Examiner News – Friday, August 12, 2011

Weekly Market Outlook “Fixing Europe’s Sovereign Debt Would Thwart a Double Dip.” Thursday’s major rebound by share prices doesn’t mean the worst has passed. Until Europe’s sovereign debt issues have been sufficiently resolved, financial markets will face considerable downside risk. Indeed, another 15% decline by the market value of common stock could hurl the US into recession. Fortunately, the latest slide by jobless claims suggests that a double dip does not yet impend. Whatever you do, don’t discard the Dramamine. “Credit vs. Equity Markets as Signals of Economic Distress.”  The corporate bond market has provided a more prescient signal of recessions than equities, reflecting the fact that credit problems have underpinned past downturns, according to a report from Moody’s Analytics. The recent volatility has affected both markets, with the bond sell-off being more pronounced. Looking to the future, we believe that spreads could widen further, providing the US economy with an unwelcome additional headwind..

 

News Clips – Friday, August 12, 2011

Va, Fl Sue NY Bank Over Pension Funds – NYTimes.com Posted on August 12, 2011  by admin

Virginia and Florida are suing the Bank of New York Mellon over the institution’s handling of both states’ pension funds. The Virginia lawsuit filed Thursday seeks $120 million in damages. It also seeks $811.6 million in civil penalties. Florida also is seeking damages and civil penalties.The Bank of New York Mellon holds about $54 billion in funds for the Virginia Retirement System. Florida’s system is worth some $120 billion. Both lawsuits accuse the bank of overcharging those pension funds on foreign currency transactions. The bank said in a statement that the lawsuits are unwarranted, and that the defendants will fight the claims in court.  Va, Fla Sue NY Bank Over Pension Funds – NYTimes.com .

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For Bank of America, Countrywide Bankruptcy Is Still an Option – NYTimes.com Posted on August 12, 2011  by admin   The real issue around Bank of America is not whether it survives, but whether it sacrifices Countrywide to save itself. More specifically, will Bank of America put Countrywide into bankruptcy? And will this stem the bleeding? The Countrywide acquisition will go down in history as a deal from hell. It has already cost Bank of America tens of billions of dollars in litigation settlements, let alone losses resulting in a $20.6 billion charge to earnings in the second quarter. Bank of America has already announced that it expects another $5 billion charge for earnings, and American International Group said this week that it would sue Bank of America for $10 billion, mostly for loans issued by Countrywide. It appears that $5 billion is the floor. These mounting losses have raised the question whether Bank of America might be overwhelmed by Countrywide’s liabilities. Bank of America could be the first candidate for the new insolvency regime put in place by the Dodd-Frank Act. But the issue is much more complicated than this. The reason is that the losses of Countrywide are not those of Bank of America. Only if Bank of America took steps after the Countrywide acquisition to assume these liabilities is there a problem.  For Bank of America, Countrywide Bankruptcy Is Still an Option – NYTimes.com . Posted in Dodd-Frank , Failures , Mortgage Industry  | Comments Off

Fed Said to Track Basel Capital Rules for Biggest U.S. Banks – Businessweek Posted on August 12, 2011  by admin   Federal Reserve officials are drawing up rules for the largest U.S. banks that won’t be more stringent than global capital standards agreed to in Basel, Switzerland, according to a person familiar with the discussions. Federal Reserve Governor Daniel Tarullo cited a “goal of congruence” between the Basel standards and the Fed’s work on rules under the Dodd-Frank Act, which overhauls banking regulation, in a June 3 speech. The central bank hasn’t veered from that, according to the person, who declined to be identified because the rules are still being drafted.  Fed Said to Track Basel Capital Rules for Biggest U.S. Banks – Businessweek . Posted in Basel (I, II, III) , Capital Requirements  | Comments Off

Credit Card Q&A: How to File a Credit Card Complaint with the Consumer Financial Protection Bureau | Credit.com News + Advice Posted on August 12, 2011  by admin     Credit Card Q&A: How to File a Credit Card Complaint with the Consumer Financial Protection Bureau…  Credit Card Q&A: How to File a Credit Card Complaint with the Consumer Financial Protection Bureau | Credit.com News + Advice . Posted in Consumer Credit , Consumer Protection  | Comments Off

TD Ameritrade, Georgetown Launch Study on Advisor Regulation – Financial Planning Posted on August 12, 2011  by admin   The research will examine various proposals for regulating investment advisors. The Jersey City, N.J.-based asset custody and advisor services firm is determined to give each option a thorough, balanced look, be it continued regulation under the SEC, new oversight from FINRA, a custom-built self-regulatory organization for advisors or examinations that are outsourced to the accounting profession.“We are agnostic in terms of who the regulator is, but I have very strong feelings as to how it should be set up and run,” Tom Bradley, president of TD Ameritrade Institutional said in a telephone interview. Whatever form the oversight takes must be run in a businesslike way. “It should be efficient and effective and have highly qualified examiners who have great training.” TD Ameritrade and Georgetown professor James Angel embark on extensive, high-level study of financial advisor oversight to protect investors – Financial Planning . Posted in Regulators & Agencies – Domestic  | Comments Off

