Remember the deal the president signed to save America’s small businesses from ruin during the government’s coronavirus shutdown? The one hammered out by the Senate and Secretary of the Treasury Steven Mnuchin over weeks of tense negotiation while Americans worriedly watched, hoping good news might come before a depression does? The details are out of Treasury now, and it looks like it isn’t going to work for a large number of small business owners after all.
It isn’t going to work because the Senate’s formula allows far too little money to make up for a lost month and get through the following two or more while meeting the Senate’s demands. The Senate made these demands to protect workers, but did not provide the money a lot of businesses will need to protect workers and themselves. It’s just common sense, Washington will say, to protect workers and the taxpayer in these hard times.
Then, even if there was enough money, it isn’t going to work because Mnuchin crafted loan parameters that make it untenable for nearly all small businesses should the Senate’s demands not be met, which would mean the loan doesn’t qualify for forgiveness. Treasury did this last bit to protect the banks while pushing them to make loans they aren’t otherwise making. It’s just common sense, he’ll say, because local and regional banks couldn’t make a more generous deal work — a problem Mnuchin knew was coming the entire time the Senate negotiated, of course.
Here’s how it all plays out in real life. Imagine you own a restaurant with a gross revenue of $1.2 million a year, or $100,000 a month. This business employs eight people and has gross expenses of $1 million a year, or $85,000 a month. So in a normal year for your restaurant, you get to take home $200,000, minus taxes. A 20 percent profit, by the way, puts you above and beyond a lot of America’s small businesses, which will be dealing with tighter margins than the ones below.
Your monthly expenses don’t include buying goods anymore, because the government shut you down for the pandemic, but they still include rent or interest on your mortgage, the real estate tax, building insurance, maintenance and utilities, coming to $15,000 a month in your case. Then you have, say, $30,000 a month in payroll before taxes, and none of this includes your own pay. Now you need a loan.
The Senate’s loan amount is generated by multiplying a business’s monthly payroll by 2.5. The loan is meant to cover two months and can go toward your costs and utilities, but to qualify for grant forgiveness you need to retain your entire workforce and put at least 75 percent of the loan toward them.
At 2.5 times your monthly payroll, which is $30,000, you’re looking at a $75,000 loan. If this seems less than your needs, it’s because it is. You’re already in the hole because you saw a steep decline in business in March as the pandemic spread, but you didn’t know what was coming so you kept your full staff without earning near full revenue. Now you’ve got $75,000 for the next two months, but two months of payroll, rent and utilities swings in at $90,000 — $15,000 more than the loan that already doesn’t take last month into account. The city closed your restaurant the next two months too, by the way, so you won’t be earning a dime of revenue in that time.
By June, you’ve earned no income and you’re halfway through your year. If you could get roaring again right away you might make up some of that, but you’re a restaurant and unless a cure is suddenly widely available, occupancy will be severely limited by the state and revenue won’t be what it once was. It might not be profitable to open at all, given new distancing requirements and their impact on sales.
If you don’t make the Senate’s requirements, you have to pay that loan back, and thanks to Mnuchin, you’re not going to be able to do that either. In the bill, Congress set a window of a maximum interest of 4 percent and loan repayment within 10 years. This was just a window, so it was up to Treasury to set the final costs and they put them at 1 percent interest and two years to pay the bank.
In real life, that means you’re looking at beginning your third quarter in debt, limping on into the winter, losing an entire year’s profits getting your business running again, and owing nearly half of next year’s profits to the bank, all before any other loans you had to take out to keep from bankruptcy. You might have been able to spread that pain out, but two years is too little time.
And then there’s all the dictates Nancy Pelosi put into the bill in exchange for the Democrat vote. You might support the speaker and think that paid leave and health insurance requirements on small businesses are a noble policy, but you’ve got a lot on your mind and in addition to keeping everything afloat, taking this loan means you expose yourself to a lot of business costs very quickly at the onset of what might be an economic depression. Republicans gave you a tax credit to pay for it all, which is nice, but that’s at the end of the year — if you’re broke and out of business by then, it won’t mean anything.
Additionally, as your neighbors’ restaurants go under, the cost of the goods you need have increased. It’s a disaster. There’s no chance you’re making $200,000 in profits this year. Instead, with the private loans you finally pried out of the near-frozen banks, you’re in debt and left wondering what you’re doing here. The business you’ve worked for all these years just went down in a sea of shutdowns and disease, and there are jobs that pay well without all the risk and danger of being an entrepreneur and employing people in your community.
Like most other small business owners, you never wanted to own a giant company or a big house on the hill — just earn a good living working hard. It’s a sad thing, but the reality is most Americans prefer stability and assurances to risk and exposure, even with the chance of reward. That’s what makes our entrepreneurs different and what makes them special: They take the risk, and because they do, a whole lot of the rest of us have jobs, favorite places to go, sponsors for our children’s sports teams, and all the other things that make a town our town.
The above scenario is just one, and some folks might have lower or higher costs than your restaurant did, but you’re united with them in that risk you took to make America a better place for yourselves and your neighbors. Now that might be over, ended by a foreign disease, politicians who don’t get what it takes to run a business, and a Treasury secretary who only cares about Wall Street and the banks. It’s a terrible thing to see. Let’s pray Washington wises up — and hold them accountable if they don’t.
Christopher Bedford is a senior editor at The Federalist, the vice chairman of Young Americans for Freedom, a board member at the National Journalism Center, and the author of The Art of the Donald. Follow him on Twitter.
Photo Ricky Harris/The White House/Flickr
Photo White House/D. Myles Cullen/Flickr.
In 13 months, we will defeat and send into well-deserved obscurity most of the violently anti-gun, anti-American candidates who are monopolizing the airways with whining. And good riddance.
But all of the “issues,” real or invented, that O’Rourke, Booker, Klobuchar, Castro, Harris and the rest are blathering about today will remain with us for many years. The vehemence of their attacks on America has, I believe, begun to change and divide this democratic republic permanently.
* How do we stop Planned Parenthood and find good homes for the 330,000 babies the organization murders every year?
* How do we end the “my-way-or-the-highway” attitude that has brought our government to a halt?
* How do we convince millennials that without viable borders, we will have chaos?
* How do we remind everyone who is not already a millionaire that capitalism offers a chance — the only chance in the world — to join that exclusive club?
* How, with the study of history dropped in favor of STEM studies, do we show that differences between rich and poor are part of every civilized society … and that this is a good thing?
* How do we address the basic issues that cause individuals to pick up a weapon and indiscriminately harm others?
The Use of Weapons in Society
We in the concealed carry community may be interested in all of the above issues, but we have a special concern about the use of weapons in our society.
Two banned novels with colorfully illustrated book covers: The Man Who Would be King by Rudyard Kipling and Robinson Crusoe by Daniel Defoe
Because they present history at variance with the lens of political correctness, many classic books and writers are now banned from school and public libraries. (Rick Sapp photo)
Whether we find ways to reduce violence in America or not, whether there is an “epidemic of gun violence” as the buffoon candidates screech or not, if the Socialist left wins elections, we will find our firearms options severely limited. Should the screechers come to power and dominate politics in America (as they do the mass media now), the Second Amendment will not stand.
The fact that these “leaders” do not understand the difference between a semi-automatic and a tank or between a hair clip and a semi-auto magazine won’t stop them from implementing anti-gun agendas. Neither will their anti-gun agendas, if fulfilled, put a dent in violence in America.
What’s to Be Done?
We must address two factors to make a dent in America’s “epidemic of gun violence.” First, we must strengthen our mental health community and insurance support for counseling and intervention. Second, inner-city communities with high rates of gangs and violence must recognize that violence is a cultural issue and can only be solved within the culture. The imposition of programs, outreach and activism of all sorts will fail unless communities accept the responsibility to teach their children that the “culture of violence” is unacceptable.
The concealed carry community is part of the great silent majority who live in “fly-over land” between the coasts. But we can ill afford to be silent as the Socialist left reshapes our country. In the end, the attack on guns, religious faith and fundamental American principles is an attack on us. It’s personal. America may very well be changing, but this is a culture war. And we cannot afford to lose.
About Rick Sapp
Richard “Rick” Sapp was a U.S. Army infantry platoon leader until recruited to the 66th Military Intelligence Group. There, he worked with the West German KRIPO (Criminal Police) at Czechoslovakian border stations during the Soviet invasion of 1968.
Returning to the U.S., he earned a Ph.D. in social anthropology after studies at the U.S. Air Force Academy, Catholic University of America and the University of Florida, following which he moved to Paris, France, for a year.
After four years with the U.S. Fish & Wildlife Service, he turned to journalism and freelance writing, specializing in outdoor features. His journalism experience includes newspapers and magazines. He has authored more than 50 books for a variety of international publishers.
Rick is married and lives in Florida.
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If there is enough tinkering with the voting booths, Trump may not be re-elected. That is what fears me. Last elections showed that it is not that hard for “them” to screw with the voting machines. “They” did not think that Trump would get so many votes, and “they” were very ill prepared. This time “they” know that Trump is going to get the votes, so if they cannot destroy him before elections, I feel “they” will see he don’t get elected, at any cost.
Extremely Handsome Herb • 4 hours ago
Does no $hyt ring a bell in regard to the title of the article? And yes, people are very stupid, in fact, the more stupid you are the more likely you are to get into politics, Mr. Trump excepted.
For all of the do gooders we have in this Country facts make no difference, crime is down with the exception of about 4 Cities, and no they will never understand, because they do not want to understand. If they every bother to learn what they are talking about then they will think like us, and us is who they are against, so why would they ever want to be like us?
You have to keep in mind that the best job these people will ever have is to be elected to some office. And the only better job is to run for a higher office, these people will do anything to keep their job and will set their own mother on fire for a better job. There is no lie too great, no trick too dirty, whatever they can get away with is just fine. Every other person on the planet is expendable as long as they get elected.
Why would you spend $1 Billion to get a job which pays less than $450.000.00, it does not make any sense, but take a look at Uncle Joe, his whole family has been enriched by his being elected to every office which he has ever held and he cannot even find his way home all by himself.
We had better hope things change, but I mean for the American People to actually wake up to the facts which are very simple to find, you only have to be willing to learn and that my friends is why change is so very hard!
Steve H. • 6 hours ago • edited
They won’t just stop at the 2nd amendment, that is just the beginning. When that falls we will be unarmed, then they will take the 1st then the 4th………. Not on my watch!
Frederick Davison • 7 hours ago
It isn’t the guns that they are after. It’s control! Plain and simple they want total control over the people of this great nation.
John Kaline Frederick Davison • 5 hours ago
I’ve said it several times before, but those FEMA camps were put in place for some particular purpose, and it’s never been satisfactorily explained or proved to the general public who may soon become those camp occupants. If you just look around, I believe the state and federal governments already have all power they believe they need to exercise martial law and simply collect all the firearms the FFLs were required to keep records on about who and where they are presently located. Label me paranoid, but I still believe it.s better to be prepared than not.
Juke 1751 John Kaline • 4 hours ago
NM has a large FEMA camp under the quise of holding illegal aliens.
Frederick Davison John Kaline • 5 hours ago
That’s why it’s nice that I had a boating accident and lost ALL of my firearms
GuitarsNguns • 8 hours ago
Just two years ago these same Dems were saying “nobody wants to take your guns we just want common sense gun laws”. Today they want to take our guns. We all know that this was their plan all along but now they are not hiding it and much to the chagrin of the establishment Democrats, they are saying it. We need to teach these little socialists a lesson by soundly defeating their sorry butts in the upcoming. I don’t worry much about Mr Trump getting re-elected but we all need to work to take back the House and increase our lead in the Senate where there are a half dozen RINOs we just can’t trust. If we can do this we will set the progressive movement back 20 years.
Clark Kent • 8 hours ago
HOORAY for the ‘my way or the highway’ attitude that has brought our government to a halt! ‘Be thankful we’re not getting all the government we’re paying for’ – Will Rogers.
You know, I just read the following article, and see that the “Millennials” are being brain washed. Goldman Sachs said back around 2008 “Only the rich should own houses, everyone else should be renting”. Sorry, I am still looking for the article wherein I quoted from. I will find it, I used that in a brief.
I knew that meant trouble. Even with foreclosure hell in the middle of its heyday, it still meant something. Not long after that, people being foreclosed upon, began being offered the chance to rent the house that they just lost.
Now, these third party entities popped up almost over night, and instead of the properties at foreclosure, reverting back to the lenders, these third parties now purchase at foreclosure auctions. Then they offer to rent you your house, or take you to magistrate court and have your thrown out, instead of the banks having to do that.
Funny thing, if you research most of these third parties, back far enough, the banks own them too, so still the same thing, just different names. Nevertheless, I could not help but post the article. It is obvious that “they” want us all in little apartments in and around the cities, easier to control “us”. I just had not realized that they were in the progress of brain-washing the Millennials into not even wanting to own a house.
In the gleeful times of 2005, my parents decided, like so many others, that it was time to “upgrade.” They sold our smaller home on the other side of town, which had appreciated nicely, and bought a 3700 square foot behemoth in a town with already exorbitant property taxes. My younger brother and I were thrilled to finally have a basement, our own rooms, and even a concrete basketball court in our backyard! All eight-year-old me knew was that things were going to be a whole lot more comfortable from there, and my optimistic parents seemed to think the same.
Jack Duffley | University of Illinois At Urbana-Champaign
The year is 2017, and my parents have only just now reached the equity levels in the house that they started with over a decade ago, nearly one-hundred-fifty mortgage payments later. However, after being bombarded by extremely high taxes for that entire time, they are essentially underwater on the property, but see little choice but to hang on for dear life until equity recovers just a bit more before they abandon ship. A thin retirement plan, mostly resting on the house, has forced their hand.
My parents’ story is in no way unique; millions of Americans who purchased homes before the 2008 recession have faced similar dilemmas, often worse than theirs. Many had no choice but to foreclose during the worst of it. After all, the homeownership rate has declined almost 5 points nationwide since the recession. If anything, they can be considered lucky, yet they are still stuck in the mud. Their children, on the other hand, are now at their own fork in the road: to be [a homeowner] or not to be.
And, all things considered, they are often choosing not to be. The census shows a stark dip in homeownership among those under the age of 35 of almost 10 percent, lowering significantly from its peak pre-recessionary levels of 43 percent to a dismal 34 percent. At the same time, rental vacancy rates nationwide fell from over 10 percent to less than 7 percent as more people turned to renting, millennials especially. Why is this happening?
