Monthly Archives: October 2012

What Could Happen In The First 12 Hours of A US Dollar Collapse

 

This is the scenario nobody thinks is possible but really at the end of the day, it’s not like the US can print money and live on debt forever right so when something cannot go on forever what happens when it stops?

So says Mark Jeftovic (http://wealth.net/) in edited excerpts of his introduction to a 7 minute video (see below) presented by www.inflation.us entitled The First 12 Hours of a US Dollar Collapse.

 

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), request that this paragraph must be included in any article re-posting to avoid copyright infringement.

Major Banks, Governmental Officials and Their Comrade Capitalists Targets of Spire Law Group, LLP’s Racketeering and Money Laundering Lawsuit Seeking Return of $43 Trillion to the United States Treasury PR Newswire (http://s.tt/1r0wJ)

NEW YORK, Oct. 25, 2012 /PRNewswire/ — Spire Law Group, LLP's national home owners' lawsuit, pending in the venue where the "Banksters" control their $43 trillion racketeering scheme (New York) – known as the largest money laundering and racketeering lawsuit in United States History and identifying $43 trillion ($43,000,000,000,000.00) of laundered money by the "Banksters" and their U.S. racketeering partners and joint venturers – now pinpoints the identities of the key racketeering partners of the "Banksters" located in the highest offices of government and acting for their own self-interests.

 

In connection with the federal lawsuit now impending in the United States District Court in Brooklyn, New York (Case No. 12-cv-04269-JBW-RML) – involving, among other things, a request that the District Court enjoin all mortgage foreclosures by the Banksters nationwide, unless and until the entire $43 trillion is repaid to a court-appointed receiver – Plaintiffs  now establish the location of the $43 trillion ($43,000,000,000,000.00) of laundered money in a racketeering enterprise participated in by the following individuals (without limitation):  Attorney General Holder acting in his individual capacity, Assistant Attorney General Tony West, the brother in law of Defendant California Attorney General Kamala Harris (both acting in their individual capacities), Jon Corzine (former New Jersey Governor), Robert Rubin (former Treasury Secretary and Bankster), Timothy Geitner, Treasury Secretary (acting in his individual capacity), Vikram Pandit (recently resigned and disgraced Chairman of the Board of Citigroup), Valerie Jarrett (a Senior White House Advisor), Anita Dunn (a former "communications director" for the Obama Administration), Robert Bauer (husband of Anita Dunn and Chief Legal Counsel for the Obama Re-election Campaign), as well as the "Banksters" themselves, and their affiliates and conduits.  The lawsuit alleges serial violations of the United States Patriot Act, the Policy of Embargo Against Iran and Countries Hostile to the Foreign Policy of the United States, and the Racketeer Influenced and Corrupt Organizations Act (commonly known as the RICO statute) and other State and Federal laws.

 

In the District Court lawsuit, Spire Law Group, LLP — on behalf of home owner across the Country and New York taxpayers, as well as under other taxpayer recompense laws — has expanded its mass tort action into federal court in Brooklyn, New York, seeking to halt all foreclosures nationwide pending the return of the $43 trillion ($43,000,000,000.00) by the "Banksters" and their co-conspirators, seeking an audit of the Fed and audits of all the "bailout programs" by an independent receiver such as Neil Barofsky, former Inspector General of the TARP program who has stated that none of the TARP money and other "bailout money" advanced from the Treasury has ever been repaid despite protestations to the contrary by the Defendants as well as similar protestations by President Obama and the Obama Administration both publicly on national television and more privately to the United States Congress.   Because the Obama Administration has failed to pursue any of the "Banksters" criminally, and indeed is actively borrowing monies for Mr. Obama's campaign from these same "Banksters" to finance its political aspirations, the national group of plaintiff home owners has been forced to now expand its lawsuit to include racketeering, money laundering and intentional violations of the Iranian Nations Sanctions and Embargo Act by the national banks included among the "Bankster" Defendants.

