Ameriquest

Wall St Consultant Frank Luntz Pens Memo On How To Channel Economic Anxiety Into Protecting Wall St Abuses

By Lee Fang

Last Saturday, at the lobbyist-organized GOP retreat, President Obama called out GOP strategist Frank Luntz for pursuing tactics meant to simply “box in Obama” rather

than pursue substantive policy debate. True to form, Luntz has released a new memo — obtained by the Huffington Post — which lays out the arguments and language Republicans should use to kill financial reform. Luntz, who gained national recognition for his role in shaping the buzzword-heavy Contract for America with Newt Gingrich in 1994, has built a sizable business selling his messaging advice to both corporations and Republican campaigns.

The new memo instructs opponents of financial reform to simply lie about reform legislation, and to twist economic anxiety resulting from the recession into fear of any government effort to fix the underlying cause of the financial crisis. The most dishonest argument is that financial reform would “punish” taxpayers while rewarding “big banks and credit card companies.” In reality, top financial industry lobbyists are not only fighting proposed oversight regulations, but have said recently that they are opposed to “any regulation” at all.

Luntz, ever the publicity hound, leaks his memos out to the media to claim credit for the Republican charge against reforming Wall Street. While he is certainly a driving force behind much of the GOP misinformation, a closer look at his client list reveals that he is in fact being paid by the finance industry:

— Luntz client Ameriquest Mortgages: The proposed Consumer Financial Protection Agency (CFPA) would eliminate predatory mortgages. Ameriquest, America’s “sub-prime leader,” has been prosecuted by Attorney General Richard Blumenthal for inflating property values so borrowers could get bigger loans, imposing upfront fees without reducing interest rates as promised, and intentionally deceiving lenders with hidden penalties and interest rates on final loan documents.

— Luntz clients Merrill Lynch and Bear Stearns: Under proposed financial reform, big banks, like Luntz clients Merrill Lynch and Bear Stearns, would face anew structure designed to police financial products, prohibit predatory ones, and require clear forms and disclosures. The CFPA would also help regulate hidden bank fees and other bank abuses.

— Luntz client American Express: The CFPA would regulate the credit card industry, preventing predatory interest rates and fees.

Nearly every attack recommended by Luntz is not grounded in reality. For instance, he calls for opponents of reform to label a CFPA head an “unaccountable” “czar.” But the legislation clearly states that the CFPA’s Director would be appointed by the President, and then confirmed by the Senate. Luntz also charges that reform advocates are behind “lobbyist loopholes” in the bill. However, the most controversial loophole was inserted by Rep. John Campbell (R-CA), whose amendment allows an exemption for auto dealers. Of course, Campbell still tried to kill financial reform once it arrived on the House floor.

Confusing the public is the point of Luntz’s work. In an interview explaining his smears against health reform, Luntz told the New York Times last year that it did not matter what the actual policy offered — he would still call it a “Washington takeover.”

https://en.wikipedia.org/wiki/Ameriquest_Mortgage

Ameriquest was one of the United States' largest sub-prime mortgage lender until it was shut down in September 2007. Its loan origination practices were at the heart of the Financial crisis of 2007–2010.^[1] Ameriquest promoted the stated income loan, which allowed potential borrowers to state their income without any process of verification. Many of these stated income loans were the catalyst to the ultimate failure of Ameriquest itself, and a key factor in the 2007 subprime mortgage financial crisis.^[2]

Prior to its failure, Ameriquest was widely known in the United States through its promotional activity. It advertised widely on television, had blimps that flew over footballand baseball stadiums, and sponsored the Rolling Stones (2005 U.S. tour), the Super Bowl XXXIX Halftime show, and NASCAR drivers. Its ad slogan is "proud sponsor of the American dream," and their company motto was to "do the right thing." Additionally, in their commercials, Ameriquest also reiterated more than once that their customers are "more than a number." This is, of course, in reference to potential borrowers who may have had poor credit but were able to find financing with Ameriquest.

Ameriquest was among the first mortgage companies to use computers to search for prospective borrowers and to speed up the loan process and was accused of predatory lending practises by US regulators.

