News Clips – Friday, April 15, 2011

 

Get Bad Loan Terms? Now You’ll Get Some Clues Why Posted on April 15, 2011 by admin Did you apply for a loan but receive a higher interest rate than you think you deserve? You’re now entitled to receive a few clues about how the lender arrived at its decision. A federal law that went into effect at the beginning of the year requires lenders to make certain disclosures to consumers when they receive less favorable credit terms than those given to borrowers with more pristine credit histories. That may come in the form of a higher interest rate, or a smaller line of credit. Get Bad Loan Terms? Now You’ll Get Some Clues Why – NYTimes.com . Posted in Bank Regulation (domestic) , Consumer Protection , mortgage lending/brokering | Comments Off

Budget Deal Cuts Reverse-Mortgage Counseling Posted on April 15, 2011 by admin One casualty of the latest federal budget deal: Funds for counseling older Americans seeking reverse mortgages, or loans that let those 62 and over tap their home equity. The latest proposal for the current fiscal year, which is scheduled for final votes in Congress imminently, cuts $88 million from the Department of Housing and Urban Development’s budget for loan counseling programs, including for reverse mortgages, a HUD spokesman confirmed Thursday. Some $9 million of that total is reserved for reverse mortgage counseling, which helps borrowers understand the benefits, costs and risks, of such loans, says Barbara Stucki, vice president for home equity initiatives at The National Council on Aging. The cuts mean that unless groups like the NCOA, which use HUD grants to offer the counseling free to potential borrowers, can raise other funds, they will have to charge for the service. The counseling is mandatory under federal regulations, so borrowers would still have to get it before getting their loan. But they may have to shell out their own money, Ms. Stucki says. Budget Deal Cuts Reverse-Mortgage Counseling – NYTimes.com . Posted in HUD , Reverse Mortgage , mortgage lending/brokering | Comments Off

In or Out? Banks Ponder $4 Trillion Ring-Fencing Posted on April 15, 2011 by admin Under proposals from a panel looking at ways to shield savers and taxpayers from a repeat of the global financial crisis, banks must set up separate retail subsidiaries. The sheer size of Britain’s top banks, whose balance sheets dwarf its economy, and the global nature of the likes of HSBC and Barclays, whose operations include extensive investment banking operations, makes it a daunting prospect. The retail arms could cover over 2.5 trillion pounds of assets, or maybe just a third of that, depending on what is included. But many details about the structure of those units and what will go on to their books will only be clarified in six months time. In or Out? Banks Ponder $4 Trillion Ring-Fencing – NYTimes.com . Posted in Bank Regulation (Foreign) , Bank Regulation (domestic) | Comments Off

Swaps Regulation Battle At Forefront As Trade Group Meets Posted on April 15, 2011 by admin It’s crunch time for the $583 trillion global swaps market, and nowhere will the battle lines between market participants and regulators be clearer than at the annual meeting this week of the International Swaps and Derivatives Association, a trade group for buyers and sellers of over- the-counter derivatives. U.S. regulators are striving to meet a mid-July deadline in the Dodd-Frank Act for new rules governing how certain swaps can be traded and processed in what could represent one of the biggest overhauls in the history of financial market regulation, dramatically affecting bank revenues. Similar efforts are afoot in Europe and Asia. ISDA, whose members include dealers, institutional investors and corporate users, has been lobbying against what it says are flaws in the regulatory proposals, but its members ultimately may have to figure out how to adapt to the new rules or fight to repeal them over time. This will be a prime topic at the meeting, held this year in Prague.  Swaps Regulation Battle At Forefront As Trade Group Meets . Posted in Derivatives , Dodd-Frank , Uncategorized | Comments Off

UPDATE 2-Deutsche Bank to take bank out of US unit-source | Reuters Posted on April 15, 2011 by admin Deutsche Bank AG plans to change the legal status of its main U.S. subsidiary to avoid having to inject billions of dollars of capital into it under new regulations, a source close to the German lender said. Under the Dodd-Frank financial reform law that Congress passed last year in the wake of the financial crisis, Deutsche Bank would have had to inject capital into Taunus Corp, its main U.S. unit, the source who was briefed on the situation said. UPDATE 2-Deutsche Bank to take bank out of US unit-source | Reuters . Posted in Bank Regulation (Foreign) , Bank Regulation (domestic) , Basel II | Basel III | Comments Off