Aside from the obvious fear of the failure that their parents faced, millennials are renting more as they define their own unique lifestyle. Millennials, in ever increasing numbers, are focusing on “living now.” They are choosing to move into urban areas in particular. As a predominantly liberal group, and with large cities tending to lean left, this is partially due to political forces. The majority, however, is due to lifestyle conveniences that come with a city: multiple options for transportation and not needing to own a car, proximity to cultural events and nightlife, and, especially with the decline of the suburbs as retail simultaneously sinks, a more positive future economic outlook. They more readily take the loss in living space for these benefits than their previous generations did.
At the same time, a growing number of millennials are facing burdensome student loan debt. Rather than come out of college with pristine back-end ratios primed for a hefty mortgage, they are handcuffed by the debt that they have amassed in their early twenties. As the Pew Research Center has noted, 37 percent of people under the age of thirty have student loan debt. They contribute to the $1.3 trillion in student debt, leverage that could presumably be used for a mortgage or some other useful credit if it were not locked up already. Millennials are trying to increase their earning power by going to school so that they have the opportunity to advance economically, but it is simultaneously holding many of them back via years of extra debt — debt that is notably not going to a physical asset.
What does this mean for real estate? For the single family home market, it spells disaster, at least in the short term. Grant Cardone, one of the premier real estate investors in the world, calls homeownership a “scam,” and emphasizes that renting over homeownership among young people is becoming more and more popular. He notes that there is a huge need for affordable rentals as millennials deviate away from single family homes. Cardone is always one to advocate renting as a more advantageous and flexible lifestyle choice, and, as it has been mentioned, millennials increasingly value the flexibility that comes with renting instead of buying a home. Many, like Cardone, now see homeownership as a solely negative ordeal.
While it may not be up to the level of a “scam,” there are significant drawbacks with owning a home. For one, it locks up a significant amount of capital, money that could be used for a number of different projects or investments. In sum, homeownership is very expensive, at least in the short term when people make their initial down payment and any potential renovations. This makes it very hard to own a home for people of all ages. Additionally, owning a home can financially lock someone to a particular location, one which they might not want to be in after a while. Finally, for those hoping for appreciation when they purchase their home, as with any investment, there is a chance that it does not pan out. A poorly timed crash can wipe out an owner’s equity in seconds just as it did to my parents and so many others.
While there are drawbacks, the Great Recession and its subsequent lifestyle shift suggest the lack of education about the benefits of owning real estate. Even my parents are constantly warning me of the dangers of homeownership; the shift is not totally driven by millennials themselves. They too are still shaken by their mistakes and the sledgehammer that was the crash. They ignore the value of building equity over the long term, the typical tax benefits that come with a primary residence, and the relative stability of the real estate market because they mistakenly overpaid for a house that, in hindsight, they cannot comfortably afford in a downturn. They just hope that I do not do the same, and rightfully so. However, what millennials should have learned from the recession is not that real estate is bad, but that they simply must be careful and reasonable with what they assume when purchasing it.
Unfortunately, the average consumer purchases on emotion. With the tremendous amounts of emotional trauma from the recession, millennials are increasingly refusing to buy a home as their parents might have desired at the same age. But what are they purchasing in its place? Many take on higher rents, consistent with the “living now” mentality. Many more use their money to buy a wealth of products online. Some are even speculating on cryptocurrency, something far more unknown than real estate, expecting to make a lot of money. Why do they do that? Because the average consumer purchases on emotion, not on something systematic. Real estate has already been proven to be a relatively safe and a potentially very powerful asset. Instead, the negatives have been, and continue to be, emphasized. This masks the positives of owning a home, or even a simple condo. Millennials in some cases are mistakenly ignoring all real estate and not just the kind of overleveraging or speculating that got their parents into trouble.
Does this spell the end to America? Will the country burst into flames as millennials move to urban areas? Of course not. It must be noted that the current trend does not own the future; millennials could very well begin to purchase homes in huge numbers, especially as prices drop over the next few years. While it is likely that this will not be the case, it is impossible for anyone but millennials themselves to determine that.
What is certain is that, in the short run, there will be pain. The single family housing market is going to suffer as millennials make lifestyle choices contrary to their parents. The market will be oversupplied with single family homes. However, millennials will still need a place to live, just like anyone else. Their increasing demand for urban locations and conveniences will push rent up in cities, as it already has in places like San Francisco and Seattle. This will open a new, and huge, opportunity for real estate investors and developers alike to profit in the cities as millennials develop their own American Dream. After all, a dream is only what a person makes of it, not what someone else defines it as.
The winning essay above was submitted to Foreclosure.com’s scholarship program.
The 2017 essay topic:
IS THE “AMERICAN DREAM” OF ONE DAY OWNING A HOME ALIVE AND WELL AMONG MILLENNIALS?
Millennials having experienced the “Great Recession,” which was the traumatic housing crisis that triggered the financial crisis a decade ago. As a result, data suggests that Millennials (those born between 1981 to 1997) have been slow to adopt homeownership. Discuss the pros and cons of homeownership for Millennials, as well as which factors could increase or decrease homeownership among the generation. Will their collective hesitation and apprehension hurt them in the long run or are Millennials simply in the process of re-defining the “American Dream?”
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.
My confidence has never been higher that the handling of money after a foreclosure sale will reveal the fraudulent nature of most “foreclosures” initiated not on behalf of the owner of the debt but in spite of the the owner(s) of the debt.
It has long been obvious to me that the money trail is separated from the paper trail practically “at birth” (origination). It is an obvious fact that the owner of the debt is always someone different than the party seeking foreclosure, the alleged servicer of the debt, the alleged trust, and the alleged trustee for a nonexistent trust. When you peek beneath the hood of this scam, you can see it for yourself.
Real case in point: BONY appears as purported trustee of a purported trust. Who did that? The lawyers, not BONY. The foreclosure is allowed and the foreclosure sale takes place. The winning “bid” for the property is $230k.
Here is where it gets real interesting. The check is sent to BONY who supposedly is acting on behalf of the trust, right. Wrong. BONY is acting on behalf of Chase and Bayview loan servicing. How do we know? Because physical possession of the check made payable to BONY was forwarded to Chase, Bayview or both of them. How do we know that? Because Chase and Bayview both endorsed the check made out to BONY depositing the check for credit in a bank account probably at Chase in the name of Bayview.
OK so we have the check made out to BONY and TWO endorsements — one by Chase and one by Bayview supposedly — and then an account number that might be a Chase account and might be a Bayview account — or, it might be some other account altogether. So the question who actually received the $230k in an account controlled by them and then, what did they do with it. I suspect that even after the check was deposited “somewhere” that money was forwarded to still other entities or even people.
The bid was $230k and the check was made payable to BONY. But the fact that it wasn’t deposited into any BONY account much less a BONY trust account corroborates what I have been saying for 12 years — that there is no bank account for the trust and the trust does not exist. If the trust existed the handling of the money would look very different OR the participants would be going to jail.
And that means NOW you have evidence that this is the case since BONY obviously refused to do anything with the check, financially, and instead just forwarded it to either Chase or Bayview or perhaps both, using copies and processing through Check 21.
What does this mean? It means that the use of the BONY name was a sham, since the trust didn’t exist, no trust account existed, no assets had ever been entrusted to BONY as trustee and when they received the check they forwarded it to the parties who were pulling the strings even if they too were neither servicers nor owners of the debt.
Even if the trust did exist and there really was a trust officer and there really was a bank account in the name of the trust, BONY failed to treat it as a trust asset.
So either BONY was directly committing breach of fiduciary duty and theft against the alleged trust and the alleged trust beneficiaries OR BONY was complying with the terms of their contract with Chase to rent the BONY name to facilitate the illusion of a trust and to have their name used in foreclosures (as long as they were protected by indemnification by Chase who would pay for any sanctions or judgments against BONY if the case went sideways for them).
That means the foreclosure judgment and sale should be vacated. A nonexistent party cannot receive a remedy, judicially or non-judicially. The assertions made on behalf of the named foreclosing party (the trust represented by BONY “As trustee”) were patently false — unless these entities come up with more fabricated paperwork showing a last minute transfer “from the trust” to Chase, Bayview or both.
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Nick Sibilla Nick Sibilla , Contributor
The Iowa Supreme Court struck a blow on Friday against the state’s civil forfeiture laws, which allow the government to permanently confiscate property without ever filing criminal charges. In a unanimous, 33-page ruling, the court strengthened the constitutional protection against self-incrimination for owners fighting civil forfeiture, revived a motion to suppress evidence, and rejected a tactic commonly used by prosecutors to prevent owners from being awarded thousands of dollars in attorney’s fees.
Iowa has been a surprising hot spot for civil forfeiture, ensnaring motorists, professional poker players, and an entrepreneur who ran a Mexican restaurant for almost four decades. The state even rewards the aggressive pursuit of forfeiture cases: Police and prosecutors can keep up to 100 percent of the proceeds from forfeited property. Little wonder then that forfeiture has become quite profitable for law enforcement. An investigation by the Des Moines Register revealed that Iowa law enforcement agencies had taken over $55 million in cash and more than 4,200 vehicles since 1985.
Spurred by these abuses, last year, Iowa legislators strengthened due process protections for innocent owners, and required a criminal conviction to forfeit property valued at under $5,000. Although Iowa’s conviction threshold is the lowest of the 15 states with a conviction requirement, in 2015, data analysis by the Institute for Justice found that only 14 percent of Iowa’s cash forfeitures topped $5,000. Friday’s ruling should further curtail civil forfeiture.
The case began when Jean Carlos Herrera was driving from New York City to Los Angeles in September 2015. While Herrera was passing through Pottawattamie County, Iowa on Interstate 80, he was pulled over by Sergeant Kevin Killpack for going four miles over the speed limit. During the stop, a drug dog alerted to the car. Without Herrera’s consent, Killpack searched the Expedition, but only found some tools, a cell phone, a hollowed-out ice cream machine, and a Pelican case that “contained drug paraphernalia and remnants of marijuana.” No other drugs were found.
Killpack cited Herrera for speeding but never charged him with a crime. Yet that didn’t stop the sergeant from seizing the car, a 1999 Ford Expedition registered to Herrera’s friend, Fernando Rodriguez, and all the equipment inside.
Less than a week after the Expedition was seized, Rodriguez hired an attorney, who promptly emailed Pottawattamie County that Rodriguez was fighting back as an “innocent owner.” Rodriguez’s attorney also noted that under Iowa law, the government must pay attorney’s fees to property owners who win their civil forfeiture cases. He also noted that “the fees are going to be greater than the vehicle value, so this might be one to let go.”
Soon after, Sergeant Killpack applied for a warrant to search possible hidden compartments within the vehicle, based on the fact that Rodriguez had hired an attorney. According to Killpack, “it does not make financial sense to spend a significant amount of money, in attorney fees, in an attempt to reclaim a vehicle worth $2,132,” which in his mind meant that “there is something much more valuable still inside the vehicle that has not been found by law enforcement in the initial search.”
A district court granted the warrant, though, as the Iowa Supreme Court noted on Friday, Killpack’s warrant application “failed to mention that Rodriguez had argued he was entitled to attorney fees from the State as an innocent owner.” On his second search, Killpack found and seized almost $45,000 in cash hidden inside a false compartment.
In October, prosecutors filed a complaint to forfeit the cash, the car, and the rest of the property taken during the traffic stop, claiming that the property was “drug proceeds” or “used in the transport of drugs.”
The two men (who were now represented by the same lawyer) filed an answer together that stated they had an interest in the seized properties and demanded their return. Herrera also invoked the Fifth Amendment and refused to completely comply with the state’s disclosure requirements.
Under state law, property owners who want to reclaim their seized property must fully disclose “the nature and extent” of their interest in the property, as well as “the date, the identity of the transferor, the circumstances of the claimant’s acquisition.” Refusing to comply can result in the property forfeited to the state. Yet those forced disclosures may reveal information that could incriminate the owner or trigger a perjury trap, which would violate the Fifth Amendment.
Writing for the majority, Justice Thomas Waterman noted that Iowa’s forfeiture laws burden owners with a “difficult choice between asserting [their] privilege against self-incrimination or foregoing [their] claim for return of the contested property.”
As Waterman recounted, Herrera omitting that information was “fatal to his claim:” The district court ruled that Herrera’s reply was not a proper answer and so he was not entitled to a forfeiture hearing.
But on appeal, the Iowa Supreme Court overturned that ruling, and held that “assertion of the Fifth Amendment privilege against self-incrimination excuses compliance” from Iowa’s disclosure requirements for civil forfeiture claims. “The court may not enforce the specific disclosure requirements…over the claimant’s Fifth Amendment objection,” Waterman ruled.
Friday’s ruling also revived Herrera’s motion to suppress evidence, which the district court had dismissed as well. Both the Iowa Supreme Court and U.S. Supreme Court have ruled that the “exclusionary rule,” which prohibits the government from using evidence that was not lawfully obtained, applies to criminal prosecutions and civil forfeiture proceedings.
In this case, Herrera claimed that the stop, search, and seizure of the car violated the Fourth Amendment and should be suppressed accordingly. Justice Waterman ruled that “the district court must first rule on motions to suppress evidence before resolving forfeiture claims,” since that ruling “determines what evidence the state can rely on during the forfeiture proceeding.”
The court’s ruling should strengthen safeguards for property owners facing civil forfeiture. According to Dean Stowers, who represented Herrera and Rodriguez, “this decision will require the state to establish the legality of the seizure” before the state can attempt “to forfeit property or to compel persons to answer questions about their property.”
A representative from the Iowa Attorney General’s Office said they were “still looking at the possible impact of the ruling” and declined to comment further.
“It appears that we followed the forfeiture rules as they existed at the time, and we argued that the claimants did not follow the rules,” said Pottawattamie County Attorney Matt Wilber. ”The District Court and Court of Appeals agreed with our position. The Iowa Supreme Court has now ordered that they are changing the rules, so we’ll all follow the new rules.”
As for Rodriguez, five months after the state filed its forfeiture complaint, prosecutors decided Rodriguez could get back his Ford Expedition. His attorney then filed to recover nearly $9,000 in attorney’s fees and expenses, which, under Iowa law, are owed to prevailing parties. But because the state dropped its forfeiture case just before a court hearing, the district court ruled that Rodriguez didn’t actually prevail because he didn’t technically win on the merits in court.
