News Clips – Tuesday, May 31, 2011

 

30 Senators Write Letter to Federal Regulators Urging MLO Rule Rewrite Posted on May 27, 2011  by admin

A bipartisan group of over 30 Senators led by Mary Landrieu (D-La.), Johnny Isakson (R-Ga.) and Kay R. Hagan (D-N.C.) will send a letter today to federal regulators urging them to rewrite the controversial new rule requiring mortgage originators to retain at least 5 percent interest in loan pools. The rule, required under Dodd-Frank, would exempt so-called Qualified Residential Mortgages (QRMs). But in order to qualify, loans would often require a 20 percent down payment, an amount seen as out of reach for many would-be home owners…From the letter: “The proposed regulation goes beyond the intent and language of the statute by imposing unnecessarily tight down payment restrictions… Read the Full letter

Posted in Dodd-Frank , MLOs , Mortgage Industry  | Comments Off

Bailouts Washed Out Car Claims (WSJ) Posted on May 27, 2011  by admin   Chrysler’s restructuring allowed it to wash away legal responsibility for car-accident victims who had won damages or had pending lawsuits before its bankruptcy filing. The same holds true for General Motors…which discarded the liabilities as part of its own $50 billion bailout and restructuring. In rescuing the car makers, the U.S. government prevented a potential meltdown of the auto industry and further shocks to the economy…On the other side, thousands of dealers, asbestos victims and other creditors received little to no recompense. Among the creditors who suffered most, car-accident victims represent a distinct mold. Unlike banks and bondholders, this group didn’t choose to extend credit to the auto makers.” http://on.wsj.com/iNtv2j Posted in Bank Bail-Outs , Insurance  | Comments Off

Merrill Lynch and Credit Suisse Fined for Subprime Deals Posted on May 27, 2011  by admin   Merrill Lynch and Credit Suisse have agreed to pay fines to settle complaints about the subprime mortgage securities that they sold in the lead-up to the financial crisis, Wall Street’s self-regulator announced on Thursday. The Financial Industry Regulatory Authority fined Credit Suisse Securities $4.5 million and Merrill Lynch $3 million, saying the firms misinformed investors about the number of bad loans they placed in dozens of securities.After Merrill Lynch realized it had reported bogus information, the firm quickly corrected the error in 2007. Credit Suisse, however, had still not notified investors or fixed its mistake as of earlier this month, according to Finra. Merrill Lynch and Credit Suisse Fined for Subprime Deals – NYTimes.com . Posted in Financial Crisis , FinRA , Mortgage Backed Securities , Subprime  | Comments Off

Op-Ed | Be transparent with new health authority | Democrat and Chronicle Posted on May 27, 2011  by admin   As New York lawmakers debate how to set up a key framework for health care reform, they must keep accountability and transparency at the forefront. The new federal health care reform law requires states to set up a health insurance exchange to offer affordable insurance for consumers and small businesses. The current task at hand is to determine who will run the exchange. Right now, Gov. Andrew Cuomo and Assembly and Senate leaders lean toward setting up a new public authority, or public benefit corporation, as it’s being called. That decision could be disturbing, given the state’s history of authorities operating with little oversight. That’s why it’s imperative that any legislation require the proposed authority to meet all the provisions of state laws enacted to make authorities more accountable in recent years. There can’t be exceptions slipped into the bill.  Be transparent with new health authority | Democrat and Chronicle | democratandchronicle.com . Posted in Insurance , State & Political News Round-Up  | Comments Off

Settlement on Military Foreclosures Posted on May 27, 2011  by admin   The Justice Department announced on Thursday that it had simultaneously filed and settled lawsuits against the two companies — a subsidiary of Bank of America formerly known as Countrywide Home Loans Servicing, and Saxon Mortgage Services, a subsidiary of Morgan Stanley. The companies were accused of knowingly and repeatedly violating the Servicemembers Civil Relief Act, a federal law that extends an array of financial and legal protections to military personnel…Without admitting wrongdoing, the former Countrywide unit agreed to pay $20 million to approximately 160 victims of illegal foreclosures from January 2006 to May 2009. It also agreed to reimburse victims of any other illegal military foreclosures found to have occurred from May 2009 to the end of last year. Settlement on Military Foreclosures – NYTimes.com . Posted in Foreclosure , Mortgage Industry  | Comments Off

Bachus Opinion: CFPB Recess Appointment Illegal Posted on May 27, 2011  by admin   The 1998 Federal Vacancies Reform Act, which allows the president to temporarily fill vacancies in the executive branch, also offers no help here. The act describes a vacancy as occurring when an officer “dies, resigns or is otherwise unable to perform the functions and duties of the office.” In other words, the position must have existed and been occupied by another officer for it to be temporarily filled without Senate confirmation. But the CFPB office has never been occupied. If the president made a recess appointment, it would not be pursuant to any act of Congress or the Constitution.  Opinion: Obama should not appoint Consumer Financial Protection Bureau head in recess – Rep. Spencer Bachus – POLITICO.com . Posted in CFPB , Government  | Comments Off

Deutsche Bank Banker Arrested Carrying Gun at HK Airport Posted on May 27, 2011  by admin   Hong Kong police have arrested a senior banker at Deutsche Bank for allegedly possessing a firearm, sources said on Friday. Shen Yan, head of North Asia institutional clients group of Deutsche Bank, was arrested at Hong Kong airport last week after a gun was found in his luggage, the sources said. “This is a personal matter for Mr Yan and has nothing to do with Deutsche Bank. Mr Yan is on administrative leave from Deutsche Bank until the matter is resolved,” said a spokesperson for Deutsche Bank. Deutsche Bank Banker Nabbed for Carrying Gun at HK Airport – NYTimes.com . Posted in Bank Regulation (Foreign)  | Comments Off

Default Insurance Growing Posted on May 27, 2011  by admin   Traders and investors have stepped up purchases of insurance against a US sovereign debt default … The gross value of derivatives contracts that pay out in the event of a US default has DOUBLED FROM YEAR AGO LEVELS … It reached $24bn at the end of last week, up from $22.7bn a week earlier and much higher than the year ago level of slightly less than $12bn. … [T]he increased activity in derivatives highlights that at least some traders are assigning a probability – even though it is seen as remote – that the wrangling over the debt ceiling will not be resolved and that the US could then miss a payment on its debt. That could count as a technical default and may result in a payout on credit default swaps. http://on.ft.com/jwssVA Posted in Credit Default Swaps , Financial Regulation , Insurance  | Comments Off

White House takes steps to cut business red tape Posted on May 27, 2011  by admin   The White House on Thursday announced steps to cut federal red tape it said would save billions of dollars over time, seeking to placate businesses complaining about what they see as an undue regulatory burden. The reforms, which scrutinized everything the federal government regulates from worker safety rules to safeguards on milk and eggs, follow a request from President Barack Obama in January to improve or remove any rules that were out of date.  White House takes steps to cut business red tape | Reuters . Posted in Financial Regulation , Government  | Comments Off

The Audacity of Chinese Frauds Posted on May 27, 2011  by admin   The fraud at Longtop Financial Technologies, a Chinese financial software company, was exposed this week in an amazing letter from its auditors, Deloitte Touche Tohmatsu. It appears to be a tale of corrupt bankers and their threats to auditors who had learned of the lies. Deloitte, which had given clean audit opinions to Longtop for six consecutive years, apparently was well on its way to providing a seventh, for the fiscal year that ended March 31. But for some reason — Deloitte did not say why —the auditor went back to Longtop’s banks last week to again seek confirmation of cash balances.  The Audacity of Chinese Frauds – High and Low Finance – NYTimes.com . Posted in Bank Fraud , Bank Regulation (Foreign)  | Comments Off

EU Watchdog Eyes Hedge Funds, Debt Shorting Posted on May 27, 2011  by admin   ESMA will launch a public consultation in July as part of its efforts to flesh out new EU curbs on hedge funds, private equity groups and other alternative investment funds. The EU is also approving rules that will require all derivatives trades to be reported. Maijoor said new trade repositories could be used for dealers to report trades to regulators to avoid duplication…Further measures were needed, he said, so regulators know who is behind each trade in the $600 trillion derivatives sector, whose opacity in the financial crisis alarmed policymakers. EU Watchdog Eyes Hedge Funds, Debt Shorting – NYTimes.com . Posted in Bank Regulation (Foreign) , Derivatives , Financial Regulation  | Comments Off

State & Local News Round-Up | May 27, 2011 Posted on May 27, 2011  by admin   Website Will Allow Public To Track Medicaid Costs, Monitor State Goals Gov. Andrew Cuomo is using the Internet to hold the feet of Medicaid providers to the fiscal fire. One of the hallmarks of this year’s budget was the governor’s plan to greatly reduce Medicaid spending through the work of a redesign team that included representatives of the state’s health care industry, labor leaders, advocates and lawmakers. They were ultimately assigned to find $2.3 billion in Medicaid savings and limit the state share of the program to $15.1 billion. If the redesign team’s recommendations don’t work, Cuomo’s Health Commissioner Nirav Shah can make many of the cuts himself. The public will be able to track how the cost-containment efforts are going through a yet-to-be-named web page, said Budget Director Robert Megna. Scheduled to launch soon, the site will show how much Medicaid money has been spent to date. http://www.nydailynews.com/blogs/dailypolitics/2011/05/wake-up-call-congress-convictions-civil-rights Ward ‘cleaver’: Andy set to ax PA boss Gov. Cuomo is planning to boot the Port Authority executive director — who’s widely credited with getting construction at the World Trade Center back on track after years of delays — following the 10-year anniversary of 9/11, The Post has learned.  Christopher Ward — a Gov. Paterson appointee whose string of successes includes the recent $1.9 billion deal to bring Conde Nast to 1 World Trade Center — never managed to develop a rapport with Cuomo, multiple sources told The Post.  In fact, the boss of the agency can’t even get the governor to take his phone calls, a source close to Ward told The Post.   http://www.nypost.com/p/news/local/ward_cleaver_andy_set_to_ax_pa_boss_ZQZDRkbZOXLYsdR9WTWLHO Taxes — how does your town rank? Schenectady has the region’s highest property taxes, according to new data from the Capital District Regional Planning Commission. That’s not surprising, as Schenectady typically has the highest property taxes in the commission’s annual survey. But the report does include some good news for the city’s taxpayers: The 2010 combined school, county and city tax rate of $39.57 per $1,000 of home value is down from the 2009 rate of $42.03 per $1,000. See a full ranking of tax rates in the Capital Region. New Law Sought After N.Y. Property Tax Ruling (WSJ) In response to a recent tax decision that cost a Connecticut couple $1 million, two Long Island lawmakers have introduced legislation in Albany to exempt some out-of-state residents with New York homes from paying additional taxes. The proposed law would shield many affluent summer homeowners in places like the Hamptons or upstate ski towns from higher taxes. The bill, which is at the committee level in both the state Assembly and Senate, would also terminate some current audits of taxpayers’ returns. But the lawmakers have crafted the proposed legislation in a way that would leave many other out-of-state residents with the same tax bills as before. That’s because the legislation offers tax relief only to people who have vacation homes more than 50 miles from their primary place of employment in New York. http://professional.wsj.com/article/SB10001424052702304066504576347641714150636.html?mod=WSJ_NY_LEFTTopStories&mg=reno-wsj Gov calls teach bluff: Invites suits on new evaluation system Go ahead, sue me.  Gov. Cuomo vowed to plow ahead with new test-heavy teacher evaluations yesterday despite threats of lawsuits from incensed teachers unions.  ”We’re going to persevere and we’re going to accomplish the goal,” Cuomo told radio station WOR/710AM. “If there are lawsuits, there are going to be lawsuits and we’ll win the lawsuits and we’ll prevail.”  Cuomo and state Board of Regents Chancellor Merryl Tisch whipped teachers into a frenzy earlier this month when they announced a more rigorous evaluation formula that would allow standardized tests to account for up to 40 percent of a teacher’s score. http://www.nypost.com/p/news/local/gov_calls_teach_bluff_ZSkyA1xQ4apm1I1BK0D17H Federal lawmaker wants to put Northeast Corridor Amtrak service up for bid Congress would take away Amtrak’s popular Northeast corridor train service and invite private investors to bid for the right to develop high-speed rail under a plan outlined by a key House Republican on Thursday.  The densely populated corridor — which extends from Washington to Boston, including service to New York City and Philadelphia — is the most viable region in the country for truly high-speed trains averaging speeds better than 110 mph, House Transportation and Infrastructure Committee Chairman John Mica, R-Fla., said.  But Amtrak has failed to provide fast service despite tens of billions of dollars in federal aid, he said while outlining his plan at a hearing.   http://www.syracuse.com/news/index.ssf/2011/05/federal_lawmaker_wants_to_put.html Christie Pulls New Jersey From 10-State Climate Initiative Gov. Chris Christie said Thursday that New Jersey would become the first state to withdraw from a 10-state trading system, the Regional Greenhouse Gas Initiative, declaring it an ineffective way to reduce carbon dioxide emissions. The decision delighted Republicans who have introduced bills in the New Jersey Legislature to repeal a law authorizing the state’s participation in the program. But it dismayed environmental advocates, who called it a serious blow to the state’s efforts to reduce emissions from power plants and foster a shift from fossil fuels to renewable energy.  Opponents were quick to ascribe political motives to the governor’s decision, given that Mr. Christie is seen as a possible Republican candidate in the 2012 presidential race and conservatives have vilified cap-and-trade programs, which set limits on emissions, as an unjust tax on business. (Mr. Christie insists he is not running.)   http://www.nytimes.com/2011/05/27/nyregion/christie-pulls-nj-from-greenhouse-gas-coalition.html?_r=1&ref=nyregion Public Services for Memorial Day Holiday GOVERNMENT OFFICES Closed. POST OFFICES Express Mail only; self-service kiosks at the main post office on Eighth Avenue at 32nd Street will be open. BANKS Option to close. PARKING Alternate-side parking regulations will be suspended. SANITATION No pickups, street cleaning or recycling. SCHOOLS Closed. FINANCIAL MARKETS Stock and bond markets will be closed. TRANSPORTATION New York City subways and buses will operate on a Sunday schedule. Long Island Rail Road will operate on a Sunday/holiday schedule. Metro-North Railroad trains will operate on a Sunday schedule, with off-peak prices offered all day. The Staten Island Ferry will operate on a regular weekday schedule, but without rush-hour service. Posted in State & Political News Round-Up  | Comments Off

