Discount Double Check for White folks only? Redlining for Blacks

State Farm says: Discount Double Check is for White folks only, as it faces new racial discrimination lawsuits. As I said on Twitter, I hope Chris Paul stops doing commercials for them, at a minimum. Per the whole background, this is why Black folks, on average, don't have the same equity as White folks.

Then, you have folks like Wells Fargo redline you on mortgages, then folks like State Farm redline you on the insurance for whatever you do buy. So, you pay more in loan overhead and then get stiffed on damage claims.

And, this all gets back to Dear Leader Obama.

I said, when he pushed for Obamacare, that it was guaranteed to be a failure without a federal department of insurance regulation. (Of course, America's Health Insurance Plans wouldn't have wanted that.) 

Such a department could obviously, if authorized, have regulatory authority over other types of insurance besides health insurance. And, given that people get sick in states other than where they live, or drive cars in states other than where they live, this would be proper under the Interstate Commerce Clause.

I'm surprised that Wells Fargo, when it originated these redlining mortgages, didn't pair up with insurers like State Farm that it thought would be more likely to not pay out on Black claims. Maybe it DID and we just don't know about it yet.

Beyond all of the above? IMO, on car insurance (as a renter, I don't have homeowners) State Farm is overpriced to boot.

Don't trust the banks? Financial pros don't either

An in-depth article in the Atlantic says that Dodd-Frank (why is he overrated, anyway?) and other financial measures of the past four years have done almost nothing to make banks more transparent or more trustworthy.

And, that financial world experts know that, and that's why bank stocks remain depressed and more. Here's a good selection:

More and more, the people in the know don’t trust big banks either. .... Some four years after the crisis, big banks’ shares remain depressed. Even after a run-up in the price of bank stocks this fall, many remain below “book value,” which means that the banks are worth less than the stated value of the assets on their books. This indicates that investors don’t believe the stated value, or don’t believe the banks will be profitable in the future—or both. Several financial executives told us that they see the large banks as “complete black boxes,” and have no interest in investing in their stocks.

And, this issue is scary. Scary indeed, as a look at Wells Fargo shows:

Like other banks, Wells Fargo uses a three-level hierarchy to report the fair value of its securities. Level 1 includes securities traded in active, public markets; it isn’t too scary. At Level 1, fair value simply means the reported price of a security. If Wells Fargo owned a stock or bond traded on the New York Stock Exchange, fair value would be the closing price each day. 

Level 3 is hair-raising. The bank’s Level 3 estimates are “generated primarily from model-based techniques that use significant assumptions not observable in the market.” In other words, not only are there no data about the prices at which these types of assets have recently traded, but there are no observable data to inform the assumptions one might use to generate prices.  

Even worse, Wells Fargo has significant "exposure" to Enron-type Special Purpose Vehicles. But, because of the opacity of its reporting, you, I and even the best of journalists don't know how dangerous this "exposure" is.

First, the roots are bipartisan, going back to Larry Summers and other neolib Democrats leading the charge in the late 1990s to repeal Glass-Steagall. (Frank, though voting against the repeal, in his words was at best equivocal in his opposition.)

Second, that bipartisanship has increased through campaign finance corruption.

Third, there would be one way to stop it. FORCE Congressional pensions to be invested with these deceitful banksters.

Fourth, per the article's authors, we could make the rules much fewer, but much more broadly written. It was that way at one time, they note, and courts gave regulators more leeway.

The Jamie Dimons of today who complain about "overregulation"? They like it that way.

Banksters fess up to illegal mortgage problems

Wells Fargo, Bank of America and Citigroup, as part of annual financial filings with the SEC, admitted that state attorneys general investigations (and a lame-o one by the feds so far) into their, well, illegal use of MERS software in mortgage paperwork filings could well be a financial deadweight and not just a perception issue.

“The current environment of heightened regulatory scrutiny has the potential to subject the corporation to inquiries or investigations that could significantly adversely affect its reputation,” Bank of America said in the filing.

The state and federal inquiries “could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs,” Bank of America said.

Wells Fargo said in its filing that it was “likely that one or more of the government agencies will initiate some type of enforcement action,” including possible “civil money penalties.”

Well, boo-hoo. Dr. America prescribes 30CCs of "cramdown" for the sick bankster patients.

More seriously, here's my tentative grand bargain:
1. State AGs as a group, agree to suspend investigations, both on the illegal use of MERS, and on banks wrongfully repo-ing deliquent-mortgage homes to which they don't have clear title in particular, for 18 months.
2. In exchange, without admitting guilt for past use, the banks agree that MERS, by not providing actual paperwork to county clerks, is illegal in all such states with such a requirement, and stop using it ASAP. (I'm assuming they're still using it, in the middle of this mess.)
3. Banks agree to triple their current mortgage-modification programs.
4. Banks agree to reveal what "minimum," as percentage of mortgage principle, they currently have as a cutoff rate for walkaway deals and other mortgage modifications, and to lower that minimum by 10 percentage points.

That's just some back-of-the-napkin figuring. I'm guessing that, given this was part of an SEC filing, that doing all of that would still hit the bottom line no harder than would state financial penalties, should the banksters dig in their heels.

What’s in Wells Fargo’s wallet?

More than 10 percent of U.S. banking assets, violating Federal regulations. You know BushCo will do nothing about WF, JPMorgan Chase and Bank of America.

Joe Stiglitz (and, why isn’t he getting mentions for Treasury, OMB or CEA?) says banking consolidation is “a very serious problem.”

But, what about an Obama Administration? Will it do more than Bush?

And, will it address other concerns raised in the story about the dysfunctionality level of much modern American banking?

Given that Obama’s top choices for Treasury are anti-regulatory neolibs, likely answer is nothing.

Economy not so bad as Wells Fargo bids for Wachovia

Wells Fargo ups Citigroup’s bid for Wachovia, setting up an epic financial battle. Because the WF deal is a straight bank acquisition, rather than a government-arranged shotgun marriage, I think it’s preferable.

News of the deal bumped the Dow upward.

(Disclosure: I bank at WF.)