WORLD • BUSINESS
L AWRENCE J OURNAL -WORLD
X Tuesday, July 19, 2011
| 7A.
2nd police official quits in scandal Obama threatens to veto
GOP plan to cut spending
By Jill Lawless and Cassandra Vinograd Associated Press Writers
LONDON — Scotland Yard’s assistant commissioner resigned Monday, a day after his boss also quit, and fresh investigations of possible police wrongdoing were launched in the phone hacking scandal that has spread from Rupert Murdoch’s media empire to the British prime minister’s office. Prime Minister David Cameron called an emergency session of Parliament on the scandal and cut short his visit to Africa to try to contain the widening crisis. Lawmakers today are to question Murdoch, his son James and Rebekah Brooks, the former chief executive of Murdoch’s U.K. newspaper arm. In a further twist, a former News of the World reporter Sean Hoare, who helped blow the whistle on Hoare the scandal, was found dead Monday in his home, but it was not believed to be suspicious. Murdoch shut down the News of the World tabloid after it was accused of hacking into the voice mail of celebrities, politicians, other journalists and even murder victims. The crisis has roiled the upper ranks of Britain’s police, with Monday’s resignation of Assistant Commissioner John Yates — Scotland Yard’s top anti-terrorist officer — following that on Sunday of police chief Paul Stephenson over their links to Neil Wallis, an arrested former executive from Murdoch’s shuttered News of the World tabloid whom police had employed as a media consultant. The government quickly announced an inquiry into police-media relations and possible corruption. Home Secretary Theresa May said people were natu-
By David Espo Associated Press Writer
Steve Parsons/AP Photo
LONDON'S METROPOLITAN POLICE ASSISTANT COMMISSIONER JOHN YATES ANNOUNCES his resignation Monday during a press conference in London. Former London police deputy John Yates said he acted with complete integrity in Britain's phone hacking crisis. Yates was the second high-profile casualty from the Metropolitan Police to resign in the past 24 hours. He was the official who decided two years ago not to reopen police inquiries into phone hacking, saying he did not believe there was any new evidence. rally asking “who polices the police,” and announced an inquiry into “instances of undue influence, inappropriate contractual arrangements and other abuses of power in police relationships with the media and other parties.” The Independent Police Complaints Commission also said it was looking into the claims, including one that Yates inappropriately helped get a job for Wallis’ daughter. Wallis, former executive editor of News of the World, was arrested on suspicion of conspiring to intercept communications. Yates said he had done nothing wrong. “I have acted with complete integrity,” he said. “My conscience is clear.” In another development, police confirmed that a second former News of the World employee was employed by Scotland Yard. Alex Marunchak had been employed as a Ukrainian language interpreter with access to highly sensitive police information between 1980 and 2000, the Metropolitan Police said. Scotland Yard said it recognized “that this may cause concern and that some pro-
fessions may be incompatible with the role of an interpreter,” adding that the matter will be looked into. The prime minister is under heavy pressure after the resignations of Stephenson and Yates, and Sunday’s arrest of Brooks — a friend and neighbor whom he has met at least six times since entering office 14 months ago — on suspicion of hacking into the cellphones of newsmakers and bribing police for information. Cameron’s critics grew louder in London as he visited South Africa on a two-day visit to the continent already cut short by the crisis. He dropped stops in Rwanda and South Sudan as his government faces growing questions about its cozy relationship with Murdoch’s media empire during a scandal that has taken down top police and media figures with breathtaking speed. Parliament was to break for the summer today after lawmakers grilled Murdoch, his son James and Brooks, in a highly anticipated public airing about the scandal. Cameron, however, said lawmakers should reconvene Wednesday “so I can make a further statement.”
W A S H I N G T O N — Courting confrontation and compromise alike, House Republicans shrugged off President Barack Obama’s threat to veto legislation to cut federal spending by trillions of dollars on Monday while simultaneously negotiating with him over more modest steps to avert a potential government default. The Republican bill demands deep spending reductions and congressional approval of a balanced budget amendment to the Constitution in exchange for raising the nation’s debt limit. But Obama will veto it if it reaches his desk, the White House said, asserting the legislation would “lead to severe cuts in Medicare and Social Security” and impose unrealistic limits on education spending. In response, GOP lawmakers said they would go ahead with plans to pass the bill today. “It’s disappointing the White House would reject this commonsense plan to rein in the debt and deficits that are hurting job creation in America,” Speaker John Boehner, R-Ohio said. By contrast, neither the administration nor congressional officials provided substantive details on an unannounced meeting that Obama held Sunday with the two top House Republican leaders, Boehner and Majority Leader Eric Cantor of Virginia. Obama said late Monday the two sides were “making progress.” Several Republicans said privately the decision to vote on veto-threatened legislation is paradoxically designed to clear the way for a compromise. They said conservatives would have a chance to push their deep spending cuts through the House, and then see the measure quickly die either in the Democratic-controlled
Senate or by veto. Barring action by Congress to raise the $14.3 trillion debt limit, the Treasury will be Boehner unable to pay all the government’s bills that come due beginning on Aug. 3, two weeks from Wednesday. Administration officials, Federal Reserve Chairman Ben Bernanke and others say the result could be a default that inflicts serious harm on the economy, which is still struggling to recover from the worst recession in decades. In a gesture underscoring the significance of the issue, Majority Leader Harry Reid, D-Nev., announced the Senate will meet each day until it is resolved, including on weekends. The two-pronged approach pursued by the House GOP follows the collapse of a weeks-long effort to negotiate a sweeping bipartisan plan to cut into future deficits. The endeavor foundered when Obama demanded that tax increases on the wealthy and selected corporations be included alongside cuts in benefit programs, and Republicans refused. The failure of that effort also reflects the outsized influence exerted by 87 firstterm Republicans, many of them elected last fall with tea party backing. As late as last Thursday,
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BUSINESS AT A GLANCE
Notable ● President Barack Obama moved Monday to get a new consumer protection bureau up and running, introducing a former Ohio attorney general as director, in an apparent acknowledgement that the woman who masterminded the agency couldn’t win Senate confirmation. In a Rose Garden ceremony under sunny skies, Obama announced he has chosen Richard Cordray to head the new Consumer Financial Protection Bureau. At the same time, Obama vowed to resist any efforts to block its work. “We are going to stand up this bureau and ensure it is doing the right thing for middle class families all across the country,” the president said. ● Small car prices, which have set record highs this year, are expected to come down this fall. Lower gas prices will make people comfortable driving something bigger. Honda and Toyota, which were hurt by the Japan earthquake, will crank up production of small cars. And Japan and Detroit will offer big discounts on smaller models as their lots fill up. Small-car prices should start falling in September and accelerate through the end of the year.