Greenwich Banker Under FDIC Investigation Posted on May 27, 2011  by admin   An elected Greenwich official, Fred DeCaro III, is under investigation by the Federal Deposit Insurance Corp. for alleged bank fraud. DeCaro III was chairman of a community bank called USA Bank from 2008 till its seizure by the FDIC in July 2010. The bank, which serviced the wealthy enclaves of Fairfield County and parts of Westchester County, New York, was founded by his father Fred DeCaro Jr. who is also part of the investigation focusing on alleged lending abuse and possible securities fraud…At the center of the investigation are moves DeCaro III allegedly executed to make defaulting loans appear performing when the bank was under the gun to raise risk-based capital levels or face being shut down by regulators. Greenwich Banker Under FDIC Investigation | Connecticut Watchdog . Posted in Bank Fraud , FDIC , Mortgage Industry  | Comments Off

Senate panel backs Treasury’s bailout chief | Reuters Posted on May 27, 2011  by admin   A Senate panel on Thursday approved Timothy Massad to lead the Obama administration’s $700-billion bank bailout program and oversee the government’s exit from insurer AIG and General Motors Co. The Senate Banking Committee voted in favor of Massad to serve as the Treasury Department’s assistant secretary for financial stability, which is in charge of the Troubled Asset Relief Program. His nomination now goes to the full Senate for a vote on whether to confirm him. Senate panel backs Treasury’s bailout chief | Reuters . Posted in Senate Banking Committee , TARP , Treasury Department  | Comments Off

Punishment or Pushback: Financial Regulation in the Midst of Recession Posted on May 27, 2011  by admin   To a truly remarkable degree, given the scale and longevity of the damage they have caused, the guilty have escaped unpunished from the financial crisis of 2008, as Washington has turned its attention elsewhere, in the process allowing bank lobbyists to water down even the modest reforms imposed at the height of the crisis. Washington, that is, except Carl Levin and his subcommittee. Their Wall Street and the Financial Crisis report deserves to be compulsory reading for every concerned citizen, for it reaffirms what we already knew — that regulation and even punishment, certainly not pushback, remains essential if the practices which generated such economic havoc and social misery in 2008 are not eventually to do the same again on an even grander scale.A little recap would not go amiss, given the amount of money, energy and argumentation now flowing into the weakening of new regulatory constraints on the behavior of leading U.S. financial institutions.  David Coates: Punishment or Pushback: Financial Regulation in the Midst of Recession . Posted in Bank Bail-Outs , Financial Crisis , Financial Regulation  | Comments Off

 

Crain’s Insider – Tuesday, May 31, 2011

Crain’s Insider

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Today’s News Tuesday, May 31, 2011

The Next Scandal?

The financial scandals of the past 25 years—the savings and loan crisis, Enron, mortgage lending, derivatives—beg the question of what is to come. “ETFs are the next crisis,” predicted one financial analyst, referring to exchange-traded funds. The analyst described ETFs as wrappers that could appear to contain something different from what is really in them. “When you describe some of those ETFs, it sure sounds like CDOs,” he said. Collateralized debt obligations were major culprits in the mortgage-lending fiasco. But one investment adviser said junky ETFs attract few investors. “The vast majority of ETF money is in ETFs that are exactly what they say they are,” he said.

Price of Payday Loans Unknown

More than 1 million New Yorkers a year take out payday loans on the Internet, according to a study commissioned by the state’s check-cashing industry, which wants to legalize short-term lending here. The industry says consumers pay $25 to $30 in interest for every $100 they borrow online. “People need an alternative that’s reasonable, responsible and regulated,” said Ed D’Alessio, a lawyer for the industry. But D’Alessio admits that the industry doesn’t know how much borrowers would pay in New York state if a pending bill to legalize short-term loans becomes law.

Lobbying for an Empty Warehouse

Salmar Properties, selected by the city Economic Development Corp. over several other bidders last week to develop a 1.1 million-square-foot warehouse in Brooklyn, was also the only bidder represented by a lobbying firm. In 2010, Salmar paid the Carey Group $67,500 to assist in procuring the project, city records show. EDC called Salmar’s proposal the best.

Ex-Colleague Reacts to Arrest

A former colleague of Gerard Denault, the ex-SAIC manager on the CityTime payroll project, was shocked when federal authorities alleged last week that Denault had received $5.6 million in kickbacks. “This ride over the last two years has been quite a roller coaster,” said the former colleague. “Who could have predicted any of it?” Although the $700 million-plus project to computerize the city’s timekeeping system has been ongoing for 12 years, charges that the project was rife with mismanagement, and possibly fraud, began surfacing about two years ago.

Hiring is odd twist in bankruptcy battle

Janine Getler, named in a recent complaint detailing the pilfering of documents and computers in a major builder’s bankruptcy case, has been hired by Earvin “Magic” Johnson’s Canyon Johnson Urban Funds as an outside consultant.

A Canyon Johnson spokeswoman initially denied Getler had been retained, but when presented with a Buildings Department permit with Getler’s name on it, conceded that she is consulting on its New York City projects.

Getler, who was the in-house counsel for HRH Construction, is a defendant in a complaint filed in HRH’s Chapter 7 bankruptcy case. Records were removed from a White Plains office that had been sealed by trustee Marianne O’Toole. According to the complaint, Getler’s electronic key card for access to the employee parking garage and building was used the day after the HRH office was secured.

When asked if Canyon Johnson was aware of the complaint, the spokeswoman declined to comment. The firm has two current projects in Brooklyn—a 39-unit condo in Brooklyn Heights and a 63-unit condo in Clinton Hill, according to its website.

In an e-mail, Getler said that her key card provided access only to the parking garage, not to the building or to HRH’s office. She said that she parked her car there on the day referenced in the complaint, but that she did not enter the office, and instead took the train to the city to attend several meetings. She is preparing a motion to dismiss the complaint.

“I had nothing to do with the incidents discussed in the complaint,” she wrote.

Getler said she hadn’t worked for HRH since September 2010, when the bankrupt firm could no longer pay her. She established the
firm Getler and Gomes, which does real estate closings and small litigation cases.

At A Glance

MOVING IN:  The Partnership for New York City has hired Stephen Gerencser as senior vice president for government affairs. He is relocating to New York from Washington, D.C., where he was a senior adviser to the Senate Committee on Banking, Housing and Urban Affairs and an aide to former Sen. Chris Dodd.

 

The sudden passing of Principal Examiner Isiaka Dairo

It is with great sadness that we inform you that our colleague Principal Bank Examiner  Isiaka Dairo passed away suddenly on May 30, 2011.  Services will be held tomorrow morning between 9-10 AM  at Romanelli Funeral Chapel.

Islamic Burial
114-30 Rockaway Blvd.
South Ozone Park, NY
(718) 296-4089

Isiaka joined the Banking Department in December 1992.  He was assigned as a field examiner and work for many years as part of the Thrift’s credit union functional team and also served in the field in the Community and Regional Banks Division; in 2002 he rotated into the Foreign and Wholesale Banks Division.  In August 2006 Isiaka rotated into an office assignment in the Consumer Services Division.

Condolences can be sent to his wife and family:
Mrs. Mujidat Dairo
116-51 147th Street
So. Ozone Park, NY 11436

Examiner News – Thursday, May 26, 2011

Quarterly Banking Profile (QBP)   is now available on line. FDIC-insured institutions reported an aggregate profit of $29 billion in the first quarter of 2011, an $11.6 billion improvement (66.5 percent) from the $17.4 billion in net income the industry reported in the first quarter of 2010. This is the seventh consecutive quarter that earnings registered a year-over-year increase. For the sixth consecutive quarter, reduced provisions for loan losses drove the improvement in earnings.  
Call and Thrift Financial Reports  

Statistics on Depository Institutions  

Indexes of Coincident Economic Indicators (CEI) has been released.

This information has recently been updated, and is now available .

News Clips – Thursday, May 26, 2011

Brokers’ sin of commission: 15-yr. insurance scheme exposed – NYPOST.com Posted on May 26, 2011  by admin

In one of most far-reaching insurance scandals in New York, a family-run insurance broker in Long Island partnered with Lloyds of London for at least 15 years to peddle $30 billion of improper policies to more than 300 Catholic universities and charities, an investigation by The Post has uncovered. The unregistered policies allowed Huntington-based Waldorf & Associates to pocket tens of millions of dollars in extra profits over the years while its clients — including St. John’s and Fordham universities, Catholic Charities, Sisters of Mercy, the Diocese of Rochester and scores of others — were potentially put in harm’s way… Brokers’ sin of commission: 15-yr. insurance scheme exposed – NYPOST.com .

