News Clips – Monday, June 20, 2011

New e-mails suggest MBIA plotted for approval of breakup plan Posted on June 20, 2011  by admin

There’s nothing quite like e-mail evidence when it comes to establishing someone’s true state of mind. Want to know how MBIA CEO Jay Brown felt about the 2008 restructuring that shifted the insurer’s mortgage-backed securities liability into a separate company? According to a coalition of banks claiming that MBIA’s restructuring was a fraud that shortchanged MBS policyholders, Brown wrote an e-mail showing that he was pretty excited about the effect the deal would have on his MBIA shares. In the February 18, 2008 e-mail, written the day the MBIA restructuring was approved, Brown said he would “need someone to push the wheelbarrow across the bank vault.” The Brown e-mail is in the newly-unsealed portion of a brief that the bank coalition filed in a regulatory proceeding challenging former New York insurance superintendent Eric DiNallo’s approval of the MBIA restructuring. The brief was originally filed in March, but most of the e-mail evidence was redacted until Thursday.  New e-mails suggest MBIA plotted for approval of breakup plan .

Posted in Insurance Department , Insurance Industry , Insurance Regulation  | Comments Off

Banks Won’t Give Up On Durbin Posted on June 20, 2011  by admin   Nothing is ever over, at least in Washington. The American Bankers Association today plans to send a letter to Fed Chair Ben Bernanke urging the central bank to rethink its approach to implementing the debit card interchange fee limit: “I wanted to once again reiterate our concerns over aspects of the proposed … rule … that will do great harm to banks throughout the country, and particularly to community banks. I strongly urge you to make revisions to the rule to mitigate those harms… As you are aware, the Tester-Corker amendment received 54 votes in the Senate last week. … While short of the 60-vote procedural threshold reserved for many controversial issues, it is clear that a majority of the world’s greatest deliberative body has sent a very strong message of concern over the approach taken by the Board in this rule. Full letter: http://politi.co/iEtzhN Posted in Credit Cards , Dodd-Frank , Durbin Amendment , Interchange Fees  | Comments Off

Ranks Grow of Inhouse Regulators at Big Banks – WSJ.com Posted on June 20, 2011  by admin   Memo to employees at big Wall Street banks and securities firms: Be careful what you say on the elevator. You might be surrounded by regulators. As part of a push to prevent another financial crisis, the Federal Reserve Bank of New York and the Office of the Comptroller of the Currency are increasing the number of examiners who go to work every day at the companies they regulate. Much like reporters assigned to a military unit during war, these regulatory “embeds” get unprecedented access to financial firms such as Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley. They file through the same security turnstiles, eat lunch at the company cafeteria and press top executives for answers to questions about mortgage-documentation procedures and exposure to European debt and municipal bonds. “We’re a cop on the beat,” says Steven Manzari, who helps oversee the Federal Reserve Bank of New York’s embeds. Ranks Grow of Inhouse Regulators at Big Banks – WSJ.com . Posted in Bank Regulation (domestic) , Federal Reserve Board/The Fed , OCC  | Comments Off

Foreclosure Backlog Gives Homeowners Reprieve Posted on June 20, 2011  by admin   Millions of homeowners in distress are getting some unexpected breathing room — lots of it in some places. In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics…Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years.  Foreclosure Backlog Gives Homeowners a Reprieve – NYTimes.com . Posted in Foreclosure , Mortgage Industry  | Comments Off

Iranian Shipper Sneaking Money Through NY Banks Posted on June 20, 2011  by admin   An Iranian government-owned shipping line that the United States believes is integral to Iran’s efforts to obtain banned technology for its nuclear and missile programs has illegally funneled tens of millions of dollars in financial transactions through the American banking system over the past three years, evading sanctions by cloaking itself in corporate alter egos and falsifying records, according to an indictment that the Manhattan district attorney plans to unseal on Monday. The 317-count indictment charges the Islamic Republic of Iran Shipping Lines and 15 other defendants with a conspiracy to set up shell companies in Singapore, the United Arab Emirates and the United Kingdom to trick major clearing banks in New York, like JPMorgan Chase, Bank of America and Citibank, into sending and receiving more than $60 million worth of payments.  Iranian Shipper Accused of Sneaking Money Through N.Y. Banks – NYTimes.com . Posted in Bank Fraud , Bank Regulation (domestic) , Bank Regulation (Foreign) , Money Laundering  | Comments Off