Justice Waterman rejected this argument wholesale:
“Rodriguez sought to prevent the State from taking permanent possession of his vehicle. He fulfilled his primary objective of getting his vehicle back after months of contested litigation against the State. On this record, we hold that Rodriguez is a prevailing party even though the district court did not expressly find that he was an ‘innocent owner.’”
Moreover, Waterman noted that fee awards “help level the playing field for persons contesting government seizures,” as they “incentivize attorneys to represent citizens seeking return of their property from the government.”
The Iowa Supreme Court’s ruling contrasts starkly with the U.S. Eighth Circuit Court of Appeals, which covers Iowa. In 2016, the Eighth Circuit considered the case of Carole Hinders, who ran Mrs. Lady’s, a cash-only Mexican restaurant in Arnolds Park, Iowa. Based simply on the way she deposited her cash, in spring 2013, the IRS raided Carole’s entire business checking account—almost $33,000. The IRS accused Carole of “structuring” her deposits, or deliberately keeping her deposits under $10,000 to circumvent a reporting requirement. She was never indicted.
Institute for Justice
With help from the Institute for Justice, Carole fought back. In October 2014, The New York Times ran a front-page story on her case. That prompted the IRS to announce it would “no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases.” Less than two months after the Times article was published, federal prosecutors dropped the case against Carole’s cash.
Under the federal Civil Asset Forfeiture Reform Act, property owners who “substantially prevail” in their civil forfeiture cases are entitled to interest as well as attorney’s fees and costs. Considering that she recovered her cash and even sparked a policy shift at the IRS, Carole believed she had “substantially prevailed.” Unfortunately, in 2016, the Eighth Circuit ruled that she did not, and instead held that “a voluntary change on the part of a defendant, even if it resulted in the outcome sought by the plaintiff, ‘lack[ed] the necessary judicial imprimatur’ to authorize a fee award.” With this ruling, the Eighth Circuit upheld a loophole for the government to skip out on paying hefty attorney’s fees to innocent property owners.
But with the Iowa Supreme Court’s decision, owners fighting forfeiture in state court now have an easier time to be made whole than if their exact same case were in federal court. One Des Moines-based forfeiture attorney told the Des Moines Register that the new decision should deter the government from seizing property, since prosecutors “risk not only the return of the property but a significant attorney fee as well.”
“The Iowa Supreme Court’s ruling is another potent reminder that the best way to prevent abusive seizures is to end civil forfeiture once and for all,” said Institute for Justice Senior Legislative Counsel Lee McGrath. “Iowa legislators should follow the lead of counterparts in North Carolina, New Mexico and Nebraska and replace it with criminal forfeiture.”
This post has been updated to include comment from the Pottawattamie County Attorney.
Subprime mortgages make a comeback—with a new name and soaring demand
The subprime mortgage industry vanished after the Great Recession but is now being reinvented as the nonprime market.
Carrington Mortgage is now offering mortgages to borrowers with “less-than-perfect credit.”
Demand from both borrowers and investors is exceeding expectations.
Diana Olick | @DianaOlick
Published 10:45 AM ET Thu, 12 April 2018 Updated 1:54 PM ET Thu, 12 April 2018
Subprime stages comeback as ‘non-prime’ loans Subprime stages comeback as ‘non-prime’ loans
1:41 PM ET Thu, 12 April 2018 | 01:28
They were blamed for the biggest financial disaster in a century. Subprime mortgages – home loans to borrowers with sketchy credit who put little to no skin in the game. Following the epic housing crash, they disappeared, due to strong, new regulation, and zero demand from investors who were badly burned. Barely a decade later, they’re coming back with a new name — nonprime — and, so far, some new standards.
California-based Carrington Mortgage Services, a midsized lender, just announced an expansion into the space, offering loans to borrowers, “with less-than-perfect credit.” Carrington will originate and service the loans, but it will also securitize them for sale to investors.
“We believe there is actually a market today in the secondary market for people who want to buy nonprime loans that have been properly underwritten,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings. “We’re not going back to the bad old days of ninja lending, when people with no jobs, no income, and no assets were getting loans.”
A home improvement contractor works on a house in Cambridge, Massachusetts. Here’s how much homeowners could cash out in home equity
2:32 PM ET Mon, 2 April 2018 | 01:14
All loans will not be the same
Sharga said Carrington will manually underwrite each loan, assessing the individual risks. But it will allow its borrowers to have FICO credit scores as low as 500. The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums. They can also do cash-out refinances, where borrowers tap extra equity in their homes, up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.
All loans, however, will not be the same for all borrowers. If a borrower is higher risk, a higher down payment will be required, and the interest rate will likely be higher.
“What we’re talking about is underwriting that goes back to common sense sort of practices. If you have risk, you offset risk somewhere else,” added Sharga, while touting, “We probably are going to have the widest range of products for people with challenging credit in the marketplace.”
Carrington is not alone in the space. Angel Oak began offering and securitizing nonprime mortgages two years ago and has done six nonprime securitizations so far. It recently finalized its biggest securitization yet — $329 million, comprising 905 mortgages with an average amount of about $363,000. Just more than 80 percent of the loans are nonprime.
A ‘who’s who of Wall Street’
Investors in Angel Oak’s nonprime securitizations are, “a who’s who of Wall Street,” according to company representatives, citing hedge funds and insurance companies. Angel Oak’s securitizations now total $1.3 billion in mortgage debt.
Angel Oak, along with Caliber Home Loans, have been the main players in the space, securitizing relatively few loans. That is clearly about to change in a big way, as demand is rising.
“We believe that more competition is positive for the marketplace because there is strong enough demand for the product to support multiple originators,” said Lauren Hedvat, managing director, capital markets at Angel Oak. “Additionally, the more competitors there are, the wider the footprint becomes, which should open the door for more potential borrowers.”
Big banks are also getting in the game, both investing in the securities and funding the lenders, according to Sharga.
“It’s large financial institutions. A lot of people with private capital sitting on the sidelines, who are very interested in this market and believe that as long as the risks are managed well, and companies like ours are particularly good at managing credit risk, that it’s a good investment opportunity,” he said.
As the economy improves, and rents continue to rise, more Americans are trying to become homeowners, but the scars of the Great Recession still stand in the way. One-fifth of consumers today still have very low credit scores, often disqualifying them from obtaining a mortgage in today’s tight lending market.
Relaxed lending standards
Last summer, Fannie Mae announced it would relax its lending standards for prime loans, allowing borrowers with higher debt and lower credit scores to obtain loans without additional risk overlays, such as large down payments and a year’s worth of cash reserves.
Fannie Mae raised its debt-to-income (DTI) limit from 45 percent to 50 percent. DTI is the amount of total debt a borrower can have compared to his or her income. As a result, demand from buyers with higher debt exceeded all expectations. The share of high DTI loans jumped from 6 percent in January 2017 to nearly 20 percent by the end of February 2018, according to a study by the Urban Institute.
“From January to July 2017, Fannie purchased 80,467 loans with DTI ratios between 45 and 50 percent. But from August 2017 to February 2018, Fannie purchased 181,911 loans in the same DTI bucket. This increase of more than 100,000 loans in just seven months exceeded our estimate (85,000 additional Fannie loans annually) and Fannie’s expectations.” – Urban Institute
The mortgage industry expectation was that Fannie Mae would mitigate the additional risk with other factors, like a higher necessary credit score, but that was not added. The mortgage insurers balked, since they would be on the hook for the risk, so last month Fannie Mae “recalibrated” its risk assessment criteria again.
“We got a bigger response than we thought we were going to, so we dialed back to make sure we were in the right spot where our governance kicks in to make sure we’re not taking excessive risk,” said Doug Duncan, Fannie Mae’s chief economist.
Millennials carry more debt
The outsized demand from borrowers with more debt as well as demand for nonprime mortgages in the private sector show just how many borrowers today would like to become homeowners but are frozen out of the mortgage market.
Millennials, the largest homebuying cohort today, have much higher levels of student debt than previous generations. Members of older generations who went through foreclosures during the housing crisis or other hits to their credit are still struggling with lower FICO scores.
In addition, credit tightened up dramatically. In fact, between 2009 and 2015, tighter credit accounted for just more than 6 million “missing” loans, according to research by Laurie Goodman at the Urban Institute. These are mortgages that would have been granted under more normal historical underwriting standards.
The rebirth of the nonprime market is focused on these missing mortgages. The hope is that the industry will also focus on better standards of underwriting and not take risk to the levels it once did, levels that resulted in disaster.
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.
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.
California attorney Andrew H. Wilson pleaded guilty of conspiracy to unlawfully sell unregistered securities.
The Nevada City man was one of 10 people convicted in a conspiracy to sell shares of shell companies they secretly controlled, then inflating values in a pump-and-dump scam that involved participants from New York and Colorado.
Wilson pleaded guilty Thursday in federal court in Miami. He faces a maximum statutory sentence of five years in prison and a fine of up to $250,000 or double the proceeds of the offense, according to prosecutors. He is at least the second attorney charged in the scam.
Prosecutors say the scheme ran for about seven years and involved fraudulent U.S. Securities and Exchange Commission filings listing nominee chief executive officers for shell companies.
Participants presented the CEO as the owner and listed shareholders while maintaining full control over blocks of shares. When the shares become unrestricted, or free trading, participants secretly sold them to shell buyers or got SEC approval to sell them publicly.
Wilson created fraudulent paperwork to support the scam, according to court documents.
In October, attorney James M. Schneider of Hillsboro Beach faced a parallel civil enforcement action by the SEC, accusing him and Wilson of participating in a fraud involving 22 blank-check companies “secretly bound for reverse mergers.” Blank-check companies “have no operations, making them attractive targets for those seeking reverse mergers for use in pump-and-dump schemes,” according to prosecutors.
New York stock promoter Yelena Furman and Colorado registered stock transfer agent John Ahearn are among those convicted, according to a news release from the Department of Justice.
Sentencing for Ahearn and Wilson is set for June 8 before U.S. District Judge Kathleen M. Williams in Miami. Furman’s sentencing is set for April 25 before U.S. District Judge Cecilia M. Altonaga.
You know, I try not to bitch about every little thing that pisses me off. I really do.
But every now and then, something happens, and I just have to bitch about it. Like the idiot stealing my documents on scribd.com and claiming to be the author of the documents, when there is no way in hell that person could have written that document.
Well, apparently, there are people here that want to post an article I have posted, and not give me any credit whatsoever for the post. I probably should not bitch, I was not the original author, the article came from ENENews. Still, a few hours after I posted it, with all the links to the article, and the articles within the article.
But still, all I can say is damn!
I always try to give credit to the poster, if I copy the post, and if I go to the site the poster got the article from, I try to give credit to the poster as well as the original author.
A lot of what I post, is articles by someone else, about Fukushima and radiation, so the articles are, what I consider, information that needs to be shared. I don’t condemn someone for wanting to share the news, but damn, at least mention where you get it from. We all want more traffic on our blogs.
Experts: ‘Scary’ problems on California coast — There may be “no food anywhere” along Pacific except in isolated areas — “It’s like crime scene investigation” in ocean — ‘Certainly’ Fukushima is one of stresses to sea life — Dolphins, whales more likely to be ‘bathed’ in radiation offshore (VIDEO)
4:30 in — “There‘s other issues going on, like with dolphins and sea lions… There’s all these different stresses happening and certainly Fukushima is one.”
8:30 in –” The problems we’re having in Monterey Bay, I think it’s pretty different than the sea star wasting. It is a very similar, heightened — scary, you know. Because the dolphins and sea lions, especially the dolphins, they’re moving way offshore, miles and miles and miles. So those animals are more likely to be bathed in whatever — if there is significant levels of radiation to cause that — they’re more likely to be bathed on a chronic long-term level in that stuff, because they’re out in that… So we’re getting different types of exposure between the marine mammals and starfish. I can’t say anything, because it’s not, and this is where I wish — I’m looking forward to seeing what reports we get from the scientists that are just meeting to assess this… [Sea stars are] not like the big tuna that are starting to show signals of radiation. They’re not like dolphins or whales that are transiting the ocean waters all the time to areas that are closer to Japan.”
Santa Cruz Hilltromper, Aug 13, 2014: The Summer of Crazy… Monterey Bay is a strange place these days…. WTF, Monterey Bay? It’s like we don’t even know you anymore. Why is our beloved Bay suddenly so moody?… All the bay’s food, including the whale food, is concentrated near the shore [in a] very narrow feeding corridor… there isn’t much food along the Pacific Coast anywhere [and] the whales and other animals may be here, [MBARI’s resident nutrient monitor Ken Johnson] says, “because there’s no food anywhere else.”… Del Monte Beach was green… sea lettuce, from Sand City to Monterey, folks were a little freaked out… Mike Graham, an associate professor at Moss Landing Marine Laboratories, has seen similar events, though admittedly slightly smaller… So while primary (plankton), secondary (anchovy), and tertiary (whales and such) production has been crammed into the narrow strip of nutrient-rich waters by the shoreline, there isn’t much happening farther out in the bay.
Jason Smith of Moss Landing Marine Laboratories: Domoic acid… has been present in all but one weekly sample since early spring…. This is also very weird… not sure exactly why it’s happening… “California sea lions are… demonstrating negative effects.”
Andrew DeVogelaere, Research Coordinator for the Monterey Bay National Marine Sanctuary: “Unfortunately we don’t understand the ocean well enough to be able to tell you with certainty what’s happening as it’s happening”…It’s not so much that there were more animals than normal… they were packed in close by the shoreline… action (i.e. whale sightings) was pretty slow offshore… “Strange days in the Monterey Bay right now. It’s not the normal year by any means… Lots of mysteries to solve. It’s like the CSI of the sea.”