Posted in Insurance , Insurance Fraud  | Comments Off

New York Fed Investigates Goldman Loan Division Posted on May 26, 2011  by admin   The New York Fed wants to know whether the mortgage-servicing arm of Goldman Sachs systematically rejected borrowers’ efforts to lower loan payments through government programs. http://dealbook.nytimes.com/2011/05/25/new-york-fed-investigates-goldman-loan-division/?nl=business&emc=dlbka23 Posted in Bank Regulation (domestic) , Federal Reserve Board/The Fed , Mortgage Loan Servicers  | Comments Off

Bair to Testify on Role of Regulator Today Posted on May 26, 2011  by admin   The Subcommittee on Financial Institutions and Consumer Credit will hold a hearing titled “FDIC Oversight: Examining and Evaluating the Role of the Regulator during the Financial Crisis and Today” at 9:30 a.m…The sole witness at this hearing will be the Honorable Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation. Here’s the FDIC’s Prep Memo: http://www.politico.com/static/PPM169_110525_fi_hearing_memo.html Posted in Bank Regulation (Foreign) , Consumer Protection , FDIC  | Comments Off

Hartford Dumps Thrift as Insurers Flee Banking – TheStreet Posted on May 26, 2011  by admin   “Basically they acquired the bank to get TARP,” said Edward Shields, an analyst at Sandler O’Neill. “It’s not core to their business and they have been looking to raise capital.” The Hartford is the second bank to recently divest banking assets. Allstate sold its bank to Discover Financial Services in February for an undisclosed amount. Many experts believe that other insurers are likely to sell off any thrifts they own prior to July when The OCC assumes the duties of the OTS and the Federal Reserve will oversee the compliance of insurers with thrifts. Those insurers that continue to operate thrifts past the July transition need to make sure they are in compliance with the Collins Amendment, the Volcker Rule and they may be put on the list of those institutions that are systemically important (SIFIs). Hartford Dumps Thrift as Insurers Flee Banking – TheStreet . Posted in Federal Reserve Board/The Fed , Financial Regulation , Insurance , OCC , OTS , TARP  | Comments Off

OCC proposes amending assessment fees for OTS transition Posted on May 26, 2011  by admin   The Office of Comptroller of the Currency is reshaping assessment fee schedules for financial institutions to facilitate the transition of regulatory power to the agency from the Office of Thrift Supervision. The OCC proposed a rule Wednesday to amend its internal assessment rules to include federal savings associations. Assessment fees, which are paid semi-annually to the OCC by the financial institutions it supervises, vary depending on the federal regulator. On July 21, the OCC will absorb the supervisory duties of OTS as mandated under the Dodd-Frank Act. The OTS was Countrywide Financial Corp.’s regulator when the mortgage finance company went under in 2008. To make the transition of these regulatory powers as smooth as possible, the OCC will provide just one assessment fee schedule for both national banks and federal savings associations. Thrift assessments normally due on July 31 would be deferred to September 30, according to the rule. Assessments would still be based on June data.  OCC proposes rule to amend assessment fees to help OTS transition « HousingWire . Posted in Bank Regulation (domestic) , Dodd-Frank , OCC , OTS  | Comments Off

Big banks face more exposure to state laws | Reuters Posted on May 26, 2011  by admin   The federal regulator of the largest U.S. banks will have less power to shield these national banks from state consumer financial laws, under a proposal released on Wednesday. Critics of the OCC charge that in the run-up to the 2007-2009 financial crisis, the agency was too aggressive in preventing states from enforcing their consumer protection laws on national banks, and took an expansive view of its ability to do so under the National Bank Act. The OCC has said it uses its pre-emption authority to protect national banks from a patchwork of state laws — such as those that apply to credit cards and mortgages — that can be contradictory and difficult to comply with. Big banks face more exposure to state laws | Reuters . Posted in Dodd-Frank , OCC , Preemption  | Comments Off

Liberal groups call for Warren recess appointment – The Washington Post Posted on May 26, 2011  by admin   Liberal groups rallied around Harvard law professor Elizabeth Warren on Wednesday and renewed calls for her to lead the fledgling consumer watchdog agency, a day after she was accused of lying in a contentious congressional hearing. An online petition circulated by the Campaign for America’s Future asking the White House to appoint her while the Senate is in recess garnered 20,000 signatures by Wednesday afternoon. A similar effort from Progressive Change Campaign Committee signed up 10,000 people an hour in the first five hours, organizers said, and won support from Sen. Al Franken (D-Minn.).  Liberal groups call for Warren recess appointment – The Washington Post . Posted in Bank Regulation (domestic) , CFPB , Consumer Protection  | Comments Off

Banks Face $17 Billion in Suits Over Foreclosures – WSJ.com Posted on May 26, 2011  by admin   State attorneys general told five of the nation’s largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn’t reached to address improper foreclosure practices, according to people familiar with the matter. The figure doesn’t cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department. State and federal officials haven’t proposed a specific comprehensive settlement figure, but Tuesday’s discussions represented the first effort to formally quantify potential liability. Representatives of the nation’s largest banks met in individual meetings on Tuesday with state and federal officials designed to highlight the potential costs they will face if a settlement isn’t reached. Banks Face $17 Billion in Suits Over Foreclosures – WSJ.com . Posted in Bank Regulation (domestic) , Foreclosure , Loan Modifications , Mortgage Loan Servicers , Mortgage Modifications  | Comments Off

BofA Targeted by States in Foreclosure Probe – Bloomberg Posted on May 26, 2011  by admin   Bank of America Corp. (BAC) faces increased pressure from two attorneys general to change its mortgage- servicing and foreclosure practices as states said the bank and four other servicers may face $17 billion in claims. Utah Attorney General Mark Shurtleff accused Bank of America of breaking state law, while Connecticut Attorney General George Jepsen said the bank failed to fix “well- documented” problems in its mortgage-servicing business, according to letters released by their offices yesterday. Their demands, along with subpoenas issued to Lender Processing Services Inc. (LPS) by attorneys general in California and Illinois, were made public the day after state officials told the five largest mortgage servicers they may face civil lawsuits seeking $17 billion if they don’t settle the nationwide investigation, according to a person familiar with the matter who declined to be named because the talks are private. BofA Targeted by States in Foreclosure Probe – Bloomberg . Posted in Foreclosure , Mortgage Industry , Mortgage Loan Servicers  | Comments Off

Standard Chartered may want to be gone for good from Korea | Reuters Posted on May 26, 2011  by admin   A wave of consolidation sweeping South Korea’s banking industry is fuelling speculation that Standard Chartered may want to take the opportunity to exit Asia’s fourth-largest economy and recoup its record $3.3 billion investment. DEALTALK-UPDATE 1-StanChart may want to be gone for good from Korea | Reuters . Posted in Bank Regulation (Foreign)  | Comments Off

Wells Fargo Bankers Defend Their Small-Business Lending – NYTimes.com Posted on May 26, 2011  by admin   Back in the darkest days of the economic crisis, few people had anything good to say about the nation’s biggest banks, least of all small-business owners. The big banks took federal bailout money, if in some cases reluctantly, and then faced accusations of being stingy with all of that capital. Even some business owners with longstanding banking relationships reported difficulty getting new loans. Others claimed their banks had dropped them altogether…Among the institutions that took criticism was Wells Fargo, the fourth-largest United States bank and the biggest lender to small businesses. But Marc Bernstein and Douglas Case, the bank’s two top executives for small-business lending, say the criticism was misplaced.  Wells Fargo Bankers Defend Their Small-Business Lending – NYTimes.com . Posted in Bank Bail-Outs , Bank Regulation (domestic) , Mortgage Industry  | Comments Off

Richard Branson Looks to a Future in Financial Services (FT) Posted on May 26, 2011  by admin   The British entrepreneur is looking to buy 600 branches from Lloyds Banking Group, in a move that would see the financial arm of his company Virgin Money become Britain’s sixth-biggest bank, The Financial Times reported. http://www.ft.com/intl/cms/s/0/6bdf965a-8719-11e0-b983-00144feabdc0.html Posted in Bank Mergers , Bank Regulation (Foreign)  | Comments Off

UBS Weighs Moving Investment Bank Out of Switzerland – NYTimes.com Posted on May 26, 2011  by admin   As new rules to regulate banks take shape around the world, they are increasingly seeking ways to soften the impact. UBS, one of Switzerland’s biggest banks, is considering a switch to a holding structure, and then incorporating the investment banking business as a separate legal entity in London…The bank also said its model of holding most of its capital in Switzerland while booking most of its assets elsewhere would probably have to change. Under the proposal, the investment banking business, whose losses during the financial crisis required UBS to accept government aid, would be capitalized separately. UBS Weighs Moving Investment Bank Out of Switzerland – NYTimes.com . Posted in Banking Department News , Basel II | Basel III , Capital Requirements , Swiss Banks  | Comments Off

The Fed’s Secretive Crisis Program Posted on May 26, 2011  by admin   The Federal Reserve set up an emergency lending program in 2008, the details of which were withheld from shareholders, Congress and the public despite the fact that the Fed loaned at least $30 billion each to Credit Suisse, Goldman Sachs and Royal Bank of Scotland. http://www.bloomberg.com/news/2011-05-26/fed-gave-banks-crisis-gains-on-secretive-loans-as-low-as-0-01-.html Posted in Federal Reserve Board/The Fed , Financial Regulation  | Comments Off

U.S. Regulations Reach Overseas (WSJ) Posted on May 26, 2011  by admin   U.S. regulators soon may extend their reach overseas and impose restrictions on foreign governments engaging in some financial transactions in the U.S. Foreign central banks, sovereign-wealth funds and international organizations like the World Bank could be subject to U.S. rules intended to reduce risk in the financial system. As part of last year’s financial-regulatory overhaul, regulators gained power to scrutinize and regulate market participants engaging in swap transactions, including those backed by foreign governments…The proposed regulations would require foreign entities to conduct swaps trades on an exchange, potentially post margin and hold enough capital to absorb losses if the trade goes sour. The prospect of such requirements is triggering a backlash from government-backed foreign institutions, including the European Central Bank, Bank of France and China’s sovereign-wealth fund, China Investment Corp. http://on.wsj.com/lA19sg Posted in Bank Regulation (Foreign) , Capital Requirements , Swaps  | Comments Off

Crain’s Insider – Thursday, May 26, 2011

Crain’s Insider

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Today’s News Thursday, May 26, 2011

Liu Hits SAIC; Worker Fires Back

Comptroller John Liu yesterday said the lead contractor on the CityTime project “bilked” city taxpayers, implying that because SAIC’s lead manager did not keep accurate records of his hours, the company overbilled the city. In a May 23 letter to the city, SAIC said it had fired Gerard Denault and was returning the $2.5 million the city paid for the hours he billed. The letter said he “recorded set hours each day rather than the actual hours that he worked as we require.” Denault told the Insider  that he actually charged too little. “I didn’t charge overtime for years,” he said. Denault said that unlike subcontractors, he was on a salary and wouldn’t get paid more if he overbilled. “I don’t falsify my time,” he said. “There’s no value in it.”

City, Truckers Differ on Deaths

As the state Legislature quickly passed a bill this week requiring convex mirrors in trucks, at the request of Mayor Mike Bloomberg, the state Motor Truck Association claimed that trucks account for just 4% of fatal or serious injuries incurred by pedestrians in New York City. The city says it’s 19%. But the truckers group did not publicly attack the bill, saying, “We believe even one injury is too many.”

MTA Tax: Make It Opaque

Supporters of the payroll tax that goes to the Metropolitan Transportation Authority say it would be more consistently collected and less unpopular if business owners did not have to pay quarterly by check. Other MTA taxes are collected more subtly. “Everyone wants transparency. How about a little opacity?” one observer asks. Even a pro-MTA business owner said of the tax, which began in 2009: “It’s onerous to me. I write all four quarters at the beginning of the year, because the paperwork is a hassle.” The economic downturn, combined with uneven collection, caused initial payroll tax revenues to fall several hundred million dollars below projections.

Recidivism’s Drop

As state budget problems have worsened, pressure to reduce the prison population has increased. But there’s another reason to consider alternatives to incarceration, according to one expert in criminal justice. Because only 10% of ex-inmates are convicted of felonies within three years of their release, down from 28% in the late 1990s, jailing people has become much less cost-effective, said law professor Franklin Zimring of the University of California, Berkeley.