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History

Ameriquest was founded by Roland Arnall in 1979, in Orange County, California, as a savings and loan association, or thrift, called Long Beach Savings & Loan. The bank moved to Orange County in 1991 and was converted to a pure mortgage lender in 1994, and renamed Long Beach Mortgage Co. In 1997, part of the business that funded loans made by independent brokers was spun off as a publicly traded company. This spin-off, which was originally founded as a subsidiary corporation under the name Ameriquest Mortgage, was now renamed "Long Beach Mortgage".

The retail part of the business was renamed Ameriquest Capital, and remained private, solely owned by Arnall. (In 1999, Washington Mutual purchased Long Beach Mortgage.) Ameriquest Mortgage was a private company held by ACC Capital Holdings, also owned by Arnall.

At the time the company stopped originating loans in September 2007, Long Beach Savings & Loan had ultimately become the conglomerate of ACC Capital Holdings. ACC Capital Holdings was divided into three parts: Ameriquest Mortgage Company, the retail division; Argent Mortgage, the wholesale division; and AMC Mortgage Services, which was Ameriquest's failed attempt to become a company that could service other loans besides its own.

On August 31, 2008, Citigroup completed its acquisition of its wholesale origination-lending unit, Argent Mortgage, and its loan-servicing unit, AMC Mortgage Services, and shut down its retail-lending unit, Ameriquest Mortgage.

The home stadium of the Texas Rangers was called Ameriquest Field until March 19, 2007, when in an undisclosed agreement between the two entities, Ameriquest relinquished the naming rights, and the stadium was renamed to the "Rangers Ballpark in Arlington".

Subprime lenders made $587 billion in new mortgages in 2004, up from $390 billion in 2003, according to National Mortgage News. Ameriquest's share of that is estimated at over $50 billion.^[3]

On August 31, 2008, ACC Capital Holdings announced that it was closing Ameriquest by no longer taking loans and selling its loan-servicing unit to Citigroup.

Predatory lending allegation

In 1996, the company agreed to pay $3 million into an "educational fund" to settle a Justice Department lawsuit accusing it of gouging and predatory lending practices against older, female, and minority borrowers. Prosecutors accused it of allowing mortgage brokers and its own employees to charge these customers an additional fee of as much as 12% of the loan amount. As part of the settlement, Ameriquest (then still known as Long Beach Mortgage) agreed to use the educational fund to train its employees in proper mortgage techniques (training which most observers agree never actually occurred to any substantial degree^[citation ^needed]), and to refrain from utilizing predatory lending techniques (such as "bicycling"^{[clarification} ^needed]), but only within the State of California. Shortly after entering into this settlement agreement, the company "switched" names with its subsidiary and began aggressively seeking refinance-mortgage business throughout the United States.

In 2001, after being investigated by the Federal Trade Commission, the company settled a dispute with **ACORN**, a national organization of community groups, promising to offer $360 million in low-cost loans.

In February 2005, reporters Michael Hudson and Scott Reckard broke a story in the Los Angeles Times about "boiler room" sales tactics at Ameriquest. Their investigation found evidence that the company had undertaken various questionable practices, including "deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers' income to qualify them for loans they couldn't afford."^[4]

On 1 August 2005, Ameriquest announced that it would set aside $325 million to settle attorney-general investigations in 30 states to settle allegations that it had preyed on borrowers by offering loans with hidden fees and balloon payments.^[5] In at least five of those states—California, Connecticut, Georgia, Massachusetts, and Florida—Ameriquest had already settled multimillion-dollar suits. Brian Montgomery, the Federal Housing Administration commissioner, said that the Ameriquest settlement reinforced his concern that the industry was exploiting borrowers, and that he was "shocked to find those customers had been lured away by the "fool's gold" of subprime loans".^[5]

In May 2006, Ameriquest Mortgage announced it was closing all of its retail offices and in the future would make its loans through mortgage brokers, a channel that was not covered by the predatory-lending settlement with the Attorneys General.

On June 13, 2007, lawyers for borrowers, who were seeking to combine 20 suits into one class-action suit, asserted in a filing ^[6] in Illinois Northern District Court that "assets of the Ameriquest entities were transferred to (the owner of Ameriquest) Arnall with the actual intent to hinder, delay, or defraud the plaintiffs in this action."

