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U.S. rejects challenge to $13 bln JPMorgan Chase settlement
“The U.S. government urged a federal judge to throw out a lawsuit seeking to scuttle its landmark $13 billion settlement with JPMorgan Chase & Co, rejecting a claim that the accord let the largest U.S. bank off too easily. “Better Markets Inc, a nonprofit critical of Wall Street, had in February accused the government of “unilaterally” engineering a backroom […]
Greek tragedy and the siren song of the fine print
Originally published in Financial World Robert Jenkins tells a cautionary tale to foreign banks operating in Greece Few financiers study the history of finance. This ensures that the tried and true will continue to surprise. Might a long-ago event in Vietnam hold lessons for Europe? As the Greek saga unfolds, it might be useful to recall the […]
Analysis: Credit agencies remain unaccountable
“The Securities and Exchange Commission has kept the credit rating industry — whose dominant members, Standard & Poor’s and Moody’s, played a notoriously key role in the financial crisis — in legal limbo for four years. And the industry’s just fine with that. “Apparently so are members of Congress, who have failed to press the […]
Seeking Tough Justice, but Settling for Empty Promises
“Don’t get too excited about bank indictments. “The Justice Department is talking tough. In an unusually frank video statement, Attorney General Eric H. Holder Jr. proclaimed that he was personally overseeing major financial investigations and that his department was poised to bring charges against several large institutions. The United States attorney in Manhattan, Preet Bharara, gave a rousing speech several […]
Top B of A Officials Promise ‘Accountability’ for Capital-Planning Error
“Jesse Jackson made an appearance. An investor told the chief executive “I love you.” And a young girl asked why her dad was laid off. “But it was Bank of America’s (BAC) huge capital-plan gaffe that stole the show at its annual meeting Wednesday in Charlotte, N.C. “This was supposed to be the year that […]
BofA’s board backed despite capital woes
“Shareholders in Bank of America supported the election of all 15 nominees to the board despite investor calls to punish directors with audit responsibilities in the wake of an embarrassing accounting error that forced the bank to suspend its dividend and share buyback plans. “PwC, the external auditor, was also backed at the annual shareholders meeting despite opposition […]
Regulators See Growing Financial Risks Outside Traditional Banks
“U.S. regulators have spent the past six years forcing banks out of businesses seen as risky. Now, they are beginning to worry that they have pushed some financial activity into the shadows and outside their legal reach. “Regulators on the Financial Stability Oversight Council on Wednesday said they are monitoring new practices by nonbank financial […]
Financial Regulators See Progress and Threats
“Some of the same weaknesses that contributed to the disastrous 2008 financial crisis persist today, the Financial Stability Oversight Council said in its 2014 annual report to Congress. “The report, released on Wednesday, highlights what it called ‘the considerable progress we have collectively made to improve the strength and resiliency of the financial sector.’ But Janet […]
Fed Feels Heat to Tailor Capital Rules for Nonbank Firms
“Lawmakers are increasing pressure on the Federal Reserve Board to apply different capital rules to nonbank financial firms, like insurance companies, thought to be risky to the financial system. “A bipartisan group of senators introduced a bill this week that would clarify a provision of the Dodd-Frank Act to say that the central bank does […]
Morgan Stanley Fined $5 Million Over I.P.O. Work
“The Financial Industry Regulatory Authority has fined Morgan Stanley $5 million, saying that the firm did not follow proper procedures in the initial public offerings for 83 companies including Facebook and Yelp. “The bank failed to distinguish between two separate types of nonbinding offers when it solicited investors for I.P.O.s., said the industry self-regulatory group, known […]
JPMorgan $280 million mortgage accord gets preliminary court approval
” JPMorgan Chase & Co (JPM.N) has won preliminary approval from a U.S. judge for its agreement to pay $280 million to resolve claims that it misled investors in billions of dollars worth of mortgage-backed securities. “U.S. District Judge Pamela Chen, in Brooklyn, New York, issued the preliminary approval on Friday. The settlement, which is subject to […]
SEC Finds High Rate of Fee, Expense Violations at Private-Equity Firms
“A top Securities and Exchange Commission official said Tuesday the agency’s recent examinations of private-equity firms had found more than half allocated expenses and collected fees inappropriately, and in some cases, illegally. “Drew Bowden, the director of the SEC’s Office of Compliance Inspections and Examinations, said the agency has identified ‘violations of law or material […]