Regional economic councils to debut next month

Gov. Andrew Cuomo hopes to spur economic development by bringing down the cost of doing business in the state. Making that happen will be a priority for the 10 new regional economic development councils, whose members are expected to be named by the governor next month.

The councils were established through legislation passed in the state budget, which allocated them $130 million in funding and $70 million in tax credits. The councils will prioritize local economic development projects and will compete with each other for that money. But Ken Adams, president and chief executive of the Empire State Development Corp., said this level of funding will not make councils “transformational.”

He said the councils may have a greater impact helping the governor execute his other priorities, such as streamlining government and allocating capital funding.

“I laid out the need to improve the business climate,” he said yesterday after a speech at an Association for a Better New York breakfast. “But I think the councils will identify the specifics of that.”

Adams said the councils are likely to be asked to identify cumbersome regulations and onerous taxes. They could also help decide which infrastructure investments should be made. Officials in Albany will sort through the councils’ recommendations, looking for common threads.

“Then let us work with the governor and the Legislature to enact reforms in response to what’s identified by the councils,” Adams said.

The councils will also consult on how a $100 million fund will be used to help communities “end their reliance on incarceration as a major source of employment and economic sustainability,” according to the governor’s budget briefing book. And the councils will review how money is spent through the New York State Foundation for Science, Technology and Innovation.

The reliance on local councils will raise the stature of Adams’ regional offices, which will coordinate council activities. “Someone’s got to convene the meeting and pour the coffee,” Adams said. Lt. Gov. Bob Duffy will lead the 10 councils’ membership.

At A Glance

BIZ FORUM:  Assemblyman Joe Lentol, D-Brooklyn, will host a free forum on small business and entrepreneurship this morning at 9:30 at the Brooklyn Brewery, 79 N. 11th St. Panelists include EDC President Seth Pinsky, Brooklyn Chamber of Commerce President Carl Hum and Brooklyn Brewery President Steve Hindy.

News Clips – Wednesday, May 25, 2011

Cummings Wants Bank Subpoenas Posted on May 25, 2011  by admin

House Oversight Committee Chair Elijah Cummings (D-Md.) sent a letter late last night to Committee Chairman Darrell Issa (R-Calif.) asking that Issa issue subpoenas to some of the nation’s largest banks and mortgage servicers seeking exhaustive data on their foreclosure practices. Cummings believes that given Issa’s aggressive probe into Countrywide Financial, the chairman should be eager to issue the subpoenas. In his letter, Cummings says six companies have refused to turn over requested documents. Cummings in a statement out later today: “The foreclosure crisis has had devastating consequences for communities across the country and continues to threaten our nation’s economic recovery, drain state and local budgets, and displace families … The banks have admitted wrongdoing, and yet they are now refusing to provide Congress with documents that are critical to our investigation.” Read the Full letter Here: http://politi.co/l85Jjq

Posted in Financial Crisis , Financial Regulation , Foreclosure , Mortgage Industry , Mortgage Loan Servicers  | Comments Off

U.S. fines bank officials for money-laundering lapses | Reuters Posted on May 25, 2011  by admin   A U.S. banking regulator has fined four board members of Pacific National Bank and its former chief executive for failing to correct anti-money laundering problems, an apparent sign of a new focus on individual accountability for such lapses. The federal Office of the Comptroller of the Currency (OCC) disclosed the fines two months after regulators fined the Miami-based bank itself $7 million for failing to correct deficiencies noted in 2005 in an enforcement action. Pacific National is a subsidiary of Ecuador’s state owned Banco del Pacifico S.A. U.S. officials consider Ecuador to be deficient in its control of money-laundering and terrorism financing.  U.S. fines bank officials for money-laundering lapses | Reuters . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , Money Laundering , OCC  | Comments Off

Report: Financial Lobbyists and the Housing Crisis – NYTimes.com Posted on May 25, 2011  by admin   The study, by Deniz Igan, Prachi Mishra, Thierry Tressel, three economists at the International Monetary Fund, suggests that implicit subsidies and a lack of regulation helped make it possible for lenders to offer lower rates on mortgages that were increasingly likely to default. My fellow Economix blogger Simon Johnson has also noted the interplay of political influence on regulation and finance. The study by the I.M.F. economists found that the heaviest lobbying came from lenders making riskier loans and expanding their mortgage business most rapidly during the housing boom. The loans originated by those lenders were, by 2008, more likely to be delinquent. Most important, lobbying meant access to tax dollars. The lenders lobbying more heavily were 7 percent more likely to receive bailout funds, received larger amounts of those funds, and enjoyed a 27 percent greater increase in their market capitalization in October 2008, the month the bailout program was announced. Casey B. Mulligan: Financial Lobbyists and the Housing Crisis – NYTimes.com . Posted in Bank Regulation (domestic) , Financial Crisis , Lobbying , Mortgage Industry  | Comments Off

Fed’s Hoenig: Restrict banks to core business | Reuters Posted on May 25, 2011  by admin   The United States should ban banks from engaging in high-risk activities outside their core business, a top Federal Reserve official said on Tuesday, as he laid out a plan to return to what he called “the business of banking”. Kansas City Fed President Thomas Hoenig said banks covered by the public safety net should be restricted to activities that don’t hamper the assessment, monitoring and control of risk — such as making loans and taking deposits. “The consequence of expanding the safety net to an ever-increasing range of activities is to invite a repeat of our most recent crisis,” Hoenig told a Global Interdependence Center conference in Philadelphia. Dealing, market making, brokerage, and proprietary trading, he said, are not core banking services and should thus be off limits, Hoenig said. Fed’s Hoenig: Restrict banks to core business | Reuters . Posted in Bank Regulation (domestic) , Federal Reserve Board/The Fed  | Comments Off

Decorum Breaks Down at CFPB House Hearing on Consumer Finance Agency – NYTimes.com Posted on May 25, 2011  by admin   A House committee hearing on Tuesday about the new Consumer Financial Protection Bureau disintegrated into heated accusations of lying, with the panel’s chairman accusing Elizabeth Warren of giving misleading testimony at a hearing in March and of making up facts about her agreement to testify this week. Representative Patrick T. McHenry told Elizabeth Warren that he believed she had given misleading testimony to Congress. Representative Patrick T. McHenry, a North Carolina Republican who is chairman of a subcommittee of the House oversight committee, told Ms. Warren, who is directing the start of the consumer agency, that he believed she had misled Congress about her role in settlement talks between government authorities and mortgage servicing companies. Ms. Warren denied Mr. McHenry’s accusation, saying that she clearly stated in March that she had provided advice to officials of the Treasury and Justice Departments about their investigations of fraud among mortgage-servicing companies and about their settlement discussions with the companies.  Decorum Breaks Down at House Hearing on Consumer Finance Agency – NYTimes.com . Posted in CFPB , Mortgage Industry , Mortgage Loan Servicers  | Comments Off

Freddie Mac completed 11,349 loan mods in April Posted on May 25, 2011  by admin   Freddie Mac completed 11,349 loan modifications in April and 46,507 modifications in the first four months of 2011, according to the company’s latest monthly volume summary. The government-sponsored enterprises said the seriously delinquent rate of single-family mortgages fell to 3.57% in April, while the multifamily delinquency rate increased to 0.40%. Last year, Freddie was reporting a growth in mortgage delinquencies. The aggregate unpaid balance on all of the GSE’s mortgage-related portfolios decreased by approximately $5.3 billion in the latest Freddie report.  Freddie Mac completed 11,349 loan mods in April « HousingWire . Posted in Fannie Mae/Freddy Mac , Mortgage Modifications  | Comments Off

Treasury Gets Small Profit From Sale of A.I.G. Stock – NYTimes.com Posted on May 25, 2011  by admin   The United States Treasury wrung a small profit on Tuesday from the first sale of its shares in the American International Group, a major step toward unwinding the government’s ownership from a 2008 bailout. The insurer raised at least $8.7 billion from the offering, which priced shares at $29 each. After the offering, Treasury’s stake in the company fell to about 77 percent from 92 percent. Its ownership stake could fall even more if underwriters are able to sell an additional 45 million shares for the government through an overallotment option. As a result, both the Treasury and A.I.G. called the offering a major accomplishment, reassuring taxpayers that they would not lose an enormous sum of money and encouraging new investors to consider the company. The Treasury made $54 million from the sale on Tuesday.  Treasury Gets Small Profit From Sale of A.I.G. Stock – NYTimes.com . Posted in Bank Bail-Outs , TARP , Treasury Department  | Comments Off

Federal Reserve’s Elizabeth Duke wants financial education in schools Posted on May 25, 2011  by admin   A shifting housing market and a changing financial landscape are making financial education a must in American schools, according to one Federal Reserve governor. Speaking Tuesday at the Federal Reserve Bank of Boston, Elizabeth Duke outlined a shaky future where baby boomers are forced to accurately time the onset of pension and Social Security collections and where more younger consumers are returning home in droves to save money…”Today’s consumers are making decisions among increasingly complex financial products and in the context of uncertain economic times,” Duke said. “A working knowledge of basic financial terms and concepts can lead to better economic decisions and outcomes for individuals over the course of a lifetime. In addition, there is a clear relationship between individuals’ financial decisions and the health of our entire economy.” Federal Reserve’s Elizabeth Duke wants financial education in schools « HousingWire . Posted in Federal Reserve Board/The Fed , Financial Education  | Comments Off

S.E.C. Leased Unneeded Space, Report Says – NYTimes.com Posted on May 25, 2011  by admin   The Securities and Exchange Commission leased $556 million worth of office space last year based on a “deeply flawed and unsound analysis” of its needs, without competitive bids and using backdated approval forms to justify its rushed attempt to rent the offices, according a report by the agency’s inspector general released Tuesday. The report, dated May 16 and posted Tuesday on the commission’s Web site, concludes that the S.E.C. may have violated federal law by committing the agency to lease office space before Congress had appropriated enough money to pay for the 10-year contract. The actions “represent another in a long history of missteps and misguided leasing decisions made by the S.E.C. since it was granted independent leasing authority by Congress in 1990,” H. David Kotz, the S.E.C. inspector general, wrote in the report.  S.E.C. Leased Unneeded Space, Report Says – NYTimes.com . Posted in Financial Regulation , SEC  | Comments Off

Bank earnings roar back, doubts about momentum | Reuters Posted on May 25, 2011  by admin   U.S. bank earnings have bounced back to their highest level since the financial crisis took hold and the pace of failures has eased, giving regulators hope the industry is on sounder footing. The Federal Deposit Insurance Corp warned, though, about the ability of banks to keep boosting their earnings by setting aside less money to cover bad loans, rather than growing their lending. The FDIC said on Tuesday that the industry earned $29 billion in the first quarter, an $11.6 billion increase from a year before. It was the highest level since the second quarter of 2007.  Bank earnings roar back, doubts about momentum | Reuters . Posted in Bank Regulation (domestic) , Capital Requirements , FDIC  | Comments Off

House panel votes to delay swaps market rules | Reuters Posted on May 25, 2011  by admin   U.S. regulation of the swaps market, a $600 trillion behemoth that is now largely unpoliced, would be delayed until September 2012 under a Republican bill approved on Tuesday by a House of Representatives committee. The measure is not expected to become law. Democrats in control of the Senate oppose it, as does the White House, but it shows the persistent clout of Wall Street in Congress almost three years after the worst of the financial crisis. Swap-market regulation is mandated under 2010′s Dodd-Frank financial reforms, approved in response to the 2007-2009 crisis, which was amplified across world markets by unregulated credit default swaps and other off-exchange derivatives.  House panel votes to delay swaps market rules | Reuters . Posted in Credit Default Swaps , Dodd-Frank , Financial Regulation , Swaps  | Comments Off