Former employees from Ameriquest described a system in which they were pushed to falsify documents on bad mortgages and then sell them to Wall Street banks eager to make fast profits.^[1] There is growing evidence that such mortgage fraud may be at the heart of the Financial crisis of 2007–2010.^[1]

Charity

Ameriquest operated the Soaring Dreams Fund, which gives money to initiatives that help children. During the 2006 NASCAR Busch Series season, the fund was promoted on race cars, whose designs were picked in a contest.

References

^ :{Jump up to::(style="-webkit-user-select:none;top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:^a ^b(https://en.wikipedia.org/wiki/Ameriquest_Mortgage#cite_ref-RoadToRuinMayANP09_1-1) ^c(https://en.wikipedia.org/wiki/Ameriquest_Mortgage#cite_ref-RoadToRuinMayANP09_1-2) "Road to Ruin: Mortgage Fraud Scandal Brewing". American News Project hosted by The Real News. May 13, 2009.
:{Jump up:(style="-webkit-user-select:none;top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:^ Paul Muolo and Mathew Padilla. Chain of Blame. John Wiley & Sons, 2008, 2010. p. 86. ISBN 978-0-470-55465-4.
:{Jump up:(style="-webkit-user-select:none;top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:^ Mike Hudson, E. Scott Reckard (February 5, 2005). "Workers Say Lender Ran 'Boiler Rooms:{':(style="padding-right:0.2em"):}:". The Los Angeles Times. Retrieved October 10, 2010.
:{Jump up:(style="-webkit-user-select:none;top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:^ Mike Hudson and E. Scott Reckard, "Workers Say Lender Ran 'Boiler Rooms'," Los Angeles Times, Feb. 4, 2005. www.latimes.com/ameriquest
^ :{Jump up to::(style="-webkit-user-select:none;top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:^a ^b(https://en.wikipedia.org/wiki/Ameriquest_Mortgage#cite_ref-nyt1221_5-1) Becker, Jo; Sheryl Gay Stolberg; Stephen Labaton (December 20, 2008). "White House Philosophy Stoked Mortgage Bonfire". New York Times.
:{Jump up:(style="-webkit-user-select:none;top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:^ Case 1:2007cv03325 Illinois Northern District Court Miller

External links

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Great Recession

Categories:

300m$ class action suit

http://www.dfi.wa.gov/cs/ameriquest.htm

Roland Edmond Arnall, of California, is U.S. Ambassador to the Netherlands. Arnall was nominated July 28, 2005, by President George W. Bush to be Ambassador Extraordinary and Plenipotentiary of the United States of America to the Kingdom of the Netherlands. He was confirmed by the U.S. Senate on February 8, 2006.

It just so happens that Arnall, his wife, Dawn Arnall, and "their companies have been the biggest political contributors to Bush since 2002." [1]

"Major 527 donor Dawn Arnall should be happy to have her husband, Roland, nominated as Ambassador to the Netherlands. Roland is Chairman of Ameriquest, and Dawn is co-Chairman. Dawn Arnall gave $5 million in August 2004 to Progress for America Voter Fund, a 527 organization," PoliticalMoneyLine commented July 29, 2005.

Also on July 28, 2005, the same dayPresident Bush nominated Arnall to be ambassador to the Netherlands, "the company he controls said it would set aside $325 million for a possible settlement of allegations of predatory lending tactics. ... Arnall's company, Ameriquest Mortgage Co., is being investigated by regulators in 30 states. A $325 million settlement would be one of the largest ever in a predatory lending case." [2]

Contents[hide]

Political Contributions 2004

The Ameriquest Capital Corporation donated $250,000 for the second Bush inauguration. Arnall and his wife, Dawn Arnall, who is co-chairman of the company, were both fund raisers for Bush-Cheney '04 Inc., achieving Ranger status by raising $200,000. [3]

#106 on the 2004 Forbes 400

At the time of his nomination, Arnall was serving "as Co-Chairman of Ameriquest Capital Corporation, a company he founded in 1979. He has served two-terms as a Trustee of the California State University System, the largest university system in the United States. Mr. Arnall is also a founding co-chairman and board member of the Simon Wiesenthal Center and the Museum of Tolerance."