Scientist: Massive spikes in radioactivity are being hidden from public — Radiation doses around nuclear reactors increase exponentially — It’s a major worry… very, very important — Something must be done (VIDEO)
Interview with Dr. Ian Fairlie, Radiation Biologist, Nuclear Hotseat hosted by Libbe HaLevy, Aug 19, 2014 (at 35:30 in): One of the key things I’d like to mention to your listeners is this; Up until 2012, we didn’t really know what happened with emissions from nuclear reactors. The only data that we had was annual data… we didn’t really know the time pattern — now we do. Now we know that the large majority — say two-thirds, three-
quarters — of the annual emissions from a reactor occur just once, during one spike. And that spike occurs when the reactor is opened up to take out the old fuel and to put in fresh fuel. During that time period — about a day, day-and-half — the reactors are depressurized… they open up the valves and the radioactive gases shoot out. It’s during that time that we think that the people down wind are exposed to high levels of radioactivity, i.e. high radiation doses… Instead of having even, little bits of emissions throughout the 365 days, you have one big, massive spike which happens over a day-and-a-half period. And that happens roughly speaking, once a year… That’s important — Very, very important — because it results in doses that are at least 20 times higher, maybe even as much as 100 times higher… That’s a major worry… I’ve said to a number of nuclear operators, “Why don’t you do this at night time when people are in bed? Why don’t you do it when it’s really, really windy out — and it’s not raining?” … When it’s very calm it just drifts everywhere and you get big doses — No response… These spikes have been hidden from us ever since the beginning of the nuclear power program … nobody knew about them apart from people who work in the nuclear industry and they keep really quiet about it. I’d like to say to your American listeners, this is very important. You have to go to your regulator and say, “There’s no reason why this is not occurring at US reactors. These data are from German pressurized water reactors… We know that it’s very, very likely the same thing is happening with
US reactors.” I hope that at least some of your listeners will pick this up and say, “Whoa, we’ve got to do something here.” >>Full interview available here
Dr. Donald Mosier, Scripps Research Institute’s Dept. of Immunology and city council member in Del Mar near San Onofre nuclear plant, Oct. 19, 2013 (at 27:15 in): The problem with the data is that tritium releases are episodic. They’ll have a release of tritium one day a month, but when they report that to the NRC, they’ll say this is the amount of tritium we’ve released over the year. You have 5 days of release, but you divide that by 365 days, it doesn’t look like so much tritium. But if you’re sitting right next to the plant on the day of the release, it’s quite a bit. There’s some data from Europe that says those spikes are dangerous. There’s no data in the US that you can interpret. >> Watch the community symposium here
Gov’t Expert: Fukushima hot particles can’t be dissolved, even with hot nitric acid! — Huge amounts of fallout are still bound to organic material… “we have very little knowledge about this” — “Reaction is irreversible” (PHOTO)
Journal of Radioanalytical and Nuclear Chemistry, Volume 295, Issue 3, 2013 (emphasis added): […] radionuclides were emitted from the FDNPP as airborne ‘hot’ particles […] Subsequent interaction of the ‘hot’ particles with water (e.g. rainfall) dissolved and strongly fixed the radiocesium on rock and soil particles, thus changing the radiocesium into insoluble forms. […] Consequently, ‘hot spots’ were studded on the rock surface rather than being uniformly distributed. […] Leaching experiments demonstrated that radiocesium in rock, soil and river suspended sediment was fairly insoluble, showing that the adsorption [binding of particles to a surface] reaction is irreversible. The micro-scale heterogeneous distribution of radiocesium […] was due to the presence of ‘hot’ particles in aerosols. […] ‘hot’ particles in the aerosols [experienced] irreversible adsorption onto the soil particle complex […]
http://www.thenuclearproctologist.org/ The entire 200 kilometers we checked of Canadian Pacific Coast Line was devoid of all life , recovery is highly unlikely . This presentation will be followed tonight with a Q & A session at 8 pm pacific Canada time on this same site beautifulgirlbydana . Watch the live presentation Aug
Japan Professor: Outbreak of cancer is now underway in Fukushima children; Clear evidence of an epidemic — All of Japan is still being exposed to nuclear radiation — Gov’t Official: It will be ‘disastrous’ if we have to conclude there’s an actual increase in thyroid cancer from Fukushima
[At the July 16, 2014 Expert Meeting Regarding the Status of Health Management of Residents Following the Tokyo Electric Fukushima Daiichi Nuclear Power Plan Accident, held by the Ministry of the Environment]
Toshihide Tsuda, a physician and an epidemiologist at Okayama University, has just emphatically stated that in certain Fukushima municipalities there was a clear evidence of a thyroid cancer epidemic […] Calling this an “outbreak, occurring only 3.1 to 3.2 years after the accident” […] “outbreak” of thyroid cancers in Fukushima children cannot be explained by the “screening effect,” when the data is analyzed and compared with the national cancer statistics as well as within Fukushima Prefecture against municipalities with the lowest exposure dose. Critical of the commonly accepted notion that health effects do not occur below 100 mSv, Tsuda presented numerous published studies that proved otherwise. […] “This Expert Meeting has not brought up these studies so I must do it” […] Tsuda also said that the Expert Meeting should consider the fact that all age groups including pregnant women were still being exposed to radiation in Fukushima Prefecture. […] Tsuda said, “We are all being exposed to radiation in Japan” […]
[Committee] Chairman Shigenobu Nagataki, emeritus professor at Nagasaki University, a former chairman of Radiation Effects Research Foundation, and a mentor to infamousShunichi Yamashita [said] “Committee members, please do not hesitate to ask questions. Given what was just stated, it will be disastrous for this committee to have to conclude that there is an actual increase in thyroid cancer (due to the Fukushima accident).” […] if the Expert Meeting were seriously considerate of the disaster victims […] why would it be disastrous for this Expert Meeting to have a conclusion that cases of thyroid cancers might be increasing? […]
Professor Shinzo Kimura [who conducted] field investigations in Chernobyl, reported that currently there are many cases of thyroid cancer […] more than 250 km away from Chernobyl
Matsumoto City Mayor Sugenoya, who has provided medical care to children with thyroid cancer in Belarus [said] even in areas contaminated with low-level radiation with an annual radiation level below 1 mSv, residents showed a depressed immune function, hematopoietic disorders, and perinatal abnormalities [and] medical personnel are not allowed to refer to the Chernobyl accident.
Okayama University Professor Tsuda pointed out that there is no end of the number of researchers who say, “No cancer occurrence is expected from radiation exposure dose under 100 mSv,” after the Fukushima accident. Tsuda candidly said researchers should refrain from making such statements. […] As of the end of March 2014 [Nakadori, the central region of Fukushima that is 40-80 km from the Daiichi plant] had the highest detection rate [of thyroid cancer,] as much as 11 times higher than Aizu [western region of Fukushima, over 80 km from the plant]. […] thyroid cancers from municipalities other than Aizu region showed rates which were 15 to 40 times higher [than data from the National Cancer Center]. He sounded an alarm […] “It’s only been 3.1 to 3.2 years but there are so many cases observed in Fukushima. We need to take immediate countermeasures.” […] “They are still exposed to radiation. We can’t wait until the results come out. […] All of us as well as Fukushima residents are being exposed to radiation.”
During this session, the audience applauded several times when witnesses spoke.
Everyone Needs to Understand, They Don’t Plan On Doing Anything To Stop the Problem. Quit Fooling Yourselves. Way Too Much Time Has Passed, They Had the Chance to Do Something, Anything. They Just Don’t Care, and Why Should They? They Are All Ready Toast and Know It!!!
‘Increasing alarm’ at Fukushima: Trenches filled with thousands of tons of plutonium contaminated liquid leaking into ocean — ‘Biggest risk’ at plant — ‘Exceptionally difficult’ problem — ‘Constant flow’ in and out of trenches — ‘Racing to stop’ more from coming in (PHOTO)
Wall St. Journal, Aug 7, 2014 (emphasis added): [Shunichi Tanaka, chairman of the Nuclear Regulation Authority] said [Tepco] needs to get its priorities straight when it comes to work to decommission […] Fukushima Daiichi […] “The biggest risk is the trench water. Until that matter is addressed, it will be difficult to proceed with other decommissioning work,” [Tanaka] said on Wednesday at his weekly news conference. “It appears that they are getting off track,” he told reporters. Tepco has been trying to remove some 11,000 metric tons of water that contains dangerous radioactive materials such as uranium and plutonium from a trench that runs from the Fukushima Daiichi plant’s No.2 reactor building. […] “What if another tsunami hits the plant and the highly contaminated water in the trench is discharged… ?” Mr. Tanaka asked reporters.
NHK, July, 30, 2014: TEPCO initially planned to freeze radioactive wastewater that’s been flowing into underground utility tunnels [trenches] at the plant. It hoped the measure would prevent the wastewater from mixing with groundwater and flowing out to sea. But 3 months into the project, the water hasn’t frozen as planned.
Nuclear Engineering International, August 7, 2014: TEPCO has admitted that it has having problems with freezing contaminated water flowing in trenches […] The water in the trenches is […] coming into contact with nuclear material[…] because the water flows in and out of the trenches because of water pumping operations, it has proved ‘exceptionally difficult’ to freeze, TEPCO said. This was despite increasing the flow of coolant, adding ice and dry ice to the trench water […]
Kyodo, Aug. 5, 2014: Tepco is racing to stop the buildup of radioactive cooling water in the trenches. […] Tepco inserted refrigeration rods in the trenches to try to freeze the water butabandoned the effort after more than three frustrating months. […] Though [Tepco has now put] 58 tons of ice in the trenches, the utility has “yet to see” whether it will work […] The new method was introduced after an increasingly alarmed Nuclear Regulation Authority urged the company last month to take additional steps as soon as possible […]
World Nuclear News, July 24, 2014: New approaches to removing the contaminated water from trenches […] after attempts to freeze it failed. […] The trenches contain highly-contaminated water that has flowed from the main power plant buildings […] Tepco said that, despite the success of early experiments, “it has proved exceptionally difficult” to freeze the trench water. This, it said, is due to the constant flow of water into and out of the trench […]
TV: Millions of fish dead at Oregon coast — “Craziest thing I’ve ever seen” — “You can’t blame people for being alarmed” — Aquarium: “It kind of looks like the apocalypse… especially big numbers… but this is a sign that anchovies are doing good” (VIDEO)
KGW (Portland, OR), July 29, 2014: Major anchovy die-off stinks up Seaside […] Millions of anchovies have died […] [A]ccording to Seaside Aquarium spokeswoman Tiffany Boothe […] anchovy die-offs aren’t unusual, although this one did seem to have especially big numbers. […] Experts said this odd phenomenon happens about every ten years. KPTV Transcript, July 29, 2014 — Witness #1: That’s crazy isn’t it? Craziest thing I’ve ever seen. Witness #2: That is a little strange. Oregon Public Broadcasting, July 29, 2014: “It kind of looks like the apocalypse,” joked [Boothe.] Unsuspecting visitors and locals not armed with the actual cause of the event found the appearance of the fish coating the banks of the river to be a bit alarming. Several mentioned how “odd” and “creepy” it was to see so many dead anchovies for no apparent reason. One visitor said he had never seen anything like it. OPB (Blog), July 31, 2014: [It’s] a sign that the anchovy population is actually thriving […] “this is a sign that the anchovies along our coastline are doing good” [said Boothe.] Latin Post, July 29, 2014: Marine biologists indicate […] when there’s a high tide, an uncommon number of anchovies try to swim upstream, get stranded and either return to the ocean or get eaten by birds, said a report by USA Today. But, [Boothe said] the fish died this week because there wasn’t enough oxygen. Nature World News, July 29, 2014: Boothe, a representative from Seaside’s Aquarium told local media that this […] mass death is larger than many seen in the past. KGW Transcript, July 29, 2014: Is it something we really need to worry about? […] When you see it you cannot blame people for being alarmed […] It is all the talk along the coast tonight. >> Watch broadcast hereSee also: Millions of fish dead on California coast — 3 major fish kills in 2 weeks — Unidentified ‘goo’ floating nearby; Police clear out beach, call health officials to investigate (VIDEO)
Just like every other catastrophe at Fukushima, I will bet that Tepco/Japan does nothing to stop the flow. If they are going to perish, they plan to take as many of us with them as possible. Don’t plan on any other govt. to work with them. The past shows that our govts don’t care about our lives either!
TV: Nuclear waste “flowing out to sea” from underground tunnels at Fukushima — 950 Billion Bq/m³ of cesium in Unit 2 shaft next to ocean — 11,000 tons estimated in tunnels — ‘Stream’ of moving water — Gov’t regulators ‘urgently assessing’ problems, ‘sense of crisis’ needed (VIDEO)
NHK, July, 30, 2014 (emphasis added): TEPCO initially planned to freeze radioactive wastewater that’s been flowing into underground utility tunnels at the plant. It hoped the measure would prevent the wastewater from mixing with groundwater and flowing out to sea. But 3 months into the project, the water hasn’t frozen as planned. […] Utility tunnels between the No. 2 and No. 3 reactors and the sea are estimated to hold a total of 11,000 tons of radiation-contaminated wastewater.
NHK transcript, July 23, 2014: The work isn’t going as planned […] Water used to cool melted fuel […] has been reaching the soil […] and seeping into the sea. Workers want to freeze the water inside the tunnels before it can leak into the ground. […] Regulators have been skeptical [and] suggested other options such as filling the tunnels with concrete.
Asahi Shimbun, July 24, 2014: NRA instructed TEPCO to pump out contaminated water in the trenches as early as possible because water inside the underground tunnels could be leaking into the surrounding soil. […] A large volume of radioactive water […] has to be removed. […] Although the operations were scheduled to be completed at the end of May […] TEPCO said a small stream of water in the trenches has hampered the freezing operations. […] The delay in draining the radioactive water from the tunnels could slow the construction of the frozen wall […]
NHK, July 9, 2014: At Wednesday’s meeting of the Nuclear Regulation Authority [officials] decided to urgently assess a range of problems [and] discussed a delay in work to freeze wastewater in underground utility tunnels at the plant to block further inflows of water and stop contaminated water from leaking out to sea. Members urged that the effort be speeded up. Some expresseddoubt as to whether the plant’s operator has a sense of crisis.
See Tepco’s June 1, 2011 ‘Plan to prevent water leakage containing highly concentrated radioactive materials to outside environment in Fukushima Daiichi nuclear power plant’ showing a two month ‘roadmap’ for containing the leaking tunnels (appendix 19) here.
