News Clips – Thursday, June 2, 2011
June 2, 2011 Leave a comment
| Angelo Mozilo wants Allstate securities case dropped Posted on June 2, 2011 by admin |
| Former Countrywide Financial Corp. CEO Angelo Mozilo is asking to be dismissed from a securities fraud case filed by Allstate Insurance against his former employer. Late last year, Allstate sued Countrywide, Mozilo and other former Countrywide executives, alleging the parties ignored underwriting guidelines on mortgage loans sold to Allstate Insurance and other institutional investors in the form of mortgage backed-securities. The housing crisis caught up to Countrywide in 2008, resulting in the subprime lender being sold to Bank of America. Mozilo and Countrywide are now asking the court to dismiss the entire Allstate case. Mozilo’s dismissal brief claims he cannot be held individually liable because Allstate has “not pled a single fact linking Mr. Mozilo to the MBS sales at issue.” Angelo Mozilo wants Allstate securities case dropped « HousingWire . |
| Posted in Financial Crisis , Insurance , Lawsuit , Mortgage Backed Securities , Subprime | Comments Off |
| Natural Disasters Batter Insurance Industry Posted on June 2, 2011 by admin The devastation from the natural disasters that have ripped through parts of the country this year has been starkly evident. Hundreds of people have died and thousands of houses have been shattered in a deadly string of tornadoes. Millions of acres of farms were inundated and businesses shut down by flooding along the Mississippi River. Now, as homes are repaired, fields are pumped and factories are cleaned out, the damage assessments will mount, and another measure of the impact will come into clearer focus: the cost to insurance companies…Catastrophes are defined in the industry as any single event with $25 million or more in insured losses. The biggest catastrophe to hit the industry’s insurers was Hurricane Katrina, which generated $45 billion, adjusted for inflation, in insured losses for houses, businesses and vehicles. Natural Disasters Batter Insurance Industry – NYTimes.com . Posted in Uncategorized | Comments Off |
| Advocates and Bankers Join to Fight Loan Rules Posted on June 2, 2011 by admin The weight of the mortgage crisis fell heavily on lower-income and minority communities, where first-time home buyers often fell victim to the predatory lending practices that resulted in an explosion of defaults and foreclosures. That left consumer advocates and civil rights groups frequently at odds with bankers, mortgage lenders and their lobbyists during the debate over the financial regulation act last year, which aims to rein in the subprime mortgage excesses that inflated the housing bubble. Now, as banking regulators are rewriting the rules for the mortgage market, unusual alliances have sprung up in opposition to tighter lending standards. Advocacy groups like the N.A.A.C.P. and the National Council of La Raza, a Latino civil rights organization, on the one hand, and the American Bankers Association on the other, are joining together to fight rules they say could make home loans less affordable for minority and working-class Americans. The growing alliance between civil-rights organizations and banking lobbyists could extend beyond the current round of financial rule-making. Advocates and Bankers Join to Fight Loan Rules – NYTimes.com . Posted in Bank Regulation (domestic) , Lobbying , Mortgage Industry , Subprime | Comments Off |
| David Maris Is Punished as a Wall Street Whistle-Blower Posted on June 2, 2011 by admin Whistle-blowers, truth-tellers and fraud-spotters pay a miserable price on Wall Street. They are vilified. They are fired. Sometimes they are even sued. Instead of being sought after, they become persona non grata. Recently, I caught up with David Maris, a one-time star pharmaceutical analyst for Bank of America who became embroiled in one of the most notorious bull/bear battles of the last decade. His story encapsulates just how broken Wall Street culture is. David Maris Is Punished as a Wall Street Whistle-Blower – NYTimes.com . Posted in Bank Regulation (domestic) , Whistle-blowers | Comments Off |
| Michel Barnier: Obama Administration, Regulators Not Doing Enough To Curb Banker Bonuses Posted on June 2, 2011 by admin The U.S. isn’t doing enough to curtail excessive banker bonuses, Europe’s top financial regulator told the Obama administration in a recently-disclosed letter. “I think you agree with me that ‘bankers’ bonuses’ is a matter that continues to cause public outrage,” Michel Barnier, the European commissioner overseeing finance, wrote to Treasury Secretary Timothy Geithner. “Getting this matter right is key to restoring our citizens’ confidence in the financial system — and ultimately — their confidence in the public authorities regulating the financial institutions.” Lavish compensation paid to traders and bankers during the housing-driven bubble fueled risk-taking at the nation’s largest financial firms, experts have said. Those risks eventually led to the collapse of storied firms, the near-collapse of the financial system and the most punishing economic downturn since the Great Depression. Yet bonuses were never recouped. Individual traders made off with tens of millions of dollars, and chief executives of failed firms and those rescued by taxpayers left with hundreds of millions. To prevent further occurrences, the European Union moved to restrict cash bonuses for executives and risk-takers at banks and other financial institutions Michel Barnier: Obama Administration, Regulators Not Doing Enough To Curb Banker Bonuses . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , Executive Compensation | Comments Off |
