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Deutsche Bank Sued for Tax Fraud; 3% Downpayments Make Comeback


americanbanker.com | December 10, 2014 

By Sarah Todd

Shell Shock: Deutsche Bank is accused of owing the U.S. government more than $190 million in taxes, penalties and interest in a lawsuit filed Monday by federal prosecutors in Manhattan. The allegations against the German lender are pretty complicated, as the New York Times warns its readers. The basic charge is that back in 2000, Deutsche wanted to avoid paying capital gains taxes on the appreciated value of Bristol-Myers Squibb stock it had recently acquired—so it sold the shares to shell companies in a way that allowed it to dodge tax liabilities. "This was nothing more than a shell game," Preet Bharara, U.S. attorney for the Southern District of New York, said in statement. (Prosecutors always seem to relish the chance to use hard-boiled slang in their press releases.) Deutsche plans to fight the lawsuit, arguing it already dealt with the issue in a 2009 settlement with the Internal Revenue Service. Wall Street Journal, Financial Times, New York Times.

Home Sweet Home: New programs offered by Fannie Mae and Freddie Mac will allow some borrowers to take out mortgages with downpayments as low as 3%. The programs are aimed at expanding homeownership access for people with solid credit but limited cash on hand. To some critics, they're also reminiscent of the policies that helped bring about the subprime mortgage crisis. "You're essentially underwater when you walk away from the table," the Cato Institute's Mark A. Calabria tells the Times. The nonprofit research group the Urban Institute downplays such concerns: "Those who have criticized low-down-payment lending as excessively risky should know that if the past is a guide, only a narrow group of borrowers will receive these loans, and the overall impact on default rates is likely to be negligible." As the Washington Post notes, Fannie Mae's program reverses its decision to stop accepting 3% downpayment mortgages in late 2013. Bonnie Sinnock of National Mortgage News explained why the GSEs are changing course in an article last month.

Wall Street Journal

In a move that suggests the Federal Reserve is getting closer to raising interest rates in mid-2015, some officials are thinking about changing the language of the Federal Open Market Committee's declaration that rates will stay low "for a considerable time." New York Fed president William Dudley has already made the shift in his latest speeches, according to the paper, saying instead that "the Fed should be 'patient' before raising rates."

Financial Times

Have the Financial Stability Board's proposed rules for systemically important financial institutions put a nail in the coffin of too big to fail once and for all? The FT's Martin Arnold offers up some reasonable doubt, running through a list of potential pitfalls of the "total loss-absorbing capacity" requirement. One of the big ones: many investors holding loss-absorbing notes that would be used to bail in big banks would be pension funds and insurers. "Imagine the headlines: My pension was wiped out to rescue greedy bankers," Arnold writes.

New York Times

Waivers for banks that violate securities laws shouldn't grow on trees, according to a column by Peter J. Henning. He believes the Securities and Exchange Commission may be ready to curtail its practice of allowing banks to go back to business as usual after breaking the rules. This optimism was sparked by the agency's handling of Bank of America's request to be released from a ban on certain activities after its $16.7 billion mortgage securities settlement. "The S.E.C. is likely to take a tougher stance in agreeing to waivers of the bad actor prohibition, which means defense lawyers will have to consider the waiver issue right from the start rather than assuming the agency will rubber-stamp requests," he writes.


Back to December 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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