Official detects radiation spike on California beach, now at 500% normal levels — ‘Befuddled’ as to why it’s so high, claims there’s no ‘immediate’ health concern — Public’s interest in Fukushima nuclear waste rising (VIDEO)
Half Moon Bay Review, Jan. 3, 2014 at 8:21p ET: [San Mateo] County health officials first learned of the radiation levels last week, and they sent their own inspector on Dec. 28 to Pacifica […] the county inspector measured the beach to have a radiation level of about 100 micro-REM per hour [1 microsievert per hour], or about five times the normal amount. […] Although the radiation levels were clearly higher than is typical, [San Mateo County environmental health director Dean Peterson] emphasized that it was still not unsafe for humans. […] Peterson admitted he was “befuddled” as to why radiation levels were higher than normal, but he was skeptical that the Fukushima meltdown could be the cause. He noted that many innocuous items could spike the radiation levels in an area, including red-painted disposable eating utensils. […] Peterson forwarded the matter to the U.S. Environmental Protection Agency and state Department of Public Health […]
Dean Peterson, San Mateo County environmental health director: “It’s not something that we feel is an immediate public health concern […] We’re not even close to the point of saying that any of this is from Fukushima. […] I honestly think the end result of this is that it’s just higher levels of background radiation.”
The Half Moon Bay Review articleprovides details on the YouTube video that spurred local officials into action: An amateur video of a Geiger counter showing high radiation levels at a Coastside beach has drawn the attention of local, state and federal public health officials. […] the short video has galvanized public concerns that radioactive material could be landing on the local coastline from Japan as a result of the 2011 meltdown of the Fukushima Daiichi reactors. […] First posted last week on YouTube, the seven-minute video shows the meter of a Geiger counter as an off-camera man measures different spots on the beach south of Pillar Point Harbor. The gadget’s alarm begins ringing as its radiation reading ratchets up to about 150 counts per minute, or roughly five times the typical amount found in the environment. […] In a blog entry, the unidentified poster of the video noted that he has been monitoring local beaches for two years before noticing a sudden rise in radiation levels in recent days. […] In the following days other amateurs with Geiger counters began posting similar videos online. […] “We can’t comment on anybody’s media creation. We really have no way of knowing right now whether it’s valid or not,” said [state Public Health] spokeswoman Wendy Hopkins.
Pete Thomas Outdoors, Jan.6, 2014: Scientists find conjoined gray whale calves in Baja California lagoon; discovery could be a first[…] It might be the first documented case of conjoined twin gray whales. […] A database search at the Natural History Museum of Los Angeles County did not reveal published instances of conjoined gray whale twins, or what might also be referred to as Siamese gray whale twins […] Alisa Schulman-Janiger, an American Cetacean Society researcher, pointed out that the twins were underdeveloped and said that pointed to a premature birth. She also wondered about the fate of the mother. […] They give birth during the southbound journey, or in the lagoons, and nurse their calves for several weeks before migrating back to the Bering and Chukchi seas. […]
Presna Latina News Agency, Jan. 7, 2014: Fishermen of the Mexican state of Baja California Sur found a baby whale dead with two heads and two tails, which is now under guard of the Directorate General of Wildlife. According to the National Commission of Natural Protected Areas (Conanp) the finding occurred on the afternoon of Sunday […] This is a Conjoined Baby Gray Whales, because there are the two bodies, two heads and two tails, joined by the ventral region, Bermudez told the newspaper El Universal. […]
Huffington Post, Jan. 7, 2014: Conjoined ‘Siamese’ Gray Whale Twins Could Be First Ever […] Footage of the discovery was posted to YouTube where some commenters speculated as to whether the birth defect was perhaps related to Japan’s Fukushima nuclear plant disaster. […] The carcasses have […] reportedly been collected for study […]
L.A. Times, Jan. 6, 2014: The number of gray whales spotted migrating south off the Southern California coast in December was double what it was compared with the same period last year […] whale spotters in December counted 364 gray whales heading south to Baja California […] More than 20,000 gray whales migrate each year from Arctic waters in the north to the shallow lagoons and bays of Baja California. […]
NOAA Fisheries, October 17, 2012: […] scientists were recently surprised to discover that some gray whales from a critically endangered population in Asia cross the Pacific every year to winter off the coast of North America. […] The Eastern North Pacific population […] migrates along the west coast of North America to Baja California […] in 2010, researchers […] tagged a male gray whale with a satellite transmitter near Sakhalin Island and then watched, surprised, as he made his way to the coast of Oregon. The next year, a tagged female made the same journey. […] Were these two whales just a couple of rolling stones, or do gray whales commonly cross the Pacific? […] [Dave Weller, a marine mammal biologist at NOAA’s Southwest Fisheries Science Center] and his colleagues sequentially compared each of 181 photos of whales near Sakhalin Island with more than a thousand photos of whales off the coast of North America. They found ten matches. Because most of the whales that winter on the North American coast do not appear in the photo catalog, the number of matches turned up in this study is probably only a fraction of the number of gray whales that cross the Pacific. […]
Nuclear Industry’s Cover-Up, Lies And Denial: Beware of the French Nuclear Model
by Harsh Kapoor
To this day, contradictory estimations of the magnitude as well as the consequences of the Fukushima disaster continue to illustrate how an iron hand seems to tightly control information, in the ‘larger interests’, and the world’s major nuclear energy firms, pro-nuclear lobbies, Japan itself along with international authorities such as WHO, IAEA or CTBTO, seem to be engaged in the organised downplaying and retention of a precious information that citizens’ groups claim is already in their possession. Secrecy is built into the nuclear establishment’s mindset everywhere, and it prevails across the nuclear industry internationally.
Starting after WWII, in Japan itself, the Hiroshima and Nagasaki nuclear bombs victims were made invisible to the public eye and discriminated, and in the same go were their concerns regarding nuclear dangers; while the USA promoted their ‘Atoms for Peace’ programme in the war-battered country, the real push came in the seventies from Japan which went on to build 55 reactors.
Today, there seems to be grand collusion between high level technocrats (an influential nuclear lobby sits in Japan’s Ministry of Economy Trade and Industry; METI), and builders and operators of the nuclear plants (the Federation of Electricity Companies—FEPC; the Nuclear and Industrial Safety Agency—NISA; and the industrial groups that build the nuclear power plants—Toshiba, Hitachi, Mitsubishi). They fund the media to assure the public opinion that nuclear energy is perfectly safe.
The Japanese Democratic Party Government that came to power in 2009 (after a five-decade uninterrupted rule by the LDP) changed nothing. It had heavy support from Rengo, the power trade union federation whose key member unions are in the nuclear energy and electricity sectors.
Negligence, cover-up and falsification of data were routinely used to keep nuclear incidents away from public eye: in 2002, some 10 odd nuclear electricity companies were found to have been involved in such corruption or cover up of incidents dating 1970. Tepco, the owner and operator of the Fukushima plant, was one of the main accused and its officials had to resign. Between 2005 and 2009, there were over a dozen incidents in Fukushima. But the Japanese establishment imposed its preference for an invisible crisis management.
Japan and France have an interlocking nuclear connection. As far back as in the 1970s, the Japanese nuclear power utilities began shipping their spent fuel to France, to be reprocessed at Areva’s plant in La Hague (France is the principal stakeholder in Areva), and since 1999, France has been sending MOX—that is, mixed oxyde fuel—supplies to Japan. France has supported Japan’s nuclear programmes, especially building the reprocessing facility in Honshu. According to Areva, four of the 55 nuclear reactors in Japan function with MOX fuel, including one in Fukushima.
For long years, there has been a controversy over the safe use of MOX fuel in nuclear reactors. In May 2001, Greenpeace filed a case on the dangers of using MOX fuel supplied by Areva in the Fukushima reactor No 3.
However, the nuclear technocrats’ lobby is no less powerful in France than it is in Japan: in the early 1970s it imposed, without public debate, a nuclear energy economy in France that was developed at breathtaking pace in less than 15 years. Manufacture of pro-nuclear public opinion is big business particularly since it is the tax payer who pays for France’s nuclear electricity. Just this year, Areva spent 15 million euros on TV spots.
France in Damage Control over Fukushima
EVER since the Fukushima nuclear disaster struck on March 11, 2011, Tepco, the Japanese and French authorities and Areva, albeit slowly forced to admit the gravity of the situation, are doing their best to protect the nuclear energy sector from economic and political consequences. Sarkozy, the first head of state to visit Japan after the nuclear accident, took this occasion to publicly reaffirm his faith in the safety and pertinence of the nuclear option, and especially in the EPR reactors made by Areva, while the CEO of Areva who accompanied him had earlier stated publicly that ‘Fukushima was not a nuclear catastrophe’.
In sheer contradiction with these statements are the following facts: Areva evacuated its German employees in charge of the maintenance of Fukushima on the very next day of the accident ( March 12); France immediately called a Cabinet meeting to discuss strategies to protect the nuclear industry and its sales of nuclear plants to China, India, Libya, etc; the magistrate in charge for long years of a court case against the inaction and disinformation of the French authorities regarding the 1986 radioactive clouds from Chernobyl was all of a sudden evicted from handling the case; nuclear authorities have launched an information blitz, with daily press conferences for the past two weeks to counter growing public concern about the nuclear sector.
Dancing French Nuclear Can-Can will come at a Heavy Price
FRANCE signed a major contract with the Indian Government for a purchase of six EPR reactors for a nuclear plant site in Jaitapur in Maharashtra; given the extraordinarily large quantity of plutonium content needed in reactor fuel for the EPRs, they are possibly the most dangerous nuclear reactors.
India’s nukedom present the French nuclear industry as a model. There is a not so bright side that the Indians should know before they proceed to take the nuclear road with French involvement.
As elsewhere, there is an uncanny silence in France around nuclear matters. Decision-making elites are pro-nuclear, so are practically all MPs, regional or local elected bodies and all political formations from Left to Right to Centre, as well as interest groups that include mainstream media, consumers’ organisations and major national trade unions—even the communist CGT union which is a key actor in the nuclear energy plant operator EDF. This explains why citizens in France are still so ill-informed regarding health hazards.
However, as most nuclear plants in France are now old and subsequently present a higher risk of radioactive contamination for the 30,000 workers of the nuclear sector, the nuclear plant operators have massively turned towards sub-contracting the highly dangerous tasks involving repair, maintenance and modifications, thereby escaping the strict health and safety norms; today, subcontractors maintain 80 per cent of the French nuclear industry as opposed to 50 per cent in the 1970s. With privatisation, France now faces workers protesting the erosion of their rights and the increased dangers and risks to public safety when the time cycle of tasks is reduced.
Nuclear France is a water guzzling machine: state owned EDF withdraws up to 19 billion cubic metres of water per year from rivers and lakes, that is, roughly half of the fresh water drawn in the country. While the average Indian nuclear reactors are about 200 MW in size, the proposed French EPRs are 1500 MW and will consume even more water.
Additionally, there are problems with the waters used for cooling reactors, since it hotter when released back into the water sources. These problems increase in hot weather: during the heat wave that affected France in 2003, 17 nuclear power reactors had to be scaled back in operation or turned off, because of the rapid rise in rivers or lakes temperature that would have affected wild life fauna and flora. What will happen in India, where the weather conditions are much hotter?
France had nearly 200 uranium mines that are now all shut. But over 160 million tonnes of nuclear residue from the mines were disposed off and given away to the construction and building industry to be used as land leveling: there are stadiums, parking areas, roads, town-ships that have used this radioactive residue and people who live on it do not know.
Today, France imports uranium from its former African colonies, mostly Niger, and the ecological and social costs are hidden, as Areva which runs mines in Niger does not maintain epidemio-logical health records of communities in the mining regions.
Although France pretends that nuclear energy guarantees the country’s energy independence, securing continued access to these crucial resources has obvious consequences on France’s foreign policy and on its eventual military presence in Africa. Trouble has been brewing uranium mining areas in Niger. The recent kidnapping and assassination of two Areva engineers in Niger point at the fragility of this ‘independence’.
The numerous nuclear incidents and accidents that occured in France have been underplayed: in 1969, in Saint Laurent des Eaux, Loire et Cher, there was partial fusion of 50 kg of uranium, and the same accident happened again in the same plant in 1980 when 20 pounds of radioactive fuel melted. Some 400 EDF employees were sent to clean the site, but since then EDF has decided to call on the sub-contractors of such risky interven-tions. Similarly on December 27, 1999, the Blayais nuclear plant near the city of Bordeaux was struck by the storm Martin, followed by a flood; the plant was surrounded by water and cut off from the world for 13 hours, with 50 employees. 3 of the 4 reactors were considered lost.
In 2008, a uranium leak contaminated 100 workers in Tricastin: a documentary film RAS Nucleaire records inspectors being told to ignore malfunctions, employees hiding incidents for fear of sanctions, work teams feeling no longer responsible due to growing externalisation of tasks point to growing risks for collective security.
‘Small’ incidents have multiplied, with about 100 level one alerts a year, but the soft pro-nuclear propaganda makes risky industry acceptable. In India too, there is an accepted culture of post-hazard compensation rather than risk prevention. Bhopal still stares in our face.
Warnings have been addressed to the French authorities: an EDF study states that the back up generators of 19 reactors are at risk of malfunction, scientists alerted that 16 reactors are at serious risks of flooding, Paris’ police headquarters claim that there are no plans in place to protect people in case of an accident in a nuclear plant while seven sites comprising 18 reactors are within a radius of 225 km, the group Sortir du Nucleaire revealed that in 2007 EDF falsified the seismic data so as not to have to undertake expensive upgradation work, etc.
France did not solve the problem of nuclear waste storage: its waste was and is largely still sent to the former Soviet Union. A project of storage in Burne was opposed by the population.
But the La Hague Reprocessing Plant, in Normandy, is functioning: it reprocesses reactor fuel. MOX (mixed oxide fuel) is made from reprocessing spent fuel; and contains a very high degree of plutonium and this reprocessing results in massive releases by factors of several thousands compared to radioactive releases from nuclear reactors, of radioactive gases and liquids and the creation of solid waste. So-called low level wastes are discharged into the English Channel and into the air, while they often contain highly radioactive and long lived isotopes, in violation of the 1970 London Dumping Convention. Discharges from the La Hague as well as the UK Sellafield reprocessing plants resulted in contaminating beaches and seas as far as the Artic Circle. Two independent medical studies found elevated rates of leukemia among young people living around La Hague and similarly around Sellafield. The sea around La Hague has been measured 17 million times more radioactive than normal sea water. La Hague routinely releases a highly toxic radioactive gases including concentrationq of krypton-85 found at levels 90 000 times higher than in nature. Some 83 metric tons of plutonium is stored in La Hague, making it a very dangerous location.
