Bank of America

Schumer Wants Probe Of Theresa Hatt Phenomenon

Zachary Roth | March 11, 2009, 11:38AM

From TPMmuckraker to the U.S. Senate. Kind of.

Remember our story from last month about how a Bank of America estates rep tried to guilt-trip the son of a deceased card-holder into paying his mother's credit-card balance, though he was under no obligation to do so?

Well, as we noted last week, the New York Times seemed to like it -- following up with their own report on debt collecting firms that contract with the credit card companies to go after the relatives of deceased card-holders, many of whom don't understand that they're usually not obligated to pay the debt.

And now, according to a press release, Sen. Chuck Schumer (D-NY) has called on the Federal Trade Commission to investigate the "deceitful practice that preys on relatives who have no legal obligation to pay their deceased loved ones' bills."

The release says Schumer's call "came on the heels of a high-profile published report last week exposing this practice," -- a reference to the Times story, which appeared to be triggered, in turn, by our own story.

According to Schumer, the practice may already be illegal under existing law, since the Fair Debt Collection Practices Act "prevents the collection companies from contacting anyone other than the debtor about outstanding bills".

He suggests that, at the least, debt collectors should be required to tell the relatives that they aren't legally obligated to pay the debt at issue.

That seems like the least that could be done.

Schumer's full letter to the FTC follows after the jump ...

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Allen Stanford

Bill That Might Have Helped Catch Stanford Died In Senate Finance Committee

Zachary Roth | February 24, 2009, 1:58PM

It's clear by this point that Allen Stanford put a lot of energy into wooing members of Congress. He was a prodigious political giver over the last decade, and even seems to have paid for some lucky lawmakers to soak up the sun in Antigua.

But few people, we're guessing, would choose to hang out with John Sweeney, Katherine Harris and co. just for fun. So what did Stanford want in return?

Over at TPMDC, Elana provided part of the answer in two posts that explain how Stanford's firm helped fight an effort to crack down on international money laundering during the late Clinton years, as well as how, shortly after, he met with Martin Frost, at the time the chair of the House Democratic caucus (and to whose political groups Stanford was contributing soft money), in a bid to convince Frost to oppose anti-money laundering initiatives.

But that was hardly the last congressional effort to deal with the problems of offshore business operations. In February 2007, Sen. Carl Levin, joined by then-senators Norm Coleman and Barack Obama, introduced the Stop Tax Haven Abuse Act, which would have closed offshore tax loopholes and forced companies to disclose far more information about their operations.

The bill listed 34 jurisdictions as probable locations for U.S. tax evasion -- one of which was Antigua and Barbuda, the Caribbean island nation where Stanford's sprawling financial empire was headquartered.

Although the measure was not primarily intended to root out large-scale frauds like the one Stanford is now accused of orchestrating, it likely would nonetheless have done so, as a "nice side benefit", according to Robert McIntyre of Citizens for Tax Justice, simply because it would have given US authorities access to far more information about offshore businesses.

What happened to the bill? Levin's office told us it came under the jurisdiction of the Senate Finance committee, which appears never to have brought it to a vote.

Since 2000, Finance chair Max Baucus has received $1000 from Stanford's firm, according to the Center for Responsive Politics. And Chuck Schumer has taken $17,000, more than all but sitting five members of Congress*.

During 2007, Stanford paid $500,000 to Ben Barnes' firm to lobby the Senate on a range of issues, including "lobbying issues related to banking" according to Senate lobbying disclosure records.

It's worth clarifying: Stanford is hardly the only businessman who'd potentially have had a lot to lose from efforts to crack down on offshore tax loopholes. Numerous Fortune 500 companies have offshore operations that could help them avoid paying US taxes, a recent GAO report found. And "fair tax" advocates tell TPMmuckraker that a broad range range of corporate interests has, over the last decade, been involved in preserving such loopholes. So even if Stanford's influence with lawmakers was a factor here, it's not as if he would have been working alone.

A spokesman for the Senate Finance committee pledged to provide TPMmuckraker with more information about the circumstances under which Levin's bill died. We'll update with anything else we learn.

* This sentence has been edited from an earlier version which referred to the contributions from Stanford received by Bill Nelson, a current finance committee member. Nelson did not join the committee until January of this year -- after the period in question.

Securities and Exchange Commission

No More Madoffs: Schumer, Shelby Want Beefed Up Efforts to Combat Financial Fraud

Zachary Roth | January 22, 2009, 2:24PM

The wages of Madoff continue to grow...

A new bill being introduced by Senators Chuck Schumer and Richard Shelby would aim to crack down on financial fraud by adding hundreds of new prosecutors and investigators to the Department of Justice -- including the FBI -- and the Securities and Exchange Commission, at a cost of $110 million.

A press release explains:

In recent months, amid the financial crisis that has roiled the U.S. economy, a rising number of securities and accounting fraud cases have surfaced, accounting for billions of dollars in losses for investors. But the agencies on the front lines of policing the Wall Street's top financial institutions and investment managers have been hamstrung by a lack of resources.

And it quotes Schumer:

Our white collar crime divisions are under-staffed, under-funded, and overwhelmed," Schumer said. "When a wave of violent crime sweeps through a city, the immediate response is to beef up the police forces, putting more cops on the beat, extending overtime, and making sure the city returns to safety. Our reaction to the financial crisis and the massive and complex financial fraud investigations that loom should be no different.

In recent weeks, there has been talk of re-structuring the financial regulatory system, of which the SEC is a major pillar, in response to the current financial crisis. So we'll see how this new effort fits in.

