News Clips – Wednesday, June 22, 2011

Hill Leaders Press Warren, Geithner on CFPB Mortgage Involvement Posted on June 22, 2011  by admin

Letter from House Financial Services Chairman Spencer Bachus (R-Ala.) and other members seeking more information from CFPB czar Elizabeth Warren on the agency’s involvement in mortgage servicer talks. Read the Letter: http://politi.co/kCYwos

Posted in CFPB , Consumer Protection , Mortgage Industry , Mortgage Loan Servicers , Mortgage Modifications  | Comments Off

Bair to Face Heat on New Rules Today Posted on June 22, 2011  by admin   FDIC Chair Sheila Bair testifies on Capitol Hill for the final time this afternoon in an appearance before the House Oversight TARP subcommittee. From subcommittee chair Rep. Patrick McHenry’s opening statement: “New risk retention rules could reduce the amount of lending to an already crippled housing market, while extreme capital standards may jeopardize the global competitiveness of U.S. financial institutions…Additionally, while some insist that the FDIC’s new regulatory authority under Dodd-Frank will put an end to the bailout culture and “Too Big to Fail” … it appears the opposite is true. … Dodd-Frank has actually made Big Banks even bigger: five of the largest financial institutions in the country are 20 percent larger than they were before the crisis.” Full statement: http://politi.co/mCFq3S Posted in Bank Regulation (domestic) , Capital Requirements , Dodd-Frank , Financial Regulation , TARP , Too Big To Fail  | Comments Off

OCC’s Walsh Warning on bank rules reform Posted on June 22, 2011  by admin   John Walsh, a top US bank regulator, warned his colleagues against imposing tougher regulations on financial groups, drawing a furious reaction from a Democratic senator who called for him to be replaced. Calling existing capital levels “extraordinarily high” and proposing a “fundamental rethink” of international liquidity standards, Mr Walsh, acting comptroller of the currency, said: “My view is that we are in danger of trying to squeeze too much risk and complexity out of banking as we institute reforms to address problems and abuses stemming from the last crisis.” His comments on Tuesday come ahead of a crucial meeting of international regulators this week and are the latest sign of banks, politicians and sympathetic regulators becoming more open in criticising reforms. The Office of the Comptroller of the Currency, which oversees more than 1,400 banks, has traditionally adopted a more laisser faire approach to regulation than some counterparts.  FT.com / US / Politics & Foreign policy – Warning on bank rules reform . Posted in Capital Requirements , Dodd-Frank , OCC  | Comments Off

Analyst: Swaps Rules Could Hurt Life Company Liquidity – Regulatory,Legislative and Tax Issues Posted on June 22, 2011  by admin   Applying the new Dodd-Frank Wall Street Reform and Consumer Protection Act derivatives rules to life insurers could limit those insurers’ financial flexibility, a ratings analyst says…The Dodd-Frank Act is supposed to impose new capital, clearing and reporting requirements on swaps transactions, in an effort to keep swaps players from creating financial houses of cards out of regulators’ sight. Life insurers have argued that they use swaps in a fashion that usually helps reduce systemic risk, rather than increasing it, and that they ought to get an “end user” exemption from swaps requirements aimed mainly at swaps traders and speculators.  Analyst: Swaps Rules Could Hurt Life Company Liquidity – Regulatory,Legislative and Tax Issues – Life and Health Insurance News . Posted in Derivatives , Dodd-Frank , Insurance Industry , Insurance Regulation (Global) , Swaps  | Comments Off

UK insurers concerned over new regulator (FT) Posted on June 22, 2011  by admin   The new regulator for insurers has triggered concerns in the industry over how it plans to help restore the trust of policyholders and whether a system designed for banks will be suitable for them. Hector Sants, chief executive of the Financial Services Authority and chief-designate of the new body, stressed that regulators understood insurers were different from banks as he outlined how the former would fit into the system. However, some in the industry are worried that the design of the new Prudential Regulatory Authority (PRA) made it unsuitable for the sector.  FT.com / UK / Business – UK insurers concerned over new regulator . Posted in Bank Regulation (Foreign) , Financial Regulation , Insurance Industry , Insurance Regulation  | Comments Off