| Lobbying Push Targeting Federal Regulatory Agencies Continues in Wall Street Reform Fight Posted on June 2, 2011 by admin It’s been more than 10 months since President Barack Obama signed massive financial regulatory reform legislation into law, but the special interests it directly affects are sustaining a federal lobbying onslaught now aimed at shaping the law’s implementation. In all, 488 companies, trade associations, unions and other groups reported lobbying on the Democrats’ financial regulatory reform law during the first quarter of 2011, according to a Center for Responsive Politics analysis of documents filed earlier this year with the U.S. Senate. That’s nearly as many organizations that lobbied on it as during the entire year of 2009, when the proposal began coursing its way through Congress. Two years ago, 501 companies and other organizations explicitly mentioned lobbying on the Dodd-Frank legislation in their lobbying reports. The legislation is named after its chief congressional sponsors, then-Senate Banking Committee Chairman Chris Dodd (D-Conn.) and then-House Financial Services Committee Chairman Barney Frank (D-Mass.) Furthermore, these lobbyists are targeting like never before several federal agencies that play significant roles in financial sector regulation Lobbying Push Targeting Federal Regulatory Agencies Continues in Wall Street Reform Fight – OpenSecrets Blog | OpenSecrets . Posted in Bank Regulation (domestic) , Dodd-Frank , Lobbying | Comments Off |
| Stress Tests Results for European Banks to Be Delayed Posted on June 2, 2011 by admin The delay, announced in a statement late Wednesday, comes after a similar test conducted last year drew criticism that the parameters used were not rigorous enough, and the tests too easy to sufficiently restore confidence in the 91 European banks covered. Some economists said they for example excluded the possibility of a Greek debt default. The E.B.A. released a stricter test methodology in March and the 91 banks submitted their data during April and May. But erroneous or missing data meant the E.B.A. would need more time to analyze the results. Stress Tests Results for European Banks to Be Delayed – NYTimes.com . Posted in Bank Regulation (Foreign) , Stress Tests | Comments Off |
| The French Determination to Run the I.M.F. Posted on June 2, 2011 by admin As the euro is a reserve currency — and a highly regarded one; for example, it remains strong relative to the dollar — the I.M.F. is now essentially lending euros to the euro zone through its various bailout programs. Does this make sense? No, unless you understand that the goal of these various bailouts is to ensure that German and French taxpayers do not realize the full extent of their losses or appreciate the ways in which their banks have been mismanaged. Simon Johnson: The French Determination to Run the I.M.F. – NYTimes.com . Posted in Bank Bail-Outs , Bank Regulation (domestic) , Bank Regulation (Foreign) | Comments Off |
| State & Political News Round-Up | June 2, 2011 Posted on June 2, 2011 by admin Cuomo says Milstein will bring a ‘business mentality’ to job Gov. Andrew M. Cuomo said his choice to head the Thruway Authority will bring a “business mentality” to the agency that runs the toll highway and the state’s canal system. The selection of Howard Milstein was kept secret — for three weeks — after Cuomo officially nominated the billionaire banker and real estate businessman, who is also a major political donor to Cuomo and other Democrats and Republicans in Albany. Cuomo publicly addressed the appointment for the first time Wednesday, a day after it was reported by The Buffalo News. http://www.buffalonews.com/city/article440666.ece Ethics bill: Single panel would handle executive & legislative branches Legislators are privately finalizing details of a bill to restructure government ethics enforcement in Albany, and officials said a public announcement of the bill could come as soon as Thursday. At its heart is the creation of a Joint Committee on Public Ethics, which for the first time would have oversight over both the legislative and executive branches, people briefed on the bill’s contents said Wednesday… But bill language has not yet been settled upon. In a possible sign of fragility, Gov. Andrew Cuomo reprised his threat to convene a Moreland Act Commission to investigate potential corruption in the Legislature if a bill is not enacted before the legislative session ends June 20. “One way or another there will be a clean-up-Albany vehicle,” he said. http://www.timesunion.com/local/article/Ethics-bill-agreement-advances-1405878.php Tax Department Kudos In this space in January, I wrote how New York state was probably losing $400 million a year to fraudulent tax returns. Sources in that column explained how bad guys were run ning tax refund mills where they would set up shop to file dozens of fraud ulent returns using hacked Wi-Fi access and misappropriated or fictitious personal information. Recently