News Clips – Thursday, May 5, 2011

More Power Over Wall Street, but Little Chance to Discuss It – ProPublica Posted on May 5, 2011  by admin   The most notable thing about the first-ever news conference of the Federal Reserve chairman, Ben S. Bernanke, last week was what wasn’t discussed: banking regulation. We hardly need more evidence that the most powerful banking regulator in the world, one that just became even more powerful after financial reform was passed, is also the least examined. Mr. Bernanke’s opening remarks were about monetary policy and the economy. When he answered questions, he repeatedly referred to the Fed’s “dual mandate” — to keep inflation low and stable and to maintain full employment for the economy. But that’s not the Federal Reserve’s true dual mandate. The Fed is indeed the steward of the economy, but it also has to regulate the financial system, making sure banks are safe and sound. In the years before the financial crisis, the Fed was a miserable failure in that role, a creature of the banks, not a watchdog. The news conference was an opportunity for Mr. Bernanke to demonstrate what the Fed had learned from the crisis about banking oversight. After all, a collapsed financial system does spectacular damage to an economy. More Power Over Wall Street, but Little Chance to Discuss It – ProPublica . Posted in Bank Regulation (domestic) , Federal Reserve Board/The Fed , Financial Crisis  | Comments Off

 

Federal Reserve’s Power Over Wall Street, Unexamined Posted on May 5, 2011  by admin   The most notable thing about the first news press conference ever of the Federal Reserve chairman, Ben S. Bernanke, last week was what wasn’t discussed: banking regulation. We hardly need more evidence that the most powerful banking regulator in the world, one that became even more powerful after financial reform was passed, is also the least examined. Mr. Bernanke’s opening remarks were about monetary policy and the economy. When he answered questions, he repeatedly referred to the Fed’s “dual mandate” — to keep inflation low and stable and to maintain full employment for the economy. But that’s not the Federal Reserve’s true dual mandate. The Fed is indeed the steward of the economy, but it also has to regulate the financial system, making sure banks are safe and sound.  Federal Reserve’s Power Over Wall Street, Unexamined – NYTimes.com . Posted in Bank Regulation (domestic) , Federal Reserve Board/The Fed  | Comments Off

 

Independent Experts to Oversee UK Report on RBS Posted on May 5, 2011  by admin   The Treasury Select Committee said on Thursday that David Walker and Bill Knight would examine, among other things, the accuracy of the Financial Services Authority report and its analysis of RBS’ problems. “We need to know the decisive mistakes which destroyed RBS, how they came to be made, whether the FSA was asleep at the wheel, and whether we can have confidence that they are awake now,” Treasury Select Committee Chairman Andrew Tyrie said in a statement. David Walker is currently a senior adviser to U.S. bank Morgan Stanley. Bill Knight is Chairman of the Financial Reporting Review Panel and a former executive at the Lloyd’s of London insurance market. The FSA has promised to publish its report into the near collapse of RBS during the financial crisis, which resulted in the bank being bailed out by taxpayers. However, the report — which is expected to criticise former RBS Chief Executive Fred Goodwin — has been delayed by legal issues.  Independent Experts to Oversee UK Report on RBS – NYTimes.com . Posted in Bank Regulation (Foreign) , Financial Crisis  | Comments Off

 

Have lying mortgage bankers met their match? Posted on May 5, 2011  by admin   In short, the feds have finally figured out a way to go after the banks for wholesale, systematic lying – a practice they have often been accused of but rarely held accountable for since the financial meltdown. Bharara’s secret is the federal False Claims Act – a law that was originally passed in 1863 to keep suppliers from ripping off the Union Army but lately has been turned mostly on greed-ridden healthcare companies…The government has collected $27 billion in False Claims Act recoveries since the law was strengthened two decades ago. Bharara’s insight is that just as giant healthcare companies illicitly fattened themselves up at the Medicare trough, the banks wrongfully enriched themselves by stuffing taxpayer-backed mortgage insurers such as the Federal Housing Administration with loans they should have known would go bad. Why, he seems to be alone in asking, should we be taking that lying down? Have lying mortgage bankers met their match? – Street Sweep: Fortune’s Wall Street Blog . Posted in Bank Regulation (domestic) , FHA , Insurance , Mortgage Fraud , mortgage lending/brokering  | Comments Off

 

FDIC Report Highlights Lessons Learned From Review of Foreclosure Practices | Mortgage News Posted on May 5, 2011  by admin   The Special Foreclosure Edition of Supervisory Insights, released by the FDIC highlights lessons learned from an interagency horizontal review of the 14 largest residential mortgage servicers. To date, FDIC reviews of state nonmember banks have not identified instances of “robo-signing” or other serious deficiencies in mortgage servicing operations. Nevertheless, any bank involved in residential mortgage servicing can benefit from understanding the issues identified in the interagency review. To help institutions minimize their legal and reputational risks, this Special Foreclosure Edition provides examples, derived from the lessons learned, of effective residential mortgage servicing practices. FDIC Report Highlights Lessons Learned From Review of Foreclosure Practices | Mortgage News | Daily National and State Headlines . Posted in Bank Regulation (domestic) , FDIC , Mortgage Servicers , mortgage lending/brokering  | Comments Off