 

The complaint – which has now been fully served on thousands of the "Banksters and their Co-Conspirators" – makes it irrefutable that the epicenter of this laundering and racketeering enterprise has been and continues to be Wall Street and continues to involve the very "Banksters" located there who have repeatedly asked in the past to be "bailed out" and to be "bailed out" in the future. 

 

The Havens for the money laundering schemes – and certain of the names and places of these entities – are located in such venues as Switzerland, the Isle of Man, Luxembourg, Malaysia, Cypress and entities controlled by governments adverse to the interests of the United States Sanctions and Embargo Act against Iran, and are also identified in both the United Nations and the U.S. Senate's recent reports on international money laundering.  Many of these entities have already been personally served with summons and process of the complaint during the last six months.   It is now beyond dispute that, while the Obama Administration was publicly encouraging loan modifications for home owners by "Banksters", it was privately ratifying the formation of these shell companies in violation of the United States Patriot Act, and State and Federal law. The case further alleges that through these obscure foreign companies, Bank of America, J.P. Morgan, Wells Fargo Bank, Citibank, Citigroup, One West Bank, and numerous other federally chartered banks stole trillions of dollars of home owners' and taxpayers' money during the last decade and then laundered it through offshore companies.

 

This District Court Complaint – maintained by Spire Law Group, LLP — is the only lawsuit in the world listing as Defendants the Banksters, let alone serving all of such Banksters with legal process and therefore forcing them to finally answer the charges in court.  Neither the Securities and Exchange Commission, nor the Federal Deposit Insurance Corporation, nor the Office of the Attorney General, nor any State Attorney General has sued the Banksters and thereby legally chased them worldwide to recover-back the $43 trillion ($43,000,000,000,000.00) and other lawful damages, injunctive relief and other legal remedies.

 

James N. Fiedler, Managing Partner of Spire Law Group, LLP, stated:  "It is hard for me to believe as a 47-year lawyer that our nation's guardians have been unwilling to stop this theft.  Spire Law Group, LLP stands for the elimination of corruption and implementation of lawful strategies, and that is what we're doing here.  Spire Law Group, LLP's charter is to not allow such corruption to go unanswered."

 

Comments were requested from the Attorney Generals' offices in NY, CA, NV, NH , OH, MA and the White House, but no comment was provided.

 

About Spire Law Group

Spire Law Group, LLP is a national law firm whose motto is "the public should be protected — at all costs — from corruption in whatever form it presents itself." The Firm is comprised of lawyers nationally with more than 250-years of experience in a span of matters ranging from representing large corporations and wealthy individuals, to also representing the masses. The Firm is at the front lines litigating against government officials, banks, defunct loan pools, and now the very offshore entities where the corruption was enabled and perpetrated.

 

Contact: 
James N. Fiedler
877-438-8766
http://spire-law.com

SOURCE Spire Law Group, LLP

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PR Newswire (http://s.tt/1r0wJ)

BIG NEWS | BofA employees could face charges in US fraud case – prosecutor

What about the CEO’s that were in place at the time?

Reuters-

Bank of America Corp employees could face civil fraud charges as part of a federal lawsuit accusing the bank of causing taxpayers more than $1 billion in losses by selling toxic mortgage loans to Fannie Mae and Freddie Mac, a prosecutor said on Thursday.

The comments were made at a hearing in Manhattan federal court to set a timetable for the U.S. Department of Justice’s first civil fraud lawsuit over mortgage loans sold to the two big mortgage financiers, which the government had announced on Wednesday. Fannie Mae and Freddie Mac were bailed out and put in government conservatorship in 2008.

“Potentially, the government may amend its complaint to include individuals, present or former employees of Bank of America,” Assistant U.S. Attorney Pierre Armand told U.S. District Judge Jed Rakoff.