Four-year Flash Crash anniversary haunts markets
“Even four years after the crash that wiped out $1 trillion in wealth in the blink of an eye, investors and academics still haven’t agreed on what caused one of the most vicious and inexplicable short circuiting of markets to occur. “On that day, the Dow Jones industrial average plunged roughly 1,000 points only to […]
When it comes to bank lobbying, size matters
“Russell Goldsmith, the CEO of City National Bank in Los Angeles, remembers the moment when the Mid-Size Bank Coalition of America was born. “It was 2009 and lawmakers were deep in the weeds of a massive financial regulatory overhaul bill that aimed to prevent the kinds of misdeeds that led to the financial crisis and […]
Early Tap of 401(k) Replaces Homes as American Piggy Bank
“Premature withdrawals from retirement accounts have become America’s new piggy bank, cracked open in record amounts during lean times by people like Cindy Cromie, who needed the money to rent a U-Haul and start a new life. “Her employer, the University of Pittsburgh Medical Center, had outsourced Cromie’s medical transcription work. Cromie said the move cut […]
Holder: No banks ‘too big to jail’
“Attorney General Eric Holder declared Monday that no banks are too big to be prosecuted if they engage in criminal activity, while another law enforcement official said a pair of cases against major banks may culminate in guilty pleas in the near future. “‘There is no such thing as ‘too big to jail,'” Holder declared […]
Borrowing Cash to Buy Complex Assets Is In Vogue Again
“Banks again are doling out money to hedge funds and other investors to finance purchases of complex debt securities, returning to a practice that helped fuel the debt boom ahead of the financial crisis. “RBC Capital Markets, Société Générale SA and Wells Fargo & Co. are among the banks offering to let investors borrow money, also known as providing leverage, […]
Mary Jo White Doesn’t Scare Anybody
“Last year, when President Obama named Mary Jo White as his pick to chair the Securities and Exchange Commission, he cast the nomination as a shot across the bow of Wall Street wrong-doers. ‘It’s not enough to change the law,’ he said. ‘We also need cops on the beat to enforce the law.’ “The line was a […]
Regulators Step Up Probe Into Bank Hiring Overseas
“U.S. regulators have expanded their investigation into large banks’ hiring practices in Asia, seeking more information from at least five U.S. and European firms, according to people close to the probe. “The Securities and Exchange Commission in early March sent letters to a group of companies including Credit Suisse Group AG, Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and UBS AG seeking more information about […]
Exclusive: SEC probing brokerages over handling of retail orders – sources
“The Securities and Exchange Commission has sent out subpoenas and demands for records to brokerage companies as part of a probe into how retail customers’ orders are routed, executed and filled, according to several people familiar with the matter. “The SEC’s enforcement division is investigating whether retail customers are receiving the best price and the most efficient execution for […]
High-Speed Trades Outpace CFTC’s Oversight, O’Malia Says
“The U.S. Commodity Futures Trading Commission isn’t keeping up with high-speed derivatives trading and needs to invest in tools to detect manipulative and disruptive practices, said Scott O’Malia, a Republican commissioner. “The CFTC lacks the technology necessary to routinely oversee the millions of messages traders send every day to futures exchanges operated by CME Group Inc. and IntercontinentalExchange […]
Analysis: US's FSOC Pokes Its Head Up While Dodging Brickbats
“Having dared to suggest hedge funds and other asset managers deserve a close look by regulators, the Financial Stability Oversight Council Wednesday afternoon holds a rare public meeting to approve its annual report. “FSOC’s enemies are waiting to pounce one more time, if the annual report again asserts that some of the biggest asset managers […]
Big Banks Erred Widely on Troubled Mortgages, U.S. Regulator Confirms
“A federal regulator confirmed on Wednesday that the country’s biggest banks committed widespread errors in dealing with homeowners who faced foreclosures at the height of the mortgage crisis, but the findings are unlikely to put to rest questions from lawmakers and others about the extent of the problems. “The report released by the Office of the Comptroller […]
Yellen Says Fed Seeking Smarter Oversight of Community Banks
“Chair Janet Yellen said the Federal Reserve will tailor its supervision of community banks to reduce their regulatory burden, and that small lenders shouldn’t face the same sort of oversight as the biggest financial firms. “’We are taking a fresh look at how we supervise community banks and possible ways that supervision can be smarter, […]