Biggest Banks in Reverse Mortgages Exit Business Posted on June 20, 2011  by admin   In days past, the borrower would get the reverse mortgage, and equity would continue to build, experts said, which would provide borrowers with more options — like refinancing — should they fall on hard times. Declining home values have changed that calculus for both bankers and consumers. Borrowers have not been able to pull out as much money. At the same time, the government has also tightened its withdrawal limits. There were a total of more than 50,000 reverse mortgages, totaling $12.66 billion, made industry-wide since last October, according to HUD. Both Wells Fargo and Bank of America will continue to service their existing reverse mortgages. And the reverse mortgage association has said it will work with its members to ensure that senior citizens who need the loans can get them, though some experts said that less competition could increase certain fees.  Biggest Banks in Reverse Mortgages Exit Business – NYTimes.com . Posted in HUD , Mortgage Industry , Mortgage Loan Servicers , Reverse Mortgage  | Comments Off

Vienna’s Leopold Museum Settles With Heir on Nazi-Looted Paintings Posted on June 20, 2011  by admin   Vienna’s Leopold Museum said it paid an undisclosed amount to keep two paintings by Anton Romako in a settlement with the heir of a Jewish construction entrepreneur whose art collection was seized by the Gestapo before 1941. The two paintings, “Greillenstein Castle” and “Countess Kuefstein at the Easel,” were owned by Moriz Eisler, an art collector who lived in Brno, now in the Czech Republic. He was arrested, together with two brothers, in 1939 for “lack of respect for the Fuehrer.” He survived Auschwitz and returned to his Brno home in 1945 to rebuild his company.  Vienna’s Leopold Museum Settles With Heir on Nazi-Looted Romako Paintings – Bloomberg . Posted in Holocaust Claims , Looted Art  | Comments Off

Former Washington Mutual Officials Near Deal With FDIC Over Bank Losses – Bloomberg Posted on June 20, 2011  by admin   Former Washington Mutual Inc. Chief Executive Officer Kerry Killinger and Chief Operating Officer Stephen Rotella are in lawsuit settlement talks with the Federal Deposit Insurance Corp., according to a court filing. Lawyers for Killinger, Rotella and David Schneider, Washington Mutual’s former home-loans president, exchanged term sheets with FDIC attorneys and are “diligently working to resolve their remaining disputes,” according to papers filed yesterday in federal court in Seattle.  Former Washington Mutual Officials Near Deal With FDIC Over Bank Losses – Bloomberg . Posted in FDIC , Financial Crisis , Mortgage Industry  | Comments Off

Executive Pay vs. Companies’ Other Costs Posted on June 20, 2011  by admin   …pay for most public companies’ top executives exists in a sort of vacuum, as far as investors are concerned. Shareholders know they pay a lot for the hired help, but a lot compared with what? Answers to that question come fast and furious in a recent, immensely detailed report in The Analyst’s Accounting Observer, a publication of R. G. Associates, an independent research firm in Baltimore. Jack Ciesielski, the firm’s president, and his colleague Melissa Herboldsheimer have examined proxy statements and financial filings for the companies in the Standard & Poor’s 500-stock index. In a report titled “S.& P. 500 Executive Pay: Bigger Than …Whatever You Think It Is,” they compare senior executives’ pay with other corporate costs and measures.  Executive Pay vs. Companies’ Other Costs – NYTimes.com . Posted in Executive Compensation  | Comments Off

