mortgage division”. And let’s not forget the money laundering scandal with Mexico’s drug cartel (this investigation continues).

Knowing all of this, you can’t help but wonder how much focus the GHWI is placing on these multi-millionaires. The short answer: very little. The IRS won’t disclose specifics, but what it does say is that there have been a grand total of 36 audits since its inception in 2009. Many of those audits turned up no wrongdoing, though the agency won’t provide hard data on those specifics, either. Still – 36 audits since its inception? What are the odds that even one member of Congress is part of that total?

Bringing it full circle, reconsider: Only 11% of bills made it past a congressional committee and only about 3% of new laws across the board were enacted between 2011 and 2013.

We have multi-millionaires, who are consistently adding to their wealth in jobs that their performance is significantly lacking and who are not held accountable – on personal or professional levels. Meanwhile, tax dollars continue to fund an arm of the IRS that refuses to release hard numbers on the job its doing.

What’s next? Who knows. Priorities are a mess and worsening, the media is busy redefining the role of journalism and the rest of us are in this constant state of frustration because we’re the ones shouldering the massive burdens – someone has to pay for the millions of dollars in fines, salaries and bailouts, after all.

JPMorgan Fines for 2013 (So Far)

It boggles the mind that a bank (or any business entity) can get away with the unethical and illegal practices the way JP Morgan, Bank of America and the other “Big Banks” have managed. And worse? They continue to rake in huge profits, despite the billions in fines they’re being forced to pay – by the U.S. and other countries. Here’s a look at what JPMorgan Chase has paid in 2013 alone – and the year’s not over, even as some of these cases – and hopefully criminal cases – are heating up. Click the image to open the inforgraphic.

jpm

You Were So Close, Herman Cain…So. Close.

No sooner had I made the decision to support the Herman Cain campaign did he go off and muss it all up and shove his foot down his throat. In an interview today, he said about the “Occupy Wall Street” group, which are picketing banks and well, Wall Street as a whole:

“Don’t blame Wall Street, don’t blame the big banks, if you don’t have a job and you’re not rich, blame yourself. It is not someone’s fault if they succeeded, it is someone’s fault if they failed,”

Now, don’t get me wrong. I happen to believe we’re all responsible for how well we do in this life. I think we cater to those who refuse to go out and earn their pay and it frustrates me to no end. That said, Cain, the “non-politician” did two things in this interview with the Wall Street Journal. He used the “b” word – it was all about placing blame (there’s a huge difference in “placing blame” and “taking responsibility”…does anyone read Dale Carnegie anymore?). But more importantly, he proved he had no idea what those folks are protesting. They’re not protesting because they don’t have jobs. They’re protesting because:

Bank of America’s new $5 debit fees for a certain “customer base”:

Those who hold the Bank of America checking accounts Platinum Privileges, Premium or Advantage are exempt from the new monthly fee. Interestingly, the accounts MyAccess, Essentials, eBanking and Enhanced will be hit with the new $5 debit card usage fees. The accounts that are exempt are usually reserved for those

Presidential hopeful Herman Cain

who maintain high bank balances or who have mortgages with the bank. The latter are those most consumers choose because of the absence of other restrictions, such as minimum balance requirements and ironically, the absence of too many fees. Additionally, the bank said Merryl Lynch, US Trust and Wealth Management account holders won’t have to pay the increased fees. In other words, if you’re depositing your paycheck every week and it’s less than $5,000, you’re going to be charged for not earning enough to qualify for the more rewarding accounts.

Then, today:

Capital One Creating “Too Big to Fail” Dynamic?:

Accusations are running the gamut regarding Capital One’s push to buy out ING Direct USA. If successful, some say it’s another step towards another subprime meltdown. Capital One executives found themselves defending their motives behind wanting to buy out ING Direct, which many say will create another “too big to fail” bank that will turn to the taxpayer to bail it out when it runs short (which it inevitably will in this economy). The Fed is required to examine whether or not any merger poses an economic threat. Specifically, it must determine whether the risk outweighs any benefits – and based on calculations by some of the nation’s leading financial analysts, the risks are entirely too great to justify any kind of benefit to anyone besides the bank.

But don’t take my word for it. Google it – it’s all over the news, which is why I’m so disappointed in Cain’s lack of knowledge on the situation. Then again, he was giving the interview to the Wall Street Journal, I guess it stands to reason he’d feel obligated to defend Wall Street. Ah…the non-politician gets all political.

NOW who am I going to support? It’s not looking very promising, that’s for sure.