Fed to widen counterparty list for exit strategy | Reuters Posted on May 25, 2011  by admin   The Federal Reserve is looking to add another group of big players to round out its roster of counterparties that will participate in its exit strategy when it is ready to end its ultra-loose monetary policy. On Tuesday, the Federal Reserve Bank of New York laid out the criteria for Fannie Mae, Freddie Mac and other government-sponsored entities, or GSEs, to become counterparties it could tap to help drain the $1.5 trillion in excess reserves from the banking system. The Fed, through reverse repurchase agreements — known as reverse repos — with GSEs, primary dealers and money market funds, could remove some of the excess reserves by exchanging them for Treasuries it owns. Fed to widen counterparty list for exit strategy | Reuters . Posted in Fannie Mae/Freddy Mac , Federal Reserve Board/The Fed  | Comments Off

SEC seeks to ban felons from private placements | Reuters Posted on May 25, 2011  by admin   Convicted felons and other “bad actors” would be banned from soliciting investors for some private placements under a new rule proposed on Wednesday by the U.S. Securities and Exchange Commission. The proposal, which will be put out for public comment, was approved in a 3-2 vote. It would implement a provision in the Dodd-Frank Wall Street overhaul law designed to protect investors by banning felons from qualifying for an exemption that lets them avoid registering securities in private offerings. Among the kinds of things that could prohibit bad actors from offering private placements would be criminal convictions, court injunctions and restraining orders, among other things. Republican Commissioners Kathleen Casey and Troy Paredes said they could not support the plan because it would apply retroactively to conduct that occurred prior to the enactment of Dodd-Frank. SEC seeks to ban felons from private placements | Reuters . Posted in Dodd-Frank , SEC  | Comments Off

Google Is Said to Have a Wireless Payment System – NYTimes.com Posted on May 25, 2011  by admin   Google will offer mobile payments with MasterCard and Citibank, according to one of the people, as well as with cellphone carriers, hardware manufacturers and retailers. Initially, the mobile wallets will be available only on Google’s Nexus S phone and will use a Citibank-issued MasterCard credit card number and a virtual Google MasterCard prepaid card. Consumers will be able to make payments at any of the 124,000 merchants that have MasterCard’s PayPass terminals, which accept contactless payments, a person briefed on the deal said.  Google Is Said to Have a Wireless Payment System – NYTimes.com . Posted in Credit Cards  | Comments Off

State & Political News Round-Up | May 25, 2011 Posted on May 25, 2011  by admin   Deal Reached in Albany to Cap Property Taxes Pledging to provide relief to highly taxed suburban homeowners, Gov. Andrew M. Cuomo and legislative leaders said Tuesday that they had agreed to place a 2 percent limit on property tax increases in a plan that rivals the toughest such measures in the nation. The proposed property tax cap, which must be approved by the Legislature, is aimed at reversing the economic decline in many parts of the state outside of New York City. It also seeks to curb soaring property tax bills in areas like Long Island, Westchester County and pockets of upstate New York, where residents are facing some of the country’s highest property taxes.  Some residents, particularly those who are older and live on fixed incomes, are being forced out of their homes by rising property taxes.  “It is going to be a game changer, and it’s going to change the trajectory of this state,” Mr. Cuomo said. http://www.nytimes.com/2011/05/25/nyregion/in-albany-agreement-is-reached-to-cap-property-tax-increases-at-2-percent.html?_r=1&pagewanted=1&ref=nyregion Tax Deal Criticized: Some Say It Doesn’t Provide Relief To Homeowners Tax reform activists say a proposed deal among state government leaders that would slow the rise of real estate taxes won’t help people who can’t afford the existing taxes on their property and won’t end flight from New York . The tentative agreement announced Tuesday by Gov. Andrew Cuomo, who hailed it as the toughest cap on real estate taxes in the nation, is “just a gimmick,” said Gioia Shebar, coordinator of Taxnightmare.org, one of several groups statewide comprising the Omnibus Tax Consortium. Real reform and relief, she said, would come from a structure that assesses property taxes based on income and prohibits a municipality from jacking up assessments to make up for revenue shortfalls. http://www.timesunion.com/local/article/Tax-cap-deal-announced-by-Gov-Cuomo-criticized-1394589.php Revelations From a Humdrum Transit-Fare Statistic A somewhat elusive statistic is not likely to get much attention when the board of the Metropolitan Transportation Authority convenes Wednesday morning for its monthly session. Nonetheless, it is an intriguing number. It even has a name, if an unwieldy one: farebox operating ratio. In recognizable English, this metric calculates the cost of running a mass transit system and the portion of it that riders pay with their coins and MetroCard swipes. For the city’s subway and bus passengers, who have seen government purse strings draw ever tighter at every level, the burden is high. The authority’s budget makers had expected it to clock in this year at 54 percent of overall costs. Instead, it is running at 64 percent. That figure comes from a report  prepared by the authority’s finance committee. Homeland Security Battle For Bucks Congresswoman Nita Lowey (D-Westchester) today tried to protect the nation’s top terror target – New York City – in the fight for homeland security money. Lowey tried to re-work a security appropriation that could otherwise cost New York City more than $100 million in counter-terrorism funds for the fiscal year that starts in October. The loss increases when port and transit security cuts are included. Lowey’s amendment would have funded the security program at $725 million, the same level as 2011, and would have pulled the high-targets program, the Urban Areas Security Initiative, out from a catch-all FEMA block grant program. “It is unacceptable to short-change security imperatives under the guise of deficit reduction,” Lowey said. The amendment failed by a vote of 19-27, and broke along party lines. http://www.nydailynews.com/blogs/dc/2011/05/homeland-security-battle-for-bucks Democrat seizes 26th District House seat in outcome carrying national impact Kathleen Courtney Hochul, the Erie County clerk and longtime Democratic figure who defied political experts who had given her little chance of success, ground out a stunning and surprisingly comfortable victory Tuesday in the special election for the House seat in the predominantly Republican 26th Congressional District. Hochul defeated Republican Jane L. Corwin, a Clarence assemblywoman, 47 percent to 43 percent, with 97 percent of election districts reporting, while the Tea Party’s Jack Davis mustered only 9 percent in his fourth try for the seat. Ian L. Murphy of the Green Party recorded 1 percent, while overall turnout was about 25 percent. http://www.buffalonews.com/topics/chris-lee/26-special-election/article432808.ece SUNY Buffalo First in State with power to set tuition The University at Buffalo could be the first in the state university system to be granted the ability to set its own tuition. UAlbany officials hope to one day have the same option.  On Tuesday, a panel of school officials, politicians and western New York business leaders presented a $375 million plan in Albany that would establish a new medical complex in downtown Buffalo, create thousands of new jobs there and raise tuition for the next five years. The school is also seeking an 8 percent annual tuition hike.  The group presented the plan to Gov. Andrew Cuomo, Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos. The 30-minute presentation at the Capitol generated plenty of excitement about a strengthened university as well as an economic engine that could help turn around the dwindling fortunes of a city that has been losing population and jobs for decades. http://www.timesunion.com/local/article/Tuition-plan-in-play-for-SUNY-1394590.php Survey Hints at a Census Undercount in New York City …an informal house-to-house New York Times survey of three representative square blocks where the Census Bureau said vacancies had increased and the population had declined since 2000 suggests that the city’s outrage is somewhat justified. In those blocks alone, census takers appear to have missed dozens of New Yorkers and to have overestimated the number of vacant apartments.  In Brooklyn, on a block near Ocean Parkway between Midwood and Gravesend, where the census said nearly half of the 148 homes were vacant, a resident said the only vacancies were in a new 33-unit apartment building that is partly occupied.  “There are not a lot of empty buildings,” said another resident, Ralph Shamah. “They’re too expensive to be empty.”   http://www.nytimes.com/2011/05/25/nyregion/survey-suggests-census-undercounted-new-york-city.html?ref=nyregion Posted in State & Political News Round-Up  | Comments Off

Crain’s Insider – Tuesday, May 24, 2011

Crain’s Insider

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Today’s News Tuesday, May 24, 2011

CBS Rejects Union Ad

CBS yesterday rejected a 20-second political advertisement by the United Food and Commercial Workers Union Local 1500 because it criticizes Target, a union spokesman said. The union is trying to organize workers at local Target stores. CBS had initially asked the union if it were interested in preparing an advertisement after reading about the campaign against Target in Crain’s . But CBS’ legal department rejected the promo because the company does not accept ads that attack organizations. The ad tweaks Target’s familiar slogan into “expects more, pays less.” “This is a first amendment issue,” the union spokesman argued.

Ravitch Shocked by Firm’s Demise

Former Lt. Gov. Dick Ravitch was surprised and saddened to hear of the liquidation of HRH Construction, which is detailed  in this week’s Crain’s . “My grandfather started that company in 1925,” he said. Ravitch joined the firm in 1960 and spent nearly two decades there, focused on affordable housing. “We built 40,000 apartments,” he said, “but also the Citicorp center, the Whitney Museum, hospitals, and office buildings.” The company was sold to the Starrett Corp. in 1977. Ravitch said he hadn’t “heard anything about HRH for 20 years” until a Crain’s  reporter told him last week about the Chapter 7 bankruptcy filing.

Guv’s Point Man on Marriage

An organizer of the push for same-sex marriage said Steve Cohen, the secretary to Gov. Andrew Cuomo, has been working with gay and lesbian groups to figure out the best way to get 32 votes for its passage in the state Senate. The previous governor, David Paterson, also supported marriage equality but lacked the popularity with voters and respect within the Legislature to mount such an effort. Cuomo released a video statement yesterday asking New Yorkers to call legislators about the measure.

Silverstein for Mayor?

Donald Trump has scuttled his presidential campaign—for now—but perhaps he’s provided a model for developers. During a real estate conference last week, Bob Knakal, founder of Massey Knakal Realty Services, asked World Trade Center developer Larry Silverstein whether he planned to run for mayor. Silverstein demurred. His spokesman told the Insider , “Larry needs to get his own reality show first. If that works, he will explore running for office.”

Expert’s take on what really cut crime

University of California-Berkeley criminal justice expert Franklin Zimring, in extensively researching the city’s policing strategies for a forthcoming book, found no clear evidence that stop-and-frisk is effective. While the tactic coincided with a drop in crime, it cannot be isolated as a cause because he said it was “part and parcel” of other proven strategies: hot-spot policing and a crackdown on public drug markets. By itself, stop-and-frisk in other cities has not reduced crime, the law professor said.

At a Citizens Crime Commission breakfast yesterday in midtown, Zimring said three other anti-crime strategies “probably worked” in reducing crime here: Compstat, gun interdiction and increased manpower.

Compstat—an intense focus on crime statistics and mapping—is often hailed as a key element of the unprecedented drop in city crime over the past two decades, so Zimring’s less-than-absolute endorsement is noteworthy.

He was even less enthusiastic about “broken windows policing,” the Giuliani-era emphasis on stopping minor crimes in order to deter major ones. “Whatever was going on in New York City was crime control,” he said. “It wasn’t broken windows.”

Zimring credited former Mayor David Dinkins with initiating police manpower increases in 1990 and said Dinkins’ much-ridiculed “midnight basketball” program actually seemed to help.

He cheered the NYPD’s focus on high-crime areas and corners where drugs were openly sold. Drug use has not decreased, but sales have moved into people’s apartments. Gone are turf wars between dealers. “That’s when the guns come out,” Zimring said.

Former NYPD Commissioner Bill Bratton, who was in the audience, called stop-and-frisk “an essential element of policing,” but agreed with Zimring that “it’s hard to measure its particular impact.”

The city’s success in reducing crime has upended old notions of social scientists, such as that urban criminality is endemic and simply moves to different blocks or times in response to police activity. It turns out, Zimring said, that “temporary solutions do work” over the long term. “Crime is much more situational and contingent than we thought,” he said.