French Anti-Nuclear Voices
WHILE France does not allow the public to make an informed opinion regarding the health and ecological costs of the nuclear energy option, small but vocal organisations campaign for transparency and alert public opinion. Among them are 700 groups that are part of the network Sortir du Nucleaire, the Observatoire du Nucleaire, the citizen’s independant nuclear lab CRIIRAD that was set in response to the Chernobyl disaster, Greenpeace France, ACDN. Working against huge odds, they face witchhunts and intimidation of activists, court cases filed against them, breaking into their offices, thefts of their computers and computer surveillance. People seem to have forgotten the 1985 the French secret service bombed and sunk the ship Rainbow warrior (belonging to Greenpeace) in distant New Zealand.
The extraordinarily high quality of public documentation generated by these groups on the dark underside of the French nuclear programme merits emulation by others internationally.
AFTER Fukushima and on the 25th anniversary of the Chernobyl disaster, the ‘business as usual’ ways of the nuclear establishment should not go unchallenged. The 1959 accord between the IAEA and WHO has to be revoked for the WHO to independently monitor and engage in public research over health and safety long term effects of Fukushima. The 1994 Convention on Nuclear Safety must be revised giving high powers to the IAEA to conduct safety checks on all functioning nuclear power reactors across the globe, till they are decommissioned.
As the tight official wraps over nuclear matters prevent credible independent information, the Indian civil society must demand a full scale independent review of the unaccountable ways of its nuclear energy sector and a moratorium on all reactor construction. India’s nuclear industry be made to come under the purview of the Central Information Commission. A parliamentary committee must call for a full hearing on safety of India’s nuclear installations, including uranium mines and radioactive waste storage and transport activities. Misleading declarations of Indian public servants in wake of the Fukushima accident should be challenged in court by citizens groups.
The author is an independent political activist who was till recently based in France. He is the founder of South Asia Citizens Web – www.sacw.net
Officials in U.S. report “very rare mutations” in Pacific sea life — “Never seen anything like this” — Photos show red crabs completely white, “shockingly bright blue… almost unnatural”, or with yellow legs — Environment “could play a role” — Also observed recently by Japan (VIDEO)
Published: July 22nd, 2014 at 11:02 am ET
Nome Nugget (pdf), July 10, 2014: EXTRAORDINARY— Crab fisherman Frank MacFarland shows a rare blue-colored red king crab that he found in his commercial crabbing pots […] According to ADF&G [Alaska Dept. of Fish & Game] biologists, the blue color is most likely a rare genetic mutation. Biologists also report rare occurrences of white red king crab.
ABC News, Jul 19, 2014: It is extremely unusual for red king crabs to be blue. Scott Kent, of the Alaska Department of Fish and Game in Nome, told the AP that blue crabs turn up “once in a blue moon.” He suspects the crab’s unusual coloring is the result of a mutation.
Anchorage Daily News, July 12, 2014 (emphasis added): Alaska The crab’s shell was a deep periwinkle, likely the result of a naturally occurring genetic mutation, Kent said. The rare discovery thrilled Norton Sound fishery managers and biologists in the Northwest Alaska city. […] Justin Noffsker [assistant plant manager at the Norton Sound Seafood Center] said he’s never seen anything like this […] In his 11 years with the Alaska Department of Fish and Game, Kent had never seen a blue red king crab either […] In September, during a pot survey in Cape Nome, Kent saw his first white red king crab, another rare coloration believed to be caused by a genetic mutation. He has also recently seen piebald crabs,spotted with irregular patches of white. Another had a red carapace but yellow legs. All the variations are considered to be the kind of “normal, random, very rare” mutations that occur within animal populations, Kent said. The environment and the crab’s diet could play a role, he said, but he doubts it. […] In January, wholesalers in Hokkaido, Japan, found [a blue-colored red king crab] in a Russian shipment.
Anchorage Daily News, July 12, 2014: a crab with a deep lavender shell [is] the likely result of a genetic mutation. It was a rare discovery, one that thrilled Norton Sound fishery managers and area biologists who said such sightings are few and far between.
KNOM, July 18, 2014: Onlookers have called it “shockingly bright blue,” “almost unnatural,” and “like that can’t possibly be real.” >> Full broadcast here
TV: 8 times more babies than usual born without brain near U.S. nuclear site; Much higher rate than anywhere else in country — “It’s scary the cause is such a mystery” — CNN: Experts speak out over failure of officials to conduct proper investigation — “The lamest excuse I’ve ever heard” (VIDEO)
Published: June 23rd, 2014 at 5:25 pm ET By ENENews
KEPR, May 14, 2014 (Emphasis Added): Serious and sometimes fatal birth defects are much more prevalent right here than anywhere else in the country. Benton, Franklin and Yakima Counties are being hit the hardest by neural tube defects, from spina bifida to anencephaly [fatal defect where large part of brain/skull is missing]. “it’s scary that the cause of this is such a mystery,” said Candelaria Murillo. […] Rate of babies being born without a brainin our part of the state is eight times the national average.
AP and other media outlets put the figure at “at least four times the national rate”. However, theYakima Herald reports: “[Officials] issued a news release Jan. 30 announcing that eight cases of anencephaly had occurred in Yakima County in 2012. Typically [they] expect only one all year.”
NBC News, June 17, 2014: Health officials, scientists and other experts gathered to discuss the cause of an alarming local spike in the disorder […] [Local residents] wanted to know exactly how long the problem had been going on, whether it could be linked to diet, occupation, geography — or the Hanford nuclear plant in nearby Richland. State officials reiterated their previous answers — no, no, no and no […] “The next step is to interview the mothers and fathers of these babies,” [Allison Ashley-Koch, an anencephaly expert at the Duke University Medical Center for Human Genetics] said. “The challenge at this point is that many of these conceptions happened four years ago. So for parents to try and remember particular eating habits, environmental exposures and such is challenging.” […] “I believe it is an ongoing problem and I believe that the environment might have something to do with it,” Don Dufault said.
Oregon Public Broadcasting, June 16, 2014: Health officials have discounted several possible causes including: pesticide exposure, nitrates in water wells, and radiation from the Hanford Nuclear Reservation.
Obstetrician Anita Showalter: “First thing I ask […] what environmental thing might have happened […] that we don’t know or understand yet?” […] She wonders if there might be chemicals present […]
CNN, June 1, 2014: Nearly two years after the state of Washington was alerted to a possible cluster of babies born with severe birth defects, experts are speaking out, criticizing the state health department for not doing enough to save babies’ lives. […] TheWashington Department of Health has steadfastly refused to interview the parents of these babies and has failed to accept offers of help from world-renowned anencephaly experts. “It really looks like they’re dragging their feet,” said Richard Finnell, a pediatric geneticist and birth defect expert at the University of Texas. He said that to find the cause of the cluster, state investigators need to speak with the parents of children with birth defects […] Butthe state has not contacted these parents. […] A team of experts […] offered help to Washington investigators back in February but hasn’t received a response. “We’re frustrated that they’re not moving more quickly to find the cause,” said Janee Gelineau-van Waes […] an associate professor of pharmacology at the Creighton University School of Medicine […] “It’s very intrusive to start knocking on doors of people who’ve had a pretty major trauma in their lives,” [state epidemiologist, Juliet VanEenwyk] said. “That’s the lamest excuse I’ve ever heard,” said Billy Petersen, reflecting the viewpoint of several families interviewed by CNN whose children have neural tube defects. “We want to talk to them,” he said. “We’d do anything to help find out why our baby died and help other families. We don’t want anyone else to go through what we’ve been through.”
Japan experts warn of more quakes off Fukushima coast — Gov’t: There’s fear ‘relatively large’ ones will occur — Recent M6.8 a “delayed tectonic reaction” to M9.0 on 3/11 — “This is just one aftershock of several to come… could occur in next 2 weeks” (VIDEO)
AFP, July 11, 2014 (emphasis added): Japan braced for more aftershocks of giant 2011 quake— Seismologists said [the M6.8] earthquake that struck near Japan’s shuttered Fukushima nuclear site early Saturday was an aftershock of the tremor that sparked 2011′s deadly tsunami, and warned of more to come. […] Seismologist Yasuhiro Yoshida of the Japan Meteorological Agency said it was a delayed tectonic reaction to the 9.0-magnitude quake which left the Fukushima nuclear power plant in a meltdown crisis […]
Inquisitr, July 12, 2014: […] experts warn that this is just one aftershock of several to come from 2011′s killer quake […] According to Japan Today, seismologists warn that the Fukushima earthquake was a delayed reaction to the monster quake from 2011. Seismologist Yasuhiro Yoshida of the Japan Meteorological Agency said, “There are fears that relatively large earthquakes will occasionally occur in the ocean area where aftershocks of the great earthquake continue […] The aftershock activity has been steadily declining on a long-term basis. But aftershocks, accompanied by tsunamis, will still occur.” Yoshida mentioned that aftershocks could occur in the next two weeks […]
IRIB, July 12, 2014: Experts warn of quake aftershocks in Japan — Experts have warned that Japan’s northeastern coast, where the Fukushima nuclear power plant lies, is prone to more aftershocks of the huge 2011 earthquake. The warning came after a quake measuring 6.8 on the Richter scale hit near the Fukushima nuclear site on Saturday morning.
Do we look and act like a bunch of bumbling idiots, or what? Three and a half years, Tepco has done nothing to fix their major fuck up @ Fukushima. Now, while they have no idea where the cores have managed to get to, and we face, geysers of radiation shooting up into the atmosphere, and Tepco still is doing nothing, and they warn of more major quakes. Tepco will still do nothing. Hell, at least Russia did what they had to do. They did not leave the schools right beside the plant open, and send kids into the schools, with actual knowledge it would kill those kids.
Please, quit allowing the excuses. Scientists and Professors in Japan has said they are being brainwashed, and the areas are not fit to live in. I hope everyone has cancelled their plans to visit the Olympics!
Japan Correspondent: It’s very scary, officials trying to brainwash public about Fukushima crisis — Professor: We’re wrapping our heads more and more around Fukushima’s legacy… human impact becoming more clear… that’s a very big and serious issue here — “Virtually no public support for nuclear power” (AUDIO)
KWMR 90.5 FM, July 14, 2014 (h/t Fukushima Response) — Umi Hagitani, interpreter, Japan correspondent for Ecological Options Network (at 9:30 in): The survivors of the nuclear power accident and supporters of children… are asking the city of Koriyama to evacuate them because of the exposure to the radiation. But the women of Fukushima, their statement demanded that the reduction of the radioactive exposure is more urgent than the current federal policies and practices in Japan, which is to force people to remain in the contaminated area… Many students of the 5th and 6th grade in elementary school, they attend something called a cancer seminar where they learn about how cancer is such a typical story for many people, they don’t have to worry about it… They’re trying to even build a junior high school and high school combined together by 2020 in Futuba County — that is the closest place to the Fukushima Daiichi. But the administration of the town invited and made a survey of the kids, and I guess kids were not told about the options that they could evacuate, they made it look like they’re interested in coming back. It seems that right now the Abe cabinet has already schemed out a lot of brainwashing and making people feel that it’s possible to decontaminate — and its making the suffering of the people invisible… I feel like that after 3 years, there are more cover-ups and silencing the survivors of this ongoing nuclear accident in Fukushima Daiichi, and it’s really well supported by the structural power hierarchy… it’s very scary to see this. The current situation is that the Ministry of Environment is putting fake radioactive monitors all over. >> Full KWMR broadcast here
ABC 90.3 FM, July 14, 2014 — Dr. Robert Jacobs, associate professor at Hiroshima City University (at 3:15 in): It’s become a much more common and regular thing you read in the newspapers and topic of discussion among people in Japan… it’s become increasingly a topic of conversation because we do here have to deal with the fact that it’s every day pouring radiation into the sea. We’re wrapping our heads more and more around the legacy of it… The human impact is unfolding in more clear view than it did at first, so that’s a very big and serious issue here… People are very, very aware of [contamination in the food supply]… People are very anxious about it… There’s virtually no public support for nuclear power, especially in the communities in which the plants are located. >> Full ABC broadcast here
NHK, July 16, 2014: An NHK survey [on] the government’s policy to allow the restarting of nuclear power plants that pass safety screening [found] 21 percent supported the policy […]
NHK, July 14, 2014: Prime Minister Shinzo Abe has suggested his cabinet’s new security policy may have influenced the outcome of a gubernatorial election in western Japan. Voters rejected the candidate recommended by Abe’s Liberal Democratic Party in the Sunday race in Shiga Prefecture. They elected an independent instead [who] campaigned on the promise of phasing out nuclear power generation in Japan.
Officials: Radioactive material released into air from Fukushima plant, areas far away being contaminated — Gov’t tracking plumes using emergency prediction system — “Large amount” of radioactive substances will soon be released (PHOTOS & VIDEO)
Kyodo News, July 14, 2014: Debris cleanup at Fukushima reactor may have contaminated rice crops [in] areas located more than 20 km from the crippled nuclear plant. Farm ministry officials said they could not deny the possibility […] A Tepco spokesman said the company does not deny the possibility that its cleanup work is to blame but added it isn’t clear whether that was the direct cause of the contamination.
NHK, July 14, 2014: Rice paddies located about 20 kilometers from the Fukushima Daiichi plant were found contaminated with radioactive cesium blown by the wind. The Fukushima Prefectural government revealed that last year’s harvested ricefrom 14 locations in the city of Minami Soma contained more than 100 becquerels of cesium per kilogram. This is beyond the government’s safety limit. […] [TEPCO] said it will increase monitoring of the spreading dust. Neither the ministry nor the utility told Minami Soma City officials the work at the plant may have contaminated the crop. City officials say they were greatly startled. They said the ministry should have explained the matter to local authorities much earlier. […] TEPCO is scheduled to conduct a large-scale debris removal work at Number One reactor. For this, it plans to disassemble covers which had been put to prevent the radioactive materials from spreading.
