News Clips – Thursday, June 16, 2011
June 16, 2011 Leave a comment
| JPMorgan Pays $27 Million to OCC, Clients Over Car-Loan Tactics Posted on June 16, 2011 by admin |
| JPMorgan Chase & Co. will pay a $2 million fine to the Comptroller of the Currency and $25 million to reimburse customers after using “high pressure” tactics to sell credit insurance on car loans. The bank’s customer-service representatives deceived borrowers about costs and terms of credit protection offered to cover missed payments in 2008 and 2009, the OCC said in a settlement document released today. “Chase Auto used written scripts together with oral high- pressure sales tactics that included statements which were materially false, deceptive or otherwise misleading in violation of the Federal Trade Commission Act,” the regulator said in a statement. JPMorgan didn’t admit or deny wrongdoing. JPMorgan Pays $27 Million to OCC, Clients Over Car-Loan Tactics – Bloomberg . |
| Posted in Bank Regulation (domestic) , Insurance Industry , OCC | Tagged Lending & Finance | Comments Off |
| Credit-Rater Federal Oversight Likely Posted on June 16, 2011 by admin The U.S. Consumer Financial Protection Bureau is likely to place the three major credit-reporting bureaus, Equifax Inc. , Experian Plc and TransUnion LLC, under direct supervision by federal examiners. The Dodd-Frank financial regulatory overhaul requires the new agency to propose regulations by July 21, 2012, on whether a company constitutes a “larger participant” in consumer financial services. That designation would lead to supervision similar to that of banks for the three firms, which provide credit reports on borrowers to prospective lenders. Three credit bureaus are likely to meet that legal test the consumer agency’s assistant director for credit information markets, told consumer advocates last month, according to three people present at the meeting. Bureau officials have also delivered this message directly to two of the three firms, according to the companies. Credit-Rater Oversight – Bloomberg . Posted in CFPB , Consumer Protection , Credit Rating , Financial Regulation | Comments Off |
| Debit Card Fee Cap Should Be Shelved During Suit, Bank Says Posted on June 16, 2011 by admin A cap on debit-card swipe fees collected by the biggest U.S. banks should be delayed past a July deadline until a challenge to the law is decided, TCF National Bank argued to a federal appeals court. The limit on the per-transaction charge is part of the Dodd-Frank financial overhaul. Banks with more than $10 billion in assets won’t be allowed to collect more than the cost of providing the service, making profit impossible, TCF said. Debit Card Fee Cap Should Be Shelved During Suit, Bank Tells Appeals Court – Bloomberg . Posted in Credit Cards , Dodd-Frank , Durbin Amendment | Comments Off |
| Budget Cuts for Consumer Bureau, IRS Proposed by Republicans Posted on June 16, 2011 by admin U.S. House Republicans proposed limiting the funding for the new Consumer Financial Protection Bureau and placing the agency under the congressional appropriations process by 2013. The House Appropriations Subcommittee on Financial Services released the measure today, which would limit to $200 million the amount the Federal Reserve can transfer to the new agency in fiscal 2012. Budget Cuts for Consumer Bureau, IRS Proposed by Republicans – Bloomberg . Posted in CFPB , Government | Comments Off |
| WAMu Reinsurance Unit Settlement Agreement Collapses Posted on June 16, 2011 by admin Washington Mutual Inc.’s agreement with shareholders, aimed at ending opposition to the company’s more than $7 billion reorganization proposal, has fallen apart, three people with direct knowledge of the negotiations said. The talks broke down over how to split up ownership of the only WaMu unit that will survive the collapse of the company, which is the former owner of the biggest U.S. bank to fail, one person with knowledge of the negotiations said. Creditors, the company and shareholders were trying to complete a contract based on the outline of a settlement that would have given a stake in the unit, a reinsurance company, to shareholders. WaMu and a committee of shareholders tried to give both common and preferred shareholders a stake in the reinsurance company. They were opposed by a group of preferred holders, who were concerned about anything being given to holders of the common stock, the person said. Washington Mutual Settlement Agreement With Shareholders Said to Collapse – Bloomberg . Posted in Bank Closings , Bank Regulation (Foreign) | Comments Off |
