Wednesday, November 20, 2013

Again - 13 Billion is NOT Enough

The 13 Billion Dollar settlement negotiated between Eric Holder and Jamie Dimon is not enough to pay for JP Morgan's crimes. Although it sounds like a whole lot of dollars, watch the video reposted from You Tube - Alexis Breaks it Down sent to me by The Other 98%. According to





"More than half of the record settlement amount will be tax-deductible, the banking giant said Tuesday.
'It's our understanding that the $2 billion penalty will not be tax-deductible, Lake said, 'but that the remaining $7 billion of compensatory payments will be deductible for tax purposes."

And:

"The Justice Department has issued this breakdown of the $9 billion in the settlement that's not tied to consumer aid:
  • $2 billion - civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act
  • $1.4 billion - to settle federal and state securities claims by the National Credit Union Administration
  • $515.4 million - to settle federal and state securities claims by the Federal Deposit Insurance Corporation
  • $4 billion - to settle federal and state claims by the Federal Housing Finance Agency
  • $298.9 million - to settle claims by the State of California
  • $19.7 million - to settle claims by the State of Delaware
  • $100 million - to settle claims by the State of Illinois
  • $34.4 million - to settle claims by the Commonwealth of Massachusetts
  • $613.8 million - to settle claims by the State of New York"
And:

"The settlement represents only a fraction of JPMorgan's $23 billion litigation reserve fund, which it has called a hedge against future legal fees and judgments. That reserve was described in the bank's third-quarter corporate filings, as Lake said in a conference call held Tuesday afternoon."



Business as usual, the cost of doing business, tax deductible, nobody goes to jail.

Thursday, November 14, 2013

Civil Sanctions for Failure to Pay Child Support

Everyday in Florida parents are subject to civil sanctions for failure to pay court ordered child support. It is common that a General Magistrate or Circuit Court Judge will order sanctions despite the fact that the parent who has been ordered to pay is not able. Sanctions often include driver's license suspension or incarceration. The fact is, and the law is, that if a parent who is ordered to pay child support does not have the ability to pay -- sanctions cannot be imposed. The inability to pay child support is not contempt of court. Contempt of court, must be willful -- not unable. Read the following appellate case. It's not long, and not hard to follow, and it may just keep you driving and out of jail.


LARSEN v. LARSEN No. 4D04-773.

901 So.2d 327 (2005)

John Edward LARSEN, Appellant,
v.
Eva LARSEN, Appellee.

District Court of Appeal of Florida, Fourth District.
May 4, 2005.

WARNER, J.
Appellant challenges an order authorizing the suspension of his driver's license for nonpayment of child support with a purge provision of $2,500. He claims that he does not have the present ability to pay the purge amount. Because the suspension of a driver's license constitutes a civil sanction, the court must provide the contemnor with the opportunity to purge the sanction, and it must determine that the contemnor has the present ability to pay the purge amount. Gregory v. Rice, 727 So.2d 251, 253-54 (Fla.1999). Not only did the trial court fail to make such a finding, nothing in the record would support a finding that appellant has the ability to pay that amount. We therefore reverse. 

Appellant has accumulated substantial arrearages on alimony and child support obligations. He has instituted several modification proceedings since the dissolution of marriage, mainly because he lost his job as a pilot. In a mediated settlement in July 2002, the parties agreed to an arrearage, and appellant agreed that should he miss one payment, the Support Enforcement Division would be entitled to seek automatic suspension of his driver's license.

Subsequent to the agreement, appellant again moved for modification, and SED moved for contempt and sought to suspend appellant's license for nonpayment of support. The contempt motion was referred to a general master who recommended holding the father in contempt and requiring a purge amount of $1,638.25. The trial court adopted the general master's recommendations, and appellant filed a petition for writ of prohibition in this court, which we treated as a non-final appeal. We reversed the order of contempt, determining, in part, that the order lacked a finding that appellant had the present ability to comply with the purge amount, and failed to provide a factual basis for such finding as required by Florida Family Law Rule of Procedure 12.615(e). See Larsen v. Larsen, 854 So.2d 293 (Fla. 4th DCA 2003).

While his petition for modification was pending, appellant received notice of SED's intent to file for suspension pursuant to section 61.13016, Florida Statutes (2003), and moved for a case status conference as well as a hearing on his motion to contest the suspension. At the hearing, the court stated that the suspension of the driver's license was not a contempt sanction. The court denied appellant's objections to the impending suspension, but imposed a purge provision of $2,500. Upon receipt of the purge amount, SED was directed to abate the proceedings for license and motor vehicle registration suspension until further order of the court. Appellant's license was suspended after he failed to pay the purge amount.
Section 61.13016 provides that an obligor who has been given notice of the intent to suspend his or her driver's license may petition the court to contest the delinquency action. § 61.13016(1)(c)1.c. The obligor may contest the notice by showing a mistake of fact as to the delinquency or the obligor's identity. § 61.13016(3). The statute does not contain language excusing the suspension for inability to pay.