Styate & Political News Round-Up | August 12, 2011 Posted on August 12, 2011  by admin   State’s drugstore owners urge governor to sign bill allowing them to compete ALBANY — Independent pharmacists are urging Gov. Andrew Cuomo to sign a bill that would allow corner drugstores to compete with mail-order pharmacies. The proposed law, called the “Anti-Mandatory Mail Order Bill,” would prohibit health plans from mandating the use of any particular mail-order pharmacy and allow local pharmacies to fill the 90-day prescriptions if the drugstore matches the price of the mail order company. The bill would also prevent health plans from offering incentives like lower co-payments or deductibles for mail-order prescriptions. http://www.timesunion.com/local/article/Drugs-by-mail-not-always-cheaper-1891261.php It’s up to the membership as PEF panel OKs contract vote The executive board of the Public Employees Federation gave the green light Thursday for a ratification vote on their proposed five-year labor contract. Members of the major state labor union will receive ballots, with votes to be tallied in late September. Ballots will go out Sept. 2 and they must be returned by Sept. 26 and will be counted the next day. PEF President Ken Brynien said negotiations leading up to the tentative agreement were the most difficult task in his tenure at the union. http://www.timesunion.com/local/article/It-s-up-to-the-membership-as-PEF-panel-OKs-1891267.php City flooded with requests to attend 10th anniversary 9/11 memorial After making a list and checking it twice, City Hall now says this year’s 10th anniversary 9/11 memorial may be open to more than just victims’ families and a handful of politicians. The city was snowed under with requests to attend this year’s ceremony – from heads of state to ordinary citizens wanting to pay their respects. Top priority always is given to the family of those killed. Space was also set aside for President Obama – the first sitting President to take part in the yearly commemoration. After reviewing security logistics and the room available, officials restricted politicians to those from New York, New Jersey and Connecticut. http://www.nydailynews.com/ny_local/2011/08/12/2011-08-12_city_scrambles_to_find_space_for_all_on_911_room_to_grieve.html Hugh Carey, former New York governor, remembered as hero at funeral New York political leaders both past and present said farewell Thursday to Hugh Carey, the former governor who rescued the city from bankruptcy four decades ago. Carey was “the most effective governor in our modern history,” another former governor, Mario Cuomo, told mourners at St. Patrick’s Cathedral. “He, in fact, saved New York City in the ’70s,” said Cuomo. “When he saved New York City, he saved New York state. He protected the honor of the whole country. Imagine what Moscow would have said if New York City went bankrupt.” http://www.nydailynews.com/ny_local/2011/08/11/2011-08-11_hugh_carey_remembered_as_hero.html Posted in Uncategorized  | Comments Off

4 from WNY cited for insurance fraud – Business First, Buffalo Posted on August 11, 2011  by Ins News   Four individuals from the Western New York region were arrested in July for insurance fraud. The frauds bureau within the state Insurance Department announced arrests made through investigations of the bureau along with law enforcement, the insurance industry and the public. http://www.bizjournals.com/buffalo/blog/morning_roundup/2011/08/4-from-wny-cited-for-insurance-fraud.html Posted in Insurance Department Mention , Insurance Fraud , Insurance Industry , Uncategorized  | Comments Off

Sovereign Debt Pressure Spreads to Insurers’ Balance Sheets – Insurance Journal Posted on August 11, 2011  by Ins News   Continuing economic weakness in Europe and the debt crisis in the United States have elevated the risk profile of U.S. insurers, stirring insurance rating agency A.M. Best to stress test insurers for how they might be affected by the ongoing economic uncertainty. http://www.insurancejournal.com/news/national/2011/08/10/210347.htm Posted in Insurance Industry , Uncategorized  | Comments Off

Surplus lines tax plan up in the air – Business Insurance Posted on August 11, 2011  by Ins News   Legislation aimed at simplifying the collection and allocation of surplus lines premium taxes so far has created more uncertainty than guidance for brokers and raises questions about potential new costs for insurance buyers.  http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20110807/NEWS07/308079988 Posted in Dodd-Frank , Insurance Industry , Insurance Regulation , Interstate Compacts , Regulators & Agencies – Domestic , SLIM Pact  | Comments Off