The judge asked the prosecutors to amend their complaint by year end. The case involves mortgage lender Countrywide Financial Corp, which Bank of America bought in July 2008.

Deutsche Bank takes another home in dubious Queens Foreclosure case

By: Dan Harris

Article from examiner.com

In an interview conducted on Saturday October 27th 2012, Queens Foreclosure Attorney Brian McCaffrey said “this case could have been fought and won on its merits” and “it’s a shame that Deutsche Bank was allowed to coast through the process without ever having to prove to the Court that they actually had standing to foreclose”

On October 24, 2012 a foreclosure process that began more than 3 years ago came full circle when the property located at 150-15 108th Avenue, Jamaica, NY 11433 was sold by Deutsche Bank for $245,100.00 to an LLC named RDG QUEENS XVIII LLC.

The LLC making the purchase was registered with the NYS DOS by the accounting firm of SINGER & FALK, INC. whose CEO is Steven Falk. When contacted for this article Mr. Falk was unavailable for comment.

The Queens Foreclosure case was entitled DEUTSCHE BANK NATIONAL TRUST vs. MBAH, CLEMENT ETAL, under index number: 027411/2009.

Although it appears from the record that the prior owner CLEMENT MBAH attempted to protect his interest by making motions in court, his pro-se attempts were too little – too late.

In a decision issued on July 11, 2011 the HONORABLE KEVIN J. KERRIGAN held that the… “Motion by Mbah to vacate the default judgment of foreclosure and sale, issued by this Court on June 15, 2010, as against him is denied. Movant has failed to set forth an excuse for his default or a meritorious defense to foreclosure”

McCaffrey expressed disappointment saying “This case is only one of many where the Plaintiff who did not own the mortgage… was never properly challenged or their case would have failed.”

To understand what Mr. McCaffrey is talking about one needs to look at the history of the ownership of this mortgage which was securitized with thousands of others during the housing and mortgage boom.

You see Deutsche Bank was the “trustee” for a NY established Trust that was formed in 2004 under NY Trust Law. Under NY Law the Trust had a closing date of September 29, 2004, and no mortgage loan could have been assigned into the Trust after that date. NY Trust law states that any act made contrary to the interest of the Trust is void. Moreover, under IRS Code it was unlawful to transfer any asset into the Trust after the closing date.

Deutsche Bank issued a memorandum in 2010 to all holders of its mortgage backed securities shifting the blame for any wrongful foreclosure practices to the servicers, saying “we told them to comply with the law”. This “memorandum” completely misses the point that as the Trustee Deutsche Bank was absolutely responsible for insuring that each and every mortgage in a pool had a collateral file that contained the documents needed to convey and prove ownership.

In this case the Mortgage Loan was never owned by the Trust at all. Instead just prior to starting the foreclosure action an assignment of mortgage was filed in the office of the Queens County Clerk, more than five years after the Trust closed.

It is painfully obvious to anyone who looks that Deutsche Bank did not own the loan, yet Deutsche Bank was able to violate the laws of New York and IRS Code with abandon and take a home away from the homeowner without ever having to prove that they had the right to do so. Surprisingly, all of this was done under the watchful eyes of the Courts of New York State.

Attorney McCaffrey explained that “the Courts take the position that the foreclosure cases brought before them are truthful and have merit unless and until someone proves otherwise.” and “in this case it appears that nobody ever bothered to explore the actual chain of title establishing ownership of the note and mortgage.”

It also appears from the record that the homeowner never bothered to file an answer to the foreclosure complaint and thereby lost his rights to raise the ownership issue.

Mr. McCaffrey provided the following advice to homeowners “don’t bury your head in the sand, if you are falling behind on your mortgage get help fast… pay close attention to every single piece of mail you receive from your lender… if you have been served with foreclosure papers see an attorney immediately – time is not your friend.”

