Good afternoon, thank you for taking the time to participate in this conference call. I would recognize John Bovenzi with IndyMac Federal, who is also on the line, and thank him for his contributions to today’s important announcement. John will provide brief remarks following mine.
I am pleased today to announce the implementation of a systematic loan modification program for troubled residential borrowers who have mortgages owned or serviced by IndyMac. Read the rest of this entry »
From the FDIC: IndyMac Federal Bank, FSB (“Indymac Federal”) will implement a new program to systematically modify troubled mortgages.
The program is designed to achieve affordable and sustainable mortgage payments for borrowers and increase the value of distressed mortgages by rehabilitating them into performing loans. This in turn will maximize value for the FDIC, as well as improve returns to the creditors of the former IndyMac Bank and to investors in those mortgages. The new program will help IndyMac Federal improve its mortgage portfolio and servicing by modifying troubled mortgages, where appropriate, into performing mortgages.
Below are some questions and answers regarding the program: Read the rest of this entry »
Aug. 8 (Bloomberg) — As U.S. regulators brace for more bank failures, consumers are wondering for the first time since the savings-and-loan crisis of the 1980s about the safety of their money.
Harry Newton, a former publisher who lives in New York City, moved $604,000 in cash to seven different banks last month after the seizure of IndyMac Bancorp Inc. to ensure that his funds were covered by the Federal Deposit Insurance Corp. Read the rest of this entry »
| FOR IMMEDIATE RELEASE July 14, 2008 |
Federal Deposit Insurance Corporation Chairman Sheila C. Bair today issued the following statement on the Federal Reserve Board’s approval of a final rule for home mortgage loans.
“I applaud the Federal Reserve Board’s decision today to issue final, strengthened rules under HOEPA that will correct many of the abuses which led to the current housing crisis and help assure that mortgage Read the rest of this entry »
| FOR IMMEDIATE RELEASE July 13, 2008 |
FDIC Chairman Sheila C. Bair, today issued the following statement about IndyMac Federal Bank, FSB, the conservatorship created by the FDIC to continue to provide banking services in communities served by the former IndyMac Bank, F.S.B. Read the rest of this entry »
PASADENA, California (CNN) — California bank IndyMac will reopen as a “strong and safe institution” under federal management and a new name Monday, days after regulators closed it, the firm’s new CEO said Sunday.
“Come Monday morning, it will be business as usual for all insured customers,” said John Bovenzi, who was placed in charge of IndyMac — now named IndyMac Federal Bank — after regulators seized the firm Friday. Read the rest of this entry »
“Part of the reason we got a current mortgage crisis has to do with the fact that people got suckered in to loans that they could not pay,” he told a crowd in Reading, Pa., last week. “There were a lot of predatory loans that were given out, a lot of teaser rates. Banks and financial institutions making these loans were making money hand over fist.”
The media firestorm this week directed at Barack Obama’s manager of his vice presidential search team prompted the swift resignation of Jim Johnson for allegedly receiving “favorable rates” from Countrywide Home Loans.
He received kickbacks in the form of great mortgages and lax underwriting guidelines on 3 properties totalling $1.7 million.
Wall Street Journal:
Perhaps the most unusual of Mr. Johnson’s loans was one for more than $1.5 million last year for a real-estate project in Big Timber, Mont. At the time he got the loan, what the records indicate were Mr. Johnson’s monthly obligations were nearly twice his stated monthly income, according to documents and to people familiar with the matter.
The records say Mr. Johnson’s “total income” was $55,834 a month, while his “total obligations” were $97,708.97 a month. The result was a total debt ratio of 175%, which Countrywide’s records say was “too high.”
Now, the media is spot on for not relenting their prime time attacks on Obama and Johnson. They definitely deserved the bashings they received. You simply cannot have “change” when you surround yourself with the same “old” greedy executives that have profited handsomely in this mortgage and housing crisis.
Housing Blood Money - Profits made mainly on the foreclosure blood and misery of millions of Americans.