Proposed: A One-Page Checking Disclosure Form – NYTimes.com Posted on August 11, 2011  by admin   The Pew Health Group, Pew’s health and consumer product safety group, is proposing that banks adopt a simple, one-page disclosure form outlining what fees are associated with checking accounts and explaining various overdraft options. The form is similar to the so-called Schumer box used for credit card disclosures…Even those who think the government is already adequately regulating banks support new rules requiring disclosure of account terms and overdraft fees…. it would be a “positive change” to require banks to provide a summary of the overdraft options they offer, how the options work and a description of associated fees. The poll also found that 70 percent supported requiring banks to process transactions in the order they occurred, instead of from the highest dollar amount to the lowest dollar amount. Proposed: A One-Page Checking Disclosure Form – NYTimes.com . Posted in Bank Products, Fees & Accounts , Consumer Protection , Overdraft  | Comments Off

In U.S. Stress Tests, a Tool to Gauge Contagion in Europe – NYTimes.com Posted on August 11, 2011  by admin   …Neither the Fed nor the Securities and Exchange Commission has forced United States banks to make as detailed disclosures as the European stress tests did of its banks. So it’s a matter of having to trust the banks and the regulators. Which brings us back to the exercise the Fed undertook last year. Two Fed officials ordered up an analysis: Daniel K. Tarullo, the board member who oversees matters of bank supervision, and Patrick Parkinson, the head of banking supervision, who is reported to have undergone a conversion from a Alan Greenspan antiregulation acolyte to a believer in strong oversight. Clinton D. Lively, a number-cruncher who recently left the New York Fed, was one of the officials who played a major role. Disturbingly, before the financial crisis of 2008, the Fed, which is the most important bank regulator and is charged with keeping the banking system safe and sound, couldn’t really do this kind of analysis, according to former Fed officials. It might have asked banks for the data on their exposures to specific countries, but it couldn’t play out a chain of events very easily. What if the central bank wanted to know what would happen to United States banks if the euro fell 20 percent in a short period? The Fed didn’t have the tools.  In U.S. Stress Tests, a Tool to Gauge Contagion in Europe – NYTimes.com . Posted in Basel (I, II, III) , Capital Requirements , Regulators & Agencies – Domestic , Regulators & Agencies – Foreign , Stress Tests  | Comments Off

In Gaining Enforcement of RESPA, CFPB Hires HUD Official | Reverse Mortgage Daily Posted on August 11, 2011  by admin   The Consumer Financial Protection Bureau, while not yet a month past its official launch on July 21, has hired the Department of Housing and Urban Development’s RESPA chief and has gained control of Real Estate Settlement Procedures Act (RESPA). The bureau gained administrative responsibility of RESPA on July 21. HUD announced Wednesday that Bart Shapiro, its former director of mortgage settlement and the person in charge of administering the Real Estate Settlement Procedures Act (RESPA), has moved into a new position at the Consumer Financial Protection Bureau.  In Gaining Enforcement of RESPA, CFPB Hires HUD Official | Reverse Mortgage Daily . Posted in CFPB , Consumer Protection , Mortgage Industry , Truth in Lending/RESPA  | Comments Off

AIG Files $10 Billion Suit Against Bank of America Over MBS Fraud | Nat’l Mortgage Professional Posted on August 11, 2011  by admin   AIG has filed a $10 billion lawsuit against Bank of America over allegations of mortgage-backed securities (MBS) fraud. AIG claims that Bank of America and several of its acquisitions, including Merrill Lynch and Countrywide, of misrepresenting the quality of the mortgages that went into bundled securities, costing AIG approximately $28 billion in losses. The suit was filed the same day Bank of America lost 20.3 percent of its stock value, as concerns arose regarding Bank of America’s ability to get ahead of the toxic mortgages it holds. This marked the company’s lowest point on Wall Street in more than two years, as Bank of America stock has now plummeted approximately 50 percent in 2011 alone.  AIG Files $10 Billion Suit Against Bank of America Over MBS Fraud | Mortgage News | Daily National and State Headlines . Posted in Asset/Mortgage Backed Securities , Institutions We Regulate , Insurance Industry , Mortgage Industry  | Comments Off

White House Seeks Ways to Stem Glut of Foreclosures – Bloomberg Posted on August 11, 2011  by admin   The Obama administration, aiming to boost a housing market showing little sign of recovery from the 2008 credit crisis, is seeking ideas for renting, selling or disposing of foreclosed homes controlled by the government. The Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, U.S. Treasury Department and the Department of Housing and Urban Development announced the solicitation in a statement today. The agencies are seeking to shrink the pool of foreclosures and boost home prices by finding investors for properties owned by the Federal Housing Administration and U.S.-run Fannie Mae and Freddie Mac. Combined, FHA and the two companies own or guarantee about 90 percent of U.S. mortgages.  White House Seeks Ways to Stem Glut of Foreclosures – Bloomberg . Posted in GSEs , Mortgage Industry  | Comments Off