At A Glance

MOVING IN:  Former Daily News  reporter Bill Farrell started last month as communications director at government relations firm Pitta Bishop Del Giorno & Giblin. He had been consulting for the firm. Farrell joined the newspaper as a copy boy in 1972 and left in 2005. He was later deputy director of the Golden Gloves boxing tournament.

News Clips – Tuesday, May 24, 2011

Press Release | Unanimous Senate Confirmation of Benjamin Lawsky as Superintendent of The Department of Financial Services
Posted on May 24, 2011 by admin

Governor Andrew M. Cuomo today announced that the State Senate unanimously confirmed Benjamin M. Lawsky as the Superintendent of the Department of Financial Services (DFS)… “There is no one better suited to take on the task of leading this new department than Ben Lawsky,” Governor Cuomo said. “Ben’s deep understanding of complex markets, evolving financial products, and consumer protection uniquely enables him to safeguard investors while maintaining a vibrant marketplace in New York. Ben has been devoted to public service for his entire career and I am glad that he will continue to serve New Yorkers in this capacity. I’d like to thank Majority Leader Skelos and Senators DeFrancisco, Griffo, Farley, Smith, Seward and Breslin for their careful consideration during the confirmation process.” Benjamin Lawsky, Superintendent of the Department of Financial Services said, “It is an honor to be confirmed as the first Superintendent of the Department of Financial Services. New York’s businesses and consumers deserve the leanest, most efficient, and most effective financial services regulator in the nation. The new DFS will promote healthy and vibrant banking and insurance industries while also protecting consumers and our markets. I thank Governor Cuomo for this opportunity, as well as Majority Leader Dean Skelos and Senators DeFrancisco, Griffo, Farley, Smith, Seward and Breslin for their thorough review.” Read the full press release here: Governor Cuomo Announces Unanimous Senate Confirmation of Benjamin Lawsky as Superintendent of The Department of Financial Services | Governor Andrew M. Cuomo .

Posted in Ben Lawsky , Department of Financial Services (DFS) | Comments Off

New bank agency in NY (Mentions the DFS) Posted on May 24, 2011 by admin Last month, Gov. Andrew Cuomo signed legislation establishing a new financial services law for New York state. The law brings about a consolidation of New York’s banking and insurance departments and creates one Department of Financial Services that will have regulatory oversight over both enormous industries. New York state is not known as being “business-friendly” — to say the least — so any new law that purports to improve the efficiency and effectiveness of regulatory oversight will be met with a huge amount of skepticism. That said, Cuomo has a stated goal of evaluating the banking and insurance regulations currently in place with an eye toward tweaking regulations or discarding them entirely if warranted.  Guest Columnist: New bank agency in NY | recordonline.com . Posted in Department of Financial Services (DFS) | Comments Off

More Banks and Bond Insurers to Face N.Y. Probe – Bloomberg Posted on May 24, 2011 by admin JPMorgan Chase & Co., UBS AG and Deutsche Bank AG are being investigated as part of New York Attorney General Eric Schneiderman’s expanded probe of mortgage securitization, according to a person familiar with the matter. Four bond insurers also were subpoenaed: Ambac Financial Group Inc. , MBIA Inc. , Syncora Holdings Ltd.  and Assured Guaranty Ltd., according to the person, who couldn’t be identified because the probe isn’t public. Schneiderman is seeking information on claims paid out during and after the economic crisis and any information or documents related to litigation or settlements with the banks, according to the person. The expanded investigation was reported earlier by the Wall Street Journal. Goldman Sachs Group Inc.  Bank of America Corp.  and Morgan Stanleywere already part of the probe, the person said earlier this month. Schneiderman, who took office in January, is examining mortgage practices and the packaging and sale of loans to investors, according to the person.  JPMorgan, UBS, Deutsche Bank to Face N.Y. Probe – Bloomberg . Posted in Bank Regulation (domestic) , Insurance , Lawsuit , Mortgage Backed Securities | Comments Off

Community Banks Lobby to Limit New Regulations – NYTimes.com Posted on May 24, 2011 by admin Network television ads appearing in the Washington area feature an anxious woman who cautions that “community banks and credit unions will be squeezed” by “bad” regulation. Subway cars serving suburban Virginia carry similar warnings, while Capitol Hill newspapers have run ads from small banks that show an empty pocketbook alongside an alarming notice that “Washington is helping you clean out your wallet.” The message is clear: lawmakers and regulators should tread lightly on small banks.  Community Banks Lobby to Limit New Regulations – NYTimes.com . Posted in Bank Regulation (domestic) , Community Banks , Dodd-Frank | Comments Off

Covered bond framework may land on the president’s desk Posted on May 24, 2011 by admin A proposal by Rep. Scott Garrett (R-N.J.) to create a regulatory framework for fostering a U.S. covered bond market holds bipartisan support, prompting ratings firm DBRS to suggest the plan could actually make it to the president’s desk. In March, Garrett and Rep. Carolyn Maloney (D-N.Y.) introduced the United States Covered Bond Act of 2011, reviving past efforts to create a regulatory framework for what lawmakers see as a investment tool to help the economic recovery. Like asset-backed securities, covered bonds are debt securities supported by cash flow from loans. The difference is issuers must insure covered bonds against losses, and the investor has a stronger ability to seek recourse from a bond pool or issuer upon default. Covered bond framework may land on the president’s desk « HousingWire . Posted in Bank Regulation (domestic) , Covered Bonds | Comments Off

Treasury Department Reveals Loan Mod Formula With Release of NPV Calculator Posted on May 24, 2011 by admin The U.S Department of the Treasury and the U.S. Department of Housing & Urban Development have announced the release of a new Web site, CheckMyNPV.com, designed to assist homeowners in calculating a net present value (NPV) evaluation of their mortgage for the federal Home Affordable Modification Program (HAMP). The site can be used by homeowners who have been denied a HAMP modification due to their NPV result. Homeowners can enter the NPV input values listed in the HAMP Non-Approval Notice received from their mortgage servicer after a loan modification denial, or substitute with estimated NPV input values, to compare the outcome provided by CheckMyNPV.com against that on the Non-Approval Notice. Treasury Department Reveals Loan Mod Formula With Release of NPV Calculator | Mortgage News | Daily National and State Headlines . Posted in Consumer Protection , Foreclosure , HAMP , Loan Modifications | Comments Off

Warren to refute ‘overblown claims’ against CFPB before subcommittee Posted on May 24, 2011 by admin Elizabeth Warren, the architect of the Consumer Financial Protection Agency, is still mum about who will be serving the agency as director, but still very vocal about defending the bureau she helped create to oversee mortgage and consumer lending in the United States. In written testimony prepared for Tuesday’s hearing in front of the House subcommittee on TARP, financial services and bailouts of public and private programs, Warren lashed back at criticisms from lawmakers who claim the bureau lacks sufficient oversight. “There have been many overblown claims about the nature of the CFPB’s power,” Warren said. “Critics have claimed that the CFPB is ‘the most powerful regulatory agency that’s ever been put together,’ that it is ‘the most powerful agency ever created, and that it ‘doesn’t have to explain what it does to anybody.’ ” Warren plans to dispute those barbs in her testimony.  Warren to refute ‘overblown claims’ against CFPB before subcommittee « HousingWire . Posted in Bank Regulation (domestic) , CFPB , Consumer Protection | Comments Off

Bank of America Settling Suit on Overdrafts – NYTimes.com Posted on May 24, 2011 by admin Bank of America would pay $410 million to settle its piece of a broad lawsuit involving excessive overdraft fees on debit cards in a deal tentatively approved by a federal judge in Miami on Monday. The legal action against Bank of America is part of a class-action lawsuit on behalf of consumers. It accuses the nation’s banks of manipulating debit transactions to maximize the fees they could charge customers who exceeded the balance in their accounts. Bank of America was the first defendant to settle in the case, said Robert Gilbert, one of the plaintiff lawyers. There are roughly 30 remaining defendants, including JPMorgan Chase, Wells Fargo, U.S. Bank, and Citibank, he said.  Bank of America Settling Suit on Overdrafts – NYTimes.com . Posted in Bank Regulation (domestic) , Lawsuit , Overdraft | Comments Off

Personal Finance: Tools to Negotiate Car Deals in a Tough Market – NYTimes.com Posted on May 24, 2011 by admin As you may have read, this isn’t expected to be a great summer to buy a car, whether you’re looking to buy new or used. Price increases from Japanese manufacturers due to the tsunami and the subsequent nuclear disaster, combined with tight supplies and higher prices of used cars, are making steals hard to find. (The average price of a new Honda Civic has risen more than $1,600 since March, according to the auto site Edmunds.com.) But there are some online tools that can help you calculate what your estimated costs will be, so that you’re in the strongest position possible to negotiate with a seller.  Tools to Negotiate Car Deals in a Tough Market – NYTimes.com . Posted in Personal Finance | Comments Off

Square Tries to Make Wallets Obsolete – NYTimes.com Posted on May 24, 2011 by admin Square, the mobile payments start-up, has tried to make cash obsolete by giving small businesses, like farm stands and cafes, a way to turn their cellphones or tablet computers into credit card terminals. Now Square is trying to make wallets obsolete, too, by upending the way that consumers pay for purchases. Square’s new apps allow consumers to pay their bills without swiping a credit card. But the company has competition. On Monday, Jack Dorsey, Square’s co-founder and chief executive, announced a way for shoppers to pay by simply giving their name to the merchant. Mr. Dorsey, who also co-founded Twitter, said customers would use a new feature on Square’s iPhone or Android apps, called Card Case, to make payments. Merchants would use one called Register to ring up and track purchases. Using cellphones to ease offline purchases is a crowded corner of tech investment. Most companies are tackling one aspect of purchasing, like mobile payments or coupons. But Mr. Dorsey is thinking big. He wants Square to be involved in every step of the transaction process by replacing cash registers, loyalty cards and paper receipts. “We think it should be one system,” he said. Square Tries to Make Wallets Obsolete – NYTimes.com . Posted in Credit Cards | Comments Off

NAMB Issues Call to Action Regarding QRMs Posted on May 24, 2011 by admin The National Association of Mortgage Brokers (NAMB) has issued a Call to Action to its membership to contact their legislators and voice their displeasure with Section 941 of the Dodd-Frank Act pertaining to risk retention and the Act’s definition of qualified residential mortgages (QRMs). Section 941 states that any mortgage lender who securitizes mortgage loans must retain a five percent risk retention. What will be exempt from the five percent risk retention will be QRMs. The driving force behind the risk retention rule is to discourage lenders from making risky loans and selling them to investors, with the end result of avoiding another collapse of the mortgage market as last seen in 2008. It is the opinion held by trade organizations such as NAMB that abiding by the current definition of QRM will further devastate the already fragile U.S. housing market.  NAMB Issues Call to Action Regarding QRMs | Mortgage News | Daily National and State Headlines . Posted in Bank Regulation (domestic) , Dodd-Frank , Mortgage Backed Securities , Mortgage Loan Servicers | Comments Off

States to ask banks for larger mortgage settlement | Reuters Posted on May 24, 2011 by admin Government negotiators plan to squeeze big banks for a larger settlement over mortgage servicing flaws when the two sides meet in Washington on Tuesday. State attorneys general and federal agencies found an offer of $5 billion from five banks “woefully inadequate,” according to a person familiar with the talks. Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial made that offer two weeks ago. The amount was a far cry from the $20 billion the states and federal agencies had been discussing, although not formally proposing. “There was a noticeable chill that went across the room” when the banks presented the offer, the person said. State and federal officials plan to describe to banks on Tuesday the scope of claims they believe could be brought against the lenders, to show why they believe $5 billion is inadequate.  States to ask banks for larger mortgage settlement | Reuters . Posted in Foreclosure , Mortgage Industry , Mortgage Loan Servicers , Mortgage Modifications | Comments Off