Thomas Perez: The 2014 IA 25 Extended Profile
“Secretary of Labor Thomas Perez is being credited with re-energizing the Department of Labor’s bid to ensure that a rule to amend the definition of fiduciary under the Employee Retirement Income Security Act gets reproposed soon. “After being sworn in last July, Perez ‘immediately started focusing’ on DOL’s fiduciary rulemaking, said Knut Rostad, president of […]
GAO: U.S. Foreclosure Review Could Have Generated Higher Payments
“A comprehensive review of major banks’ foreclosure files could have delivered an additional $1.5 billion in cash to consumers if it wasn’t halted last year, a federal watchdog has found. “The Government Accountability Office, in a report being released Tuesday, evaluated federal bank regulators’ decision last year to cancel a prolonged review of foreclosure-processing and […]
Global Swap Regulators Holding Closed-Door Talks With Industry
“Global regulators are holding closed-door meetings with financial industry representatives to discuss derivatives rules that banks have sought to curb, according to three people with knowledge of the matter. “Regulators including the U.S. Commodity Futures Trading Commission and the Hong Kong Securities and Futures Commission met in Washington yesterday to discuss the cross-border reach of derivatives rules, according to […]
Bank of America’s Bad Accounting
“The strange accounting that tripped up Bank of America is on its way to being changed. “That accounting rule, which has been around since 2007, has vexed investors in financial institutions ever since it began to be applied. The banks greatly enjoyed it at first because it had the seemingly perverse result of increasing their reported […]
Why the OCC Raised Exam Fees on Big Banks
“The Office of the Comptroller of the Currency has been tightening its supervision of the largest banks — and apparently that upgrade comes with a price. “The agency said Monday it plans to increase examination fees for the first time in nearly 20 years for institutions with over $40 billion in assets, a step the […]
Big U.S. Banks Make Swaps a Foreign Affair
“As regulators tighten rules on the U.S. swaps market, large American banks are maneuvering to take some of the business overseas. “Banks including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley are changing the terms of some swap agreements made by their offshore units so they don’t get caught by U.S. regulations, according to people […]
Why Only One Top Banker Went to Jail for the Financial Crisis
“On the evening of Jan. 27, Kareem Serageldin walked out of his Times Square apartment with his brother and an old Yale roommate and took off on the four-hour drive to Philipsburg, a small town smack in the middle of Pennsylvania. Despite once earning nearly $7 million a year as an executive at Credit Suisse, […]
Two Giant Banks, Seen as Immune, Become Targets
“Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades. “In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important […]
Deutsche Bank to Boost Capital After First-Quarter Profits Fall
“Deutsche Bank AG pledged to take all possible measures to bolster its capital as its first-quarter profit tumbled 34%. “We would take all measures to reach our capital targets but keep focused on organic capital creation,” Co-Chief Executive Anshu Jain told analysts Tuesday. The bank said that a key capital ratio worsened in the first quarter, and analysts predicted […]
Dow ends at record high as Fed upbeat on economy
“The Dow closed at its first record high of 2014 on Wednesday after the Federal Reserve gave an upbeat view of the economy’s prospects as it announced another cut to its massive bond-buying program. “Investors brushed aside data showing weak first-quarter economic growth, which was tied to the severe winter that hampered exports and hit investment spending. […]
Legal Memo Defends Ackman’s Actions in Allergan Bid
“In the wake of this week’s unusual hostile bid for Allergan, one of the most pressing questions has been whether William A. Ackman, the activist investor who runs Pershing Square Capital Management, engaged in insider trading.” “By accumulating a large stake in Allergan while knowing a bid was imminent, Mr. Ackman clearly had an advantage over other […]
Banking Committee to Consider Fed Nominees, GSE Bill Next Week
“WASHINGTON — The Senate Banking Committee is scheduled to vote Tuesday on a stack of pending nominees to the Federal Reserve Board and other agency positions, before it proceeds with a highly anticipated vote on a bill to overhaul the housing finance system.” “The banking panel will consider the nominations of Lael Brainard and Stanley […]
How FDIC Is Nudging Banks to Reach Underserved
“WASHINGTON — The issue of serving so-called “underbanked” borrowers has taken on a new urgency since regulators began cracking down on payday and certain other low-dollar, high-interest loans, prompting fears of a credit crunch for low-income consumers.” “Even as the Consumer Financial Protection Bureau writes new rules for payday loans and the Justice Department continues […]