The Bankers Who Cried Wolf: Wall Street’s History Of Hyperbole About Regulation Posted on June 22, 2011  by admin   Bank profits grew in the five years after the adoption of the most stringent blue sky laws, according to research by University of Virginia School of Law professor Paul G. Mahoney. And the big national banks that opposed the laws mushroomed in size, with average total individual deposits increasing more than 25 percent from 1914 to 1916…While it is difficult to quantify the precise impact of these laws, they certainly did not hinder investment activity or crimp bank profits. Today, Wall Street is again on the attack against a regulatory overhaul that includes more stringent investor and consumer protections. Though the financial landscape is far different and the details of the proposals have changed since 1912, the industry is using much of the same alarmist rhetoric to oppose new regulations and rules. The Bankers Who Cried Wolf: Wall Street’s History Of Hyperbole About Regulation . Posted in Bank Regulation (domestic)  | Comments Off

U.S. Money Fund Exposure to European Banks Remains Significant Posted on June 22, 2011  by admin   U.S. prime money market funds (MMFs) continue to have sizable exposures to European financial institutions, a relationship which could affect both sectors. MMFs are a potential channel for eurozone credit market volatility. For European banks, a loss or reduction in MMF funding could create negative perceptions about an institution’s financial strength.” Full report: http://www.politico.com/static/PPM191_moneyfundexposure621.html Posted in Bank Regulation (domestic) , Bank Regulation (Foreign)  | Comments Off

A Loophole a Day: Insurance companies try to wriggle out of health-care reform requirement Posted on June 22, 2011  by admin   The industry has a special term for the amount of money it spends on patient care and not on administrative costs or stockholder dividends: “medical loss ratio.” The term indicates a lot. For an insurer, a dollar spent on medical care for their customers is a dollar lost (sometimes the industry calls it a more benign-sounding “care” or “benefit” ratio). It’s no surprise then that insurance carriers are squirming to get out of this. In some cases, state insurance commissioners are seeking temporary waivers from the rule, which the Affordable Care Act authorizes the Secretary of Health and Human Services to grant them to prevent a mass exodus of companies from state markets. Nevada, New Hampshire and Maine have received waivers, and 10 other states are seeking them. via A Loophole a Day . Posted in Insurance Industry , Insurance Regulation  | Comments Off

NY Fed Won’t Say How Much Money Went to Iraq Posted on June 22, 2011  by admin   The Fed’s lack of disclosure is making it difficult for the inspector general to follow the paper trail of billions of dollars that went missing in the chaotic rush to finance the Iraq occupation, and to determine how much of that money was stolen. The New York Fed will not reveal details, the inspector general said, because the money initially came from an account at the Fed that was held on behalf of the people of Iraq and financed by cash from the Oil-for-Food program. Without authorization from the account holder, the Iraqi government itself, the inspector general’s office was told it can’t receive information about the account. The problem is that critics of the Iraqi government believe highly placed officials there are among the people who may have made off with the money in the first place.  War and Money: NY Fed Won’t Say How Much Money Went to Iraq – CNBC . Posted in Bank Fraud , Federal Reserve Board/The Fed , Money Laundering  | Comments Off

