RBS bankers joked about destroying the US housing market By Rob Davies


RBS bankers joked about destroying the US housing market
By Editor August 16, 2018
http://www.theeventchronicle.com/finanace/rbs-bankers-joked-about-destroying-the-us-housing-market/


A boarded up building in Cleveland, Ohio, in January 2008. In the build up to the crisis mortgage lenders were incentivised to make as many loans as possible. Photograph: Timothy A. Clary/AFP/Getty Images
Transcripts of pre-financial crisis conversations show senior bankers’ disregard for customers

By Rob Davies

RBS bankers joked about destroying the US housing market after making millions by trading loans that staff described as “total fucking garbage”, according to transcripts released as part of a $4.9bn (£3.8bn) settlement with US prosecutors.

Details of internal conversations at the bank emerged just weeks before the 10-year anniversary of the financial crisis, which saw RBS rescued with a £45bn bailout from the UK government.

The US Department of Justice (DoJ) criticised RBS over its trade in residential mortgage backed securities (RMBS) – financial instruments underwritten by risky home loans that are cited as pivotal in the global banking crash.

It said the bank made “false and misleading representations” to investors in order to sell more of the RMBS, which are forecast to result in losses of $55bn to investors.

Transcripts published alongside the settlement reveal the attitude among senior bankers at RBS towards some of the products they sold.

The bank’s chief credit officer in the US referred to selling investors products backed by “total fucking garbage” loans with “fraud [that]was so rampant … [and]all random”.

He added that “the loans are all disguised to, you know, look okay kind of … in a data file.”

The DoJ said senior RBS executives “showed little regard for their misconduct and, internally, made light of it”.

In one exchange, as the extent of the contagion in the banking industry was becoming clear, RBS’ head trader received a call from a friend who said: “[I’m] sure your parents never imagine[d]they’d raise a son who [would]destroy the housing market in the richest nation on the planet.”

He responded: “I take exception to the word ‘destroy.’ I am more comfortable with ‘severely damage.’”

Another senior banker explained to a colleague that risky loans were the result of a broken mortgage industry that meant lenders were “raking in the money” and were incentivised to make as many loans as possible.

Employees who might raise the alarm about the riskiness of such lending “don’t give a shit because they’re not getting paid”, he said.

The bank made “hundreds of millions of dollars” from selling RMBS, the DoJ said, while disguising the risk they posed to investors, which included a group of nuns who lost 96% of their investment.

By October 2007, as signs of stress began to show in the banking system, RBS’ chief credit officer wrote to colleagues expressing his true feelings about the burgeoning volume of subprime loans in the housing market.

He said loans were being pushed by “every possible … style of scumbag”, adding that it was “like quasi-organised crime”.

“Nobody seems to care,” he added.
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The DoJ criticised RBS’ failure to do due diligence on the loans it was packaging, saying the bank feared it would lose out to rivals if it performed stricter tests.

One analyst at the lender referred to the bank’s due diligence procedures as “just a bunch of bullshit”, according to the transcripts.

When the bank became concerned about the poor quality of loans and started imposing tighter due diligence, one senior banker complained, saying: “Oh, God. Does anyone want to make money around here any more?”

RBS expected to make $20m from one deal that involved trading particularly risky loans, but faced resistance from the bank’s chief credit officer.

A senior executive responded to the concerns by telling the bank’s head trader: “Please don’t fuckin’ blow this one. We need every dollar we can get our hands on.”

Internal conversations between bankers also offer some insight into their growing realisation of the poor quality of the loans the bank owned and sold.

In September 2007, one trader referred to an appraisal of loans as giving “pretty shitty results”.

The transcripts were released by the DoJ as it confirmed the details of the settlement with the bank over its trading in RMBS.

RBS said: “Under the terms of the settlement, RBS disputes the allegations but will not set out a legal defence, while the settlement does not constitute a judicial finding.”

Certainty over the scale of the settlement will allow the bank to pay its first dividend in a decade this year.

The dividend is worth £240m and the Treasury will receive £149m as RBS is still 62%-owned by the government.

Ross McEwan, RBS chief executive, said: “This settlement dates back to the period between 2005 and 2007. There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today.”

He added that the bank could now “focus our energy on serving our customers better”.

But league tables published by the Competition and Markets Authority on Wednesday placed RBS joint bottom for customer service, with fewer than half of customers saying they would recommend the bank to a friend.

RBS will have to publish the results in branches, on its website and mobile app from today.