The profits and mortgages made by these lending corporations, Wall Street, and investors, over the last 3- 5 years was nothing more than fools gold and snake oil. The oil that I am speaking of is real estate and mortgages. In particular Alt-A and subprime loans.
But there is another close associate on Barrack Obama’s campaign that has flown below the media “moral character” radar… someone who makes Johnson look like an amateur.
Of course I am speaking of Penny Pritzker, billionaire (net worth $2.8 Billion US and ranked 135th on the Forbes List of Richest Americans) hotel heiress (Hyatt) and president of the Pritzker Realty Group. Also notably former president of the failed Superior Bank in Chicago. Currently she is the national finance chairwoman of Barack Obama’s presidential campaign.
Let’s take a look at the Bank that Pritzker was connected to. She knew exactly what she was doing and what the bank’s loans were doing to the people of her community and of our country:
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
Superior Bank suffered as a result of its former high-risk business strategy, which was focused on the generation of significant volumes of subprime mortgage and automobile loans for securitization and sale in the secondary market. OTS found that the bank also suffered from poor lending practices, improper record keeping and accounting, and ineffective board and management supervision.
Penny Pritzker and Superior Bank - Is she the innovator who founded the predatory subprime business model in 1993?
A quick walk down the Google memory lane shows that at minimum she was one of the pioneers of the model that has blown sky high now. Let’s take a look at how Pritzker and Bear Stearns started the subprime wave that has now turned into a foreclosure tsunami that is engulfing or Nation and now the world:
The purchase of Superior Bank:
The thrift had come into the Pritzker fold in 1988, when Jay Pritzker and Alvin Dworman-old social friends and partners in several past business ventures-put up $42.5 million for the insolvent Lyons Savings Bank, as it was then called, in return for an estimated $645 million in federal tax credits and loan guarantees. (By one estimate, it would have cost the government $200 million less simply to shut Lyons down.)
Although Dworman had agreed to run the renamed Superior Bank out of his New York office, Jay deputized his niece Penny-a Harvard educated go-getter who had just earned her law degree and M.B.A. from Stanford-to help keep tabs on the investment. She served as chairman of Superior from 1989 to 1994, long enough for the bank to regain its financial health and embark on an aggressive new strategy, making high-interest home andauto loans to people with bad credit. For a time, that strategy appeared to work like a charm, yielding big profits-and large dividends for the Pritzkers and Dworman.
Chicago Magazine - Tremors in the Empire
The institution’s failure is “a tale of gross mismanagement,” says George Kaufman, a finance professor at Loyola University Chicago. “[Superior] was engaged in relatively unethical practices, fancy-footwork accounting, playing it very close to the edge.” Kaufman says many share in the blame for the mess-the bank’s managers, directors, and auditors, as well as banking regulators-but he also wonders how the Pritzkers, as co-owners, could have allowed it to happen. “One of the great mysteries to me is what the Pritzkers were up to, why they took these chances,” he says. “It makes no sense given their wealth and visibility.”
Maybe having the regulators in their back pocket had something to do with it? The tax giveaways to the Pritzkers in setting up the bank was your first sign. But “boring” financial stuff like this never makes the front page.
“Superior was effectively facilitating very sleazy lending,” said Bert Ely, a Washington, D.C., banking consultant who testified before Congress on the Superior failure.
Superior, co-owned by Pritzker family trusts, began focusing on subprime loans in 1993, according to the FDIC Inspector General’s report. At the time, Pritzker was the board’s chair. She left the board in 1994 and continued as a director of the bank’s holding company. In 2002, the Pritzkers agreed to pay, through trusts, $460 million in a settlement with the government relieving them of liability.
“I regret that Superior Bank failed,” Pritzker told USA TODAY. “My family voluntarily agreed to pay the FDIC $460 million … without litigation or any allegation by federal regulators of wrongdoing. I am proud of how my family responded to this situation.”