EU banks urged to grasp chance to raise capital
“European banks have been urged to take advantage of favourable market conditions to raise capital before tougher rules on tapping public backstops come into force.” “Vítor Constâncio, the European Central Bank ’s vice-president, said the current strong appetite among investors to plough money into euro area banks was “reassuring”, amid a series of fundraisings by euro area lenders.” However, […]
Federal Reserve on course for further $10bn taper
“The US Federal Reserve is highly likely to slow its asset purchases by another $10bn next week as the economy shakes off its winter torpor.” “Retail sales, industrial production and payrolls growth were all robust in recent weeks, adding to evidence of accelerating growth, after a cold winter led to fears for the economic outlook.” “The US […]
Pension funds pile pressure on Barclays over governance
“(Reuters) – A group of British public sector pension funds has heaped pressure on Barclays (BARC.L) ahead of its annual general meeting by saying it has governance concerns over the company’s search for a new chairman.” “That could add even more spice to Thursday’s meeting as investors are asked to approve the bank’s plan to […]
Big Banks Dispute Fed’s Case for Physical Commodities Restrictions
“Wall Street banks — and the trade groups and law firms that represent them — are challenging the Federal Reserve Board’s basis for restricting ties banks have to physical commodities, arguing it is fundamentally flawed. “The central bank is worried that bank holding companies could potentially face significant legal liabilities if physical commodities they are […]
OCC Warns About Vendor Concentration, Foreign Subcontractors
“Comptroller of the Currency Thomas Curry said his agency is increasingly concerned about the cybersecurity risks from banks relying too much on certain vendors and using service providers in foreign countries. “Banks can end up becoming dependent on certain vendors because of consolidation in the service provider industry, Curry said in his prepared remarks for […]
Seven Takeaways for Banks from Warren’s New Memoir
“In a move that will surprise no one, Sen. Elizabeth Warren pulls no punches calling out bankers and Washington insiders in her just-released memoir. “The book, A Fighting Chance, hit bookstores on Tuesday. It details the Massachusetts lawmaker’s dramatic rise from humble Oklahoma roots to bookish Harvard law professor to liberal juggernaut, highlighting her work […]
Settlement time for U.S. trades closer to being shortened
“The Depository Trust & Clearing Corporation, which processes all U.S. stock and fixed income trades, said on Wednesday it supports shortening the settlement cycle for U.S. equities, corporate and municipal bonds, and unit investment trust trades. “The settlement cycle, which refers to the time between when a trade is made and the time that the […]
Deutsche Bank rights issue back on table
“A year ago Anshu Jain, co-chief executive of Deutsche Bank, proudly announced that the lender’s “hunger march” for more capital was over, after a successful share issue that bolstered the bank’s equity strength and catapulted it from the sector’s laggard into the top league. “Fast forward 12 months, and Deutsche has yet again fallen behind, […]
Deutsche Bank under pressure by investors to raise capital
“Deutsche Bank is facing pressure from investors to raise capital amid fears the bank is still not robust enough to cope with a tougher regulatory environment and a slump in global debt markets. “Insiders at Germany’s largest lender are understood to accept as a real threat that the European regulators will direct them to raise […]
Ackman’s Pershing Square Subsidiaries Hint at Future Moves
“The hedge fund billionaire William A. Ackman may be plotting his next big stock move, even as he is on the media circuit explaining his decision to partner with Valeant Pharmaceuticals to make a $45.6 billion hostile bid for the Botox manufacturer Allergan. “In amassing its 9.7 percent stake in Allergan, Mr. Ackman’s Pershing Square […]
New York Financial Regulator Uses Dodd-Frank to Sue Auto Lender
“By his own admission, even New York’s top financial regulator did not know he could use the Dodd-Frank law to enforce consumer protections until very recently. “Once he did, however, Benjamin M. Lawsky, the state’s superintendent of financial services, put the power to use. “On Wednesday, Mr. Lawsky’s office filed a lawsuit against a subprime […]
In Allergan Bid, a Question of Insider Trading
“One trading day after announcing the news that the huge hedge fund he runs, Pershing Square Capital Management, had partnered with Valeant Pharmaceuticals International to make an unsolicited $45.6 billion cash and stock takeover bid for Allergan, William A. Ackman is sitting on a paper profit of more than $1 billion on the Allergan shares […]