Price-Fixing, Who’s Shocked?

Price-Fixing, Who's Shocked? CoesterVMS Wrap-Up, Free FNMA/Freddie…criminal investigation into price-fixing…

The State of Pennsylvania has filed a class action law suit against some of the biggest banks and financial institutions in the country. The claim is these companies conspired to fix the prices on almost $500 billion in bonds issued by Fannie and Freddie over a mere 5 year period from 2009-2014.

The named defendants are: Bank of America – Barclays Capital – BNP Paribas – Citigroup – Credit Suisse – Deutsche Bank & Deutsche Bank Securities – First Tennessee Bank & FTN Financial Securities – Goldman Sachs – JP  Morgan Chase – Merrill Lynch – UBS Securities

These are not mortgage-backed bonds, but rather bonds issues by the GSE’s to cover their operating expenses. These were not publicly traded bonds and are classified as over the counter where investors worked directly with the named institution representatives. According to the law suit, the institutions underpaid sellers and overcharged buyers with predetermined pricing among themselves.

According to HousingWire, The Department of Justice has an open investigation against these institutions for price-fixing the GSE Bonds as well. See the lawsuit here.

Defendants had the ability to use secretive communications, such as multi-user electronic chat rooms, to maintain their collusive price-fixing scheme and coordinate in real time to share proprietary customer information and align their pricing. The Wall Street Journal has described secretive and instantaneous means such as chat rooms as “integral to the way traders communicate with one another.”..

And speaking of being shocked, no not really, we saw this coming for a while. VaCAP has been keeping you informed on the CoesterVMS and Brian Coester shenanigans for a while. Many appraisers stopped working for CoesterVMS prior to the official shut down. Unfortunately, some did not heed the warnings and may still be owed money. There is a surety bond filed with DPOR for this purpose, however, a court ordered judgement must be obtained prior to collecting. WorkingRE Magazine did an excellent recap on the demise of CoesterVMS.

Fannie and Freddie to be set Free? According to the article by Tyler Durden published on March 27, 2019, President Trump will release a plan to free Fannie and Freddie from Government Control.

Wells Fargo CEO Tim Sloan Suddenly Quits! The Bank has stated they will seek an outside candidate to replace Mr, Sloan who resigned after intense pressure from Federal Lawmakers. Will this be  turning point for Wells Fargo? The New York Times breaks down the events that led up to this abrupt decision.

VaCAP Board
Image credit flickr - Mr. Austin Frothingslosh
VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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9 Responses

  1. Avatar Advocate says:

    Well it looks like the banks have a history of this. Check out the lawsuit filed against 10 banks from the City of Baltimore for price fixing on bonds for public works… These bank Executives need to go to jail.

  2. Avatar CJK says:

    These are the very same corrupt corporations that will report an appraiser to the state. They also require all appraisers to carry E&O insurance just so they can file a claim when they make bad loans that go into default. One E&O company said that no one files more claims against appraisers than JP Morgan Chase. They will also black list you if you do not violate USPAP and do what they tell you to do. Now, these very same hypocrites do not even want the appraisers to look at the property for the appraisal, funny how they work. I am not sure how I made it 36 years in this corrupt environment, both as a staff and fee appraiser.

    • Avatar DianaN says:

      Let’s not forget the majority of appraisal work ordered by E & S who went belly up owning appraisers several million dollars was for J.P.Morgan Chase. When a lawsuit was filed against J.P.Morgan Chase in Florida court by appraisers, Chase basically said tough and the damn judge backed them up. Can’t help wondering how much J.P. stock the judge had.

  3. Avatar CJK says:

    I have a friend who was in charge of one of the underwriting departments for Countywide back in the day. When he left the company he talked to the local FBI about the corruption within the company. Higher level management was approving loans that the underwriters knew were bad. No one acted on his information and we all know what became of Countywide. Another friend was an underwriter with Wells for over 20 years, she was the head of one the the underwriting departments. Wells recently laid her off (with 600 others) and replaced her with another person from another department. This person was making much more money and had NO underwriting experience.

  4. Baggins Baggins says:

    Lots of content here. Great daily.

    CJK, that dang Denver Post, ad block denial and subscription wall. Always try to source the article from an alternative. Zero Hedge is the bomb! Wish I had more time there. Also would like to post there but if you’ve ever read their blog signup terms, they’re pretty harsh. If you didn’t know, ‘Tyler Durden’, ha, it’s like 3 or 5 different people and I’m not sure they ever did come clean with who’s who, but that is an anon set of authors whom are now widely known as just tyler.

    I’ve got the solution for gse mismanagement already ready to go, don’t sweat it. Cancel fractional reserve lending allowances, make them loan the entirety, from their own money, and stop all forms of taxpayer backing so they all go under when the music stops and the jig is up. Holy smokes, they’re going after all those big banks at once? They’re going to get buried in legal response paperwork. Figures though, those power players were finally proved to have manipulated libor and silver exchange rates for decades right under everyone’s noses and the exposure only recently came out. Just search caught manipulating the silver (or) libor exchange rate, there are a million articles from last year and prior. It’s not appraisal I don’t even bother but as usual, it always leads back to the fed in one form or another. If they were not printing fiat day and night, none of that would have happened. It’s the first receivers of money argument, the money is worth a lot more to them when they get it directly from the fed, than that money is worth further down the line. They’re borrowing from the fed at a negative rate for heaven’s sakes. Anyone know where I can get a loan like that as a non banker? It’s just important to understand that many lenders only engage customers to fleece them, they literally can simply do nothing and profit from negative rate borrowing, the taxpayer keeps these guys in business weather they willingly participate or not. Audit the fed.

    Google search; Caught manipulating sliver exchange rate

    I stay abreast of financial news with PTG. It’s really fun to listen to while I type up appraisal reports, you should try it.

  5. We have been accusing banks; AMCs and certain AMC oriented AMC associations with engaging in price fixing for years. As early as back in 2014 when Coester had achieved a one size fits all national price-fixing scenario that ‘magically’ all the other AMCs and banks were citing to their clients overnight…all before any appraiser was asked for a bid!

    • Avatar DianaN says:

      Mike, they are still price fixing. Just got a request for a single family 1004 and they were willing to pay me the huge sum of $325.00 WOW, but some appraiser took it.

      • Baggins Baggins says:

        Try playing around with that. I entered an address and got all zero’s back. Know of any others?

        How nifty, I entered a random and got 390 back. Who’s taking the ten dollars off the top? Appraisers typically bill in metric increments by the 25’s while most jump by 50 per difference. If you’re pricing down to the dollar, you’re doing it wrong, and so is the provider of that appraisal order request.

      • We have been distracted by TAFs shiny baubles of ad nauseum USPAP revisions and PAREA. IF FTC won’t settle the Louisiana case asap so other states can start enforcing DF C&R, then we need to start a new and completely independent campaign to get federal regulations changed.

        We may need to do that anyway with all the unofficial full steam ahead for hybrids

        One appraiser still has many unreleased documents reportedly showing collusion among the lenders/AMCs and others. When that can be released we need to be ready as appraisers all across the country.


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Price-Fixing, Who’s Shocked?

by VaCAP Board time to read: 2 min