| Haldane Eyes Shadow Banking as New BOE Panel Targets Bubbles Posted on June 16, 2011 by admin The U.K. Financial Policy Committee may target unregulated bank transactions as it seeks to prevent bubbles and end the “Chuck Prince dynamic,” said Andrew Haldane, a Bank of England official and member of the new panel. The FPC must “advise government when we think risks have migrated outside of the conventional banking system into what is these days called the shadow banking system,” Haldane said in an interview in London yesterday. Evidence of “banking-type activities” in “non-regulated parts of the system” could compel the FPC to ask the government to expand its powers. The interim FPC meets tomorrow for the first time as part of Prime Minister David Cameron’s shake-up of banking regulation. The panel will be chaired by Bank of England Governor Mervyn King, who is due to speak in London later today. Haldane, executive director for financial stability at the bank, said officials are still deciding what tools will be used to shield the economy from financial risks. Haldane Eyes Shadow Banking as New BOE Panel Targets Bubbles – Bloomberg . Posted in Bank Regulation (Foreign) , Shadow Banking | Comments Off |
| Parkinson Says High Quality Capital Should Back Bank Surcharge Posted on June 16, 2011 by admin The Federal Reserve’s top banking supervisor said the largest global banks should retain an additional buffer against potential losses in the form of “high quality capital.” The Fed and banking regulators around the world are discussing the size of capital cushions for the largest financial firms, considering whether that buffer should be in the form of common equity or hybrid securities. “The Federal Reserve strongly supports such efforts to increase the level and quality of regulatory capital for our internationally active banking organizations,” Patrick Parkinson, director of the Division of Banking Supervision and Regulation, said today in a speech in Washington. Parkinson Says High Quality Capital Should Back Bank Surcharge – Bloomberg . Posted in Basel II | Basel III , Capital Requirements , Federal Reserve Board/The Fed | Comments Off |
| Tussle Over Indonesian Agency Raises Risks for Bank Supervision Posted on June 16, 2011 by admin A tussle between lawmakers and the government over Indonesia’s planned financial regulator has raised the risk of political interference in bank supervision, highlighting the nation’s struggle to eliminate corruption. The Financial Services Authority parliamentary working committee, which is holding meetings this month to debate whether lawmakers can appoint two members to the nine-person board of commissioners for the agency…The government’s proposal for the board would exclude members of parliament. The outcome may influence the effectiveness and independence of an authority set to take over regulation of capital markets, insurers, pension funds and banks from the finance ministry and central bank. Tussle Over Indonesian Agency Raises Risks for Bank Supervision . Posted in Bank Regulation (Foreign) , Insurance Regulation | Comments Off |
| Osborne to Back Vickers Plan for U.K. Retail-Bank Firebreaks Posted on June 16, 2011 by admin Chancellor of the Exchequer George Osborne will back proposals to erect firebreaks around the consumer-banking units of British banks as he seeks to protect taxpayers and depositors during future financial crises. Osborne will express his support for recommendations drawn up by the Independent Commission on Banking in April for the first time in public during his annual Mansion House speech to bankers in London this evening, according to a Treasury official who declined to be named in line with government practice. Osborne to Back Vickers Plan for U.K. Retail-Bank Firebreaks – Bloomberg . Posted in Bank Bail-Outs , Bank Regulation (Foreign) , Consumer Protection | Comments Off |
| U.S. Regulators Approve Rule Setting Capital Floor for Banks Posted on June 15, 2011 by admin The Federal Deposit Insurance Corp. board approved a measure barring the largest U.S. lenders from reducing capital levels below baselines set for smaller banks as part of a joint rulemaking under the Dodd-Frank Act. FDIC board members voted 5-0 today to enact the rule, which will also hold large financial holding companies to the same capital requirements as their deposit-taking subsidiaries. The Office of the Comptroller of the Currency and the Federal Reserve announced their approval in an interagency statement. The measure, included in the regulatory overhaul at the request of U.S. Senator Susan Collins of Maine, prevents lenders from lowering capital holdings using formulas in the Basel II international banking accords. Without such a floor, banks and their holding companies would have been allowed to reduce capital levels over time. U.S. Regulators Approve Rule Setting Capital Floor for Banks – Businessweek . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , Basel II | Basel III , Capital Requirements , FDIC | Comments Off |
