Respectfully submitted by Lawrence E. Rafferty (rafflaw) Weekend Contributor
In the past, I have written about the Big Banks continued unlawful actions that only result in “slap on the wrist fines” that in many cases are passed on to the shareholders and/or used as a tax deduction. It seems that Wall Street and the Banksters have not learned a thing. Or have they?
The latest wrinkle in Banksters taking advantage of American citizens is noted in a Crooks and Liars report which detailed an investigation into several Big Banks and their alleged refusal to honor the orders of Bankruptcy judges across the country. Of course, the “usual suspects” have been named in the latest investigations.
“The practice — a subtle but powerful tactic that effectively holds the credit report hostage until borrowers pay — potentially breathes new life into the pools of bad debt that are bought by financial firms.
Now lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the banks of violating federal bankruptcy law by ignoring the discharge injunction, say people briefed on the investigations.” Crooks and Liars
What the US Trustee Program is investigating is the alleged practice by the aforementioned target banks of refusing to extinguish the debts that Bankruptcy judges have ordered extinguished and keeping those debts on the debtor’s credit reports. Without the debts being removed from the credit reports, discharged debtors are caught in a never ending process of trying to pay off discharged debts, just to renovate their credit ratings.
Of course, this practice is in direct conflict with our bankruptcy laws, but the law never seems to get in the way of Big Banks and their efforts to make everyone pay, except for themselves. A few examples from the New York Times, may help understand the impact of these alleged illegal actions by the aforementioned Big Banks.
“The errors are not clerical mistakes, but debt-collection tactics, current and former bankruptcy judges suspect. The banks refuse to fix the mistakes, the borrowers say, unless they pay for the purged debts. And many borrowers end up paying, given that they have so much at stake — the tarnished credit reports showing they still owe a debt can cost them a new loan, housing or a job. The Vogts, a couple in Denver, for example, paid JPMorgan $2,582 on a debt that was discharged in bankruptcy because they needed a clean credit report to get a mortgage.
There are many more who make payments on debts that they no longer legally owe, but never alert anyone because they do not realize the practice is illegal or cannot afford to litigate.
Humberto Soto, a 51-year-old unemployed hospital worker who went through bankruptcy in 2012, said he was almost one of those people who paid. In January, he was rejected for a Brooklyn apartment after the housing agency pulled his credit, which was tarnished by $6,411 on a Chase credit card, according to a letter from the agency, a copy of which was reviewed by The New York Times.
When he called JPMorgan, Mr. Soto said, he was told that the black mark would remain unless he paid. “It was either pay or lose the apartment,” he said. But after his bankruptcy lawyer explained the situation to the rental agency, Mr. Soto ultimately did not pay. (He got the apartment.)” New York Times
Federal Judge Robert D. Drain is handling these cases and he is skeptical about the defenses raised by the Big Banks.
“Judge Drain, who is presiding over the cases, posited that the banks’ ability to sell the soured debts depends on ignoring the bankruptcy discharge in order to collect money from people who don’t have to legally pay it.
In July, the judge refused to throw out the lawsuit against JPMorgan, saying that the “complaint sets forth a cause of action that Chase is using the inaccuracy of its credit reporting on a systematic basis to further its business of selling debts and its buyer’s collection of such debt.”
During a hearing last year on a related case, transcripts show, Judge Drain said, “I might refer this, if the facts come out as counsel’s alleging, to the U.S. attorney,” for criminal prosecution.” New York Times
As noted in the examples above, real people get hurt by the Big Banks alleged refusal to follow the law. Of course, I guess I should not be surprised that a Big Bank would do whatever it takes to get their money. Even if it breaks the law. After all, according to the linked New York Times article, their are billions at stake.
As shown in the latest reports of some of these same Big Banks being caught manipulating the foreign currency exchange market and the $4.3 Billion dollar fine assessed, they never seem to learn. Or as I suggested earlier, maybe they have learned how to game the Justice Department.
If these targeted corporate persons are found to have violated the Bankruptcy Laws, do you think any officer or director will go to jail? Just asking.
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