As I detailed before it is unlikely that Pritzker regrets anything:
The FDIC also agreed to pay the Pritzkers 25 percent of any claim won in a lawsuit against Ernst & Young. Since the FDIC is now suing for $548 million, the Pritzker share could be $137 million. On top of that, the agreement stated that the Pritzkers get half of any civil penalties from such a lawsuit (after certain agency expenses). The FDIC is asking for triple damages, or $1.64 billion; the Pritzker share could be over $800 million.
Even taking into account the “record” settlement they made with the FDIC, the Pritzkers could make more than $700 million in additional profit for running a financial institution into the ground. They had already profited handsomely, sharing in the more than $200 million in dividends to the owners in the ’90s.
The Pritzker family controlled half the board seats of the bank’s holding company, which benefited from all that dividend income, and the Pritzker Organization’s chief financial officer, Glen Miller, chaired the bank’s audit committee. Penny stepped down as the bank’s chairman in 1994, but remained as director of its holding company. Penny and the rest of the Pritzker family who were involved were responsible, no doubt about it. “We didn’t know” or “Blame the auditors” as a story just does not fly.
The FDIC:
Using “liberal interpretations of accounting principles” Superior was able to “report impressive net income figures that masked the net operating losses the institution was actually experiencing.”
Sounds familiar! Looks like these methods were adopted by many other banks subsequently (Countrywide, WaMu, Wachovia, we are thinking of you).
Chicago Magazine:
Those phony “profits,” by the way, allowed Coast-to-Coast Financial Corporation, the holding company owned jointly by the Pritzkers and Dworman, to collect more than $200 million in dividends from 1993 to 1999-money the bank desperately could have used as it tottered toward insolvency.
Pritzkers Response:
Pritzker’s attorney Kevin Poorman and Obama’s campaign spokesman emphasized that not all “subprime lending” is the “predatory” kind that Obama and White House rival Hillary Clinton rail against. The kind of subprime lending Superior was doing in 2001 was not predatory, Poorman said.
Well Mr. Poorman, the FDIC and the OTS seem to disagree with you sir. The bank failed. Your words are empty and do nothing to curb the facts or take the spot light off of your client, Penny Pritzker.
When is the media going to give Obama the media bashing he deserves for his contradictory speeches and hollow words? How can you bash predatory lenders for snookering Americans, when your campaign finance chairwoman was involved in snookering the very borrowers in your own community?
I am surely not a rocket scientist, but to me, this seems to be a pretty clear connection of culpability.
Mr. Obama, Penny Pritzker was as involved in predatory lending as you can get, and it’s time to address that what you have been sweeping under the campaign “money” rug.
Money and billionaires seem to put blinders on our presidential candidates. It’s time to help Obama take them off, and place a media spot light on Pritzker and the truth!
Penny Pritzker and the Superior Bank Scandal Reads:
FDIC Failed Bank Information - Superior Bank
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
OTS Announces Resolution of Charges Against Auditor of Closed Superior Bank FSB
Ernest & Young Order from the OTS - PDF
Ernst & Young LLP Stipulation and Consent to Issuance of Consent Order - PDF
Ernst & Young to Pay U.S. Over Bank Collapse in ‘01 - NY Times
Dennis Berstein:“Obama’s Sub-Prime Conflict”
Earl Ofari Hutchinson:“If Obama’s For Real on the Sub-Prime Crisis, He’ll Dump His Campaign Finance Chair”
Bob Feldman:“Obama Campaign’s Pritzker/Superior Bank S&L Scandal Link?”
Flashpoints Radio:“An investigative report into Penny Pritzker”
Moe Bedard - Is Obama for the People or the Banks?
Thomas Jefferson was the third President of the United States (1801–1809), the principal author of the Declaration of Independence :
BANK (NATIONAL) (THREAT TO LIBERTY)
If the American People ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the bankers and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.
We are completely saddled and bridled, and the bank is so firmly mounted on us that we must go where they ill guide.
The dominion which the banking institutions have obtained over the minds of our citizens…must be broken, or it will break us.
(Letter to James Monroe, January 1, 1815).
Meanwhile almost 200 years later………..
FDIC chairman, Sheila Bair is pushing for “more proactive intervention” is needed to prevent more home foreclosures.
