HUD Digs an Escape Tunnel for Jamie Dimon

The other day I dismissed US disdain for Mexico at its inability to keep Chapo Guzmán jailed. After all, I pointed out, we don’t even try to imprison our Transnational Crime Organization bosses.

At the Intercept yesterday, DDay pointed out another example. After JP Morgan Chase and Citigroup pled guilty to forex fraud, the Department of Housing and Urban Development “changed their form” for FHA insurance, so as to permit those TCOs to continue to have taxpayers insure their customers’ loans.

On May 20 of this year, JPMorgan Chase and Citigroup both entered a guilty plea on one felony count of conspiring to rig foreign currency exchange trades, the largest market on the globe.

Five days earlier, on May 15, HUD slipped a notice into the Federal Register, seeking to alter its standard loan-level certification form, known as HUD-92900-A. This form must be filled out for lenders to receive FHA insurance, which reimburses them if the homeowner falls into foreclosure.

On the current HUD-92900-A form, lenders must certify that their firm and its principals “have not, within a three-year period … been convicted of or had a civil judgment rendered against them” for a variety of crimes, including “commission of fraud … violation of Federal or State antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements or receiving stolen property.”

JPMorgan and Citi’s guilty plea would fall under the antitrust statute, and according to Brown, Warren and Waters’ reading of the certification, that would make them ineligible to obtain FHA insurance on their loans.

On the updated form, this language has been excised.

As Senators Sherrod Brown and Elizabeth Warren and Congresswoman Maxine Waters read it, this will eliminate what should have been one of the biggest impacts of the TCOs’ guilty plea.

Again, Jamie Dimon’s tunnel may not be so spectacular as Guzmán’s. But that’s partly because even more parts of government are helping him to escape any punishment for his TCO’s crimes.

Marcy has been blogging full time since 2007. She’s known for her live-blogging of the Scooter Libby trial, her discovery of the number of times Khalid Sheikh Mohammed was waterboarded, and generally for her weedy analysis of document dumps.

Marcy Wheeler is an independent journalist writing about national security and civil liberties. She writes as emptywheel at her eponymous blog, publishes at outlets including the Guardian, Salon, and the Progressive, and appears frequently on television and radio. She is the author of Anatomy of Deceit, a primer on the CIA leak investigation, and liveblogged the Scooter Libby trial.

Marcy has a PhD from the University of Michigan, where she researched the “feuilleton,” a short conversational newspaper form that has proven important in times of heightened censorship. Before and after her time in academics, Marcy provided documentation consulting for corporations in the auto, tech, and energy industries. She lives with her spouse and dog in Grand Rapids, MI.

6 replies
  1. scribe says:

    I knew a guy who used to run seminars for construction-industry professionals, addressing legal issues. Put together a day’s worth of speakers, each for an hour or half hour, charge some money. turn a nice profit. He bragged that he once bought a new 450SL from the profit of one day’s seminar, and this was prior to the Reagan-era tax cuts – when the top marginal rate was >50%.
    .
    Anyway, one of his favorite presenters was this former construction executive who’d gotten caught rigging bids, been convicted of antitrust violations, and gone through the criminal justice system, including some prison time. This guy’s spiel was to get up there looking like the audience, and tell the audience: “‘I am a convicted felon’, go through all the things he could no longer do, how he’d been to prison, been humiliated, couldn’t get a decent job, his kids got grief at school about their jailbird dad, etc., and here’s what I did wrong to get to that place. Please don’t do this to yourself, your business, your family “.
    .
    I never quite decided why he was such a favorite presenter – because he was a good, persuasive speaker or because he gave the talks for free, as a part of his community service sentence.
    .
    But nowadays, when it comes to savvy businessmen, the rules move aside of their own accord and they surely don’t have to worry about the inconvenience of something as gauche as having to obey the law or face the consequences.

  2. What Constitution? says:

    Reading the article in The Intercept, it seems that the excuse offered by HUD officials for the supposedly innocuous removal of this disqualifying corporate representation from this form was that this was somehow a “ministerial” “paperwork reduction” change that is somehow not worth noticing — for the reason that “HUD asserted in staff-level discussions that removing the certification does not represent a change in policy. HUD staff argued that a certification on a separate lender-level form is sufficient for keeping criminally negligent lenders out of the program.”

    Thus, HUD is affirmatively representing that any entity that might have been foreclosed from obtaining federal insurance on loans would ALREADY be barred from obtaining such insurance by virtue of already having made a substantively identical disclosure on some “other” form. So, apparently, HUD made this “ministerial” deletion because the representation demanded by the form originally is only to be considered redundant.