The Asahi Shimbun, July 14, 2014: [There’s] strong indications that earlier removal work contaminated rice paddies far from the stricken facility […] Although the utility has since suspended its clearing operations at the plant, the company plans to soon dismantle a cover installed on the No. 1 reactor building, where highly contaminated debris remains to be removed. TEPCO has not told the
public about the ministry’s findings. […] the ministry concluded that the radioactive substances had been newly released […] The ministry is pointing to Aug. 19, when […] dose rates increased at five measuring points 2.8 to 8.3 km north-northwest […] the System for Prediction of Environmental Emergency Dose Information (SPEEDI) estimated that the released particles would reach the city within three hours. […] the utility said it has yet to learn how far the released particles spread. The company said its plans to dismantle the cover on the No. 1 reactor building will be the fastest way to remove wreckage from the site. TEPCO […] acknowledged that the procedure will still lead to the release of a large amount of radioactive substances, and the spread of the substances will depend on the weather and the wind direction.
PHOTO CAPTION: “The black spots on rice harvested in Minami-Soma, Fukushima Prefecture, show radioactive substances.”
Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages
*CORRECTION: The release below previously stated that New York is receiving $613.8 million in this settlement, however, the number is $613.0 million. This correction notice was posted on Nov. 20, 2013.*
The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan – the largest settlement with a single entity in American history – to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009. As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public – including the investing public – about numerous RMBS transactions. The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country. The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.
This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability. I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”
The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines. Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors. This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis. “Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West. “The conduct JPMorgan has acknowledged – packaging risky home loans into securities, then selling them without disclosing their low quality to investors – contributed to the wreckage of the financial crisis. By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”
Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS. Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $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, and $613 million to settle claims by the State of New York.
JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual. That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight. An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations. If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.
The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.
“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group. “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”
“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner. “The impacts were staggering. JPMorgan sold securities knowing that many of the loans backing those certificates were toxic. Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result. In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry. We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.” “Today’s settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger. “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis. It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”
This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual. The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.
To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.
“The settlement announced today will provide a significant recovery for six FDIC receiverships. It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg. “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”
“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz. “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”
“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit. We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”
The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.
“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group. “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do. We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”
“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”
“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden. “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees. Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”
“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan. “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”
“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley. “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”
The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.
The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.
This Settlement Agreement (“Agreement”) is entered into between the United States
acting through the United States Department of Justice (“Department of Justice”), along with the
States of California, Delaware, Illinois, and New York and the Commonwealth of Massachusetts,
acting through their respective Attorneys General (collectively, “the States”), and Citigroup Inc.
(“Citigroup”). The United States, the States, and Citigroup are collectively referred to herein as
A. The Department of Justice conducted investigations of the packaging, marketing,
sale, structuring, arrangement, and issuance of residential mortgage-backed securities (“RMBS”)
and collateralized debt obligations (“CDOs”) by Citigroup between 2006 and 2007. Based on
those investigations, the United States believes that there is an evidentiary basis to compromise
potential legal claims by the United States against Citigroup for violations of federal laws in
connection with the packaging, marketing, sale, structuring, arrangement, and issuance of RMBS
B. The States, based on their independent investigations of the same conduct, believe
that there is an evidentiary basis to compromise potential legal claims by California, Delaware,
Illinois, Massachusetts, and New York against Citigroup for state law violations in connection
with the packaging, marketing, sale, structuring, arrangement, and issuance of RMBS and CDOs.
C. Citigroup has resolved claims filed by the Federal Deposit Insurance Corporation
as Receiver for Strategic Capital Bank, and the Federal Deposit Insurance Corporation as
Receiver for Colonial Bank (collectively, “FDIC”), alleging violations of federal and state
securities laws in connection with private-label RMBS issued, underwritten, and/or sold by
Citigroup. The terms of the resolution of those claims are memorialized in a separate agreement,
attached as Exhibit A.
D. Citigroup acknowledges the facts set out in the Statement of Facts set forth in
Annex 1, attached and hereby incorporated.
E. In consideration of the mutual promises and obligations of this Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. Payment. Citigroup shall pay a total amount of $4,500,000,000.00 to resolve pending
and potential legal claims in connection with the packaging, marketing, sale, structuring,
arrangement, and issuance of RMBS and CDOs by Citigroup (“Settlement Amount”). As set out
below, $4,000,000,000.00 of that amount will be deposited in the United States Treasury and the
remainder is paid to resolve the claims of the States and the FDIC, pursuant to the subsequent
provisions of this Paragraph 1.
A. Within fifteen business days of receiving written payment processing instructions
from the Department of Justice, Office of the Associate Attorney General, Citigroup shall pay
$4,208,250,000.00 of the Settlement Amount by electronic funds transfer to the Department of
i. $4,000,000,000.00 of the Settlement Amount, and no other amount, is a civil
monetary penalty recovered pursuant to the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. § 1833a. It will
be deposited in the General Fund of the United States Treasury.
ii. $208,250,000.00 and no other amount, is paid by Citigroup in settlement of the
claims of the FDIC identified in Recital Paragraph C, pursuant to the settlement
agreement attached hereto as Exhibit A, the terms of which are not altered or
affected by this Agreement.
B. $102,700,000.00, and no other amount, will be paid by Citigroup to the State of
California pursuant to Paragraph 6, below, and the terms of written payment instructions from
the State of California, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of California, Office of the Attorney General.
C. $7,350,000.00, and no other amount, will be paid by Citigroup to the State of
Delaware pursuant to Paragraph 7, below, and the terms of written payment instructions from the
State of Delaware, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Delaware, Office of the Attorney General.
D. $44,000,000.00, and no other amount, will be paid by Citigroup to the State of
Illinois pursuant to Paragraph 8, below, and the terms of written payment instructions from the
State of Illinois, Office of the Attorney General. Payment shall be made by electronic funds
transfer within fifteen business days of receiving written payment processing instructions from
the State of Illinois, Office of the Attorney General.
E. $45,700,000.00, and no other amount, will be paid by Citigroup to the
Commonwealth of Massachusetts pursuant to Paragraph 9, below, and the terms of written
payment instructions from the Commonwealth of Massachusetts, Office of the Attorney General.
Payment shall be made by electronic funds transfer within fifteen business days of receiving
written payment processing instructions from the Commonwealth of Massachusetts, Office of the
F. $92,000,000.00, and no other amount, will be paid by Citigroup to the State of
New York pursuant to Paragraph 10, below, and the terms of written payment instructions from
the State of New York, Office of the Attorney General. Payment shall be made by electronic
funds transfer within fifteen business days of receiving written payment processing instructions
from the State of New York, Office of the Attorney General.
2. Consumer Relief. In addition, Citigroup shall provide $2.5 billion worth of consumer
relief as set forth in Annex 2, attached and hereby incorporated as a term of this Agreement. The
value of consumer relief provided shall be calculated and enforced pursuant to the terms of
Annex 2. An independent monitor will be appointed to determine whether Citigroup has
satisfied the obligations contained in this Paragraph (such monitor to be Thomas J. Perrelli), and
any costs associated with said Monitor shall be borne by Citigroup.
3. Covered Conduct. “Covered Conduct” as used herein is defined as the creation,
pooling, structuring, arranging, formation, packaging, marketing, underwriting, sale, or issuance
prior to January 1, 2009 by Citigroup of the RMBS and CDOs identified in Annex 3, attached
and hereby incorporated. Covered Conduct includes representations, disclosures, or nondisclosures
to RMBS investors made in connection with the activities set forth above about the
underlying residential mortgage loans, where the representation or non-disclosure involves
information about or obtained during the process of originating, acquiring, securitizing,
underwriting, or servicing residential mortgage loans included in the RMBS identified in
Annex 3. Covered Conduct also includes representations, disclosures, or non-disclosures made
in connection with the activities set forth above about the CDOs identified in Annex 3, attached
and hereby incorporated. Covered Conduct does not include: (i) conduct relating to the
origination of residential mortgages, except representations or non-disclosures to investors in the
RMBS listed in Annex 3 about origination of, or about information obtained in the course of
originating, such loans; (ii) origination conduct unrelated to securitization, such as soliciting,
aiding or abetting borrower fraud; (iii) the servicing of residential mortgage loans, except
representations or non-disclosures to investors in the RMBS listed in Annex 3 about servicing, or
information obtained in the course of servicing, such loans; or (iv) representations or nondisclosures
made in connection with the trading of RMBS, except to the extent that the
representations or non-disclosures are in the offering materials for the underlying RMBS listed in
4. Cooperation. Until the date upon which all investigations and any prosecution arising
out of the Covered Conduct are concluded by the Department of Justice, whether or not they are
concluded within the term of this Agreement, Citigroup shall, subject to applicable laws or
regulations: (a) cooperate fully with the Department of Justice (including the Federal Bureau of
Investigation) and any other law enforcement agency designated by the Department of Justice
regarding matters arising out of the Covered Conduct; (b) assist the Department of Justice in any
investigation or prosecution arising out of the Covered Conduct by providing logistical and
technical support for any meeting, interview, grand jury proceeding, or any trial or other court
proceeding; (c) use its best efforts to secure the attendance and truthful statements or testimony
of any officer, director, agent, or employee of any of the entities released in Paragraph 5 at any
meeting or interview or before the grand jury or at any trial or other court proceeding regarding
matters arising out of the Covered Conduct; and (d) provide the Department of Justice, upon
request, all non-privileged information, documents, records, or other tangible evidence regarding
matters arising out of the Covered Conduct about which the Department or any designated law
enforcement agency inquires.
5. Releases by the United States. Subject to the exceptions in Paragraph 12 (“Excluded
Claims”), and conditioned upon Citigroup’s full payment of the Settlement Amount (of which
$4 billion will be paid as a civil monetary penalty pursuant to FIRREA, 12 U.S.C. § 1833a), and
Citigroup’s agreement, by executing this Agreement, to satisfy the terms in Paragraph 2
(“Consumer Relief”) and Paragraph 4 (“Cooperation”), the United States fully and finally
releases Citigroup and each of its current and former subsidiaries and affiliated entities
(collectively, the “Released Entities”), and each of their respective successors and assigns from
any civil claim the United States has against the Released Entities for the Covered Conduct
arising under FIRREA, 12 U.S.C. § l833a; the False Claims Act, 31 U.S.C. §§ 3729, et seq.; the
Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801, et seq.; the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq.; the Injunctions Against Fraud Act, 18
U.S.C. § 1345; common law theories of negligence, payment by mistake, unjust enrichment,
money had and received, breach of fiduciary duty, breach of contract, misrepresentation, deceit,
fraud, and aiding and abetting any of the foregoing; or that the Civil Division of the Department
of Justice has actual and present authority to assert and compromise pursuant to 28 C.F.R.
6. Releases by the California Attorney General. Subject to the exceptions in
Paragraph 12 (Excluded Claims), and conditioned solely upon Citigroup’s full payment of the
Settlement Amount (of which $102,700,000.00 will be paid to the Office of the California
Attorney General, in accordance with written payment instructions from the California Attorney
General, to remediate harms to the State, pursuant to California Government Code §§ 12650-
12656 and 12658, allegedly resulting from unlawful conduct of the Released Entities), the
California Attorney General fully and finally releases the Released Entities from any civil or
administrative claim for the Covered Conduct that the California Attorney General has authority
to bring, including but not limited to: California Corporate Securities Law of 1968, Cal.
Corporations Code § 25000 et seq., California Government Code §§ 12658 and 12660 and
California Government Code §§ 12650-12656, common law theories of negligence, payment by
mistake, unjust enrichment, money had and received, breach of fiduciary duty, breach of
contract, misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The
California Attorney General executes this release in her official capacity and releases only claims
that the California Attorney General has the authority to release for the Covered Conduct. The
California Attorney General agrees that no portion of the funds in this paragraph is received as a
civil penalty or fine, including, but not limited to any civil penalty or fine imposed under
California Government Code § 12651. The California Attorney General and Citigroup
acknowledge that they have been advised by their attorneys of the contents and effect of Section
1542 of the California Civil Code (“Section 1542”) and hereby expressly waive with respect to
this Agreement any and all provisions, rights, and benefits conferred by Section 1542.
7. Releases by the State of Delaware. Subject to the exceptions in Paragraph 12
(Excluded Claims), and conditioned solely upon Citigroup’s full payment of the Settlement
Amount (of which $7,350,000.00 will be paid to the State of Delaware, in accordance with
written payment instructions from the State of Delaware, Office of the Attorney General, to
remediate harms to the State allegedly resulting from unlawful conduct of the Released Entities),
the Delaware Department of Justice fully and finally releases the Released Entities from any civil
or administrative claim for the Covered Conduct that it has authority to bring, including but not
limited to: 6 Del. C. Chapter 12 (the Delaware False Claims and Reporting Act), 6 Del. C.
§§ 2511 et seq. (the Delaware Consumer Fraud Act), 6 Del. C. Chapter 73 (the Delaware
Securities Act), and common law theories of negligence, payment by mistake, unjust enrichment,
money had and received, breach of fiduciary duty, breach of contract, misrepresentation, deceit,
fraud and aiding and abetting any of the foregoing. The State of Delaware agrees that no portion
of the funds in this paragraph is received as a civil penalty or fine, including, but not limited to
any civil penalty or fine imposed under 6 Del. C. § 1201 or § 2522.
8. Releases by the State of Illinois. Subject to the exceptions in Paragraph 12 (Excluded
Claims), and conditioned solely upon Citigroup’s full payment of the Settlement Amount (of
which $44,000,000.00 will be paid to the State of Illinois, Office of the Attorney General, in
accordance with the written payment instructions from the State of Illinois, Office of the
Attorney General, to remediate harms to the State allegedly resulting from unlawful conduct of
the Released Entities), the Illinois Attorney General of the State of Illinois fully and finally
releases the Released Entities from any civil or administrative claim for the Covered Conduct
that it has authority to bring, including but not limited to: Illinois Securities Law of 1953, 815
Ill. Comp. Stat. 5/1 et seq., and common law theories of negligence, payment by mistake, unjust
enrichment, money had and received, breach of fiduciary duty, breach of contract,
misrepresentation, deceit, fraud and aiding and abetting any of the foregoing. The State of
Illinois agrees that no portion of the funds in this paragraph is received as a civil penalty or fine.