Data show there could be a second wave of the more traditional credit stress you see in an economic slowdown,” Bair said. “The slowdown we’ve seen in the U.S. economy since late last year appears to be directly linked to the housing crisis and the self-reinforcing cycle of defaults and foreclosures, putting more downward pressure on the housing market and leading to yet more defaults and foreclosures.”
What she is speaking of is the trickle down affect that the mortgage and housing crisis is having in all other credit markets. The current credit markets that are being affected are construction and development lending as well as for commercial and consumer debt.
More from Bair:
Bair called for using low-cost government loans to help borrowers pay down unaffordable mortgages, a plan she put forward last month as a way to help about 1 million homeowners.
“Over the past year, federal and state governments, and consumer groups have worked with some success to encourage the industry to modify loans,” Bair said. “But it’s just not happening fast enough. Given the scale of the problem, this cannot go on loan-by-loan as it has.”
We can talk about loan modifications all day and yes, lenders and servicers are assisting the lucky homeowners who make it through the maze of phone and employee hell.
But, the simple issue that is not being addressed is man power. They do not have the capacity and employees that are needed to handle these loan workouts.
Plain and simple. MAKE them hire or outsource staffing to clean up their mess. This is a travesty that we sit and let them operate their loss mitigation departments in such a shoddy and unprofessional manner. To be frank with you all, they all are operating at half ass capacity. All to squeeze fees from the consumer and reduce costs from their bottom line.
My guesstimate would be that they are operating their loss mitigation departments at 25% capacity of where they really should be. Lenders were the ones that had underwritten these loans. Not the American homeowner, but the banks. They sure had the staff and man power to originate all the subprime, toxic loans. But when it comes to cleaning up their massive toxic, subprime spill, they run for the hills and close the doors to their glass houses paid in full by blood money. All the while they are made filthy rich as they cash in their massive stock portfolios.
Meanwhile the rest of America suffers silently in their homes.
We must demand that mortgage servicers hire the proper amount of employees they need to handle their delinquencies and defaults in a timely matter and to offer meaningful and long term loan modifications to eligible borrowers.
The facts are that the consumer, the American Citizen and homeowners drive the majority of our economy. We are being severely hurt in all areas of our pocket books and if it continues, we may see anarchy in the streets.
Not a day goes by with out an increase in the food we eat, gas for our cars and the services we need to live. We are slowly being nickeled and dimed to death every where we go. Gassed to death in our cars. Milked to death in our super markets and now we are being led to our foreclosure deaths in what (our homes) was SOLD to us as the American Dream.
All this suffering we are facing is to help clean up a mess that was created by corporate America. By Wall Street and by our Governments lack of regulation.
They live in glass houses as we suffer in shattered homes we don’t own and never have.
The mighty Bush Administration bails out their buddies at Bear Stearn’s to the tune of billions of dollars as the consumer gets kicked out of their house.
So here we sit. Suffering in our homes as the housing circus plays outside our front doors and on our televisions.
Wake up America and do something. Let your voices be heard over the senseless lip service that is being played out in the media and in Washington. We the people, can make change. Not Obama, not Clinton and certainly not McCain. But the people.
Thomas Jefferson:
I hope we shall take warning from the example and crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.
(Letter to Logan, 1816). THOMAS JEFFERSON ON DEMOCRACY 138 (S. Padover Ed. 1953).
I’m the Fran Sweet mentioned in the article. Elizabeth apparently you are a very gullible Obamaite. You believe Penny Pritzker? Wow what world do you live in!?
Please see the Chicago Sun Times article dated Aperil 28, 2008, titled: Obama’s Subprime Pal which provides proof (a letter signed by Penny) that Penny Pritzker was actively involved in the management of the privately owned Superior Bank as late as May 31, 2001.
Penny has never been accused of any wrong doing? Why do you suppose that is? Check out the unpaid loan the bank made to one of the bank’s owners.