When questioned about banks lying to the Courts about actually owning the loan they are foreclosing on, McCaffrey said “as evidenced by the case in this article a bank that is permitted to foreclose without being challenged has little fear of having the light of truth shined upon its actions”

McCaffrey closed the interview by saying “Many of our Courts have non-profit legal services available to homeowners facing foreclosure, there is no reason why a homeowner should ignore legal action and lose their right to defend their home against a plaintiff that might not even have the right to foreclose.”

Barney Frank cries foul in government’s lawsuit against JPMorgan

(Reuters) – Democratic Congressman Barney Frank defended the nation's largest bank on Monday, saying in a statement that the government was wrong to go after JPMorgan Chase & Co for the alleged misdeeds of Bear Stearns.

Frank, the co-author of the 2010 Dodd-Frank financial reform law, said federal and state officials should reconsider holding financial firms liable for the wrongdoing of institutions they absorbed at the government's urging.

The unusual statement comes after New York Attorney General Eric Schneiderman sued JPMorgan, the nation's largest bank by assets on October 1 over mortgage-backed securities packaged and sold by Bear Stearns.

A JPMorgan spokeswoman declined to comment.

Since that suit was filed JPMorgan Chief Executive Jamie Dimon lashed out at the decision.

At a Washington event on October 10, Dimon said his bank and its shareholders were still paying the price for doing the Federal Reserve "a favor" by buying Bear Stearns in early 2008, when its instability was threatening the larger financial system.

Dimon said the suit could make financial firms think twice in the future about rescuing their failing rivals.

Frank, who served as chairman of the House Financial Services Committee during the Bear acquisition, said in his statement: "The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished."

Frank backed up Dimon's assertion that it was the government that pushed Bear Stearns on JPMorgan.

Federal officials "believed that the failure of Bear Stearns would have terribly negative consequences for the economy," Frank said.

The officials urged JPMorgan "to do a good deed by taking over an institution which, I believe, the bank would never have sought to acquire absent that urging," he said.

A spokesman for the New York Attorney General's office did not immediately respond to a request for comment.

Frank also drew a line between what he said were fair legal actions and unfair ones, while noting he was not advocating for immunity for banks.

For example, he said Bank of America should probably be shielded from government legal action related to Merrill Lynch, which Bank of America took over in part because of federal officials' urging.

However, Frank said he was aware of no federal urging that led former Bank of America CEO Ken Lewis to take over Countrywide.

ALL IN ONE BASKET: THE BANKRUPTCY RISK OF A NATIONAL AGENT-BASED MORTGAGE RECORDING SYSTEM

 

ALL IN ONE BASKET:  THE BANKRUPTCY RISK OF A NATIONAL AGENT-BASED

MORTGAGE RECORDING SYSTEM

John Patrick Hunt,* Richard Stanton,† and Nancy Wallace‡

 

Abstract

 

Mortgage Electronic Registration Systems, Inc. (“MERS, Inc.”) owns legal title to some

30 million mortgages in the United States.  The company, which was a key part of the mortgage

securitization apparatus in the late 1990s and 2000s, is now under intense pressure from public

and private lawsuits and investigations and faces a very real threat of insolvency.  Policymakers

are looking ahead to potential replacements for MERS, Inc., as a recent Fed staff proposal for a

substitute system indicates.  This Article examines what might happen to the mortgages that

MERS, Inc. at least nominally owns in the event that the company enters bankruptcy, a question

that apparently has never been explored in a publicly available analysis.

Download Complete Abstract Here

Although the legal analysis underlying the design of MERS, Inc. does not appear to be

publicly available, a key assumption seems to have been that if the company ever entered

bankruptcy, the mortgages in its hands would not enter the company’s bankruptcy estate and

would not be available to creditors.  This Article challenges that assumption, pointing to the

broad authority the Bankruptcy Code confers on the bankruptcy trustee with respect to interests

in real property, such as mortgages.  Most courts that have considered the issue have found that

the bankruptcy trustee can bring into the estate any real property interest that the debtor could

have conveyed to a good-faith purchaser.  There is a significant risk that MERS, Inc. can convey

MERS mortgages to a purchaser acting in good faith.