| FDIC: Systemic Firms May Be Told to Simplify Posted on June 15, 2011 by admin Systemically important financial institutions in the U.S. may have to simplify their business if they can’t provide viable plans for unwinding themselves in a crisis, a senior Federal Deposit Insurance Corp. official said. “Ultimately, a SIFI could be required to restructure its operations if it cannot demonstrate it is resolvable in an orderly manner under the Bankruptcy Code,” Michael Krimminger, the FDIC’s chief counsel, told a House Financial Services subcommittee today at a hearing in Washington. Systemic Firms May Be Told to Simplify, FDIC Official Says – Businessweek . Posted in Bank Regulation (domestic) , FDIC , House Financial services Committee , Too Big To Fail | Comments Off |
| Hacking blitz drives cyber insurance Posted on June 15, 2011 by admin New York – The recent string of sensational hacker attacks is driving companies to seek “cyber insurance” worth hundreds of millions of dollars, even though many policies can still leave them exposed to claims. Companies are having to enhance not just their information technology practices but also their human resources and employee training functions just to get adequate coverage against intrusion – and in some cases, they are also accepting deductibles in the tens of millions of dollars. Insurers and insurance brokers say demand is soaring, as companies try to protect themselves against civil suits and the potential for fines by governments and regulators, but also as they seek help paying for mundane costs like “sorry letters” to customers. via Hacking blitz drives cyber insurance: News24: Sci-Tech: News . Posted in Consumer Protection , Cyber Security , Insurance Industry | Comments Off |
| Chase Dumps David Lowman, Mortgage Head Posted on June 15, 2011 by admin Less than a month after proclaiming to shareholders that foreclosing on the homes of 27 active-duty military personnel was the worst mistake the bank ever made, JPMorgan Chase CEO Jamie Dimon has booted the executive in charge of his disgraced mortgage unit. The ouster of David Lowman, the global head of mortgages at Chase who also oversaw the unit tainted in the “robo-signing” scandal, was announced in a terse morning e-mail to employees…Dimon has described the mess with foreclosures of military personnel as one the “biggest mistakes” the firm has made and offered his most fervent apology at the bank’s annual meeting last month in Columbus, Ohio–a meeting in which hundreds of protesters paraded outside the building. Chase dumps David Lowman, global head of mortgages – NYPOST.com . Posted in Foreclosure , Mortgage Industry , Robo-signing | Comments Off |
| Broker-Dealer Audits Targeted In New U.S. Inspection Program Posted on June 15, 2011 by admin The biggest U.S. broker-dealers will have to pay more than $1 million a year to finance inspections of the firms that audit them under a regulatory program prompted by revelations related to Bernard Madoff’s Ponzi scheme. The Public Company Accounting Oversight Board voted 5-0 today to establish a temporary system for monitoring auditors of broker-dealers that will give the Washington-based watchdog time to determine what a permanent system should look like. The PCAOB’s new program requires U.S. broker-dealers to fund the estimated $14.4 million inspections program, which could amount to more than $1 million for the largest firms. The board said 640 brokerages will be charged this year, with fees assessed in proportion to a firm’s net capital. The fee structure was also passed by the board with a 5-0 vote. Companies such as Goldman Sachs Group Inc. and Morgan Stanley can expect the new fees to be assessed on their broker- dealers, separately from fees already assessed on parent companies for the PCAOB’s existing public-company audit inspections. Broker-Dealer Audits Targeted In New U.S. Inspection Program – Bloomberg . Posted in Financial Regulation | Comments Off |
| CFTC Proposes Six-Month Delay of Swap Rules Slated for July Posted on June 15, 2011 by admin Rules scheduled to take effect in mid-July for the $601 trillion swaps market would be delayed until as late as the end of the year under a proposal by the U.S. Commodity Futures Trading Commission. The agency’s commissioners voted 5-0 today to propose “temporary relief” from some requirements set to be in place on July 16, a year from the enactment of the Dodd-Frank Act. The delay would give the CFTC more time to write dozens of rules aimed at reducing risk and boosting transparency. CFTC Proposes Six-Month Delay of Swap Rules Slated for July – Businessweek . Posted in CFTC , Dodd-Frank , Swaps | Comments Off |