the New York State Department of Taxation and Finance proudly announced that it denied a record $400 million “of questionable tax refund claims” thanks to new equipment it got from IBM. “The department continues to evolve its technology-based capabilities to keep up with the growing sophistication of tax evaders.” What can I say except — it’s a miracle! SEC to advisers: Keep political friends close, but your wallet closer – NYPOST.com . State Labor Agreement Under Scrutiny (WSJ) New York state Comptroller Thomas DiNapoli is holding up approval of a major highway construction contract amid allegations that the Cuomo administration improperly steered work to union crews at a cost of millions of additional tax dollars. The comptroller’s office says transportation officials have failed to justify their decision to broker the unusual pact with labor leaders. The state disqualified a nonunion contractor that submitted the lowest bid but wouldn’t accept the union-friendly terms of the state’s agreement. The focus of the dispute is a $70 million overhaul of a winding, traffic-choked Route 17 exit ramp on the western edge of the Hudson Valley. The site has emerged as the latest flash point in a national debate over the government-mandated construction pacts, called project labor agreements. http://professional.wsj.com/article/SB10001424052702303657404576359940227555996.html?mod=googlenews_wsj&mg=reno-secaucus-wsj Dinapoli, Biben Order Special Investigations Of SUNY Research Foundation Two powerful state investigative agencies announced new inquiries Wednesday into the inner workings of the Research Foundation of the State University of New York amid accusations that the foundation’s president violated state ethics laws. Comptroller Thomas DiNapoli has directed his auditors, including members of his fraud unit, to do a comprehensive investigation of the secretive arm of the public university system, and state Inspector General Ellen Biben has started her own probe, according to a letter released by her office. Both developments come in the wake of allegations that the daughter of former Senate Majority Leader Joseph L. Bruno held a $84,120 no-show job at the Research Foundation as Foundation President John J. O’Connor’s special assistant. http://www.timesunion.com/local/article/SUNY-target-of-dual-probes-1404918.php Cuomo Ends State’s Role in Checking Immigrants Gov. Andrew M. Cuomo said on Wednesday that he was suspending New York’s participation in a federal immigration enforcement plan that has drawn fire from immigrant advocates, civil liberties lawyers and elected officials in the state and around the country. A statement from Mr. Cuomo’s office said there was “mounting evidence” that the program, called Secure Communities, had not only failed to meet its goal of deporting the most serious immigrant criminals but was also undermining law enforcement and compromising public safety. http://www.nytimes.com/2011/06/02/nyregion/cuomo-pulls-new-york-from-us-fingerprint-checks.html?_r=1&ref=nyregion Survey: Improved Tax Collections Can’t Keep Pace With States’ Fiscal Needs Although state tax collections are picking up after several brutal years, a new survey by the National Governors Association and the National Association of State Budget Officers found that states still expect to collect less tax revenue and spend less money in the coming fiscal year than they did before the Great Recession began. http://www.nytimes.com/2011/06/02/us/02states.html?ref=politics NIFA hiring accountant to cut Nassau costs (Newsday) A state oversight board says it’s ready to take its shot at trimming the fat from Nassau County’s $2.6 billion budget. The Nassau Interim Finance Authority, which took control of the county’s books in January, will hire an accounting firm this month that will spend the summer scouring Nassau’s departmental spending and recommending ways to secure cost savings. http://www.newsday.com/long-island/nassau/nifa-hiring-accountant-to-cut-nassau-costs-1.2922159 State wants to know why airport ignored recommendations A state watchdog agency that recently recommended the board of the Monroe County Airport Authority be removed and replaced called on Monroe County Executive Maggie Brooks on Wednesday to explain why she has refused to comply. The county two weeks ago responded dismissively to a scathing report on Airport Authority operations issued by the Authorities Budget Office, which found that the board could not act independent from county government and had a long history of lax oversight. The report concluded, among other things, that the seven-member board should be replaced. The board is by law appointed by the county executive. http://www.democratandchronicle.com/article/20110601/NEWS01/110601049/State-wants-know-why-airport-ignored-recommendations?odyssey=tab|topnews|text|Home Posted in State & Political News Round-Up | Comments Off |
| Oral drug costs offer bitter pill Posted on June 2, 2011 by admin Bonstein and advocates from the Leukemia and Lymphoma Societyvisited the Capitol on Wednesday to lobby for legislation that would require insurers to cover oral chemotherapy the same way they cover IV chemotherapy. The New York Health Plan Association opposes the mandate, saying it would increase premiums and could prompt employers to drop prescription coverage. Under most insurance plans, intravenous chemotherapy is covered as a medical benefit. Patients usually pay about $20 for each IV treatment. Oral chemotherapy is usually covered under the drug benefit that, depending on the plan, requires consumers to pay a percentage of the drug cost. Oral drug costs offer bitter pill – Times Union . Posted in Insurance | Comments Off |