This article (RBS bankers joked about destroying the US housing market) was originally published on The Guardian and syndicated by The Event Chronicle.

Georgia: Disbarred Lawyer Richard Merritt Jailed on Theft, Elder Abuse Charges



Georgia: Disbarred Lawyer Richard Merritt Jailed on Theft, Elder Abuse Charges
Attorney Richard Merritt was disbarred Monday for pocketing a client’s $75,000 settlement and jailed Wednesday on multiple felonies.

Georgia: Disbarred Lawyer Richard Merritt Jailed on Theft, Elder Abuse Charges
http://www.barcomplaint.com/attorney-theft/georgia-disbarred-lawyer-richard-merritt-jailed-on-theft-elder-abuse-charges/

The problems of Richard Merritt have come to a head with his arrest. This has been long coming has his behavior has been in question for several years.


Richard Vinson Merritt

Former Smyrna attorney Richard V. Merritt, who was disbarred Monday after admitting to settling a client’s suit for $75,000 and then pocketing the money, woke up in the Cobb County Jail Thursday after being arrested on separate felony elder abuse, theft, exploitation and check fraud charges.

The spokesperson for the Cobb County Sheriff’s Office said he had no further information on the charges, which were apparently filed by the Smyrna Police Department. The booking report includes a notation that Merritt is to be held for the Fayette County Sheriff’s Office, where a press liaison said they received a bench warrant for “indirect criminal attempt.”

He provided no further information, and there was no immediate response from Smyrna police.

On Friday, Cobb County District Attorney Vic Reynolds said there was little he could offer concerning Merritt’s case so far.

“We have yet to receive the complete investigative file from the Cobb Sheriff’s Department,” said Reynolds via email. “When we do, our White Collar Unit will begin the process of determining what charges we will proceed to the grand jury with. In addition, our Investigators will begin reviewing the file upon receipt to see if there are any additional victims or charges which need to be pursued.”

Merritt remained in jail on Friday afternoon.

Merritt is the subject of multiple civil suits in Cobb County, including one filed by a woman who claims he forged her name on a $150,000 settlement agreement and check without her knowledge. She claims Merritt never turned over any funds.

He also faces several legal malpractice and fraud lawsuits in Cobb County from clients claiming he agreed to handle their cases and then never filed them and never pursued any actions.

Merritt has represented himself in each of the lawsuits.

The attorney for a plaintiff in one case, Sapp & Moriarty partner Daniel Moriarty—interviewed before word of Merritt’s arrest was known—said he was surprised at the mild tone in the state Supreme Court’s disbarment opinion, which only said Merritt “settled a client’s personal injury matter for $75,000 but failed to promptly disburse those funds to his client or her medical providers and failed to render a full accounting of the funds to his client.”

“That’s a euphemism for stealing money,” said Moriarty. “I talked to an investigator who has seen his bank records and determined that he had stolen hundreds of thousands of dollars. It just blows my mind what he’s gotten away with.”

According the bar complaint reviewed by the Daily Report, Merritt was retained to handle a personal injury matter in December 2016 and settled it last February, cashing the forged check Feb.7. On Feb. 10, he filed a lawsuit “and continued to lead me on until late May 2017 when I learned what he had done,” the confidential complaint said.

“I have never seen a dime of the $75,000,” said Merritt’s former client.

Another civil suit filed in Cobb County State Court last year said Merritt forged a husband and wife’s signature on a settlement and check in a medical malpractice case and never told them.

Another complaint said Merritt accepted a med-mal case and continually told his client that he was investigating it. Merritt sent emails saying “All is well and we are moving forward on your case,” and “No worries I’m on it!”

Then he stopped accepting the woman’s calls, and the filing deadline passed.

In that case, Judge Maria Golick struck Merritt’s answers and ordered a damages-only trial after finding he “willfully failed to respond” to hearing notices. Golick scheduled a show-cause criminal contempt hearing, and the decision is apparently still under advisement, according to court records.

In the case Moriarty is handling, Merritt also allegedly claimed to be conducting discovery and searching for experts, even scheduling bogus depositions for his clients, only to cancel them at the last minute.

Merritt was the principal for the Smyrna-based Merritt Firm, whose offices were the subject of several dispossessory actions between 2015 and 2017, according to court records.

Last August, Merritt sued two attorneys on behalf of spine surgeon and frequent medical expert James Chappuis. At the time, Merritt said he vice president and general counsel of Chappuis’ Orthopaedic & Spine Surgery of Atlanta.

That case settled confidentially shortly after it was filed.

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