Walgreens plans to sell you health insurance – CNN Money Posted on August 11, 2011  by Ins News   Walgreens, the nation’s largest drugstore chain, is planning to start selling health insurance to customers this fall. Deerfield, Ill.-based Walgreens will sell health insurance products with different price ranges and coverage levels from coast-to-coast through a private health insurance exchange, according to people familiar with the matter.  http://money.cnn.com/2011/08/09/news/companies/walgreens_health_insurance/ Posted in Health Insurance & Exchanges , Insurance Industry  | Comments Off

Foreclosure activity falls to 44-month low – HousingWire Posted on August 11, 2011  by admin   Foreclosure activity fell 35% in July compared to last year, hitting a 44-month low, according to foreclosure data firm RealtyTrac. The number of foreclosure filings – which includes default notices, auctions and bank repossessions – hit 212,764 in July, down 4% from June. Irvine, Calif.-based RealtyTrac added that one in every 611 housing units experienced a foreclosure filing last month. At the same time, REOs in the states of New York, Massachusetts, Georgia, Virginia and Illinois grew more than 20%. RealtyTrac attributes the drop in foreclosures to delays caused by government and judicial interventions in the housing market and expects housing market troubles will plague the nation well beyond 2012.  Foreclosure activity falls to 44-month low « HousingWire . Posted in Foreclosure & Mortgage Mods , Mortgage Industry  | Comments Off

US lawmaker eyes McAfee briefing on cyber attacks | Reuters Posted on August 11, 2011  by admin   A U.S. congresswoman on Wednesday requested more information on security company McAfee’s report detailing a five-year hacking campaign that breached 72 organizations globally. Representative Mary Bono Mack, chairman of the House Commerce subcommittee with jurisdiction over cybersecurity, said she was alarmed by the report on a slew of cyber attacks that McAfee has dubbed “Operation Shady RAT.” In a letter to Dmitri Alperovitch, vice president of threat research for McAfee and author of the report, Bono Mack requested a briefing with his research team and asked how the government and private sector could more effectively mitigate data breaches.  US lawmaker eyes McAfee briefing on cyber attacks | Reuters . Posted in Congress & Committees , Cybersecurity  | Comments Off

NY Court Hands Life Settlement Industry a Win – Insurance News Posted on August 11, 2011  by admin   A recent New York Supreme Court ruling has the potential to benefit the life settlement industry doing business in the state in a big way, says an insurance industry attorney who has been following the case. New York State Supreme Court Justice Paul Wooten denied Phoenix Life Insurance Co.’s motion to dismiss a lawsuit brought by a Credit Suisse subsidiary over the payout of an “incontestable” life insurance policy before the insured had died. CSSEL Bare Trust, which is owned by Credit Suisse, had asked Wooten to grant a declaratory judgment that determined the life insurance policy written by Phoenix must be paid, citing several cases in which Phoenix contested whether it was required to pay policies that had been immediately transferred to a third party… Phoenix argued CSSEL Bare lacked standing because the insured had not yet died, therefore making it impossible to determine whether Phoenix would contest the policy’s payment in the future. Insurance News – NY Court Hands Life Settlement Industry a Win . Posted in Insurance Industry  | Comments Off

IFRS debate heats up as US banks weigh in – Global Financial Strategy Posted on August 11, 2011  by admin   The American Bankers Association has hit back at the International Accounting Standards Board over remarks apparently pressurising the US to effectively “put up or shut up” on adoption of IFRS. Donna Fisher, ABA senior vice president of tax and accounting, says she is “a little confused” by the IASB’s call for the Securities and Exchange Commission to endorse adoption of IFRS or risk weakened ties with its US counterpart – the Financial Accounting Standards Board. “It’s almost as if there is a deadline,” Fisher says. “So [the IASB is saying], ‘we want a single set of standards so long as its by the end of 2011′. Rather than, ‘we’re going to have an ongoing effort even if the SEC doesn’t make that decision’.  Global Financial Strategy – IFRS debate heats up as US banks weigh in . Posted in Accounting  | Comments Off

Government Study Examines Long-Term Care Insurance Rate Increases – InsuranceNewsNet Posted on August 11, 2011  by admin   August 10, 2011 – A report released today by the U.S. Government Accountability Office (GAO) examines the impact of rate increases on long-term care insurance policyholders. Specifically, the report examines the Federal Long-Term Care Insurance Program (FLTCIP), the largest private long-term care insurance program in the nation. “As a voluntary plan consisting of typical employees, this is a most representative group,” states Jesse Slome, executive director of the American Association for Long-Term Care Insurance (www.aaltci.org), one of those interviewed by GAO staff preparing the study. “Instead of hyperbole, we now have facts to prove that the majority of consumers understand the value of their long-term care insurance protection and do not drop or reduce their coverage even when faced with a rate increase.”  Insurance News – Government Study Examines Long-Term Care Insurance Rate Increases . Posted in Insurance Industry  | Comments Off