Download Complete Abstract Here

Although part of that risk arises from the company’s conduct in making and acquiescing

in claims in court that the company can sell the mortgages, has constitutionally protected

property interests in the mortgages, is a creditor of mortgage borrowers, and owns a beneficial

interest in the mortgages, part of the risk is inherent in any mortgage recording system that

operates nationally and holds mortgages as an agent.  Policymakers should consider that risk as

they consider whether MERS should be replaced and what form the replacement should take.

 

* Assistant Professor of Law, University of California, Davis School of Law, jphunt@ucdavis.edu.  A.B.

Harvard College, J.D. Yale Law School. M.F.E. (Master’s in Financial Engineering) University of California,

Berkeley Haas School of Business.

Berkeley Haas School of Business, stanton@haas.berkeley.edu.  B.A., M.A. Cambridge University, Ph.D. Stanford

University.

University of California, Berkeley Haas School of Business, wallace@haas.berkeley.edu, B.A. University of

Michigan, Maîtrise, Université de Paris, VIII, Ph.D. University of Michigan.  The authors gratefully acknowledge

helpful contributions from and discussions with Jack Ayer, Andrea Bjorklund, Anupam Chander, Joel Dobris,

Katherine Florey, Jesse Fried, Robert W. Hillman, Dwight Jaffee, Meredith Kane, Tobias Keller, Christopher Klein,

Evelyn Lewis, Lance Liebman, Eric Talley, Ken Taymor, and Rebecca Tushnet. We also appreciate excellent

research assistance from Ronny Clausner and Sumair Khan. All opinions and errors are the authors' own.

Download Complete Abstract Here

 

Pre-existing Evictions – Community Activists Try to Stop Banks From Foreclosing on Cancer Victims

Wells Fargo Bank and US Bank have chosen to celebrate Breast Cancer Awareness Month by trying to evict breast cancer survivors from their homes.

Last week, Ana Casas Wilson — a wheelchair-bound woman with celebral palsy and terminal stage-four breast cancer, and who has struggled for months to get Wells Fargo and US Bank to accept her money and stop foreclosing on her home of forty years — received a final 5-day notice to vacate from LA County Sheriff Lee Baca's office. Wilson and her family briefly fell behind on her payments after she had to go into the hospital for a double mastectomy, as I described in an earlier post. She and her friends and supporters have launched a round-the-clock vigil at her home in a blue-collar suburb outside Los Angeles (8968 San Juan Ave., South Gate, CA 90280) to resist eviction, as the Los Angeles Times reported last week.

It turns out that Wilson isn't the only cancer victim that Wells Fargo and US Bank are trying to evict. Community groups around the country have met with others in a similar situation. One of them is retired police detective Jacqueline Barber. She spent 20 years on the Atlanta police force, only retiring after she was injured by a car in the line of duty. In 2009, the predatory loan on her house caused her monthly payment to go up by $1500, and she fought to stay current, according to a local Atlanta news outlet. Then she was diagnosed with bone marrow cancer and had to undergo aggressive treatment to save her life. She fought back against the disease, and spent months filling out forms and asking Wells Fargo for modifications to her mortgage.

A Wells Fargo Executive Vice President assured he they were working on her case. Instead, they sold her loan to US Bank at foreclosure auction, and now she's fighting imminent eviction. The banks are refusing even to sell the home to friends and family who have banded together to help Jacqueline.

We all know that increased stress makes it harder for the body to fight back against serious illness. There is little in life that is more stressful than being evicted. By pursuing these foreclosure evictions US Bank and Wells Fargo are hurting the lives of Ana and Jacqueline.