 

Appellate judge orders NY Insurance Dept. to turn over MBIA-related emails Posted on May 5, 2011  by admin   A New York appellate judge is permitting a limited search of New York State Insurance Department emails to uncover any communications that could suggest bias by the Empire State regulators when they agreed to approve the 2009 restructuring of mortgage insurer MBIA Inc. The discovery request is tied to a major legal action involving MBIA and the state insurance department. In the original complaint, the plaintiffs — including Bank of America , JPMorgan Chase and others — alleged the New York Insurance Department and its former superintendent, Eric Dinallo, approved “one of the largest fraudulent conveyances in history” by allowing MBIA to create a second mortgage insurer, using $5 billion siphoned from the company’s original insurance subsidiary. The plaintiffs allege executives within the state’s insurance department at the time ignored their statutory duties when ruling in favor of granting MBIA’s request to split up its insurance business.  Appellate judge orders NY Insurance Dept. to turn over MBIA-related emails « HousingWire . Posted in Bank Regulation (domestic) , Insurance  | Comments Off

 

Lawmaker on debit fee curbs: slay the dragons | Reuters Posted on May 5, 2011  by admin   A key Republican lawmaker on Monday urged hundreds of tiny banks to “slay the dragons” when they battle Congress over new limits on debit card fees that could hurt their profits. Speaking to bank executives before they set out to lobby lawmakers this week, Representative Spencer Bachus told them the outcome of the controversial “interchange” rule was “up to them.” “Go ye to the hill and slay the dragons,” said Bachus, the chairman of the House Financial Services Committee that is helping to oversee the implementation of the Dodd-Frank regulation bill. As required by the legislation, regulators are crafting the “interchange” rule that will crack down on fees banks charge merchants on debit card transactions. Lawmaker on debit fee curbs: slay the dragons | Reuters . Posted in Bank Fees , Interchange Fees  | Comments Off

 

Goldman lobbying hard to weaken Volcker rule Posted on May 5, 2011  by admin   Goldman Sachs Group Inc has just a few more months to put its stamp on the Volcker rule, and it is not wasting any time. The rule, designed to limit banks from speculating with their own money, will cost Goldman at least $3.7 billion in annual revenue, by one estimate. And billions more could be at stake if regulations now being drawn up are extra-tough. The Volcker rule was one of the main topics on the agenda when Chief Executive Lloyd Blankfein met recently with U.S. Securities and Exchange Commission Chairman Mary Schapiro. Wall Street chiefs do not often lobby top regulators directly, but this issue is unusually important to Goldman. “They’re totally freaked out about Volcker,” said a Goldman lobbyist who declined to speak on the record for fear of losing the contract. “People are working on that a lot, with agency staff, with lawmakers, you name it.” Goldman lobbying hard to weaken Volcker rule | Reuters . Posted in Bank Regulation (domestic) , Lobbying , SEC , Volcker Rule  | Comments Off

 

UBS Settles Fraud Charges in Municipal Bond Market – NYTimes.com Posted on May 5, 2011  by admin   The Swiss bank UBS agreed to pay $160 million in fines and restitution because former employees conspired to rig bids in the municipal bond derivatives market, federal and state officials announced on Wednesday. The Justice Department, the Securities and Exchange Commission, the Internal Revenue Service and 25 state attorneys general entered into the agreement with UBS, which admitted that, from 2001 through 2006, several of its former employees repeatedly manipulated the bidding process when local governmental entities or nonprofit organizations sought to invest the proceeds of municipal bond offerings. The conduct of UBS and its employees “corrupted the competitive process and harmed municipalities, and ultimately taxpayers, nationwide,” said Assistant Attorney General Christine A. Varney, who oversees the federal antitrust division. “Today’s agreements with UBS ensure that restitution is paid to the victims of the anticompetitive conduct, that UBS pays penalties and disgorges its ill-gotten gains.” UBS Settles Fraud Charges in Municipal Bond Market – NYTimes.com . Posted in Bank Regulation (Foreign) , Bank Regulation (domestic) , Derivatives , Lawsuit , SEC  | Comments Off

 

Bank of America to Triple Number of Mortgage Help Centers Posted on May 5, 2011  by admin   The bank, which will announce the plan on Thursday, will focus on regions hit especially hard by the rising tide of homeowners struggling to make their mortgage payments. Seven locations will open in California and three in the Detroit area; other centers will be unveiled in St. Louis, Newark, Philadelphia and Tucson, among other cities. Just over two million homes are in foreclosure nationwide, according to LPS Mortgage Monitor, and another two million borrowers are severely delinquent. Additional centers may open later this year, the bank said. Counselors fluent in languages including Spanish, Korean, Vietnamese and Russian will be available for non-English speaking customers.  Bank of America to Triple Number of Mortgage Help Centers – NYTimes.com . Posted in Consumer Protection , Foreclosure , Mortgage Modifications  | Comments Off

 