Monday’s markets Dow Industrials —94.57, 12,385.16 Nasdaq —24.69, 2,765.11 S&P 500 —10.70, 1,305.44 30-Year Treasury +.04, 4.29% Corn (Chicago) —8 cents, $6.77 Soybeans (Chicago) —0.75 cent, $13.86 Wheat (Kansas City) —3.50 cents, $7.61 Oil (New York) —$1.31, $95.93
Report: Mortgage ’robo-signing’ lingers By Michelle Conlin and Pallavi Gogoi Associated Press Writers
Mortgage industry employees are still signing documents they haven’t read and using fake signatures more than eight months after big banks and mortgage companies promised to stop the illegal practices that led to a nationwide halt of home foreclosures. County officials in at least three states say they have received thousands of mortgage documents with questionable signatures since last fall. Lenders say they are working with regulators to fix the problem but cannot explain why the practice, known collectively as “robosigning,” has continued. Last fall, the nation’s largest banks and mortgage lenders, including JPMorgan Chase, Wells Fargo, Bank of America and an arm of Goldman Sachs, suspended foreclosures while they investigated how corners were cut to keep pace with the crush of foreclosure paperwork.
A systematic problem Critics say the new findings point to a systemic problem with the paperwork involved in home mortgages and titles. And they say it shows that banks and mortgage processors haven’t acted aggressively enough to put an end to widespread document fraud in the mortgage industry. “Robo-signing is not even close to over,” says Curtis
DILBERT
Hertel, the recorder of deeds in Ingham County, Mich., which includes Lansing. “It’s still an epidemic.” In Essex County, Mass., the office that handles property deeds has received almost 1,300 documents since October with the signature of “Linda Green,” but in different handwriting styles and with many different titles. Linda Green worked for a company called DocX that processed mortgage paperwork and was shut down in the spring of 2010. County officials say they believe Green hasn’t worked in the industry since. Why her signature remains in use is not clear. “My off ice is a crime scene,” says John O’Brien, the registrar of deeds in Essex County, which is north of Boston and includes the city of Salem. In Guilford County, N.C., the office that records deeds says it received 456 documents with suspect signatures from Oct. 1 , 2010, through June 30. The documents, mortgage assignments and certificates of satisfaction, transfer loans from one bank to another or certify a loan has been paid off. Suspect signatures on the paperwork include 290 signed by Bryan Bly and 155 by Crystal Moore. In the mortgage investigations last fall, both admitted signing their names to mortgage documents without having read them. Neither was charged with a crime.
Republican leaders held a news conference to tout plans to vote this week on a proposed balanced budget amendment to the Constitution. But the same senior Republicans emerged from a closed-door meeting of the rank and file on Friday to say the House would instead vote on an alternative — dubbed by its advocates as “Cut, Cap and Balance.” No date has been set for a vote on the constitutional amendment itself. Officials said the change in course had been requested by members of the Republican Study Committee, whose members are among the most conservative in Congress. Supporters of the measure say it would cut $111 billion from government spending in the budget year that begins on Oct 1, and $6 trillion more over the coming decade through a requirement that the budget shrink relative to the overall size of the economy. Additionally, it would require both houses of Congress to approve a balanced budget amendment to the Constitution as a condition for an increase in the debt limit. Both Boehner and Cantor reacted relatively mildly to the White House veto threat. “As President Obama has not put forth a plan that can garner 218 votes in the House, I’d caution him against so hastily dismissing ‘Cut, Cap and Balance,”’ Cantor said.
Foreclosures start, stop And in Michigan, a fraud investigator who works on behalf of homeowners says he has uncovered documents filed this year bearing the purported signature of Marshall Isaacs, an attorney with foreclosure law firm Orlans Associates. Isaacs’ name did not come up in last year’s investigations, but county officials across Michigan believe his name is being robo-signed. The nation’s foreclosure machine almost came to a standstill when the nation’s largest banks suspended foreclosures last fall. Part of the problem, banks contended, was that foreclosures became so rampant in 2009 and 2010 that they were overwhelmed with paperwork. The banks reviewed thousands of foreclosure filings, and where they found problems, they submitted new paperwork to courts handling the cases, with signatures they said were valid. The banks slowly started to resume foreclosures this winter and spring. The 14 biggest U.S. banks reached a settlement with federal regulators in April in which they promised to clean up their mistakes and pay restitution to homeowners who had been wrongly foreclosed upon. The full amount of the settlement has not been determined. But it will not involve independent mortgage processing firms, the companies that some banks use to handle and file paperwork for mortgages.
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