You can help by:

  • Signing this petition to Wells Fargo CEO John Stumpf and US Bank CEO Richard Davis to stop sickness evictions and commit to no more illness foreclosures.
  • Adding your name to the more than 13,000 people who have already signed this other petition on behalf of Ana Casas Wilson.
  • Emailing your friends and posting this on your Facebook page to encourage others to join the campaign to help Ana and others like her save their homes from unfair evictions.
  • Showing up at Ana's press conference this Tuesday (October 30) at 10:30 am, at the Flower Street entrance of the Los Angeles Central Library to lend your support to the national campaign to end evictions of cancer patients. Wilson will join with groups around the country to push for a national bank moratorium on foreclosure evictions for homeowners with cancer.
  • Joining Ana and her friends and supporters at the round-the-clock vigil at her home at (8968 San Juan Ave., South Gate, CA 90280) to resist eviction.
  • Contacting Peter Kuhns, an organizer for the Alliance of Californians for Community Empowerment (ACCE) at (213) 272-1141 to offer your help.
 
 
 

JPMorgan rivals face billions in damages after New York fraud case

David McLaughlin, Bloomberg News

JPMorgan Chase & Co.’s rivals may face government lawsuits claiming tens of billions of dollars in damages tied to investor losses on mortgage bonds after New York’s attorney general filed a fraud lawsuit against the nation’s biggest bank by assets.

A state-federal task force set up this year to investigate misconduct in the bundling of mortgage loans into securities will bring other cases, according to New York Attorney General Eric Schneiderman. Investor losses in the JPMorgan case alone will be “substantially more” than the US$22.5-billion cited in his complaint, he said.

 

We’re looking at tens of billions of dollars, not just by one institution, but by quite a few

“We do expect this to be a matter of very significant liability, and there are others to come that will also reflect the same quantum of damages,” Schneiderman said in an interview yesterday with Bloomberg Television’s Erik Schatzker. “We’re looking at tens of billions of dollars, not just by one institution, but by quite a few.”

Schneiderman alleged that the Bear Stearns business that JPMorgan took over in 2008 deceived mortgage-bond investors about defective loans backing securities they bought. Bear Stearns “systematically failed” to evaluate loans, ignored defects uncovered and “kept investors in the dark” about review procedures and problems with the loans.

The Bear Stearns mortgage unit packaged US$212-billion in mortgage bonds from 2003 through 2006, according to the state’s complaint. Losses on US$87-billion of those bonds packaged during just two of those years total US$22.5-billion so far, it estimated.

Mortgage Securitizations

The case targets mortgage securitizations between 2005 and 2007 involving Alt A and subprime mortgages, Schneiderman said in a conference call with reporters. It will take further investigation to determine the full extent of the losses, he said.

“There are further losses being incurred,” according to Schneiderman, who called the case a “template” for cases against other issuers of mortgage securities.

New York will use at least some of the money it collects from the suits to reimburse investors, Schneiderman said in the Bloomberg interview.

“The investors who were defrauded deserve to get money back,” he said. “I don’t think there’s any dispute about that. This is a matter of doing justice. If anything, most folks in the U.S. think there were too few strings on the banks that were the recipients of the bailout and the recipients of taxpayer- backed loans.”

Contest Complaint

Joe Evangelisti, a JPMorgan spokesman, said the New York- based bank would contest the state’s complaint, which is “entirely about” conduct by Bear Stearns. JPMorgan acquired Bear Stearns in March 2008 after a run on what was then Wall Street’s fifth-largest securities firm.

“We’re disappointed that the NYAG decided to pursue its civil action without ever offering us an opportunity to rebut the claims and without developing a full record — instead relying on recycled claims already made by private plaintiffs,” Evangelisti said in an e-mail.

The case is the first legal action by the state-federal task force set up by President Barack Obama this year to investigate claims related to packaging mortgage loans into securities. The group includes officials from the Department of Justice, the Securities and Exchange Commission and the Department of Housing and Urban Development.