Madoff Trustee’s Filing Alleges JPMorgan ‘Thoroughly Complicit’ in Fraud Posted on April 15, 2011 by admin The trustee liquidating con man Bernard L. Madoff’s former investment firm filed a revised complaint that disclosed new details of his $6.4 billion lawsuit against JPMorgan Chase & Co. The document, a new version of the complaint filed by trustee Irving Picard on Dec. 2 in Manhattan, adds information redacted from the original, including the names of almost two dozen JPMorgan Chase employees and Madoff investors Norman Levy and Carl Shapiro Today’s filing follows a ruling by U.S. Bankruptcy Judge Burton Lifland on April 12 ordering that the names be made public. Lifland allowed other information to remain private to protect trade secrets and confidential research. “For whatever it’s worth, I am sitting at lunch with Matt Zames who just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme,” John Hogan, the bank’s chief risk officer, according to Picard, is quoted as saying on June 15, 2007, a year and a half before Madoff was arrested. Madoff Trustee’s Filing Alleges JPMorgan ‘Thoroughly Complicit’ in Fraud – Bloomberg . Posted in Bank Fraud | Comments Off

Banks, SEC in talks to settle mortgage charges Posted on April 15, 2011 by admin The securities regulator is in talks with major Wall Street banks to settle fraud allegations relating to the sale of toxic mortgage bonds to various investors that helped unleash the financial crisis, the Wall Street Journal reported, citing sources familiar with the matter. The first settlement with the Securities and Exchange Commission could be reached as soon as next week, while some of the other deals could take months to work out, the WSJ said. SEC’s negotiations with the banks include JPMorgan Chase, Citigroup Inc, Morgan Stanley, Merrill Lynch, now an unit of Bank of America, and UBS, according to the Journal. Banks, SEC in talks to settle mortgage charges: report | Reuters . Posted in Uncategorized | Comments Off

Credit ratings agencies a ‘key cause’ of the financial crisis: Senate report Posted on April 15, 2011 by admin A bipartisan study on the financial crisis from a Senate subcommittee mirrors the Financial Crisis Inquiry Commission’s report in that it blames credit ratings agencies for unleashing the market madness that consumed investors three years ago. The Senate Permanent Subcommittee on Investigations released findings from a two-year study this week, saying “inaccurate triple-A credit ratings” from Standard & Poor’s and Moody’s Investors Service introduced risk into the financial system and “constituted a key cause of the financial crisis.” Credit ratings agencies a ‘key cause’ of the financial crisis: Senate report « HousingWire . Posted in Credit Rating , FCIC , Financial Crisis | Comments Off

Lawmakers to consider reducing QRM down payment to 10% Posted on April 15, 2011 by admin Lawmakers in the House of Representatives are considering a push to lower the 20% down payment required for exemption of the recently proposed risk-retention rules on securitized mortgages. The House capital markets subcommittee held a hearing Thursday on the risk retention rule proposed in March and its unintended consequences. The rule, approved by federal regulators, would require lenders to maintain 5% of the risk on mortgages pooled into securities. An exemption was also established. Any qualified-residential mortgage that has, among other requirements, 20% down would be exempt from risk retention. Critics of the rule claim the 20% down is too high, and that lenders wanting to avoid holding onto the risk would price out low- to middle-income borrowers and further constrict demand for an already struggling housing market. Lawmakers to consider reducing QRM down payment to 10% « HousingWire . Posted in Mortgage Backed Securities | Comments Off

Fed makes another $534 million on sale of AIG assets Posted on April 15, 2011 by admin The Federal Reserve Bank of New York recouped well over a $1 billion this week by selling subprime mortgage bonds it acquired from American International Group  in 2008. On Thursday, the bank sold eight bonds from its Maiden Lane II portfolio for $534.1 million. Earlier in the week, the central bank sold 37 subprime mortgage bonds for $626 million. The transactions suggest there is still demand for this asset class in the market. The Fed acquired the bonds from AIG in the heat of the financial crisis and parked them in its Maiden Lane II portfolio. The new sales follow a $1.3 billion subprime mortgage-backed offering by the Fed on similar AIG assets a week ago. Fed makes another $534 million on sale of AIG assets « HousingWire . Posted in Federal Reserve Board/The Fed | Comments Off

Lawmakers press financial regulators on systemic importance Posted on April 15, 2011 by admin Lawmakers criticized regulators on a new oversight council Thursday for not specifying how they would determine what financial institutions are systemically important to the economy. Members on both sides of the aisle argued that the new Financial Stability Oversight Council (FSOC) has failed to establish a clear process for how financial firms would receive the systemically significant designation, which brings added federal oversight and stricter capital requirements. The council, which was created by the Dodd-Frank law and charged with broad oversight of the financial market, gathers the top financial regulators together for regular meetings and rulemaking. Lawmakers press financial regulators on systemic importance designation – The Hill’s On The Money . Posted in Bank Regulation (domestic) , Dodd-Frank , FSOC , Too Big To Fail | Comments Off