| Albany may unleash check-casher lending | Mentions the DFS Posted on June 2, 2011 by admin EVERY DAY COULD BE PAYDAY for New York state’s 700 check-cashing companies and thousands of their customers, if an industry-backed bill clears Albany.The bill would allow licensed check-cashers to lend as much as 25% of a borrower’s gross monthly income, to a limit of $2,000. The head of the new state Department of Financial Services would set the interest rates for the loans, which could exceed the 25% limit set by New York’s usury laws.Critics, such as New Yorkers for Responsible Lending, warn that the annual interest rates of these loans could skyrocket into the triple digits, spurring lending that might bury people in debt. Proponents argue that many New Yorkers need small, short-term loans but have few options in low-income areas that lack banks and credit unions. Albany may unleash check-casher lending | Crain’s New York Business . Posted in Banking Department News , Check Cashing Industry , Consumer Protection , Department of Financial Services (DFS) , Financial Regulation | Comments Off |
| Amy Traub: Legalized Loan-Sharking: Is It Coming to New York? Posted on June 1, 2011 by admin Payday lending has been denounced as “a scourge on vulnerable citizens” and condemned as “modern day usury.” Across the country, consumer advocates are fighting to rein in the high-cost, short-term loans that trap low- and moderate-income borrowers in thousands of dollars of high-interest debt. So why do some state legislators want to introduce these predatory financial products to New York? New York State usury laws limit the interest charged on small loans, ensuring that borrowers will not be harmed by exorbitant interest rates on debt they have little ability to repay. Our longstanding safeguards in this area are a model for other states. Yet last week, legislation to roll back these consumer protections passed the Senate Banks Committee. Amy Traub: Legalized Loan-Sharking: Is It Coming to New York? . Posted in Bank Regulation (domestic) , Consumer Protection , Payday Lending , Predatory Lending | Comments Off |
| Cummings requests copies of banks’ engagement letters from federal regulators Posted on June 1, 2011 by admin House Oversight and Government Reform ranking member Elijah Cummings (D-Md.) asked federal regulators on Tuesday to release copies of letters between 14 mortgage servicing companies and the private consultants they hired to review their foreclosure practices. In a letter sent Tuesday , Cummings requests copies of the engagement letters by June 3. He also asked for an explanation of why any bank hasn’t completed the process. The regulators — the Federal Reserve, Federal Deposit Insurance Corporation, Comptroller of the Currency and Office of Thrift Supervision — set up a Tuesday deadline to approve the engagement letters after ordering comprehensive reviews of foreclosure practices following an April 13 report that found “critical weaknesses” and widespread risk” with the foreclosure practices at the 14 banks, such as the document preparation processes and oversight and monitoring of third-party vendors, including foreclosure attorneys. Cummings requests copies of banks’ engagement letters from federal regulators – The Hill’s On The Money . Posted in FDIC , Federal Reserve Board/The Fed , Foreclosure , Mortgage Industry , Mortgage Loan Servicers , OCC , OTS | Comments Off |
| BofA, UBS Ask New York’s Highest Court to Reinstate Lawsuit Against MBIA Posted on June 1, 2011 by admin New York’s highest court was asked by Bank of America Corp., UBS AG and other institutions to reinstate their lawsuit claiming that bond insurer MBIA Inc.’s 2009 restructuring was intended to defraud policyholders. A lower-court decision throwing out the lawsuit improperly blocked claims the banks could bring as creditors, their lawyer told the New York State Court of Appeals at oral arguments yesterday in Albany. Eric Dinallo, the state’s former insurance superintendent, approved the split in 2009, allowing Armonk, New York-based MBIA to move its guarantees on state and municipal bonds out of the unit that insured some of Wall Street’s riskiest mortgage debt. Robert Giuffra Jr., lead counsel for the banks, called the action unprecedented. BofA, UBS Ask New York’s Highest Court to Reinstate Lawsuit Against MBIA – Bloomberg . Posted in Financial Regulation , Insurance , Lawsuit , Mortgage Backed Securities , Mortgage Industry | Comments Off |
| Who Needs Health Care Reform? Posted on June 1, 2011 by admin It is no secret that health care has become increasingly unaffordable as the cost of medical treatments and insurance premiums keep rising. Two recent studies have documented just how severe the burden can be and underscored the urgent need for the health care reforms that Republicans are so determined to repeal. Who Needs Health Care Reform? – NYTimes.com . Posted in Health Care Reform , Insurance | Comments Off |
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