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Chuck Schumer

Schumer On Tanner's Racist Email: "Shocking"

Zachary Roth | January 15, 2009, 3:03PM

In a move that piqued our interest here at TPMmuckraker, Sen. Schumer, during his questioning of Eric Holder, cited the racist email sent by John Tanner, who was at the time the head of the voting rights section, about Mary Frances Berry, the then-chair of the US Commission on Civil Rights.

Schumer called the statement "all the more shocking becasue it's a supervisor in the civil rights division who said this."

Tanner sent a letter of apology to Berry earlier this week.

Here's the video:

Alberto Gonzales

Schumer To Holder: You and Obama Are "Both Very Handsome"

Zachary Roth | January 15, 2009, 2:48PM

Ok, so that headline wasn't really on point. But now that you're reading...

In his questioning of Eric Holder this morning, Sen. Chuck Schumer really doubled down on the theme of politicization at DOJ under Alberto Gonzales -- a theme that, as we noted, has served as the constant backdrop to the hearings so far.

Schumer declared that "the likes of Alberto Gonzales and Bradley Schlozman sullied and demoralized a great legal institution, probably the finest civil service institution in the country, that they really dragged through the mud.

As for GOP efforts to suggest Holder could act similarly, Schumer called the comparisons "ludicrous," then initiated the following clever and enlightening exchange to demonstrate Holder's comparative independence:

Schumer: As I look at your background and your record, it's clear that you are less connected and less beholden to the new president than most attorneys general in the last fifty years. Let's review for the moment. I have a few quick questions for you.

Have you ever been President-Elect Obama's personal lawyer, like William French Smith had been for years for Ronald Reagan?

Holder: No, I have not.

Schumer: Have you ever been a staffer for Barack Obama, like Ed Meese had been for Reagan?

Holder: No, I have not, senator.

Schumer: Have you ever served as official counsel to Barack Obama, like Alberto Gonzales had for George Bush?

Holder: No, I have not, senator.

Schumer: And has Barack Obama ever dispatched you to the hospital room of a sick government official, to get him to authorize an illegal wiretap program?

Holder: No, he has not.

Schumer: Yeah I didn't think so. Alright, and I take it you're not a close relation to the new president, like Bobby Kennedy was to Jack Kennedy?

Holder: No, we're not related by blood though people to say we look alike.

Schumer: I don't think so. Although you're both very handsome.

Holder: I'd heard he's handsome and was going to try to draft on that.

Schumer: OK, let me ask you this, have you ever been a professional politician like John Ashcroft or Dick Thornburgh?

Holder: No, I've never run for office.

Here's the video of the exchange:

Chuck Schumer

Schumer Helped Block Regulation Of Ratings Agencies

Zachary Roth | December 15, 2008, 12:03PM

We told you last month about the role of the credit ratings agencies in helping to cause the financial crisis. A major part of the problem, in a nutshell, is that the major ratings agencies -- Moody's, Standard & Poor's, and Fitch -- are paid by the institutions (often investment banks) who are issuing the bonds. That gives the agencies a clear incentive to produce favorable ratings, or risk seeing the banks hire a different ratings agency that's willing to offer a better rating.

But over the weekend, in a profile of Sen. Chuck Schumer, the New York Times revealed that the veteran New York Democratic lawmaker -- who, with seats on both the finance and banking committees, has built a reputation as a key ally of the financial sector, a major industry in his home state -- played a major role in stymieing efforts to fix that problem.

Here's what happened:

In 2006, Christopher Cox, the Bush-appointed chair of the Securities and Exchange Commission -- and hardly a left-wing proponent of heavy-handed government regulation -- became convinced that the conflict of interest problem needed to be addressed.

A plan to give the SEC more regulatory authority "drew broad, bipartisan support," says the Times. But it was opposed, of course, by the ratings agencies themselves ... who turned to Schumer.

"They knew Schumer would support them," one former Moody's executive told the Times. "He was their go-to guy."

The paper adds: "While the Manhattan-based agencies were not significant campaign donors to Mr. Schumer or the Senate campaign committee, their lobbyists and many of their clients were."

As an alternative to Cox's plan, Schumer advocated a largely voluntary approach in which regulators would simply encourage the agencies to disclose their ratings methods. "They're making good-faith efforts," Schumer told Cox at a 2006 Senate hearing.

Ultimately, says the Times, Schumer was able to get the measure amended "so that it explicitly prohibited the S.E.C. from regulating the procedures and methods the agencies use to determine ratings."

In other words, he appears to have blocked the crucial part of the legislation. Sean Egan, of Egan-Jones Ratings -- one of the few agencies that largely avoided buying into the mortgage bubble, perhaps in part because it's structured to avoid conflicts of interest -- told the Times: "The bill was eviscerated. You have stripped away basic safeguards for the investors."

And sure enough, under the weak regulatory system that Schumer had helped to ensure, the agencies,as we've seen, offered high ratings to bonds based on risky sub-prime loans, encouraging investors to see them as secure, and ultimately helping to inflate the mortgage bubble.

Schumer claims to have learned from his mistakes. He supported a belated but necessary SEC move earlier this month to meaningfully address the conflict of interest problem, and related issues, saying: "The work at these ratings firms was severely compromised, and the companies were some of the biggest contributors to the current financial crisis."

But had Schumer adopted that position back in 2006, when the SEC did, the ratings agencies might not have wound up as a significant cause of our current financial turmoil.