State & Political News | April 15, 2011 Posted on April 15, 2011 by admin Pay freeze would hurt pensions of aging state work force Negotiations between Gov. Andrew Cuomo and state employee unions took a new turn this week when the governor reached a tentative pact with one of the smallest state bargaining units, the law enforcement officers represented by Council 82. But that doesn’t guarantee the state’s major unions, the Public Employees Federation and the Civil Service Employees Association, will agree to the contract offered to the 1,160 members of Council 82. Because that deal calls for a pay freeze through March 2014 and other givebacks, PEF and CSEA leaders distanced themselves from the Council 82 package as soon as it was announced on Wednesday. PEF President Ken Brynien said the Council 82 agreement “in no way sets the groundwork for our continuing negotiations.” http://www.timesunion.com/local/article/Pay-freeze-would-hurt-pensions-of-aging-state-1338160.php Savage leaving for state tax post Susan E. Savage will resign over the weekend as chairwoman of the Schenectady County Legislature to take a job in Gov. Andrew Cuomo’s administration at the Department of Taxation and Finance.  The Niskayuna Democrat has been tapped to become assistant deputy commissioner with the department’s Office of Real Property Tax Services, according to county spokesman, Joseph McQueen.   http://www.timesunion.com/local/article/Savage-leaving-for-state-tax-post-1337028.php Comptroller: Agencies skirt laws State Comptroller Thomas DiNapoli says several local governments are avoiding fiscal laws by creating special agencies to fund projects that leave taxpayers holding the bag. DiNapoli says examples of misuse of local development corporations include a fire station that cost $9 million more than taxpayers agreed. In another, a deal soured that left taxpayers with a ferry too costly to operate…The Democrat said the tax-exempt agencies are supposed to build or renovate buildings for new employers as part of their economic development duties, but are too often being used to borrow and spend money when fiscal restrictions aimed at protecting taxpayers constrain the local government. http://www.timesunion.com/news/article/Comptroller-Agencies-skirt-laws-1338156.php Cuomo: D.C. made us look good Still basking in the glow of the state’s first on-time budget in five years, Gov. Cuomo this morning said the recent federal budget battle actually made Albany look good. “If anything, it made me proud of what we did in Albany,” Cuomo told reporters after an event in western New York. “We worked through very tough issues” without the same polarization experienced in D.C. Cuomo hailed yesterday’s giveback contract with Council 82 as “fair and reasonable” and one that “recongizes the economic reality we’re in.” Noting he is still at the table with the state’s two biggest unions, CSEA and PEF, Cuomo did not address the likelihood of layoffs. http://www.nydailynews.com/blogs/dailypolitics/2011/04/cuomo-dc-made-us-look-good Ex-Chairman of New York Stock Exchange May Run for Mayor Richard A. Grasso, the former chairman of the New York Stock Exchange, suggested on Thursday night that he would run for mayor of New York City in 2013 if his longtime nemesis, former Gov. Eliot L. Spitzer, entered the race and the city’s police commissioner sat it out.  It was the first time that Mr. Grasso publicly addressed his interest in becoming a candidate, though the possibility that he might has been rumored in city political circles for months.  Mr. Grasso told a crowd at Wagner College on Staten Island that he would relish the chance to take on Mr. Spitzer, who as attorney general in 2004 sued to try to recover much of Mr. Grasso’s $140 million in compensation from the stock exchange. That sum embroiled Mr. Grasso in a drawn-out controversy that eventually became a public feud with Mr. Spitzer, now a CNN host. http://www.nytimes.com/2011/04/15/nyregion/ex-chairman-of-new-york-stock-exchange-may-run-for-mayor.html?_r=1&ref=nyregion Hevesi Sentenced Today Disgraced ex-Controller Alan Hevesi is facing up to four years in the slammer when he’s sentenced Friday for his role in a massive pension-fund pay-to-play scandal. Hevesi, 71, pleaded guilty last year to a single felony corruption charge for pocketing $1 million in gifts for himself and cronies. Hevesi’s lawyer, Bradley Simon, had no comment yesterday. In court papers seeking leniency, Simon cited Hevesi’s decades in public service. http://www.nydailynews.com/news/ny_crime/2011/04/15/2011-04-15_hevesi_will_face_the_music_today.html Horner’s time at NYPIRG up in smoke Blair Horner, the granddad (okay, maybe father) of New York’s current good government movement, has a new gig. Horner is leaving the New York Public Interest Research Group for the smokier pastures of the American Cancer Society, where he’ll serve as vice president for advocacy. Sounds like a pretty title for lobbyist. Horner’s first day on the new job will be May 2. For all but one year since 1979, Horner has tormented governors, lawmakers, and lobbyists with his push for reforms. He’s also been a dial-a-quote for many of the Capitol’s journalists. It’s not the first time he’s left NYPIRG. Horner joined then Attorney General Andrew Cuomo’s staff to help develop the AG Office’s Project Sunlight website. He rejoined NYPIRG and recently was singled out for public scorn by Cuomo spokesman Josh Vlasto. http://www.nydailynews.com/blogs/dailypolitics Albany panel agrees to let council vote on allowing Backyard Chickens The fate of the Albany chicken movement now lies in the hands of the full Common Council. After more than 90 minutes of debate Thursday night, the council’s Law Committee voted 3-1 to send an ordinance that would allow people to keep backyard hens to the 15-member council. But the committee made no recommendation on whether the measure should be approved. Boosters of the chicken movement packed the gallery of the second-floor City Hall courtroom and hailed the vote as a victory. They vowed to redouble their efforts to win support among the 10 city lawmakers not on the panel, some of whom have already staked out positions for or against the legislation. http://www.timesunion.com/local/article/Albany-s-chicken-movement-advances-1338013.php 30,000 comments opposing shale gas drilling hit feds Environmentalists said they delivered a record 30,000 public comments opposing natural gas drilling near the Delaware River to federal regulators on Thursday. The comments to the Delaware River Basin Commission come from residents of New Jersey, New York, Pennsylvania and Delaware who oppose “fracking,” a technique in which water, sand and toxic chemicals are injected to break up shale and release natural gas. DRBC spokesman Clarke Rupert confirmed receiving seven boxes filled with comments, but said the content of the boxes hadn’t been counted at the close of business Thursday. He said an additional 7,600 comments had been submitted electronically.   http://www.timesunion.com/news/article/30-000-comments-opposing-shale-gas-drilling-hit-1338159.php This Lady Liberty Is a Las Vegas Teenager As if further proof were needed that New York is not the center of the universe. The United States Postal Service has issued a new stamp featuring the Statue of Liberty. Only the statue it features is not the one in the harbor, but the replica at the New York-New York casino in Las Vegas.  You might think that the post office would have just gone with the original, the one off the tip of Lower Manhattan that for 125 years has welcomed millions of New York’s huddled masses yearning to breathe free. Instead, they accidentally used the 14-year-old statue that presides over thousands of weary gamblers a week.  The post office, which had thought the Lady Liberty “forever” stamp featured the real thing, found out otherwise when a clever stamp collector who is also what one might call a superfan of the Statue of Liberty got suspicious and contacted Linn’s Stamp News, the essential read among philatelists.   http://www.nytimes.com/2011/04/15/us/15stamp.html?hp Posted in Morning News | Comments Off