PNC Said Near $3.45 Billion Deal for R.B.C. Unit Posted on June 20, 2011  by admin   The PNC Financial Services Group is near a deal to buy the Royal Bank of Canada’s American consumer banking operations for about $3.45 billion in cash and stock, people briefed on the matter said on Sunday. The transaction, which would allow R.B.C. to shed a division that has been hobbled by the housing crisis, could be announced as soon as Monday, these people said. They cautioned that final details were still being ironed out and that the deal could still fall apart.  PNC Said Near $3.45 Billion Deal for R.B.C. Unit – NYTimes.com . Posted in Bank Mergers , Bank Regulation (domestic) , Bank Regulation (Foreign)  | Comments Off

State & Political News Roundup | June 20, 2011 Posted on June 20, 2011  by admin   Latimer Introduces Bill Giving DFS Authority to Investigate Auto Insurance Fraud Grants the superintendent of financial services authority to investigate fraudulent activities, such as motor vehicle operators who drive with no insurance coverage, and those who misrepresent their principal place of residence or where their motor vehicle is principally garaged and operated; requires applicants for motor vehicle registrations and driver’s licenses to provide the department of motor vehicles with the address of their principal place of residence. http://assembly.state.ny.us/leg/?default_fld=&bn=A08362&term=&Summary=Y&Actions=Y&Votes=Y&Memo=Y&Text=Y The big push at session’s end | Several key issues hang in balance There will be people in red shirts shouting about the need for stronger rent controls, a football star extolling the virtues of traditional marriage and legions of lobbyists nudging favored bills toward floor votes that will continue long after the sun has set. The state Legislature reconvenes Monday for its last scheduled day of session, but with major issues still unresolved, lawmakers are preparing for the final push to stretch through Wednesday. http://www.timesunion.com/local/article/The-big-push-at-session-s-end-1431238.php Strong new rent deal in the home stretch Gov. Cuomo and legislative negotiators are hours from a deal on a strong new rent law protecting New York City tenants.  The agreement, expected to come as soon as today, will raise the rental threshold under which apartments can be decontrolled to about $2,500 a month — up from $2,000 — and boost the maximum annual income for tenants in regulated apartments from $175,000 to about $200,000, a source familiar with the negotiations said.   http://www.nypost.com/p/news/local/strong_new_rent_deal_in_the_home_1gWRA83SYtmZsiW1qLWo5N You pay for it: Tax dollars help cover pensions for private lobbying The groups, nonprofit corporations that lobby for their respective layers of government, are funded in large part from tax dollars paid in the form of annual dues. They also obtain revenues from grants, publications, seminars and insurance products. Two of the groups — the Association of Counties and the School Boards Association — also pay “performance dividends” to employees and provide take-home vehicles for their directors. Despite their inclusion in the state retirement system, the corporations are not subject to the Freedom of Information Law. They are not subject to competitive bidding restrictions. Hiring decisions are made subjectively rather than according to civil service rules. Their employees’ salaries are not set by an act of the Legislature or a government agency, and bonuses and salary levels are generally left to the discretion of their executive directors. Plus there is no restriction on any of them from being hired back by their employers as highly paid consultants once they take their public pensions. Several veteran state lawmakers said they were unaware the groups all are enrolled in the New York Common Retirement Fund even though it was done through an act of the Legislature decades ago. http://www.timesunion.com/local/article/You-pay-for-it-Tax-dollars-help-cover-pensions-1430439.php Integrity panel farewell The short and sometimes rocky history of the state Commission on Public Integrity will essentially come to an end in the next few days when Gov. Andrew Cuomo signs the bill he constructed to create a new ethics agency. The replacement organization won’t be set up for at least four months. So the current agency is going to be doing clerical activities because, by law, it’s out of the investigating, disciplining and advisory business once the bill is signed, leaving scores of cases unresolved. Monday’s meeting of the COPI board was postponed. No one seems to know for sure what happens to the outfit created during the Spitzer administration in September 2007 by merging the former ethics and lobbying commissions, but Cuomo aides say the plan is to leave the staff in place until further notice. http://www.timesunion.com/local/article/Integrity-panel-s-farewell-1431239.php Clash of the titans | Mike & Andy revive gov-mayor feud After years of relative calm between the Governor’s Office and City Hall, sparks are flying once again between the state’s two most powerful pols. Mayor Bloomberg and Gov. Cuomo don’t personally get along, sources told The Post. And neither do their staffers, who don’t hesitate to mock their boss’ rival. Bloomberg and Cuomo disagree on a host of issues and nowhere is it clearer than in lower Manhattan. http://www.nypost.com/p/news/local/clash_of_the_titans_tYszvUKmOK9zokyQiBAtRO Posted in State & Political News Round-Up  | Comments Off