| Gallagher Faces $1 Million Pay Cut If Confirmed for SEC Post Posted on June 15, 2011 by admin Daniel M. Gallagher will take a pay cut of more than $1 million a year if the Senate confirms him for a spot on the U.S. Securities and Exchange Commission. The securities lawyer and former SEC deputy division director is one of President Barack Obama’s two commission nominees facing a confirmation hearing tomorrow before the Senate Banking Committee. Gallagher’s financial disclosures show he was paid about $1.2 million a year advising SEC-regulated firms. If confirmed, his salary will be $155,500, according to the U.S. Office of Personnel Management. Gallagher Faces $1 Million Pay Cut If Confirmed for SEC Post – Bloomberg . Posted in SEC | Comments Off |
| S.E.C. Investigates Merrill Over Magnetar C.D.O. (FT) Posted on June 15, 2011 by admin With echoes of Abacus, the securities regulator is reported to be looking into how Merrill Lynch sold to clients like the Dutch lender Rabobank a collateralized debt obligation it had made for the hedge fund Magnetar. FINANCIAL TIMES Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , CDOs, Collateralized Debt Obligations , Mortgage Backed Securities , Mortgage Industry , SEC | Comments Off |
| Deutsche Bank Star, Faces Barriers to Top Job Posted on June 15, 2011 by admin As a non-German speaker and Wall Street product, Mr. Jain is facing an uphill battle to succeed Deutsche Bank’s chief executive, Josef Ackermann. More diplomat than banker, the Swiss-born, German-speaking Mr. Ackermann and the Deutsche board have resisted persistent shareholder demands that the bank put forward a succession plan before Mr. Ackermann’s contract expires in 2013. All of which has enhanced the view that Mr. Ackermann sees it as his legacy to crown a successor in his own statesmanlike mold — perhaps Axel A. Weber, the recently departed president of the German central bank. There has been much talk of Mr. Weber’s becoming chief executive or coming in to share the job in some way with Mr. Jain. Ultimately it will be a board decision, and the bank may well decide to anoint Mr. Jain. But the delay, institutional shareholders say, runs the risk of alienating Mr. Jain and might cause him to jump to another investment bank. Anshu Jain, Deutsche Bank Star, Faces Barriers to Top Job – NYTimes.com . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) | Comments Off |
| French Banks On Watchlist Over Greece Exposure Posted on June 15, 2011 by admin French banks were punished Wednesday for their exposure to Greek debt after Moody’s Investors Service placed three of the largest on review for a possible downgrade. Moody’s cited “concerns” about the exposure of BNP Paribas, Société Générale and Crédit Agricole to the Greek economy, either through holdings of government bonds or loans to the private sector there, directly or through subsidiaries operating in Greece. It said the reviews would also examine “the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels.” Moody’s to Review French Banks Over Greece Exposure – NYTimes.com . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) | Comments Off |
| Schumer Helps Banks With a Patent Problem Posted on June 15, 2011 by admin For years and much to their frustration, big banks have paid hundreds of millions of dollars to a tiny Texas company to use a patented system for processing digital copies of checks, making Claudio Ballard, the inventor of the system, a wealthy man and the bank industry’s biggest patent foe. After years of fighting the federal Patent Office, in court and across a negotiating table, the banks went to see one of their best friends in Congress, Senator Charles E. Schumer of New York, who inserted into a patent overhaul bill a provision that appears largely aimed at helping banks rid themselves of the Ballard problem. The Senate passed the bill easily in March. The proposal would allow banks to get a federal re-examination of certain patents that they have been accused of infringing…The language is now included in a bill that may come to a vote in the House of Representatives as early as Wednesday. While at least two House members have moved to strip the provision from the bill, bank lobbyists have worked hard to defeat previous attempts to remove it. Mr. Schumer and the Financial Services Roundtable, a business group that pushed the measure, say the provision is not focused on any one company but more broadly at “meritless litigation over patents of dubious quality…” Schumer Helps Banks With a Patent Problem – NYTimes.com . Posted in Bank Regulation (domestic) , Check Cashing Industry , Financial Regulation , Financial Services Roundtable , Government , Lobbying | Comments Off |
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