Walsh Says Fixing Mortgage Servicing Problems Will Be “Messy” Posted on April 14, 2011 by admin Fixing the broken foreclosure process will be “messy” but is necessary to restore integrity to the system, John Walsh, acting Comptroller of the Currency said. In a speech in Washington today, Walsh said that an agreement announced yesterday that will force mortgage servicers to review two years of loans and pay restitution to borrowers who were damaged should not affect other efforts by law enforcement officials to assess wrong-doing. “My hope is that our enforcement actions will establish a framework, and the actions that state law enforcement officials and the other federal agencies may take will be complementary to, and consistent with, what we are doing,” Walsh said. “This is a messy process, and it will take time to put things right.” A groups of state attorneys general is continuing to negotiate with mortgage servicers, calling for changes to foreclosure practices and mandatory loan modifications, including mortgage principal write downs. Walsh Says Fixing Mortgage Servicing Problems Will Be “Messy” – Bloomberg . Posted in Foreclosure , Mortgage Servicers , mortgage lending/brokering | Comments Off

Regulators Investigate Possible Bank Cartel in Libor Investigation Posted on April 14, 2011 by admin Securities and Exchange Commission officials are collaborating with Justice Department investigators to see if big banks in Europe and the United States colluded to manipulate the London Interbank Offered Rate, or Libor, The Wall Street Journal reported. WALL STREET JOURNAL | BLOOMBERG Posted in Bank Fraud , Bank Regulation (Foreign) , Bank Regulation (domestic) , SEC | Comments Off

Senate subcommittee recommends complete dismantling of OTS Posted on April 14, 2011 by admin The Office of the Comptroller of the Currency should completely dismantle the Office of Thrift Supervision since the agency received much of the blame for ignoring lending and securitizaton risks at Washington Mutual and other banks prior to the 2008 financial meltdown, a new report from the U.S. Senate Permanent Subcommittee on Investigations said this week. That recommendation is just one of many proposed by senators in the “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse” report, which outlines the causes of the financial crisis. Senate subcommittee recommends complete dismantling of OTS « HousingWire . Posted in OTS | Comments Off