FDIC’s Spoth: Community Banks Didn’t Cause the Crisis and Should Have Reduced Regulatory Burden Posted on June 17, 2011  by admin   The Senate Banking Subcommittee on Financial Institutions and Consumer Protection held a hearing on Wednesday titled “Enhancing Safety and Soundness: Lessons Learned and Opportunities for Continued Improvement.” A number of witnesses delivered testimony on the topic, among them: Michael Foley, Senior Associate Director, Banking Supervision and Regulation Division, FRB; Christopher J. Spoth, Senior Deputy Director, Division of Risk Management Supervision for the FDIC; David Wilson, Deputy Comptroller for Credit and Market Risk, Office of the Comptroller of the Currency (OCC); Salvatore Marranca, chairman, president and CEO of Cattraugus County Bank in Little Valley, N.Y.; and Frank A. Suellentrop, chairman and president of Legacy Bank in Wichita, Kan. The Committee is led by Chairman Tim Johnson (D-SD) and Ranking Member Richard Shelby (R-AL)  FDIC’s Spoth: Community Banks Didn’t Cause the Crisis and Should Have Reduced Regulatory Burden | Mortgage News | Daily National and State Headlines . Posted in Community Banks , FDIC , Senate Banking Committee  | Comments Off

MBIA Hid Losses of Up to $950M From Regulator, Banks Say Posted on June 17, 2011  by admin   MBIA Inc. hid potential losses of as much as $950 million on commercial real estate debt as it sought New York regulators’ approval to restructure its insurance business in 2008, banks including Bank of America Corp. and UBS AG claimed in court papers. New York insurance regulators were given an internal presentation that included “manual overrides” of loan data that dropped potential losses from the debt to zero, the banks said in a brief that was filed in redacted form in March and unsealed yesterday in state court in Manhattan. When making its case to the regulators, MBIA, once the world’s biggest bond insurer, deleted parts of a presentation originally given in November 2008 to the company board’s credit risk committee. Those deletions showed that in a “more stressful economic environment” the insurer could have losses from the debt as much as $950 million, according to the court papers. MBIA Hid Potential Losses of Up to $950 Million From Regulator, Banks Say – Bloomberg . Posted in Insurance Department , Insurance Industry , Insurance Regulation  | Comments Off

Cattaraugus CEO tells Congress of unfair bank regulatory burden Posted on June 17, 2011  by admin   Testifying on behalf of the Independent Community Bankers of America, Marranca said the nearly 5,000 members are suffering at the hands of overzealous regulators. “I’ve met with thousands of community bankers from every part of the country in recent years, and I can tell you there is an unmistakable trend toward arbitrary, micromanaged, unreasonably harsh examinations that have the effect of suffocating lending,” he said. Marranca said that very thing is happening at his bank. Based in Little Valley, Cattaraugus County Bank has $175 million in assets and 30 employees. Even so, the small community bank is soon to undergo a compliance exam from the Federal Deposit Insurance Corp., which comes on top of two Community Investment Act reviews, examinations from the Internal Revenue Service and the Federal Home Loan Bank and several other oversight measures. “There seems to me there’s a better way to allocate the resources of an examination,” he said. “And this takes me away from lending and away from my consumers and away from my customers.” Cattaraugus CEO tells Congress of unfair bank regulatory burden – Business – The Buffalo News . Posted in Bank Regulation (domestic) , Community Banks , FDIC  | Comments Off