Note: Bear Stern bought some of the Superior Bank subprime loans after the bank’s failure. In addition, less than one year after Penny Pritzker stole $42 million dollars from the depositors of Superior Bank (not to mention the loan shark interest rates charged the subprime mortgage and auto borrowers)she had the audacity to give a philanthropical gift of $30 million to the University of Chicago.
The same elitist university Barack Obama happens to have worked for as a professor of law and at which Michelle Obama worked at in a high level position. I suggest, Elizabeth that you continue your research on the Pritzker sweetheart deals with the government. How is they were able to obtain the Naval base land which closed near Orlando Florida for so little money? How is it the Ernst & Young accounting firm settlement resulting from the Superior Bank failure gave the Pritzkers 25% of the settlement and none to the stiffed depositors? Check into the relationship between Ernst & Young and other Pritzker businesses. (Smell like Enron does it?)
They agreed to pay the FDIC $460 Million over 15 years at no interest and at an escalating devaluation of the dollars owed. The Superior Bank failure will cost the FDIC over $700+ million. Does Penny mean to say she’s proud she was able to get away with stiffing the government for over $250 Million and the Superior Bank depositors of the remaining $15 Million she still owes them?
To John Jason and Elizabeth: Unfortunately for Barack Obama we are judged by the company we keep, i.e Jerimiah Wright, Penny Pritzker, Tony Rezko. Like Jerimiah Wright, Penny Pritzker is more than a casual acquaintance of the Obamas, see the Wall Street Journal article Money Maven. When candidates have political positions that are the same or very similar, wise people judge them by their character.
One of the factors in judging character is the company a person keeps.
The plan, which needs Congress approval, would permit new government loans so borrowers can repay up to 20 percent of the principal they owe on their mortgage, the report said, citing a confidential draft of the proposal.
Though borrowers would not have to make any payments on the Treasury loan for the first five years, they would still be required to pay off the mortgage and loan, the report said.
Sheila Bair says government intervention is needed—soon
As chairman of the Federal Deposit Insurance Corp.—the agency charged with protecting accounts at the nation’s 8,500 banks—Sheila Bair is knee deep in the government’s efforts to resolve America’s most harrowing financial crisis in a generation. She recently sat down with U.S. News to discuss the cancerous effect of home foreclosures and why she believes government should ramp up its efforts to prevent them. Excerpts:
Why does the foreclosure problem warrant government intervention?
I am increasingly concerned about the foreclosure rate and the potential for a downward spiral, where we have too much inventory, additional foreclosures adding to inventory, which forces home prices down, meaning fewer people can refinance—leading to more foreclosures and more downward pressure on home prices. If this downward spiral takes hold, there could be much broader ramifications for the economy as a whole. So I think we need to come to grips with the need for government intervention. It’s not politically popular. We just need to be honest with people that we have a significant problem here and that additional measures are going to have to be taken. And yes, it may cost money.
I wrote a blog post about Penny Pritzker, 2008 campaign finance chairman for Barack Obama 2 weeks ago titled, “Is Obama for the People or the Banks?” and in that post I quoted Earl Ofari Hutchinson from the Huffington Post.
I had to do more research into this and expose the truth behind the Pritzker family, their involvement in the Superior Bank failure and what it means to the American people, who need to know the truth.
The Pritzkers, one of the nation’s wealthiest families and heirs to the fortune created by the Hyatt hotels, agreed today to pay a record $460 million to the federal government to avoid being punished for the failure of Superior Bank F.S.B., the big savings and loan institution that regulators seized last summer.
Federal officials said the payment, which will be spread out over 15 years, is the largest settlement ever in the failure of a banking institution. The failure itself is one of the largest in the last decade, one that some estimate could cost the government up to $1 billion.
Unbelievable isn’t it? The failure of Superior Bank, based in Hinsdale, cost the F.D.I.C. about $700 million, making it one of the largest federally insured financial institutions to fail in a decade. Regulators said Superior had collapsed because of poor lending practices and sloppy bookkeeping.