However, this case is controlled by expansive language1 in Gregory v. Rice, 727 So.2d at 254:
Under Bagwell, regardless of whether the sanction is incarceration, garnishment of wages, additional employment, the filing of reports, additional fines, the delivery of certain assets, the revocation of a driver's license, or other type of sanction, the court must provide the contemnor with the ability to purge the contempt; that is, if the contemnor satisfies the underlying support obligation, the sanctions must be lifted.
(Emphasis added). Gregory also reconfirmed the principles of Bowen v. Bowen, 471 So.2d 1274 (Fla.1985), that the court must find a present ability to pay the purge amount in order to enter a civil sanction. 727 So.2d at 253-54.

Therefore, the sanction of driver's license suspension must be considered a contempt sanction under Gregory for which the court must find a present ability to pay any purge amount set. Here, the court made no such finding. Thus, the order authorizing the suspension must be reversed.

Appellee argues that appellant agreed to the automatic suspension of his license should he fall behind in support payments. However, no agreement was made as to the terms of any purge provision. Without a purge provision, the coercive sanction becomes a criminal contempt sanction, requiring the due process protections of a criminal proceeding. See Bowen, 471 So.2d at 1277.

We recognize that this opinion may cause considerable uncertainty in the use of driver's license and other license suspensions in child support proceedings without the setting of a purge amount in accordance with the dictates of Bowen. However, we are bound by the clear language of Gregory.

Reversed and remanded for further proceedings.
FARMER, C.J., and GROSS, J., concur.

FootNotes


1. The language is expansive because International Union v. Bagwell, 512 U.S. 821, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994), discusses only civil fines and incarceration. It never mentions other civil sanctions.

Saturday, November 9, 2013

$864 Million Bank of America Fine a Fraction of Damage Done

Today, November 9, 2013, reported on Reuters, the U.S. government urged that Bank of America pay $863.6 million in damages after a federal jury found Bank of America liable for fraud over defective mortgages sold by its Countrywide unit. The case centered on a mortgage lending process at Countrywide, which Bank of America bought in July 2008, known as the "High Speed Swim Lane," or alternatively "HSSL" or "Hustle." Government prosecutors said Countrywide's program emphasized and rewarded employees for the quantity rather than the quality of loans produced, and eliminated checkpoints designed to ensure that loans were sound. The Hustle case, like some other financial crisis cases recently pursued by the government, was brought under the Financial Institutions Reform, Recovery, and Enforcement Act, a law passed after the 1980s savings-and-loan scandals.

The lawsuit is the first government case to go to trial over the faulty mortgage practices that led to the 2008 financial crisis.


A new wave of claims against financial institutions and rating agencies could breathe new life into an old law. Federal prosecutors have turned to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA is a civil anti-fraud law passed in the wake of the savings and loan crisis.

FIRREA was passed, in part, to “enhance the regulatory and enforcement powers of Federal financial institutions’ regulatory agencies.” The obvious precedent event was the Savings & Loan Crisis that caused billions of dollars in losses to investors and federally insured deposit funds. Read more about FIRREA


Net income is what remains of a company's revenue after subtracting all costs. It is also referred to as net profit, earnings, or the bottom line. Net Income that is not paid out in dividends is added to retained earnings. On October 16, 2013 Bank of America Corporation reported net income rose to $2.5 billion in the third quarter of 2013 from $340 million in the year-ago quarter.

I admit that $864 million sounds like a lot of money, a whopping fine. But when you do the math, its not much. The proposed fine resulting from the FIRREA based law suit I mentioned, represents only .345% of Bank of America's most recent quarterly net. One quarter, Q3 only. Less than 1% of one quarter's net. How bad is that slap on the hand going to hurt?


According to RealtyTrac.com - November 2013.

Although many media types continually speak of the foreclosure crisis, and the world financial crisis in the past tense. We are not past it. The nightmare continues. There are currently 1,254,701 properties in U.S. that are in some stage of foreclosure. In September, the number of properties that received a foreclosure filing in U.S. was 2% higher than the previous month.

According to an article published in Huffington Post in May 2013, Americans lost $192.6 billion in wealth, or an average of $1,700 per household, in 2012 due to foreclosures. The article also stated that the U.S. could lose $221 billion more within the next year if officials don't come to the aid of millions of borrowers who owe more on their homes than they're actually worth.


And in the Fall 2012 issue of "Democracy, A Journal of Ideas", declared that wealth stripping has increased during the economic crisis. Since the onset of the Great Recession, Americans have lost $7 trillion in equity in their homes. The Federal Reserve estimates the median American family has lost nearly two decades of wealth, or almost 40 percent of their assets. In a separate report, the Pew Research Center estimates that Latinos, Asians, and African Americans have experienced wealth losses of 66 percent, 54 percent, and 53 percent respectively, compared to 13 percent for whites. These losses are largely due to home foreclosures and lost equity.

So, no, less than 1% of one quarter earnings as a fine for Bank of America is not nearly enough to put a dent in the damage done.