The Forbes 400 for 2004 said of Arnall: "Secretive founder of mortgage lender Ameriquest started company as Long Beach Savings & Loan 1980. Now offers full-service lending. Arnall also invests in oil and gas, insurance and real estate. Retail loans: $40 billion a year.Longtime political donor gives on both sides of the aisle: contributed to both Arnold Schwarzenegger and former Calif. governor Gray Davis, who officiated at his wedding; backing Bush campaign. Pet charities: wildlife protection, education and human rights. Spends downtime on $46 million, 650-acre Aspen, Colo. compound."

Related SourceWatch Resources

External links

Profiles

"Forbes 400 Richest in America: #106, Arnall, Roland," Forbes, 2004.

Articles & Commentary

"An energetic push to inaugural fund," New York Times News Service (The Hindu), December 26, 2004.
Kirstin Downey, "Bush Picks Ameriquest Owner as Ambassador. Firm's Lending Tactics Investigated," Washington Post, July 29, 2005.

Many Private and Public Sector Actors Could Have Prevented the Crisis

There was ample time and means to prevent any financial crisis from arising from the incipient epidemic of fraudulent lending. A large number of actors, the regulators, prosecutors, credit rating agencies, secondary market purchasers, inside and outside auditors – and, of course, the CEOs of the lenders making the fraudulent loans – could have stopped the appraisal fraud epidemic in its tracks. It is obvious why the CEOs of the fraudulent lenders did not stop the endemic appraisal fraud that was designed to cover up the endemic mortgage origination fraud. The spread of the mortgage fraud epidemics throughout the secondary market participants and CDOs is a testament to the power of the CEOs who lead accounting control frauds to suborn myriad private sector firms and professionals to aid their frauds.

The fact that no federal banking regulatory agency responded to the appraisers’ warning with effective action (or even a warning about the fraud epidemic) reveals how severe the damage is when three Presidents in a row (Clinton, Bush, and Obama) appoint anti-regulatory leaders for the agencies. Appointing anti-regulators is, of course, a self-fulfilling prophecy of failure. That is what the industry intends when it influences presidents to appoint anti-regulatory leaders. This particular regulatory failure to take the epidemics of fraudulent liar’s loans and appraisals is one of the most inexcusable in history.

We Know That Real Regulators Would Have Prevented the Crisis (Again)

It is not a hypothetical to say that real regulators would have reacted promptly, long before the crisis, to end the twin control fraud epidemics. We did so a decade before the appraisers first began their petition. We did so against exactly the same twin barrel fraud assault – led by the same CEO and the same lender. Only the name of the firm and the identity of its potential federal regulator had changed. We acted in 1990-1991 to halt this incipient epidemic of accounting control fraud because we were the regional regulators (OTS West Region) with jurisdiction over Orange County, California – the traditional birthplace of U.S. financial frauds.

We acted to end liar’s loans because we listened to our examiners who explained why no honest home lender would make liar’s loans and commit appraisal fraud. The alert reader will know that our struggle against the Orange County frauds in 1990-1991 constituted a “second front” in the war that the S&L control frauds were waging against our Nation. We were exceptionally busy during that period. We were driving the anti-regulator who controlled our agency, OTS Director Danny Wall, to resign in disgrace through our testimony in a series of explosive congressional hearings. Wall had removed our jurisdiction over Lincoln Savings under political coercion from the five U.S. Senators who became known as the “Keating Five” because we refused to rescind our recommendation that the government take over Lincoln Savings. If we failed to demonstrate that Wall had disgraced his office we would have been fired. We also had to end Darrel Dochow’s tenure as OTS’ head of supervision. Dochow had led the effort to cave in to Keating’s political intimidation. I considered him the worst professional banking regulator in the Nation. When Wall resigned in disgrace his successorremoved Dochow as head of supervision.

We were closing scores of failed S&Ls in our region, many of them exceptionally large. We were making thousands of criminal referrals, bringing scores of civil suits, and hundreds of enforcement actions. We were testifying before the Senate Ethics investigation of the Keating Five and the House ethics investigation of Speaker Wright. We were adopting new rules in conformance with the 1989 and 1991 legislative acts. I was defending a $400 million civil suit brought by Charles Keating against me in my individual capacity. We were training FBI agents and Assistant U.S. Attorneys. A material number of our top examiners were “detailed” to work for the FBI to serve as internal experts on their highest priority investigations. (This allowed them access to confidential Rule 6 (e) grand jury materials.) Many of us spent material time testifying in criminal cases as percipient and expert witnesses.