‘When Ready’

“There are quite a few investigations under way and we will bring cases when they’re ready,” Schneiderman said on the conference call.

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JPMorgan was sued by the Federal Housing Finance Agency last year over US$33-billion in mortgage securities sold to Fannie Mae and Freddie Mac. The bank is among more than a dozen financial institutions, including Bank of America Corp. and Goldman Sachs Group Inc., sued by the regulator over similar claims.

The JPMorgan case involves securitizations by JPMorgan, Washington Mutual and Bear Stearns, according to court papers. JPMorgan acquired Washington Mutual in 2008.

The top issuers of mortgage securities without government backing in 2005 included Bank of America’s Countrywide Financial unit, GMAC, Bear Stearns and Washington Mutual, according to trade publication Inside MBS & ABS. Total volume for the top 10 issuers was US$672-billion.

Countrywide Bonds

Countrywide ranked as the top issuer of the securities in 2005, 2006 and 2007, when the worst-performing debt was created, according to Inside MBS & ABS. The lender created US$405-billion of the US$3.04-trillion of bonds sold in those years.

JPMorgan, with Bear Stearns and Washington Mutual, are facing lawsuits and claims against mortgage-related deals totaling US$120-billion, the bank said in a regulatory filing. In the first quarter, JPMorgan had a US$2.5-billion pretax expense for additional litigation reserves, mostly mortgage-related, a charge that knocked 39 cents a share off its profit. The quarter’s actual litigation expense was US$2.7-billion.

As of March 31, the bank estimated its outstanding mortgage repurchase liability at US$3.5-billion, an amount already recognized in earnings, according to the quarterly filing. Litigation reserves may need to be increased, although probably not this year, the bank said.

Competitors

Among JPMorgan’s competitors, Citigroup Inc., the third- biggest U.S. bank by assets, “continues to cooperate fully” with regulators and law enforcers in response to subpoenas and information requests related to its mortgage activities, the bank said in its latest quarterly filing. It didn’t specify the cases.

Goldman Sachs Group Inc., the fifth-biggest U.S. bank, has had subpoenas and requests for information from state and federal law enforcers and regulators over mortgage-related securitization and subprime mortgages and is co-operating in the inquiries, the bank said in its latest quarterly filing.

A Securities and Exchange Commission probe of US$1.3-billion of subprime residential mortgage-backed securities underwritten in 2006 by Goldman Sachs ended without enforcement action, the bank said.

Recent filings by Bank of America, the second-biggest U.S. bank, mention that the bank receives subpoenas without specifying from whom or what for.

Citigroup, Bank of America and JPMorgan each estimated their litigation liabilities might at worst exceed their estimates by US$4-billion to US$5-billion.

Settlement Estimate

It may cost JPMorgan as much as US$3-billion to settle the New York case, although the cost could be higher depending on what the state ultimately requests, said Charles Peabody, a bank analyst with Portales Partners in New York.

“The language is so vague on what they’re defining in the way of damages, it’s so hard to know,” he said in an interview.

Peabody said his estimate is conservative and based on similar cases by private investors against Bank of America and other lenders, which have generally settled for about 2% to 3% of the original investment amount.

Since the state’s complaint doesn’t specify the timeframe, number of securities or amount of damages sought, Peabody based his estimate on the peak years of the housing boom from 2005 through 2007. Bear Stearns issued roughly US$162-billion in mortgage bonds over those three years, according to Peabody’s calculations.

“It’s very open-ended,” Peabody said. “Until you define it, everything is just that, an estimate.”

A settlement may be reached for as little as US$2-billion, Peabody said. He raised his estimate for JPMorgan’s third- quarter litigation costs to US$1.6-billion from US$500-million and cut his estimate for the bank’s earnings, which are scheduled to be released Oct. 12, by 17% to 95 cents a share.

The case is People of the State of New York v. J.P. Morgan Securities, 451556-2012, New York State Supreme Court (Manhattan).