Lawmakers Seek Assurances in Regulation of Banking Posted on June 17, 2011  by admin   Harmonization has been a top consideration in international talks related to how much capital the biggest banks must maintain and methods for orderly wind-downs of large firms, several officials told the House Financial Services Committee on Thursday at a hearing in Washington. Representative Spencer Bachus, the Alabama Republican who leads the Financial Services Committee, conducted the hearing amid complaints from bankers that American regulations being imposed under the Dodd-Frank act might slow economic recovery from the 2008 financial crisis and drive business overseas. Lawmakers sought assurances that regulators were looking out for United States interests in dealing with their international counterparts.  Lawmakers Seek Assurances in Regulation of Banking – NYTimes.com . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , Dodd-Frank , House Financial services Committee  | Comments Off

Basel Said to Weigh 3.5%-Point Fee Based on Bank Size Posted on June 17, 2011  by admin   The Basel Committee on Banking Supervision is considering extra capital requirements of as much as 3.5 percentage points that the largest banks may face if they grow bigger, according to two people familiar with the talks. The so-called surcharge would take the form of a boost to capital the banks must hold and would apply to financial institutions whose collapse would harm the global economy. A list of such banks hasn’t been disclosed. Basel Said to Weigh 3.5 Percentage-Point Fee Based on Bank Size – Businessweek . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , Basel II | Basel III , Capital Requirements , Too Big To Fail  | Comments Off

Debit-Card Swipe-Fee Cap ‘Not Traditional,’ Bank Lawyer Argues Posted on June 17, 2011  by admin   A planned cap on the debit-card swipe fees charged to merchants by the biggest U.S. banks is “discriminatory,” a lawyer for one of the affected banks told a U.S. appeals court panel. Timothy D. Kelly, a lawyer for TCF National Bank, told the St. Louis-based court yesterday that it should reverse a trial judge’s decision denying the bank’s bid to block the cap while the lender challenges its legality. The provision is scheduled to take effect July 21. Dodd-Frank Debit-Card Swipe-Fee Cap ‘Not Traditional,’ Bank Lawyer Argues – Bloomberg . Posted in Bank Regulation (domestic) , Credit Cards , Dodd-Frank , Durbin Amendment  | Comments Off

U.K. Government Publishes Draft Financial Regulation Bill Posted on June 17, 2011  by admin   U.K. Chancellor of the Exchequer George Osborne published draft legislation that will hand powers to the Bank of England to police Britain’s banks in the biggest regulatory overhaul since 1997. The Financial Regulation Bill, which will now undergo pre- legislative scrutiny, will abolish the Financial Services Authority and transfer most of its responsibilities to the central bank. The bill is scheduled to be put to Parliament formally later this year and approved by legislators in late 2012. It will pave the way for the central bank’s Financial Policy Committee to begin its work of monitoring risk.  U.K. Overhaul, Bank Oversight, House Budget, Basel Bank Curbs: Compliance – Bloomberg . Posted in Bank Regulation (Foreign) , FSA  | Comments Off

McKinseyGate: Affordable Care Act Study Flawed Posted on June 17, 2011  by admin   The story so far: McKinsey released the alleged results of a study showing that large numbers of firms will drop health insurance coverage once the Affordable Care Act goes fully into effect. This is very different from the results of other studies, notably the Congressional Budget Office assessment of the act. So when the McKinsey alleged study made headlines, the firm was pressed to explain how the study was conducted. And it has refused to answer. It’s hard to escape the conclusion that the study was embarrassingly bad — maybe it was a skewed sample, maybe the questions were leading, maybe there was no real data at all. Whatever. McKinseyGate – NYTimes.com . Posted in Affordable Care Act , Insurance Industry  | Comments Off

Citi’s Sale of Consumer Finance Unit Hits Block Posted on June 17, 2011  by admin   Potential bidders for CitiFinancial have yet to be convinced that the Citigroup unit and one of the biggest consumer finance companies in the United States is viable as a stand-alone business, people familiar with the matter told The Financial Times…Citigroup is looking to sell the business without taking losses, unlike insurer American International Group Inc, which last year sold its consumer finance business at a loss. Citigroup’s Sale of Consumer Finance Unit Hits Block – Report – NYTimes.com . Posted in Mortgage Industry  | Comments Off

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