In our era, the industry did not yet call stated income loans “liar’s” loans. Our examiners had to figure out that the loans were endemically fraudulent.

The schwerpunktof the Orange County control fraud’s“liar’s loan” assault on the public was Long Beach Savings, led by Roland Arnall. Arnall caused Long Beach to be the pioneer in making liar’s loans. Arnall also caused it to be a leader in appraisal fraud and a pioneer in predatory mortgage lending targeting blacks and Latinos.

We drove stated income loans out the S&L industry in 1990-1991. Because of our supervisory crackdown on stated income loans, Arnall voluntarily gave up federal deposit insurance and converted to a mortgage bank for the sole purpose of escaping our regulatory jurisdiction. He changed Long Beach’s name to Ameriquest. A husband/wife team that we had “removed and prohibited” from the federally insured financial industry started a mortgage bank that became one of Arnall’s material competitors. Michael W. Hudson’s 2010 book The Monster provides a superb history ofAmeriquest. In addition to our supervisory actions that led Arnall to flee our jurisdiction we made the referrals to the Department of Justice about Long Beach’s predatory lending that included discrimination against black and Latino borrowers. Those referrals eventually led to DOJ sanctions against Ameriquest. Once Arnall was able to convert Long Beach into a mortgage bank, however, we lost all ability to protect the public from Arnall and Ameriquest.

The FTC and the state attorneys general, however, continued to have jurisdiction over aspects of Ameriquest’s mortgage lending. Their investigations prompted the third and fourth major sanctions against Ameriquest.

The Fed, the OCC, and the OTS Have No Excuse for Not Heeding the Warnings

The Fed had the unique authority under the Home Ownership and Equity Protection Act of 1994 (HOEPA) to stop all “liar’s” loans by any lender regardless of whether the lender had federal deposit insurance. The Fed held the hearings at which Krystofiak testified because Congress mandated that it did so because of continuing concerns in Congress about predatory lending.

The Fed was never dealing with a crisis from 2000-2007. It was “busy” notdealing with the crisis. The Fed had far greater staff than we, the OTS West Region, had. The Fed finally used HOEPA to ban liar’s loans in mid-2008. Even then, it acted in response to Congressional demands that they do so. Worse, Bernanke delayed the effective date of the rule by 15 months – because one would not want to inconvenience a fraudulent lender.

The Fed had the immense advantage of our experience with liar’s loans, the testimony of Krystofiak and dozens of other witnesses, the fact that the industry now called the loans “liar’s loans,” and the warnings from the appraisers, the FBI, MARI, and the state attorneys general. The frauds were massively greater in their era because they failed to act.

The OCC and the OTS failed when Ameriquest’s fraudulent lending operations were sold. Citicorp and Washington Mutual’s (WaMu) holding company eagerly acquired Ameriquest’s operations and pumped out tens of thousands of additional fraudulent loans. The OCC and the OTS had all the advantages not simply of our general crackdown on liar’s loans but our two actions against Long Beach Savings and the subsequent actions of the FTC and the state attorney’s general. It was insane to allow Citicorp and WaMu to acquire Ameriquest’s fraudulent and predatory lending arms. OTS gets the prize for worst of the worst because it promoted Dochow repeatedly and put him in charge of the West Region where he again failed to regulate. OTS compounded the insanity of allowing WaMu’s holding company to acquire Ameriquest’s mortgage operations (called “Long Beach Mortgage) by permitting the holding company to transfer Long Beach Mortgage to WaMu, the federally insured S&L. That transfer put the FDIC fund and the Treasury at risk of loss. Long Beach Mortgage had fraudulently sold so many fraudulent and predatory liar’s loans, often with fraudulent appraisals, that its potential liability was enormous. . ...http://www.alternet.org/print/economy/fedearl-reserve-and-mortgage-crisis

Ameriquest

Contents

History

Predatory lending allegation

Charity

See also

References

External links

Political Contributions 2004

#106 on the 2004 Forbes 400

Related SourceWatch Resources

External links

Profiles

Articles & Commentary