Gretchen Morgenson is one of the more astute journalists in our country writing with insight for the NY Times about Wall Street and foreclosure frauds.  First thing this morning I was alerted to her latest article calling attention to the fact that the banks may be misrepresenting their profits (ya think? – I’m shocked).  I’m wondering about the rest of the expenses the banks don’t seem to be paying or claiming on their books – like insurance, HOA fees, taxes, maintenance… these are sizable figures and no one seems to be making them accountable.

FAIR GAME
2nd Loans, 2nd Wave of Losses
GRETCHEN MORGENSON
Published: July 16, 2011

HAVE you heard the good news? Big banks are making more money than we thought.

On Thursday, JPMorgan Chase said it earned $5.4 billion during the second quarter. On Friday, Citigroup said it earned $3.3 billion.

Despite such happy tidings, many banks face a daunting challenge, and one federal regulators want to know more about: the potential costs associated with home loans that banks made during the great credit mania.

Still to be dealt with are potentially large legal bills — and settlements — related to accusations that many banks acted improperly, first in bundling all those loans into mortgage securities, and later in foreclosing on homeowners.

Under pressure from the Securities and Exchange Commission, banks have been estimating the potential damage in their financial filings. Last October, the S.E.C. warned them to be scrupulous in detailing risks associated with demands that they buy back soured loans or securities, as well as about possible defects in securitizations and foreclosures.

But while the S.E.C. has been pressing banks to make comprehensive disclosures about these potential pitfalls, regulators have been quiet on another worry for investors: how banks are valuing their vast holdings of home equity lines of credit, also known as second liens. [MORE]