One of the unfortunate victims who suffered as a result of the poor lending practices at the hands of the Pritzker family was Fran Sweet, who was written about in the In These Times in 2002 (emphasis and italicized comments added):
Meanwhile, roughly 1,000 depositors who had deposits above $100,000 in a Superior account—money above the FDIC-insured limit—lost about $65 million. Most of them were middle-class individuals, attracted by Superior’s high interest rates. [Ed. note: it is presence of FDIC itself that allows unsound banks to offer high interest rates like this.] In the three months just before the bank was closed, there was a surge of $9.6 million in uninsured deposits. Since about 54 percent of the uninsured money has since been repaid as Superior was sold off, the depositors have still collectively lost about $30 million. (That just happens to be the amount that the Pritzkers gave to the University of Chicago’s Pritzker School of Medicine earlier this year.)
Some of that money could have paid back Fran Sweet for the roughly $138,000 that she has still not recovered from her deposits at Superior. After retiring as a manager at a telecommunications company, Sweet was seeking a secure place to put her entire retirement savings of about $500,000. “I knew the Pritzkers were owners of the bank,” she says, “and they were a reputable name in Chicago. I had no idea that the bank was in trouble.”
She even asked a bank manager if there was anything wrong with the bank. “She said, ‘No, nothing is wrong, We’re owned by the Pritzkers,’ ” Sweet recalls. “I want it all back. I worked 23 years for a company and got this money from them as a buyout, and the Pritzker family and Dworman stole it from me.”
The political blogosphere has debated the Pritzker/Obama relationship and it is the same ole BS bashing of words, comments and rants. While I have a tendency to rant, a lot, my rants focus on the American people who are getting screwed by corporate America and not the men and women in the glass towers like Obama and the Pritzker family.
I wanted to share these words from a victim of the Pritzker family and with everyone around the world. Fran Sweet just left this comment on my blog (a victim of Superior Bank):
I’m the person mentioned in the article “Breaking the Bank” published in In These Times, 11/08/02.
As of this date I have not been repaid full the amount stolen from me by Penny Pritzker & Superior Bank. To add insult to injury approximately one year after stealing $42 million, the Pritzker family gave a $30 million dollar gift to the University of Chicago. My letters sent to Edgar D.Jannotta, Chairman of the Board of Trustees University of Chicago and other board members asking them to examine their conscience on receiving this money from the same family that stole $42 million dollars from Superior Bank depositors went unacknowledged.
I wonder if Michelle Obama was associated with the University of Chicago Board of Directors at during this time?
In addition, except for Stephanie Tubbs-Jones, letters sent to the 21 U.S House of Representatives Committee on Financial Services Subcommittee on Oversight & Investigation members regarding the Pritzker theft went unacknowledged. Included in this committee were Luis V. Gutierrez (IL) and Janice Schakowsky (IL). These people have no regard for everyday people, caring only about the billionaire class. Needless to say, I have no respect for Senator Obama who has aligned himself the likes of these people.
Could Senator Obama actually be considering Ms. Pritzker for a position on his administration?
If we are to use a person’s judgment as a voting criterion, as Senator Obama suggests over and over again, then the best thing would be a vote against a man with such poor judgment, i.e. Barack Obama. He was in Chicago at the time of the Superior Bank failure & has full knowledge of what went on and the cause of the collapse.
Here is an interview with Fran Sweet and Dennis Bernstein of the Pacifica radio network conducted yesterday in which Fran shared her experience in the original subprime mortgage debacle and expressed her thoughts on Barack Obama and Penny Pritzker.
It amazes me that the media has been virtually silent about the Penny Pritzker and her family’s involvement in the banks failure and her new position with the Obama campaign as his finance chair. Especially in light of the mortgage and housing melt down that is blamed on the same issues that caused the failure of the Pritzkers’ Superior Bank.
Regulators say Superior was badly managed and insolvent when they closed in July 2001. The bank specialized in loans to people with poor credit histories, a practice called subprime lending. Sound familiar?
Here we are, 7 years later and if you truly think about it, Superior Bank was the leader and pioneer of reckless lending and poor accounting in the lending industry. Maybe Aaron Krowne should place this bank at #1 on his infamous implosion list of failed and imploded lenders which now is at 242.