    OK then. So that means that HUD is denying federal insurance to these criminal banks already (or at least is about to do so) because these banks already are under a preexisting disclosure obligation that has exactly the same consequence.

    Yes?

    When did HUD withdraw/terminate these banks’ qualification status under the “other” regulation/form? Is that happening later today?

  3. thatvisionthing says:

    DDay: HUD solicited public comment for two other alterations to the form. Under the Paperwork Reduction Act, only administrative changes that potentially raise burdens on private businesses must go through the public comment process. Anything that reduces paperwork burdens has no such requirement.

    I’m just looking for due process, if that’s the word you use for lawmaking as well as determining criminal guilt. Since the DOJ is a colluder with HUD here–let me check:

    DDay: The day before HUD released the notice in the Federal Register, the New York Times reported that the Justice Department sought to lessen the consequences of the guilty pleas in the foreign exchange rigging case, ensuring that federal regulators would not use the pleas to bar banks from certain business lines.

    The Securities and Exchange Commission then granted waivers from disqualification to JPMorgan Chase, Citi, and the other guilty banks in the case, over the objections of one SEC Commissioner that the big banks had effectively become “Too Big to Bar.”

    ok, DOJ and SEC…

    DDay: “HUD may have good reasons for proposing these changes at this time,” write Brown, Warren and Waters, but “but its Federal Register notice fails to even describe the changes to the certifications on illegal conduct — let alone offer a rationale for them.” They allege that HUD staffers offered to give additional reasons, but only after the comment period ended on July 14. The notice has already been reviewed and approved by the Office of Management and Budget, the final step before authorization.

    …and OMB, I guess I can’t expect a federal case by the government to be made against HUD, since they’re all co-conspirators. And since these are three Senators–lawmakers, at least on the face–writing a sternly worded letter, it looks like they’re already bypassed, so there goes an electorate voice. Do they have any more clout than just saying this, DDay’s final paragraph?

    The Democratic lawmakers believe removing the certification language results in a change in policy rather than simply a change to the form. They requested that HUD withdraw the notice and issue it again under the Administrative Procedures Act, giving an explicit rationale for the change, and how it would affect JPMorgan and Citigroup’s FHA loan status. The public would then have an additional 60-day comment period.

    I’m wondering? Can these three Senators stop it, could public comment stop it, or can a private lawsuit stop it? I realize all these checks-and-balances processes I’m looking for involve paperwork and fingerprints, which the Paperwork Reduction Act, what, legally removes a requirement for? What a bizarre world! DDay says there’s no way to tell by looking at the form that the form had changed, you’d have to have before and after side by side to compare, and know what you were looking for.

  4. thatvisionthing says:

    Is there an honest bank, one that didn’t plead guilty, that can sue for unfair competition? Or something?

    Shirley I. Jest

  5. pdaly says:

    Speaking of fixers, did anyone see the Washington Post piece this week on David Margolis? He is retiring? Doesn’t sound like it. So what was the point of the article? I’m hoping EW sheds light on it!
    .
    https://www.washingtonpost.com/world/national-security/david-margoliss-50-years-of-quips-and-controversies-at-justice-department/2015/07/15/920c33c2-1f38-11e5-bf41-c23f5d3face1_story.html?hpid=z4
    .
    Five or so years ago similar puff pieces were written about how “apolitical” Margolis is in his job–ignoring the reality that Margolis puts the interests of his department ahead of justice or rule of law.

    • wallace says:

      quote”Speaking of fixers, did anyone see the Washington Post piece this week on David Margolis?”unquote

      Indeed. What a load of access pandering bullshit. If anything, this war criminal protecting scumbag is the posterchild for the TwoTieredInJustice system of the Ministry of Fix.

      Speaking of sewers, if anyone knows about HUD’s criminals and it’s DOJ fixers, it’s Catherine Austin Fitts.

      http://www.dunwalke.com/7_HUD_is_a_Sewer.htm

      This cabal of financial crime enabling scum has been at the root of the most organized government criminality for decades, not to mention it’s involvement in the drug trade. As the largest mortgage insurance fund in the world(think 100’s of Billions$$).. is it any wonder it’s “owned” by Wallstreet. As for who in HUD tried to sekritly sneak this little regulation not gem into the record, I’d submit these congresscritters subpena the banking records of those HUD officials who have the authority to do this. Just look for a transfer from JP Morgan. As for it’s Paperwork reduction excuse…Hahahahahahaha…hohohohohohohoho…hahahahahahahaha!!

      These morons really do think the public are idiots.

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