State & Political News Roundup | June 22, 2011 Posted on June 22, 2011  by admin   Rush to finish Tax cap, rent control deal; same-sex marriage talks Lawmakers and Gov. Andrew Cuomo late Tuesday said they had reached agreement on legislation that would simultaneously cap property taxes and renew New York City’s rent control regulations — a landmark measure that would represent a major break in end-of-session gridlock. The legislation could be printed and voted upon as soon as Wednesday…Senators and Cuomo aides were still haggling over language strengthening exemptions for religious institutions, as well as the details of the tax cap and rent regulations. But the governor was optimistic as he announced the progress Tuesday evening.   http://www.timesunion.com/local/article/Rush-to-finish-at-the-Capitol-1433826.php Land-bank bill approval may help fight vacant housing New York State is on the verge of approving a new tool to help cities combat their vacant housing crises. The question is whether Buffalo, home to the highest vacancy rate in the state, will buy into municipal land banks as a remedy. A bill creating New York’s first land banks passed the Assembly and State Senate and, according to supporters, is expected to be signed into law by Gov. Andrew M. Cuomo.   http://www.buffalonews.com/city/politics/article461852.ece Plan to Ease Way for Unions (WSJ) The National Labor Relations Board Tuesday proposed the most sweeping changes to the federal rules governing union organizing elections since 1947, giving a boost to unions that have long called for the agency to give employers less time to fight representation votes. The NLRB’s proposals would likely compress the time between a formal call for a vote by workers on whether to join a union, and the election itself. http://professional.wsj.com/article/SB10001424052702304070104576399822234404508.html?wpisrc=nl_wonk&mg=reno-secaucus-wsj Bloomberg Move Exploits Taxi Industry’s Limited Reach in Albany Most New Yorkers see the taxi industry from a passenger’s viewpoint: an immigrant driver and a beat-up Crown Victoria. But behind the scenes, the industry is primarily run by wealthy owners, many from multigeneration dynasties, who control medallions that are worth millions of dollars and that can carry an equivalent degree of political might.   http://www.nytimes.com/2011/06/22/nyregion/bloomberg-move-exploits-taxi-industrys-short-reach.html?_r=1&ref=nyregion Expanded Boundaries Likely to Make More Eligible for 9/11 Compensation The original $7 billion compensation fund for victims of the attack, now spent, was limited to those who were on the 16-acre World Trade Center site or just outside it. But in December, Congress passed the James Zadroga 9/11 Health and Compensation Act, which reopened the fund and provided $2.8 billion to compensate those with health problems, primarily respiratory troubles, linked to the attack.  The special master, Sheila L. Birnbaum, issued draft regulations on Tuesday expanding the area of compensation, covering all of Lower Manhattan below Reade Street and the Brooklyn Bridge ramps. It would include Battery Park and Stuyvesant High School… http://www.nytimes.com/2011/06/22/nyregion/area-in-new-york-for-911-compensation-is-expanding.html?ref=nyregion Advocates praise autism therapy pay bill The state Legislature passed a bill last week that would require insurance companies to pay for therapy for autistic children. Gov. Andrew Cuomo has not signed the bill into law yet.  About 1 in 110 children is born with an autism spectrum disorder, according to the Center for Disease Control. Insurance companies typically deny payment for physical, speech and behavioral therapy, leaving families or the government to pay for it or go without services, autism advocates said. The association that represents many insurance companies in New York said if the autism bill becomes law, it will drive up health care costs. http://www.timesunion.com/local/article/Advocates-praise-autism-therapy-pay-bill-1434440.php Audit set for NYRA after $11M horse racing deficit projected The state budget director asked state investigators to begin an inquiry Tuesday into the New York Racing Association for being secretive about finances and executive salaries. Threatening to revoke NYRA’s exclusive franchise to run races at the state’s Aqueduct, Belmont and Saratoga thoroughbred tracks, Budget Director Robert Megna said NYRA must change its behavior. He also demanded the association take actions to assure profitability of its track operations. Megna, who also serves as the chairman of the Franchise Oversight Board, requested the state Inspector General’s Office to audit NYRA’s books. Plans for the audit were confirmed by a spokesman for the inspector general. http://www.timesunion.com/local/article/Audit-set-for-NYRA-after-11M-horse-racing-1434441.php NY State Senate passes bill naming Herkimer Diamond as official state mineral The state Senate today passed a bill that would designate the Herkimer Diamond as the official state mineral. Sponsored by Sen. James Seward, R-Milford, who represents Herkimer County, where the doubly-terminated quartz crystal is found, the legislation passed unanimously. “The Empire State has a proud tradition of recognizing and trumpeting the features that make it unique. Certainly, the Herkimer Diamond is one of those rare treasures well deserving of ‘official’ statewide status,” Seward said in a news release He noted that New York’s Legislature has previously designated an official gemstone (garnet), fossil (sea scorpion), shell (bay scallop), bush (lilac), salt water fish (striped bass), and reptile (snapping turtle).  An identical version of the bill is pending in the Assembly. http://www.syracuse.com/news/index.ssf/2011/06/ny_state_senate_passes_bill_na.html Posted in State & Political News Round-Up  | Comments Off