On July 27, 2001, the Office of Thrift Supervision officially closed the banks doors and issued this pess release. These words are straight from the OTS:
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
Superior Bank suffered as a result of its former high-risk business strategy, which was focused on the generation of significant volumes of subprime mortgage and automobile loans for securitization and sale in the secondary market. OTS found that the bank also suffered from poor lending practices, improper record keeping and accounting, and ineffective board and management supervision.
Superior became critically undercapitalized largely due to incorrect accounting treatment and aggressive assumptions for valuing residual assets. The bank also experienced significant losses during 2000 from its automobile lending program.
OTS has determined that Superior Bank is insolvent, having incurred losses that have depleted all or substantially all of its capital. OTS also determined that Superior Bank was no longer able to transact business in a safe and sound manner.
OTS notified the bank of its serious concerns in July 2000.
The bank was purchased by two families in 1988 — the Pritzker family of Chicago, owner of Hyatt Hotels and other interests, and the Dworman family of New York, with interests in real estate and financial services activities — and was operated through a complex network of holding companies.
In light of these findings, OTS determined that closure and the appointment of FDIC as receiver were necessary to protect the interests of the bank’s insured depositors.
As of March 31, 2001, the failed bank had total assets of $1.9 billion and total deposits of $1.5 billion. FDIC insures depositors’ accounts up to the statutory limit of $100,000.
Superior is the only bank that OTS has closed in 2001, and only the fourth OTS-regulated institution closed in the past five years.
The FDIC has established a toll free telephone number for customers of Superior. That number is 1-800-331-6306, and will be available until midnight tonight and then from 7 a.m. to 7 p.m. daily thereafter.
And guess who bought the servicing portfolio rights of the failed bank? From the FDIC:
The assets were sold to EMC Mortgage Corporation, a wholly owned subsidiary of Bear Stearns & Co., Inc.. The FDIC recovered $517 million (net) from the residual interest portfolio since Superior’s failure on July 27, 2001, including $471 million in sales proceeds. The transfer of the servicing rights to EMC Mortgage Corporation is expected to be completed by the end of June.
So the glorious Federal Reserve bails out Bear Stearns, TO THE TUNE OF $30 BILLION and Bear Stearns was involved in buying all the toxic crap from Superior Bank in 2001? Holy smokes Batman! What the hell is going on here? I am sure the guys at Bear packaged and sold that stuff fast. Rinse and repeat. They now have found the new business model that they will duplicate over and over to where we sit today folks.
Pritzker is the national finance chair of Obama’s presidential campaign. She’s from one of America’s richest families, the founders of the Hyatt hotel chain, and is herself the 135th richest person in America.
She also has an ugly history as the former chair of Superior Bank in Illinois, which (1) was created thanks to a giant S&L bailout by the government; (2) then helped invent the securitization of subprime mortgages; and (3) then collapsed in 2001 thanks to massive financial chicanery.
Interestingly, she lives in a fancy Chicago neighborhood just a short stroll away from Austan Goolsbee, a University of Chicago professor who’s one of Obama’s main economic advisors. It’s really quite wonderful how Goolsbee can maintain his deep admiration for the Free Market while living a few blocks away from billionaires who use massive government power to create and subsidize their businesses. (Both Pritzker and Goolsbee are, of course, graduates of Stutts University.)
I have been wondering why the Clinton camp has been silent on this matter and here is a theory on why:
One reason we don’t hear the Clinton campaign raising this as an issue is because Penny’s brother has apparently been playing a spokes-person role in Hillary’s campaign. Reminds me of Enron buying off both Republicans and Democrats, along with accounting firms, the media, law firms, regulators, ….
Interesting reads on the Pritzkers, the Superior Bank failure.
FDIC Failed Bank Information - Superior Bank
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
OTS Announces Resolution of Charges Against Auditor of Closed Superior Bank FSB
The Consent Order requires that Ernst & Young pay $85,000,000 to the Federal Deposit Insurance Corporation (FDIC) as receiver for Superior Bank. Ernst & Young agreed to issuance of the Consent Order without admitting or denying that its conduct in auditing Superior Bank did not comply with any professional accounting standards.
