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>If Jamie Dimon asked a developer at the bank "hey can you have Chase ATMs allow these 10 accounts that are in my name to withdraw unlimited funds?" everyone in

>If Jamie Dimon asked a developer at the bank "hey can you have Chase ATMs allow these 10 accounts that are in my name to withdraw unlimited funds?" everyone involved would be in jail. This isn't true I worked for a large bank. I managed data for their mortgages. We bought another bank and processed their mortgages with our systems. There were several thousand accounts that we called "friends of the <former CEO>" because they had really weird terms. A noteworthy example is: $10m Home Equity loan, with 2% interest for 40 years, and the owner could refinance any anytime without any fees In English, this means we can't repossess their loan, they pay a super low monthly payment, and the final amount is never really due.

mertd 4y ago
I fail to see the equivalence. These are just loans with weirdly favorable terms. If the other bank had shareholders, then this would be a breach of the fiduciary duty. Otherwise it's just bad business? Bad business != fraud.
- headsoup 4y ago
  Isn't it fraud if you're telling you're customers you don't and can't do this?
  - PeterisP 4y ago
    I'm not sure why would that be fraud - who would be the defrauded party there? Offering wildly different conditions or prices to different customers definitely isn't fraud. The other customers have no standing there, they have no relationship whatsoever that contract between the bank and another customer, they have no legal expectation to get the same conditions or to know what conditions other customers get. If the bank explicitly and intentionally lied that no other customers get so favorable conditions, that might be false advertising but I'm not sure, I'd expect a reasonable court to interpret that a bank "telling your customers you don't and can't do this" is exaggeration/puffery (i.e. permissible) and doesn't have to literally mean that they're not doing that for anyone, it means that they absolutely refuse to do it for you.
  - tiahura 4y ago
    No. A car salesman telling you they can't sell you the new Buick for $42,000, when they sold one to their neighbor yesterday for $41,000 is not fraud.
    - headsoup 4y ago
      Yeah but if the salesman told you it's a brand new Buick never been driven that they've actually been lending out to friends and driving around?
notyourwork 4y ago
In english it means the terms are 40 years to repay the loan at a 2% rate. Not sure how that translates to never really due.
- deleted 4y ago
  [deleted]
- zopa 4y ago
  I’m assuming the poster meant refinance with the same terms. So the borrower can get another 40 years to pay back the remaining balance anytime they like.
  - geoduck14 4y ago
    You're right. I believe the technical term is "recast" where you take all of the outstanding balance and spread it over the course of "the next 40 years" with the same interest rate. Another fact I omitted is that the interest rate is 2%, but the minimum payment is lower. So the borrower is accumulating owed balance because they are paying less than interesting accruing.
vel0city 4y ago
$10M ona 40 year term and a 2% rate is like $30k/mo in payments. I wouldn't say most people would think of $30k a month a super low payment. And now that the bank has new ownership they might be able to refinance again and continue to kick the can down the road, but they're less likely to get as favorable of terms I'd imagine.
- geoduck14 4y ago
  Your math is right. I forgot to mention than the minimum payment might be less than the interest rate. And the technical term for the type of refinance is "recast" (iirc) - so the "new bank" honors the terms because it is a part of the originating documents.
jacquesm 4y ago
Given the market of the last couple of years they may actually have been able to re-finance that loan with a different bank and gotten better terms. 40 years is a long time.
- megablast 4y ago
  > and the final amount is never really due. Yeah??

mertd 4y ago

I fail to see the equivalence. These are just loans with weirdly favorable terms. If the other bank had shareholders, then this would be a breach of the fiduciary duty. Otherwise it's just bad business? Bad business != fraud.

headsoup 4y ago
Isn't it fraud if you're telling you're customers you don't and can't do this?
- PeterisP 4y ago
  I'm not sure why would that be fraud - who would be the defrauded party there? Offering wildly different conditions or prices to different customers definitely isn't fraud. The other customers have no standing there, they have no relationship whatsoever that contract between the bank and another customer, they have no legal expectation to get the same conditions or to know what conditions other customers get. If the bank explicitly and intentionally lied that no other customers get so favorable conditions, that might be false advertising but I'm not sure, I'd expect a reasonable court to interpret that a bank "telling your customers you don't and can't do this" is exaggeration/puffery (i.e. permissible) and doesn't have to literally mean that they're not doing that for anyone, it means that they absolutely refuse to do it for you.
- tiahura 4y ago
  No. A car salesman telling you they can't sell you the new Buick for $42,000, when they sold one to their neighbor yesterday for $41,000 is not fraud.
  - headsoup 4y ago
    Yeah but if the salesman told you it's a brand new Buick never been driven that they've actually been lending out to friends and driving around?

notyourwork 4y ago

In english it means the terms are 40 years to repay the loan at a 2% rate. Not sure how that translates to never really due.

deleted 4y ago
[deleted]
zopa 4y ago
I’m assuming the poster meant refinance with the same terms. So the borrower can get another 40 years to pay back the remaining balance anytime they like.
- geoduck14 4y ago
  You're right. I believe the technical term is "recast" where you take all of the outstanding balance and spread it over the course of "the next 40 years" with the same interest rate. Another fact I omitted is that the interest rate is 2%, but the minimum payment is lower. So the borrower is accumulating owed balance because they are paying less than interesting accruing.

vel0city 4y ago

$10M ona 40 year term and a 2% rate is like $30k/mo in payments. I wouldn't say most people would think of $30k a month a super low payment. And now that the bank has new ownership they might be able to refinance again and continue to kick the can down the road, but they're less likely to get as favorable of terms I'd imagine.

geoduck14 4y ago
Your math is right. I forgot to mention than the minimum payment might be less than the interest rate. And the technical term for the type of refinance is "recast" (iirc) - so the "new bank" honors the terms because it is a part of the originating documents.

jacquesm 4y ago

Given the market of the last couple of years they may actually have been able to re-finance that loan with a different bank and gotten better terms. 40 years is a long time.

megablast 4y ago
> and the final amount is never really due. Yeah??