Sunday, December 8, 2013

CA Supreme Court Judge Holding Millions in Wells Fargo Stock Rules in Favor of WF in Mortgage Case

During information gathering for an article on State Supreme Court Justices’ disclosure requirements called State Supreme Court Justices Reveal Scant Financial Information, the Center for Public Integrity discovered an egregious conflict of interest by California State Supreme Court Justice Kathryn Werdeger.

According to the article by Kytja Weir:

Last December, the California Supreme Court declined to hear an appeal filed by a couple who had accused financial giant Wells Fargo & Co. of predatory lending.

One justice, who owned stock in the bank, recused himself from the case. But Justice Kathryn Werdegar, who owned as much as $1 million of Wells Fargo stock, participated — and shouldn’t have.

What makes that conflict of interest by the highest court in California so important is a case that is winding its way through the California court system involving Wells Fargo and the City of Richmond

Richmond became the first city in the country to offer to purchase mortgages of distressed homeowners from Wall Street banks and other lenders.  The city council approved a plan in April to allow the city to use its eminent domain authority to purchase loans in order to modify them and allow families to avoid foreclosure and stay in their homes. 
Eminent Domain is the power of government to take private property for the public good.  The 5th Amendment to the U.S. constitution was put into law by James Madison to ensure property owners would receive “just compensation” for their property.  Just compensation as defined by the Supreme Court means “fair market value”.

The City of Richmond’s case is based on the 2005 Kelo vs. the City of New London, CT US Supreme Court Case.  In that case the United States Supreme Court ruled in a controversial 5-4 decision, that a private developer could seize the land of private citizens for economic development as long as they paid “fair market value”. 

In the City of Richmond, California almost half of the city’s residential mortgage holders are underwater.
According to Richmond Mayor Gayle McLaughlin, “We are stepping in by taking these troubled loans off the hands of the banks, and we’re paying them fair market value for these loans.  And then we’re working with the homeowners to refinance and modify loans in line with current home values.  We call on the banks to voluntarily sell us these loans, and if they don’t cooperate, we will be considering eminent domain”.
 “Wells Fargo, three other banks and even the Federal Housing Finance Agency think otherwise”.
“The banks have filed two lawsuits alleging that the plan is an illegal abuse of eminent domain, which allows governments to seize private property for public use – like a house in the path of a new highway or a piece of land needed for a new park”.
 “The banks argue the plan would "severely disrupt the United States mortgage industry" because many other cities would likely adopt the same program to help homeowners who owe more on their mortgages than their houses are worth”
The Obama Administration’s Federal Housing Finance Agency has sided with Wells Fargo bond holders and the banks against the City of Richmond and its residents. 
However, according to a December 6th article in the Credit Union Times by David Morrison, the ACLU has filed suit against Obama’s Federal Housing Agency:
The American Civil Liberties Union has sued the Federal Housing Finance Agency seeking information about the FHFA’s position on the use of eminent domain to reduce the principal amounts of mortgage loans.

The organization brought the suit in U.S. District Court for the Northern District of California under the federal Freedom of Information Act, contending that it had asked the agency about how it has developed its position on the use of eminent domain to reduce mortgage principal and, particular, about the role larger banks might have played in developing that policy.

"The FHFA has taken an aggressive stance on this issue in a way that has harmed minority communities. The public deserves to know why," said Linda Lye, staff attorney with the ACLU of Northern California.

The ACLU said that it first asked for the information in October and, after receiving one response from the agency, have not received any more.

In the wake of the city of Richmond, Calif., beginning to take steps toward using eminent domain to reduce the principal on some mortgages, the ACLU charged the FHFA threatened legal action against Richmond or any other city that uses eminent domain to reduce mortgage principals and by threatening to deny credit to people seeking mortgages in those communities.

Imagine that, the United States Government under Barack Obama is threatening any city that uses eminent domain to reduce mortgages and keep people in their homes. Will the California Supreme Court Justices with millions of shares of Wells Fargo Stock recuse themselves?

I guess that Wall Street Banks who funneled a billion dollars into the Obama campaign are being paid off in the trillions.

By Patricia Baeten

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