Ernest & Young Order from the OTS - PDF
Ernst & Young LLP Stipulation and Consent to Issuance of Consent Order - PDF
Ernst & Young to Pay U.S. Over Bank Collapse in ‘01 - NY Times
Dennis Berstein:“Obama’s Sub-Prime Conflict”
Earl Ofari Hutchinson:“If Obama’s For Real on the Sub-Prime Crisis, He’ll Dump His Campaign Finance Chair”
Bob Feldman:“Obama Campaign’s Pritzker/Superior Bank S&L Scandal Link?”
Flashpoints Radio:“An investigative report into Penny Pritzker”
It is truly a sign of unusual economic times when a group of high tech leaders asks a bank regulator of all people to speak to them.
But bank regulation – or perhaps I should say weaknesses and holes in our bank regulatory structure — lie at the heart of our current housing predicament. California has been hit particularly hard and we’ve been working closely with Governor Schwarzenegger on foreclosure prevention in California. Read the rest of this entry »
WASHINGTON — The pace of loan modifications on adjustable subprime mortgages is lagging, which could prompt regulatory action on the mortgage industry, U.S. Federal Deposit Insurance Corp. Chairman Sheila Bair warned Thursday.
“Unfortunately, at this point, the available information seems to show that foreclosures continue at an unacceptably high level while true loan modifications are lagging,” Bair said in prepared testimony to the Senate Banking. “It is important that servicers demonstrate and document real progress soon or they invite regulatory and legislative action to supplement the industry’s actions.”
Citing an increase of more than 60 percent in foreclosures during the first three quarters of 2007 from a year earlier, Bair said mortgage servicers need to act more quickly to prevent a bigger wave of defaults over the next two years.
“This is deadly serious,” Sheila Bair said in a speech Downtown. “Foreclosures are too high in Pittsburgh and around the country.”
The FDIC chairman seems to speaking out more and more in regards to the efforts of lenders and servicers to perform loan workouts and loan modifications. Bair spoke at a downtown Pittsburg, Pa. to more than 100 community-development and mortgage officials. The event was sponsored by the Pittsburgh Community Reinvestment Group, or PCRG, and First Commonwealth Bank, Indiana, Pa.
The federal government will “step up the pressure” on the lending industry to work out America’s mortgage mess so fewer people lose their homes, the chairman of the Federal Deposit Insurance Corp. said Thursday.
The FDIC chairman said mortgage lenders should modify unaffordable, subprime home-loan rates or loan amounts if borrowers are “reasonably current” on their mortgage payments.
“It’s always better for everyone to modify the loan than to foreclose,” Bair said. “It makes economic sense.”
Yes it does, doesn’t it?
But Sheila Bair needs to understand that she can talk about this all day and it will not help too much unless actions is taken Read the rest of this entry »
Improving Foreclosure Prevention and Enhancing Enforcement before the Financial Services Committee; U.S. House Of Representatives; 2128 Rayburn House Office Building
December 6, 2007
Conclusion of Statement
Poor underwriting and abuses in the subprime mortgage market are having a significant negative impact on the housing markets and the U.S. economy. In the coming months, large numbers of subprime adjustable rate mortgages will reset to higher interest rates and borrowers will generally be facing default and possible foreclosure.
The FDIC is advocating a systematic approach to loan restructuring that will create long-term, sustainable solutions that enable borrowers to stay in their homes and provide a better financial result for investors than foreclosure. By restructuring subprime hybrid ARMs into long-term, sustainable loans at the starter rate for borrowers occupying their homes, servicers can proactively address a wave of likely defaults and foreclosures that will harm individuals and communities and instead provide for long-term, sustainable results. A systematic approach to restructuring for these borrowers also will free up servicer resources to work with troubled borrowers who will require more individualized solutions.
Thank you for the opportunity to testify. I would be happy to answer any questions the Committee might have. Read the rest of this entry »