Fed’s Rosengren: Capital should be narrowly defined | Reuters Posted on May 24, 2011 by admin Bank regulators should narrowly define capital as that which is easily available to absorb losses during a financial crisis, a top Federal Reserve policymaker said on Tuesday. Boston Federal Reserve Bank President Eric Rosengren told a meeting of international regulators in St. Petersburg, Russia, that during the 2007-2009 crisis banks that had adequate capital according to broader definitions were unable to calm investors. “Clearly we need to focus on the narrow definitions of capital — that which can readily absorb losses,” Rosengren said, according to remarks prepared for delivery to a Bank for International Settlements meeting.  Fed’s Rosengren: Capital should be narrowly defined | Reuters . Posted in Bank Regulation (domestic) , Capital Requirements | Comments Off

State & Political News Round-Up | May 24, 2011 Posted on May 24, 2011 by admin Joining of forces: AG Schneiderman, DiNapoli announce plan to collaborate In a move that could considerably expand the investigative reach of two independently elected state officials, Attorney General Eric Schneiderman and Comptroller Tom DiNapoli will collaborate on public integrity enforcement. Their pact, first reported Monday in The New York Times, calls for the creation of a joint task force — helmed by co-chairs named by each office — to identify issues that would benefit from shared resources.  If Schneiderman and DiNapoli concur with their task force that a specific investigation should be launched, staff from either office could be assigned to the matter. Because of the comptroller’s broad oversight role as the state’s accountant and paymaster, the deal could result in investigations that touch upon agencies and authorities as well as the legislative and executive branches — ranging from pensions and member items to state and local contracts with private firms.  ”Anything where government money is spent” could fall under the agreement, said Schneiderman’s spokeswoman Jennifer Givner.   http://www.timesunion.com/local/article/Joining-of-forces-planned-on-probes-1392555.php Negotiators say ethics package doesn’t include enforcement language A pending ethics bill will do nothing to beef up enforcement of the state’s campaign finance laws, according to people involved in negotiating the legislation. Good-government advocates say New York’s campaign finance laws are lax and the state’s Board of Elections has done little to crack down against even serial violators like ex-Sen. Pedro Espada Jr. The Bronx Democrat — now indicted on unrelated federal charges — repeatedly failed to disclose his donors or expenditures and ignored fines for doing so. But negotiators working in private to draft legislation that is acceptable to Gov. Andrew Cuomo and legislative leaders have instead focused on forcing legislators to disclose outside income, and the question of who will make up a new enforcement panel. http://www.timesunion.com/local/article/Bill-won-t-affect-campaign-finance-1392556.php FBI looking into Oswego County Clerk’s office The FBI has subpoenaed the Oswego County Clerk’s office for a decade’s worth of records detailing the relationship between the office and Info Quick Solutions, a Clay company that has done hundreds of thousands of dollars worth of business with the county… IQS manages text and image work on documents, such as deeds, mortgages and court records filed in the county clerks’ offices around the Northeast. In Oswego County, IQS provides more than 100 pieces of equipment, including servers, computers printers, scanners and other items, Williams said. In February, Oswego County’s bipartisan ethics committee cleared Williams but said Mansfield had violated rules requiring her to disclose the money she made working part-time for IQS. The disclosure, the panel said, should have been made on the form legislators and top county employees fill out. “It was not intentional,” Mansfield said at the time, “it was stupid.” http://www.syracuse.com/news/index.ssf/2011/05/fbi_looking_into_oswego_county.html Police Association: ‘overtaxed’ is a subjective term There are several arguments against Gov. Andrew Cuomo’s proposed 2 percent property tax cap but the state Union of Police Associations is offering a novel one: that New York’s taxes aren’t all that bad. That’s what they suggest in page two of this open letter to lawmakers arguing against the cap. “Whether New Yorkers are “overtaxed” is subjective,” reads part of the letter by the organization’s president Anthony Solfaro. The letter also points out that lawmakers, who have mismanaged state finances for years, shouldn’t try to mandate local spending and taxing levels. Solfaro also raises questions about how a mandated cap squares with the concept of home rule. http://blog.timesunion.com/capitol/archives/68290/police-association-overtaxed-is-a-subjective-term/ Wheelchair Access in Taxis Is Focus of U.S. Investigation The United States attorney’s office in Manhattan has opened an investigation into whether the lack of wheelchair-accessible taxicabs in New York City amounts to a violation of parts of the Americans With Disabilities Act.  The investigation, revealed on Monday in letters mailed to city lawyers and owners of taxi medallions, could result in the federal government’s bringing a civil case against the Taxi and Limousine Commission, which regulates which vehicles can be used as taxicabs.  Taxicab owners are not required by the city to operate vehicles that are accessible to the disabled. The Nissan NV200, the minivan chosen by the city as its exclusive yellow cab for the next decade, will not provide access either.  Federal lawyers are conducting “a thorough evaluation” of whether this complies with the disabilities act, which prohibits local governments, or private groups that provide public transportation services, from discriminating against the disabled, according to the letter sent to medallion owners.   http://www.nytimes.com/2011/05/24/nyregion/us-inquiry-into-wheelchair-access-in-new-york-taxis.html?_r=1&ref=nyregion Inside the Destiny-Citigroup deal: Lender cuts off money, owners escape personal guarantees Citigroup will provide no more money for the expansion of the Carousel Center shopping mall in Syracuse under an agreement that settled a two-year lawsuit between the bank and developer Robert Congel. Under the terms of the settlement completed in March, Citigroup Global Markets Realty Corp. will not loan Congel’s Destiny USA Holdings any money beyond the $86.63 million it has loaned to the developer. That’s far short of the $155 million the bank originally agreed to lend the project. The deal leaves unanswered how Congel will complete his 1.3-million-square-foot mall addition, a project he has said is part of a plan to transform the Carousel Center into a world-class tourist destination called Destiny USA. Details of the agreement came to light Friday, revealing how Citigroup and Destiny ended the stalemate that halted construction on the project in 2009. Citigroup and Congel tried to keep the deal private, but after Syracuse city officials said they would release the records to The Post-Standard under the state’s Freedom of Information Law, Destiny provided a copy to the newspaper.  The newly released 1,082 pages of records also show: http://www.syracuse.com/news/index.ssf/2011/05/inside_the_destiny-citigroup_n.html – incart_mce Tuition differential remains key for those opposing UB 2020 A revised expansion plan for the University at Buffalo will face the same kind of opposition as in past years if it includes a request to permit the school to charge different undergraduate tuition rates than other State University of New York institutions, key lawmakers warned Monday. “Members do not want students to be precluded from a state university by virtue of the fact that tuition is higher,” Assembly Speaker Sheldon Silver said Monday — a day before UB and state leaders are scheduled meeting in the Capitol to discuss a revised UB 2020 plan. “There has been strong opposition to that,” Assemblywoman Deborah J. Glick, D-Manhattan and chairwoman of the Assembly’s Higher Education Committee, said of UB’s long-held contention that it should be allowed to charge a tuition “differential” to help cover what it says are a university center’s higher operating costs, compared with those of colleges. The new plan will be unveiled today. http://www.buffalonews.com/city/article431263.ece Posted in State & Political News Round-Up , Uncategorized | Comments Off

JPMorgan, UBS, Deutsche Bank to Face N.Y. Probe – Bloomberg Posted on May 24, 2011 by admin JPMorgan Chase & Co. , UBS AG and Deutsche Bank AG are being investigated as part of New York Attorney General Eric Schneiderman’s expanded probe of mortgage securitization, according to a person familiar with the matter. Four bond insurers also were subpoenaed: Ambac Financial Group Inc., MBIA Inc. , Syncora Holdings Ltd.and Assured Guaranty Ltd. , according to the person, who couldn’t be identified because the probe isn’t public. Schneiderman is seeking information on claims paid out during and after the economic crisis and any information or documents related to litigation or settlements with the banks, according to the person. The expanded investigation was reported earlier by the Wall Street Journal.  JPMorgan, UBS, Deutsche Bank to Face N.Y. Probe – Bloomberg . Posted in Bank Regulation (domestic) , Insurance , Mortgage Backed Securities , Mortgage Industry | Comments Off

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News Clips – Friday, May 20, 2011

Op-Ed | The Fight for Consumer Protections Comes to a Check Casher near You – Mentions the BD Posted on May 20, 2011 by admin

I have to admit it is downright depressing that Republicans in Congress are doing whatever they can to block the newly formed Consumer Financial Protection Bureau (CFPB) from fully getting off the ground. The bureau came about as a response to the failure of the various protection agencies to do their job on subprime and predatory products in the decade leading up the collapse. Many of these agencies had arguably been bought off by the industries they were supposed to protect us from. These same industries are now working the politicians in Washington to keep the CFPB from having any teeth. What may actually be even more depressing is that New York State is now considering a bill that will relax some of our own strong consumer protections – mainly the state’s longstanding civil and criminal usury laws, which cap interest rates on small loans at 25%. The Senate Committee on Banks voted yesterday in favor of a bill that would exempt check cashers from this usury cap and allow them to make triple-digit interest rate short term loans.  The Fight for Consumer Protections Comes to a Check Casher near You | Bronx News Networkbronx .

Posted in Banking Department News , Check Cashing Industry | Comments Off

New York State Opens New Chapter With Financial Services Watchdog Posted on May 20, 2011 by admin DFS is the result of redrawing regulatory powers, from existing state regulators in industry and finance. The Departments of Banking and of Insurance will merge into the new entity if, as expected, there is no political opposition from lawmakers. The new department would begin official operations on October 3, 2011.The reform and consolidation of regulatory power in the Empire State has been a cornerstone of New York governor Cuomo’s promises to get tough on financial irregularities. Proponents also see it as consistent with Cuomo’s tenure as a “no-nonsense” state Attorney General. Cuomo’s pick for the Empire State’s top regulator as Superintendent is long-time confidant, and current chief of staff, Benjamin M. Lawsky (41). The appointment had been rumored for some months, but only became official this week. An e-mail discussing the timing of Lawsky’s appointment had been inadvertently leaked through a public source. http://gamutnews.com/20110518/5628/new-york-state-opens-new-chapter-with-financial-services-watchdog.html Posted in Department of Financial Services (DFS) | Comments Off

CFPB News Posted on May 20, 2011 by admin CORKER TAKES ON CFPB – Sen. Bob Corker (R-Tenn.) and other Banking Committee Republicans sent a letter to Committee Chairman Tim Johnson urging him to hold hearings on their effort to change the structure of the CFPB because “no one person should have the power the director of the bureau is currently given.” JOHNSON RESPONDS – From prepared statement: “Senate Republicans may want to use revisionist history, but the structure of the CFPB was developed with Republican ideas in bipartisan negotiations last year. However, they ultimately chose to walk away instead of supporting these important new protections for American consumers. We should not re-legislate the bureau when it hasn’t even had a chance to start doing its job.” http://www.politico.com/morningmoney Posted in CFPB , Consumer Protection | Comments Off

Senator Tester offers to shorten debit card fee delay | Reuters Posted on May 20, 2011 by admin Opponents of a crackdown on debit card fees are seeking more support for their cause by offering to shorten a proposed delay of the fee cutback. On Wednesday Senator Jon Tester said he is proposing to delay the crackdown, which will become effective in July, for 15 months rather than two years as he originally proposed so a study of its impact can be done. “While it’s important to stop and examine the impact of limiting debit card swipe fees — some have said two years is too long,” he said on the Senate floor. Tester’s new proposal is the latest development in a raging lobbying fight over a Federal Reserve rule limiting the fees a bank can charge a retailer when a customer uses a debit card. The Fed in December proposed capping the fees at about 12 cents per transaction — a 75 percent cut. The rule is required by the new Dodd-Frank financial oversight law but opponents of the crackdown argue the Fed rule goes too far.  Senator Tester offers to shorten debit card fee delay | Reuters . Posted in Consumer Protection , Credit Cards , Dodd-Frank | Comments Off