Business & Financial News, Breaking US & International News | Reuters.com Posted on May 5, 2011  by admin   Two congressional committees led by Republicans approved measures on Wednesday to delay and weaken key provisions of last year’s Dodd-Frank Wall Street reforms, but they were expected to fizzle in the Senate. With Democrats in control of the upper chamber of Congress and President Barack Obama able to defend Dodd-Frank with his veto pen, efforts by Republicans to water down and postpone the reforms seemed unlikely to succeed, analysts said. That is not stopping Republicans from pressing their rollback agenda, however, especially in the U.S. House of Representatives. “Dodd-Frank is not in any way, shape or form in danger of being repealed,” said Ed Mills, a financial policy analyst with brokerage FBR Capital Markets. “But they’re building the groundwork over time to strip away elements that the business community feels are the most onerous.” As a global regulatory crackdown moved ahead fitfully in the United States and Europe after the 2007-2009 financial crisis, a House subcommittee voted in favor of weakening the powers of the new U.S. Consumer Financial Protection Bureau, or CFPB. Set up by Dodd-Frank to protect consumers from abusive and misleading credit cards and mortgages, the CFPB will open its doors in July. Like the rest of Dodd-Frank, it has been hotly opposed by Republicans and Wall Street since it was proposed. Business & Financial News, Breaking US & International News | Reuters.com . Posted in Bank Regulation (domestic) , Consumer Protection , Dodd-Frank  | Comments Off

 

Freddie Mac Loses $929 Million Posted on May 5, 2011  by admin   Mortgage finance giant Freddie Mac on Wednesday said it lost just short of a billion dollars last quarter, though it did not ask taxpayers for more aid as the loss stemmed from interest payments to the government. The second-largest U.S. residential mortgage funds provider reported net loss attributable to common shareholders of $929 million in the first quarter, including a $1.6 billion payment to the government. Without that interest payment, Freddie Mac earned about $676 million in the first three months of the year. That’s the first three month period since the second quarter of 2009 that the firm reported positive net income, excluding the interest payment, and stems from higher quality loans made in recent years. The first-quarter loss, including the interest payment, represents about $0.29 per share. Freddie Mac and its sister firm Fannie Mae have taken more than $150 billion in taxpayer aid since they were seized by the government in late 2008. Freddie Mac Loses $929 Million – NYTimes.com . Posted in Fannie Mae/Freddy Mac , Money Laundering  | Comments Off

 

LA Sues Deutsche Bank Over Foreclosure Blight – NYTimes.com Posted on May 5, 2011  by admin   The City of Los Angeles sued Deutsche Bank on Wednesday, claiming the global financial institution is one of the biggest “slumlords” in the second-largest U.S. city. Due to widespread foreclosures, Deutsche Bank subsidiaries have taken title to more than 2,000 residential properties in Los Angeles, according to a copy of the lawsuit available on the city’s web site. However, the bank has disregarded its responsibilities as property owners, creating vacant nuisance properties and substandard housing, the lawsuit said. Deutsche Bank said the lawsuit is misguided, as loan servicers are contractually responsible for the maintenance of foreclosed properties. “The Los Angeles City Attorney’s Office has filed this lawsuit against the wrong party,” the bank said in a statement on Wednesday. Two Deutsche Bank subsidiaries “have become two of the largest, if not the largest, slumlords in the City of Los Angeles,” the lawsuit said. LA Sues Deutsche Bank Over Foreclosure Blight – NYTimes.com . Posted in Foreclosure , Lawsuit , Mortgage Servicers  | Comments Off

 

Onetime S.E.C. Enforcement Lawyer Joins Weil Gotshal Posted on May 5, 2011  by admin   Christian R. Bartholomew, a former senior enforcement lawyer at the Securities and Exchange Commission, has joined Weil, Gotshal & Manges as head of the law firm’s S.E.C. enforcement and litigation practice in Washington. Mr. Bartholomew, who for several years brought civil fraud charges against broker dealers and other financial firms, has more recently been defending the industry he once policed. His clients have included TD Ameritrade, Raymond James and SunTrust Banks, according to Weil. Mr. Bartholomew comes to Weil from Morgan, Lewis & Brockius. Onetime S.E.C. Enforcement Lawyer Joins Weil Gotshal – NYTimes.com . Posted in Bank Regulation (domestic) , SEC  | Comments Off

 

Citigroup Hires UBS Banker Posted on May 5, 2011  by admin   Kevin Cox, formerly head of Americas investment banking at UBS, is joining Citigroup as co-chairman of global industrial banking. He is the latest in a recent flurry of banker departures from UBS. Since the financial crisis, the Swiss bank has been grappling to rein in compensation. Mr. Cox, who joined UBS in 2002, had served as chairman of the global industrials group. Before UBS, he had been at Morgan Stanley for nearly 16 years. He is a graduate of Georgetown University and Harvard Business School. At Citigroup, Mr. Cox will be based in New York and report to Raymond J. McGuire, head of global banking.  Citigroup Hires UBS Banker – NYTimes.com . Posted in Bank Regulation (Foreign) , Bank Regulation (domestic)  | Comments Off

 

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