Where is the Money Going?

N.Y. State Sues California Lender over High Rates and Collection Practices

The attorney general said the companies have made at least 17,970 loans in New York worth $38 million since 2010, for which they were now owed $185 million. Annual interest rates ranged as high as 355%. A two-year $1,000 loan would cost the consumer $4,942 in interest and principal.At least nine other states and the Federal Trade Commission have taken action against CashCall and/or Western Sky, some very recently. read more

Feds and Banks Go After Richmond for Its Eminent Domain Mortgage Plan

Last Wednesday, Wells Fargo Bank and Deutsch Bank made good on threats by the financial industry to take legal action and sued in federal court. On Friday, the FHA said it would instruct U.S.-sponsored mortgage giants Fannie Mae and Freddie Mac to “limit, restrict or cease business activities” in any area that used eminent domain to seize underwater properties. That would be a death sentence for any city. read more

Long-Term-Care Policyholders Sue CalPERS after 85% Premium Increase

The lawsuit argues that CalPERS had given them no warning of the announced rate hike in February, or told them that the program was “grossly underfunded” and hadn’t enrolled any new members since 2009. “Now more than 125,000 Class Members, many of whom are elderly and on fixed incomes, are placed in the untenable position of either allowing their policies to lapse or paying CalPers increased premiums that they simply cannot afford,” the suit complains. read more

5 Years after Contributing to Financial Meltdown, S&P is Back to Giving Inflated Credit Ratings

Inflating the credit-worthiness of dicey Wall Street financial securities was a winning strategy for the nation’s top ratings agencies before the financial collapse of 2008 put a crimp in their style. But despite multiple multi-billion-dollar lawsuits filed by the federal government and more than a dozen states—including one in California—Standard & Poor’s (S&P) is revisiting those discredited practices, according to a study commissioned by the New York Times. read more

Richmond’s Plan to Beat Foreclosures: “Seize” Homes and Resell to Owners

The city is strongly considering using the power of eminent domain to seize the homes, which are worth less than the amount owed on the mortgage, and sell them back to the owners at fair market prices. It would be the first city in the nation to use eminent domain in this fashion. Besides threatening court action, banks are seeking legislation at the state and federal level to snuff out the nascent movement, and revving up advertising campaigns to argue their case. read more

California Companies Dominate List of Those Using Offshore Tax Dodges

Eighty-two of the top 100 publicly-traded companies in the United States, including 13 that are California-based, keep $1.17 trillion outside the country to avoid U.S. taxes, according to a new study (pdf) by the California Public Interest Research Group (CalPIRG). General Electric keeps the most money in tax havens, $108 billion, followed by California’s own Apple, at $82.6 billion. read more

Drug Rehab Clinics and Their Fake Clients Allegedly Rip off Taxpayers for Millions

The yearlong probe implicated 56 clinics in schemes that may have ripped off the state’s version of Medicaid for $94 million over a two-year period. That’s about half the money spent through the program on drug rehabilitation for the poor. Clinics allegedly round up clients from foster care, board-and-care homes and off the street who don’t have addictions or need rehabilitation and submit paperwork based on their participation in the program. read more

JPMorgan to Pay $410 Million in Enron-Like Scheme, but Admits Nothing while Execs Skate

Not only does the settlement contain no admission of guilt by JPMorgan, it will have no “material impact” on JPMorgan earnings because the company had already set aside money in its reserves to cover the costs, according to the Los Angeles Times. JPMorgan had $97 billion in revenue last year. That’s billion, with a “b.” read more

State AG Wants to Know Why Famed Car Museum Is Making Questionable Sales

California Attorney General Kamala Harris wants to know why the famed museum is selling 119 cars from its collection of 400 vehicles, at least 10 of which were either donated or loaned to the Petersen by the Los Angeles County Natural History Museum. Members of the attorney general’s staff met with museum officials last week. read more

State Government Finally Embraces Transparency, Wants to Post Retiree Pension Info

The public’s right to know how its money is spent collided with an individual’s right to privacy when the California Public Employees’ Retirement System (CalPERS) announced two weeks ago that it plans to post pension information online about its 500,000 retirees. The database was scheduled to go live the week after the announcement but an outcry from retirees and talk of a lawsuit gave CalPERS officials pause and they delayed releasing the information. read more

A Not-Too-Transparent Look at State Government’s Lobbyist Data

if you really want to know “how much is being spent on lobbying” you either have to buy a CD-ROM of the raw database from the state, wait until next Labor Day when, the Secretary of State promises, a copy of the database will be available for download, or rely on the kindness of strangers. Last week, the Sacramento Bee made available a rudimentary online form for accessing some of the data about lobbying of state government, sufficient to glean a few lists of who did what for who. read more

Barclays Bank Fined $453 Million for Rigging California and Western Energy Markets

The British-owned financial institution, fresh from a $450 million fine for its role in rigging the London Interbank Offer Rate (LIBOR), said it and its traders did nothing wrong by placing complicated bets, in a derivative swaps market, against its own energy market investments. Four traders for the bank were also fined a total of $18 million for their role in what is called a “loss-leader” scheme. read more

State Regulators Flip on San Bruno Blast, Seek $300 Million Fine for PG&E

One of the PUC’s most vocal critics, The Utility Reform Network (TURN), said the new proposal mirrors its own recommendations on consumer benefits. “The differences between the two proposals are night and day,” TURN's legal director Thomas Long told the Oakland Tribune. “The first proposal was smoke and mirrors. This is a real proposal that holds PG&E accountable for serious and unprecedented violations of the law that led to the explosion.” read more

$1 Billion Lead Cleanup Lawsuit Underway after 13 Years of Legal Maneuvering

The lawsuit differs from other unsuccessful attempts in seven other states to sue lead paint manufacturers by arguing the companies violated state public nuisance laws, rather than health laws. Government lawyers won’t have to show that specific individuals were harmed in a direct way, only that the industry assisted in the creation of a public nuisance. read more

Tribune, Burdened with Tax Liabilities, Wants to Spin off L.A. Times and Its Newspapers Rather than Sell Them

Tribune announced a $2.7 billion deal last week to add 19 television stations to the 23 it already owns, taking on billions of dollars of new debt less than a year after emerging from a tortuous 5-year bankruptcy. The company would package them with radio, online and real estate holdings and keep the name Tribune Corporation, while the newspapers would be on their own as the Tribune Publishing Company. read more

Treasurer’s Office Report Says Default Is Likely if Road Tolls Aren’t Extended 13 Years

The agency that controls Orange County’s 51 miles of failed toll roads in Southern California wants to restructure its $2.4 billion debt and delay by 13 years, until 2053, the date when the freeways become free for drivers. Last week, a report (pdf) out of state Treasurer Bill Lockyer’s office recommended the Foothill/Eastern Corridor Transportation Agency get the green light, otherwise, it will probably default on its existing bonds. read more