Insurers May Owe More Than $1 Billion in Unpaid Policy Benefits Posted on May 20, 2011 by admin Life insurers may be keeping at least $1 billion in unclaimed benefits owed to policyholders, beneficiaries or states, according to a Florida regulator. Florida Insurance Commissioner Kevin McCarty, who made the estimate, said it was a “conservative number,” in a conference with reporters during a break in a hearing today in Tallahassee. Officials from MetLife Inc. (MET), the largest U.S. life insurer, and Nationwide Mutual Insurance Co., the policyholder-owned insurer, were subpoenaed to appear at a hearing by the Florida Office of Insurance Regulation to explain how they determine when policyholders have died. “We want to ensure that insurance companies use as much effort to find and pay benefits as they do to find and collect premiums,” McCarty said during the call with reporters. The hearing, which was attended by representatives from about 15 states, was held to help determine whether life insurers use Social Security Administration death records to stop annuity payments, without using that same data to identify life insurance policyholders who have died.  Insurers May Owe More Than $1 Billion in Unpaid Policy Benefits – Bloomberg . Posted in Insurance | Comments Off

CFTC’s Gensler: Reporting rule may be early arriver Posted on May 20, 2011 by admin A large-trader reporting rule, to collect data on swaps positions, could be one of the first swaps rules implemented by futures regulators under the new regulatory reform law, said the chairman of the Commodity Futures Trading Commission on Thursday. The CFTC has proposed 51 rules under the Dodd-Frank law, which brings federal regulation to the vast over-the-counter derivatives market. During a meeting of an agricultural advisory committee, CFTC chairman Gary Gensler said the large-trader reporting rule “might be something we can move in a more timely fashion” than some proposals that attracted thousands of comments.  CFTC’s Gensler: Reporting rule may be early arriver | Reuters . Posted in Bank Regulation (domestic) , CFTC | Comments Off

HSBC U.S. client to plead guilty to hiding account | Reuters Posted on May 20, 2011 by admin A board member for Boston Private Bank and Trust Corp plans to plead guilty of illegally hiding funds at HSBC Bank Bermuda, the latest plea in a crackdown on Americans evading taxes, federal prosecutors said on Thursday. Michael Schiavo, 53, will plead guilty to one count of failing to report a foreign account after he quietly refiled his tax returns for several years to account for the money he held at the HSBC Holdings Plc unit, according to court records. The Internal Revenue Service has held two programs recently for Americans to come forward to disclose assets they have hidden overseas to evade U.S. taxes and pay any back taxes and associated penalties. Schiavo had as much as $150,000 in the HSBC account, but he did not participate in the IRS amnesty programs, according to the criminal information document filed in U.S. District Court for the District of Massachusetts.  HSBC U.S. client to plead guilty to hiding account | Reuters . Posted in Tax Evasion | Comments Off

Florida AG says investigating 5 prepaid debit card companies Posted on May 20, 2011 by admin The Florida Attorney General’s office said it was investigating prepaid debit card companies — First Data Corp, Green Dot Corp, Account Now Inc, NetSpend Corp and Unirush Financial Services LLC — for possible deceptive and unfair practices. The Attorney General’s Economic Crimes Division also issued a series of subpoenas regarding possible hidden fees on prepaid debit cards. Florida AG says investigating 5 prepaid debit card companies | Reuters . Posted in Consumer Protection , Credit Cards | Comments Off

Bloomberg Regulatory News Round-Up Posted on May 20, 2011 by admin Basel Methodology and Liquidity Rules Zubrod Sees Dodd-Frank Rules Completed at Year End Mirow Says Basel III Doesn’t Suit Emerging Economy Banks Italy, Spain Fail to Implement Banker Bonus Rules, EU Says Citigroup Hedge-Fund Returns Jump as Ban on Prop Trading Looms Sweden Vows to Implement EU Bank Capital Rules to Avert Suit EU Bank Stress Tests to Be More Demanding, Goldman Sachs Says via Basel Methodology, EU Stress, Resona Pledge, Privacy Hearings: Compliance – Bloomberg . Posted in Driving the Day: Early Morning News , Uncategorized | Comments Off

Study Says Spam Can Be Cut by Blocking Card Transactions Posted on May 20, 2011 by admin The hope, the scientists said, was to find a “choke point” that could greatly reduce the flow of spam. And in a paper to be presented on Tuesday at the annual IEEE Symposium on Security and Privacy in Oakland, Calif., they will report that they think they have found it. It turned out that 95 percent of the credit card transactions for the spam-advertised drugs and herbal remedies they bought were handled by just three financial companies — one based in Azerbaijan, one in Denmark and one in Nevis, in the West Indies. The researchers looked at nearly a billion messages and spent several thousand dollars on about 120 purchases. No single purchase was more than $277. If a handful of companies like these refused to authorize online credit card payments to the merchants, “you’d cut off the money that supports the entire spam enterprise,” said one of the scientists, Stefan Savage of the University of California, San Diego, who worked with colleagues at San Diego and Berkeley and at the International Computer Science Institute. Study Says Spam Can Be Cut by Blocking Card Transactions – NYTimes.com . Posted in Consumer Protection , Credit Cards , Cyber Security | Comments Off

Mets owners deny Irving Picard’s claim that Sterling Partners went ‘shopping’ for fraud insurance Posted on May 20, 2011 by admin In a brief opposing the Mets owners’ motion to dismiss Picard’s lawsuit against them, Picard said the fact that Sterling Partners – the catch-all name for a group of companies controlled by Wilpon and Katz – was “in the market for this ‘one of a kind’ insurance policy” that may have protected against Ponzi schemes “establishes incontrovertibly” that Sterling Partners was on notice that Madoff was suspicious. Wilpon and Katz deny knowing anything of Madoff’s schemes, and Greg Nero, general counsel for Sterling Equities, said the most sensational claim in Picard’s new filing was “just wrong. “They didn’t go shopping,” Nero said. “A trusted colleague made a recommendation about looking at insurance, so they spoke to an insurance salesman, received some basic information and they ultimately decided not to purchase it because they trusted Mr. Madoff – and believed that they did not need it.”  Mets owners deny Irving Picard’s claim that Sterling Partners went ‘shopping’ for fraud insurance . Posted in Bank Fraud , Insurance | Comments Off

Online Treasury Sales Challenge Elderly Investors Posted on May 20, 2011 by admin The federal government has started shifting the purchase of Treasury securities to the Internet to cut costs, which means many elderly investors are facing an unwelcome change. The United States Treasury Department has begun phasing out its older Legacy Treasury Direct program, which allows users to buy Treasury bills and other securities by mail or phone and receive paper statements. It has started limiting use of the system and will completely shut it down on Nov. 1, 2012. Users must switch to the newer, Web-based TreasuryDirect system, or arrange to buy Treasury bills, notes and bonds through a bank or broker — which typically involves a fee. Slightly more than 200,000 people are affected, according to the Bureau of the Public Debt, the Treasury arm that handles the sale and redemption of Treasury bills and other government securities… The problem is that most users of the older system are elderly — their average age is 75, and many are over 80. Many lack computers, or the inclination to use one. The department acknowledges that the shift will be challenging for these people and encourages them to have their children, grandchildren or other trusted helpers assist them with the change.  Online Treasury Sales Challenge Elderly Investors – NYTimes.com . Posted in Consumer Protection , Personal Finance , Treasury Department | Comments Off

Financial regulation: A shield asunder (FT) Posted on May 20, 2011 by admin On a late January day in a discreet basement room of the Grischa Hotel by the ski lifts of Davos, Tim Geithner listened to grievances from 14 executives from some of the biggest financial groups in the world. Some complained to the US Treasury secretary about regulation – but not regulation that emanated from Washington. Bob Diamond, a prominent American banker, was in the room at the Swiss resort but he was representing Barclays, the British group he now runs. Among the rest were Jan Hommen, chairman of the Dutch ING, and Urs Rohner of Credit Suisse. Many of those present maintained that it was Europe’s rules that were unfairly severe. Mr Geithner had had the group assembled deliberately and it achieved its purpose – providing him with a refreshing counterpoint to the moans and groans of bankers at home, always complaining that their European rivals had a softer ride. FT.com / Comment / Analysis – Financial regulation: A shield asunder . Posted in Bank Regulation (Foreign) | Comments Off

State & Political News | May 20, 2011 Posted on May 20, 2011 by admin Poll: Cuomo, tax cap, remain popular The Siena Research Institute released its monthly survey this morning, showing he maintains high approval ratings — fueled by Republicans and conservatives. Seventy-one percent of voters view Cuomo favorably and 52 percent say they approve of his job performance. Echoing results of a Marist Poll last week, poll spokesman Steve Greenberg explains the Democratic governor “has a better than two-to-one favorability rating with Republicans and a nearly two-to-one favorability rating with conservatives.” The poll of 807 registered voters (with a 3.4 percent margin of error) found voters support legalizing same-sex marriage 54-42. This is lower than the 58 percent support Siena found last month but higher than the bare 50 percent polled last week by Marist. And Siena drilled into opinions about a proposal to cap local property tax increase, which I think is very interesting. Says Greenberg:   http://blog.timesunion.com/capitol/archives/67932/poll-cuomo-tax-cap-remain-popular/ New York politicians praise Janet Napolitano for not cutting terrorism funding New York politicians had a clear message Thursday for the nation’s Homeland Security Secretary: thanks for seeing it our way. Influential pols from New York convinced the feds to spike a slew of smaller cities from sucking up precious homeland security funds. As a result, Homeland Security Secretary Janet Napolitano cut the number of eligible cities sharing the pie from 64 down to 32. The result is that New York City will get the same amount as last year – $152 million – from a program designed to protect at-risk cities and key targets from a terrorist attack. http://www.nydailynews.com/ny_local/2011/05/19/2011-05-19_new_york_to_receive_152_million_in_funding_from_dept_of_homeland_security_for_te.html Donald Trump’s for-profit ‘Trump University’ investigated for possibly deceptive business practices The state attorney general is investigating Donald Trump’s online business school where he charges would-be moguls up to $35,000 to “learn from the master.” The for-profit Trump University is being probed for possibly deceptive business practices, sources familiar with Eric Schneiderman’s investigation said Thursday. Problems with Trump’s business education firms first surfaced last year when the Daily News revealed that more than 150 students in 22 states said they’d been cheated out of tens of thousands of dollars for useless courses. Schneiderman subpoenaed the school – which is nonaccredited and changed its legal name to the Trump Entrepreneur Initiative after News inquiries – as part of a broad-based probe of New York’s for-profit college industry. http://www.nydailynews.com/ny_local/2011/05/19/2011-05-19_donald_trumps_forprofit_trump_university_investigated_for_possibly_deceptive_bus.html Posted in State & Political News | Comments Off

Cuomo nominee promises to form ‘nimble’ agency Posted on May 19, 2011 by admin Gov. Andrew Cuomo’s departing chief of staff Ben Lawsky received unanimous approval from two state Senate committees Wednesday, setting the stage for his confirmation as early as next week as superintendent of the newly formed Department of Financial Services. The new entity, created as part of the 2011-2012 budget, combines the state Banking Department and the Department of Insurance. It’s slated to begin operations in early October. In addition to serving Cuomo since his election and during his tenure as attorney general, Lawsky is a former federal prosecutor, Justice Department staff lawyer and counsel to U.S. Sen. Chuck Schumer. In his remarks to the Senate insurance and banking committees, Lawsky said he would work to craft a “nimble” regulatory entity that wouldn’t stifle innovation. Cuomo nominee promises to form ‘nimble’ agency – Times Union . Posted in Department of Financial Services (DFS) | Comments Off