JPMorgan Pays $153 Million to Settle Mortgage Case Posted on June 21, 2011  by admin   JPMorgan Chase has agreed to pay $153 million to settle allegations that it misled investors when it created and marketed a risky mortgage investment shortly before the housing market collapsed.The Securities and Exchange Commission on Tuesday accused JPMorgan of securities fraud, saying the bank failed to disclose that a hedge fund helped create the investment while also betting that the deal would fail.  JPMorgan Pays $153 Million to Settle Mortgage Case – NYTimes.com . Posted in Bank Regulation (domestic) , Financial Crisis , Mortgage Backed Securities , Mortgage Industry , Mortgage Loan Servicers , SEC  | Comments Off

Op-Ed | Banking’s Moment of Truth: Capital Matters Posted on June 21, 2011  by admin   Capital matters. Let me put that another way. The current fight over additional capital requirements for the banking industry, eye-glazing though it is, also happens to be the most important reform moment since the financial crisis broke out three years ago. More important than the wrangling over Dodd-Frank. More important than the ongoing effort to regulate derivatives. More important even than the jousting over the new Consumer Financial Protection Bureau. Banking’s Moment of Truth – NYTimes.com . Posted in Bank Regulation (domestic) , Capital Requirements , Dodd-Frank  | Comments Off

FICO Scores to Predict Drug Adherence? Posted on June 21, 2011  by admin   Nearly three in four Americans do not follow doctor’s orders for taking prescription drugs, a problem that is associated with 125,000 patient deaths each year, according to the National Consumers League….But which patients are likely to take their prescription medications correctly and which ones are likely to deviate from the plan? FICO, a company whose credit score is widely used to assess the credit worthiness of millions of consumers, is planning to answer that question. It has developed a new FICO Medication Adherence Score that it says can predict which patients are at highest risk for skipping or incorrectly using prescription medications. FICO Scores Predict Drug Adherence – NYTimes.com . Posted in Consumer Protection , Credit Rating  | Comments Off

Bank Data Thefts Threaten National Security Posted on June 21, 2011  by admin   From the opening statement to be delivered this morning by Senate Banking Committee Chairman Tim Johnson (D-S.D.) at a hearing on data theft in the financial services industry: “Recent high-profile data breaches at major institutions within the financial sector and elsewhere underscore the importance of cyber-security for the American economy. … Breaches are disruptive and raise the potential for financial fraud, identity theft and, potentially, severe threats to our national economic security.” Learn More About Today’s Hearing … Posted in Bank Regulation (domestic) , Cyber Security  | Comments Off

Connected NYC Lawyers Reap Foreclosure Benefits Posted on June 21, 2011  by admin   The foreclosure crisis has caused a surge in the number of court-appointed receivers for distressed properties in New York, and politically connected lawyers are benefiting. Yet even as the fees mount, totaling millions of dollars, it remains unclear why judges are selecting some of these lawyers, and whether the fees are being well spent. The court system in New York State has long been criticized for fostering a system of patronage appointments that enriches lawyers and others with ties to influential politicians. Court officials defend the process of selecting receivers for distressed properties, saying judges are looking for people who they know have done good work. Over all, the number of receivers appointed by judges to oversee distressed properties in the city jumped to 284 last year from 47 in 2007, records show. Connected N.Y.C. Lawyers Reap Foreclosure Benefits – NYTimes.com . Posted in Foreclosure  | Comments Off