9. Releases of the Commonwealth of Massachusetts. Subject to the exceptions in
Paragraph 12 (Excluded Claims), and conditioned solely upon Citigroup’s full payment of the
Settlement Amount (of which $45,700,000.00 will be paid to the Commonwealth of
Massachusetts, in accordance with the written payment instructions from the Commonwealth of
Massachusetts, to remediate harms to the Commonwealth allegedly resulting from unlawful
conduct of the Released Entities), the Attorney General of the Commonwealth of Massachusetts
fully and finally releases the Released Entities from any civil claim for the Covered Conduct that
she has authority to bring, including but not limited to: M.G.L. c. 93A, M.G.L. c. 12, and
common law theories of negligence, payment by mistake, unjust enrichment, money had and
received, breach of fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding
and abetting any of the foregoing. The payment to the Commonwealth of Massachusetts shall be
made to a trustee chosen by the Commonwealth, which shall hold the monies and distribute them
as directed by the Massachusetts Office of the Attorney General for consumer relief,
compensation to the Commonwealth and its entities, and pursuant to M.G.L. c. 12 § 4A,
implementation of this Agreement and related purposes. Funds or portions of the funds
remaining in the trust after 90 days, at the discretion of the Massachusetts Office of the Attorney
General, may be transferred to the Massachusetts Treasury. The Commonwealth of
Massachusetts agrees that no portion of the funds in this paragraph is received as a civil penalty
10. Releases by the State of New York. Subject to the exceptions in Paragraph 12
(Excluded Claims), and conditioned solely upon Citigroup’s full payment of the Settlement
Amount (of which $92,000,000.00 will be paid to the State of New York, in accordance with
written payment instructions from the State of New York, Office of the Attorney General, to
remediate harms to the State allegedly resulting from unlawful conduct of the Released Entities),
the State of New York, by Eric T. Schneiderman, Attorney General of the State of New York,
fully and finally releases the Released Entities from any civil or administrative claim for the
Covered Conduct that it has authority to bring, including but not limited to any such claim
under: New York General Business Law Article 23A, New York Executive Law § 63(12), and
common law theories of negligence, payment by mistake, unjust enrichment, money had and
received, breach of fiduciary duty, breach of contract, misrepresentation, deceit, fraud and aiding
and abetting any of the foregoing. The payment to the State of New York shall be used, to the
maximum extent possible, for purposes of redeveloping and revitalizing housing and home
ownership and rebuilding communities in the State, and for programs intended to avoid
preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to provide funding for
housing counselors and legal assistance, housing remediation and anti-blight projects, for code
enforcement, and to enhance law enforcement efforts involving financial fraud or unfair or
deceptive acts or practices. The State of New York agrees that no portion of the funds in this
paragraph is received as a civil penalty or fine.
11. Releases by the FDIC. The release of claims by the FDIC is contained in a separate
settlement agreement with Citi, attached as Exhibit A. Any release of claims by the FDIC is
governed solely by that separate settlement agreement.
12. Excluded Claims. Notwithstanding the releases in Paragraphs 5-11 of this Agreement,
or any other term(s) of this Agreement, the following claims are specifically reserved and not
released by this Agreement:
a. Any criminal liability;
b. Any liability of any individual;
c. Any liability arising under Title 26 of the United States Code (the Internal
d. Any liability to or claims of the FDIC (in its capacity as a corporation, receiver, or
conservator), except as expressly set forth in the separate agreement with the
e. Any claim related to compliance with the National Mortgage Settlement
(“NMS”), or to compliance with the related agreements reached between the
settling banks and individual states;
f. Any liability to or claims of the United States of America, the Department of
Housing and Urban Development/Federal Housing Administration, the
Department of Veterans Affairs, or Fannie Mae or Freddie Mac relating to whole
loans insured, guaranteed, or purchased by the Department of Housing and Urban
Development/Federal Housing Administration, the Department of Veterans
Affairs, or Fannie Mae or Freddie Mac, except claims based on or arising from
the securitizations of any such loans in the RMBS or CDOs listed in Annex 1.
g. Any administrative liability, including the suspension and debarment rights of any
h. Any liability based upon obligations created by this Settlement Agreement;
i. Any liability for the claims or conduct alleged in the following qui tam actions,
and no setoff related to amounts paid under this Agreement shall be applied to any
recovery in connection with any of these actions:
(i) United States, et al. ex rel. Szymoniak v. American Home Mortgage
Servicing, Inc. et al., No. 0:10-cv-01465-JFA (D.S.C.), and United States
ex rel. Szymoniak v. ACE Securities Corp. et al., No. 13-cv-464-JFA
(ii) United States ex rel. [Sealed] v. [Sealed], as disclosed to Citigroup;
j. Claims raised in Commonwealth of Massachusetts v. Bank of America, N.A., et
al., Civ. No. 11-4363 (BLS1)(Massachusetts Suffolk Superior Court); and
k. Any claims related to the alleged manipulation of the London Interbank Offered
Rate or other currency benchmarks.
13. Releases by Citigroup. Citigroup and any current or former affiliated entity and any of
their respective successors and assigns fully and finally release the United States and the States,
and their officers, agents, employees, and servants, from any claims (including attorney’s fees,
costs, and expenses of every kind and however denominated) that Citigroup has asserted, could
have asserted, or may assert in the future against the United States and the States, and their
officers, agents, employees, and servants, related to the Covered Conduct and the investigation
and civil prosecution to date thereof.
14. Waiver of Potential FDIC Indemnification Claims by Citi. Citigroup hereby
irrevocably waives any right that it otherwise might have to seek (and in any event agrees that it
shall not seek) any form of indemnification, reimbursement or contribution from the FDIC in any
capacity, including the FDIC in its Corporate Capacity or the FDIC in its Receiver Capacity for
any payment that is a portion of the Settlement Amount set forth in Paragraph 1 of this
Agreement or of the Consumer Relief set forth in Paragraph 2 of this Agreement, including
payments to the United States and the States made pursuant to Paragraphs 1 and 2 of this
15. Waiver of Potential Defenses by Citigroup. Citigroup and any current or former
affiliated entity (to the extent that Citigroup retains liability for the Covered Conduct associated
with such affiliated entity) and any of their respective successors and assigns waive and shall not
assert any defenses Citigroup may have to any criminal prosecution or administrative action
relating to the Covered Conduct that may be based in whole or in part on a contention that, under
the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive
Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought
in such criminal prosecution or administrative action.
16. Unallowable Costs Defined. All costs (as defined in the Federal Acquisition Regulation,
48 C.F.R. § 31.205-47) incurred by or on behalf of Citigroup, and its present or former officers,
directors, employees, shareholders, and agents in connection with:
a. the matters covered by this Agreement;
b. the United States’ audit(s) and civil investigation(s) of the matters covered by this
c. Citigroup’s investigation, defense, and corrective actions undertaken in response
to the United States’ audit(s) and civil and any criminal investigation(s) in
connection with the matters covered by this Agreement (including attorney’s
d. the negotiation and performance of this Agreement; and
e. the payment Citigroup makes to the United States pursuant to this Agreement, are
unallowable costs for government contracting purposes (hereinafter referred to as
17. Future Treatment of Unallowable Costs. Unallowable Costs will be separately
determined and accounted for by Citigroup, and Citigroup shall not charge such Unallowable
Costs directly or indirectly to any contract with the United States.
18. This Agreement is governed by the laws of the United States. The Parties agree that the
exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States
District Court for the Eastern District of New York.
19. The Parties acknowledge that this Agreement is made without any trial or adjudication or
finding of any issue of fact or law, and is not a final order of any court or governmental
20. Each Party shall bear its own legal and other costs incurred in connection with this
matter, including the preparation and performance of this Agreement.
21. Each party and signatory to this Agreement represents that it freely and voluntarily enters
into this Agreement without any degree of duress or compulsion.
22. Nothing in this Agreement in any way alters the terms of the NMS, or Citigroup’s
obligations under the NMS.
23. Nothing in this Agreement constitutes an agreement by the United States concerning the
characterization of the Settlement Amount for the purposes of the Internal Revenue laws,
Title 26 of the United States Code.
24. For the purposes of construing the Agreement, this Agreement shall be deemed to have
been drafted by all Parties and shall not, therefore, be construed against any Party for that reason
in any dispute.
25. This Agreement constitutes the complete agreement between the Parties. This
Agreement may not be amended except by written consent of the Parties.
26. The undersigned counsel represent and warrant that they are fully authorized to execute
this Agreement on behalf of the persons and entities indicated below.
27. This Agreement may be executed in counterparts, each of which constitutes an original
and all of which constitute one and the same Agreement.
28. This Agreement is binding on Citigroup’s successors, transferees, heirs, and assigns.
29. All parties consent to the disclosure to the public of this Agreement, and information
about this Agreement, by Citigroup, the United States, the States, and the FDIC whose separate
settlement agreement is referenced herein and attached as an exhibit to this Agreement.
30. This Agreement is effective on the date of signature of the last signatory to the
Agreement (“Effective Date of this Agreement”). Facsimiles of signatures shall constitute
acceptable, binding signatures for purposes of this Agreement.
For the California Department of Justice:
California Attorney General
California Department of Justice
455 Golden Gate, Suite 1000
San Francisco, CA 941 02
Phone: (415) 703-5500
Dated: 7 I!J I/ [ I I
For the State of Illinois:
Attorney General State of Illinois
500 South Second Street .
Springfield, IL 62706
Phone: (217) 782-1090
Dated: -vr, I’1 I L1)’ 2A> /,,( —–f—-‘——–.,
For the Commonwealth of Massachusetts:
Office of the Attorney General
Attorney General Martha Coakley
Assistant Attorney General
One Ashburton Place
Boston, MA 02108
Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages
Citigroup to Pay the Largest Penalty of Its Kind – $4 Billion
The Justice Department, along with federal and state partners, today announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to Jan. 1, 2009. The resolution includes a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). As part of the settlement, Citigroup acknowledged it made serious misrepresentations to the public – including the investing public – about the mortgage loans it securitized in RMBS. The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas. The settlement does not absolve Citigroup or its employees from facing any possible criminal charges.
This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered $20 billion to date for American consumers and investors.
“This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” said Attorney General Eric Holder. “The bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008. Taken together, we believe the size and scope of this resolution goes beyond what could be considered the mere cost of doing business. Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last.”
The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors. Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects. As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects. In one instance, a Citigroup trader stated in an internal email that he “went through the Diligence Reports and think[s] [they] should start praying . . . [he] would not be surprised if half of these loans went down. . . It’s amazing that some of these loans were closed at all.” Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting RMBS to investors for billions of dollars. This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
“Today, we hold Citi accountable for its contributing role in creating the financial crisis, not only by demanding the largest civil penalty in history, but also by requiring innovative consumer relief that will help rectify the harm caused by Citi’s conduct,” said Associate Attorney General Tony West. “In addition to the principal reductions and loan modifications we’ve built into previous resolutions, this consumer relief menu includes new measures such as $200 million in typically hard-to-obtain financing that will facilitate the construction of affordable rental housing, bringing relief to families pushed into the rental market in the wake of the financial crisis.”
Of the $7 billion resolution, $4.5 billion will be paid to settle federal and state civil claims by various entities related to RMBS: Citigroup will pay $4 billion as a civil penalty to settle the Justice Department claims under FIRREA, $208.25 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $102.7 million to settle claims by the state of California, $92 million to settle claims by the state of New York, $44 million to settle claims by the state of Illinois, $45.7 million to settle claims by the Commonwealth of Massachusetts, and $7.35 to settle claims by the state of Delaware.
Citigroup will pay out the remaining $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup. That relief will take various forms, including loan modification for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas. An independent monitor will be appointed to determine whether Citigroup is satisfying its obligations. If Citigroup fails to live up to its agreement by the end of 2018, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.
The U.S. Attorney’s Offices for the Eastern District of New York and the District of Colorado conducted investigations into Citigroup’s practices related to the sale and issuance of RMBS between 2006 and 2007.
“The strength of our financial markets depends on the truth of the representations that banks provide to investors and the public every day,” said U.S. Attorney John Walsh for the District of Colorado, Co-Chair of the RMBS Working Group. “Today’s $7 billion settlement is a major step toward restoring public confidence in those markets. Due to the tireless work by the Department of Justice, Citigroup is being forced to take responsibility for its home mortgage securitization misconduct in the years leading up to the financial crisis. As important a step as this settlement is, however, the work of the RMBS working group is far from done, we will continue to pursue our investigations and cases vigorously because many other banks have not yet taken responsibility for their misconduct in packaging and selling RMBS securities.”
“After nearly 50 subpoenas to Citigroup, Trustees, Servicers, Due Diligence providers and their employees, and after collecting nearly 25 million documents relating to every residential mortgage backed security issued or underwritten by Citigroup in 2006 and 2007, our teams found that the misconduct in Citigroup’s deals devastated the nation and the world’s economies, touching everyone,” said U.S. Attorney of the Eastern District of New York Loretta Lynch. “The investors in Citigroup RMBS included federally-insured financial institutions, as well as a host of states, cities, public and union pension and benefit funds, universities, religious charities, and hospitals, among others. These are our neighbors in Colorado, New York and around the country, hard-working people who saved and put away for retirement, only to see their savings decimated.”
This settlement resolves civil claims against Citigroup arising out of certain securities packaged, securitized, structured, marketed, and sold by Citigroup. The agreement does not release individuals from civil charges, nor does it release Citigroup or any individuals from potential criminal prosecution. In addition, as part of the settlement, Citigroup has pledged to fully cooperate in investigations related to the conduct covered by the agreement.
Michael Stephens, Acting Inspector General for the Federal Housing Finance Agency said, “Citigroup securitized billions of dollars of defective mortgages, after which investors suffered enormous losses by purchasing RMBS from Citi not knowing about those defects. Today’s settlement is another significant step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit in the lead up to the financial crisis, and is a necessary step toward reviving a sound RMBS market that is crucial to the housing industry and the American economy. We are proud to have worked with the Department of Justice, the U.S. Attorneys’ Offices in the Eastern District of New York and the District of Colorado. They have been great partners and we look forward to our continued work together.”
The underlying investigation was led by Assistant U.S. Attorneys Richard K. Hayes, Kevin Traskos, Lila Bateman, John Vagelatos, J. Chris Larson and Edward K. Newman, with the support of agents from the Office of the Inspector General for the Federal Housing Finance Agency, in conjunction with the President’s Financial Fraud Enforcement Task Force’s RMBS Working Group.
The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state Attorneys General offices around the country.
The RMBS Working Group is led by its Director Geoffrey Graber and its five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.