Lending Battle Is Risky Business – WSJ.com Posted on June 21, 2011  by admin   Banks and other lenders are engaged in an increasingly pitched fight for some corporate borrowers, raising concerns among analysts and regulators that the banks aren’t charging enough to cover the risk they are taking on. The battle to make loans, in contrast to the credit squeeze of recent years, is being driven by two factors: demand by investors for these loans and desire by banks to boost their revenues, which they have struggled to do recently. “These guys are kind of climbing over each other” to increase loan volumes, said William Schwartz…His said his concern is that banks are relaxing their lending standards to make more loans. Lending Battle Is Risky Business – WSJ.com . Posted in Bank Lending & Borrowing , Bank Regulation (domestic) , Bank Regulation (Foreign)  | Comments Off

Whistleblower Sues N.H. Insurance Regulators Posted on June 21, 2011  by admin   A health policy analyst with the New Hampshire Insurance Department who was fired after challenging her bosses over a federal health care contract is now suing them under the state’s whistleblower statute. Concord attorney Chuck Douglas…filed a lawsuit in Merrimack County Superior Court on Thursday against Insurance Commissioner Roger Sevigny and Deputy Commissioner Alexander Feldvebel on behalf of Leslie Ludtke. Ludtke was fired May 31 after challenging her bosses over their push to change bidding procedures for a contract to design an insurance exchange under the federal Patient Protection and Affordable Care Act. They said she was fired for refusing to work with them.  Whistleblower Sues N.H. Insurance Regulators . Posted in Insurance Industry , Insurance Regulation  | Comments Off

Bi-Partisan Push on Derivatives Posted on June 21, 2011  by admin   Sen. Debbie Stabenow (D-Mich.), chair of the Senate Agriculture Committee and Rep. Frank Lucas (R-Okla.), chair of the House Agriculture Committee, wrote to federal regulators urging them to implement the derivatives title of Dodd-Frank in a way that does not imposed extra costs on end-users or put U.S. firms at a disadvantage to foreign competitors. Read the Letter Here: http://politi.co/mxFKvA Posted in Derivatives , Dodd-Frank  | Comments Off

BofA May Sell Some China Bank Stake Posted on June 21, 2011  by admin   Bank of America Corp. may sell some of its $21 billion stake in China Construction Bank Corp. to bolster capital before new international standards take effect, said three people briefed on the plans. Bank of America, the biggest U.S. lender by assets, wants to keep about half its CCB shares so it can remain a strategic investor in the world’s second-biggest bank by market value, said two of the people, who declined to be identified because the plans are private. CCB led declines among Hong Kong-listed Chinese banks today. “This is obviously a forced sale — it’s a big chunk of a valued enterprise in an attractive place in the world…” BofA May Sell Some China Bank Stake – Bloomberg . Posted in Bank Regulation (domestic) , Bank Regulation (Foreign) , Basel II | Basel III , Capital Requirements  | Comments Off

Appealing An Insurer’s Denial Is Often A Good Strategy Posted on June 21, 2011  by admin   Nobody wants to get into a fight with a health insurer, but it may be worth your while. A recent Government Accountability Office report found that more claims problems stemmed from annoying but often straightforward billing and eligibility issues than from disagreements over whether care was medically appropriate. What’s more, the odds are about 50/50 that if you appeal an insurer’s decision, you’ll win….Under the 2010 health law…[h]ealth plans will be required to inform members that they can appeal disputed claims internally within the health plan as well as to an independent review organization not affiliated with the health plan. The new rules become effective in July. Appealing An Insurer’s Denial Is Often A Good Strategy – Kaiser Health News . Posted in Insurance Regulation  | Comments Off