Daily Archives: July 8, 2012

Deutsche Bank suspends two over Libor -report

From Reuters:

A spokesman for Deutsche Bank on Sunday declined to comment on the article, referring to its quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates.

On Friday, people familiar with the matter told Reuters that Germany’s markets regulator has launched a special probe into Deutsche Bank over suspected manipulation of interbank lending rates.

Investigators in the United States, Europe and Japan are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate (Libor).

Britain’s Barclays has been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million.

The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars worth of contracts around the world.

A spokesman for Frankfurt-based private bank Metzler said one of its investment companies has joined a number of class action suits in New York against banks accused of manipulating Libor rates.

This is a standard procedure,” he said.


Homeowners could sue lenders under CA new bill of rights – Auburn Journal

Homeowners could sue lenders under new bill of rights – Auburn Journal.

Protection could be on the way for some Auburn homeowners on the brink of foreclosure under the California Homeowner’s Bill of Rights.

Hallmarks of the series of related bills championed by California Attorney General Kamala Harris include restricting lenders’ ability to foreclose on a home if owners are in the process of modifying their loan, requiring banks to provide a single point of contact to borrowers at risk of default and allowing California homeowners to sue lenders to stop foreclosures or seek monetary damages if the lender violates state law.

After passing in the house and the senate, the bills will now go to the desk of Gov. Jerry Brown for consideration.

Local lawyers and loan modifiers say the legislation addresses roadblocks some owners face when trying to stay in their homes in good-faith, while the California Chamber of Commerce, who opposed the legislation, says it will slow down the economic recovery of California’s housing market by allowing borrowers who really can’t afford to stay in their homes to stall the foreclosure process.

Richard Hall, an attorney and owner of BottomLine Lawyers and president of the Auburn Chamber of Commerce, has represented many homeowners during the foreclosure process. He said in his office alone he has had more than a dozen cases where clients were in the process of modifying their loan or short selling their home when a lender foreclosed on them.

“More often than not it’s a result of one hand not knowing what the other hand is doing,” Hall said.

The ability for homeowners to sue lenders and collect damages adds some teeth to the legislation, which prior legislation has often lacked, he added.

Kurt Sandhoff, president of AIM Property Solutions and broker for Re/max Real Estate in Lincoln, said the provision calling for banks to provide a single point of contact will be the most critical when it comes to helping people stay in their homes. Sandhoff said he actually documents every person he speaks with now at a given lending company, including their employee ID number and comments, because there was such inconsistency from employees at lending companies.

“In the past, if you could even get a hold of someone to talk to no one had any notes as to what the last person said,” Sandhoff said. “In some cases I caught them outright lying about what they said or didn’t say. If I was running a business like that, it would definitely not be in business.”

Sandhoff said while the provisions that would make dual-tracking illegal and make the process less bureaucratic are positive, the laws need to go further.

Barclays May List Investment Bank in New York, Sunday Times Says


Barclays Plc (BARC) directors are considering splitting the group in two and listing the investment bank previously known as Barclays Capital in New York, the Sunday Times reported, citing insiders it didn’t name.

The rest of Barclays would remain listed in London after the interest-rate rigging scandal, the newspaper reported. London-based Barclays said yesterday a split wasn’t being considered, even as two senior insiders and one former board member said the plan would be studied, according to the report.

Rep. Edolphus Towns got cushy VIP home loan at 0.5% interest rate as Brooklyn constituents had city’s highest foreclosure rate

And two Senators got a free pass from the Senate Ethics Committee:

Former Senator Chris Dodd, for many years chairman of the Senate Banking Committee, received several discounted loans from Countrywide. Coincidentally, in June 2008, Dodd proposed a housing-bailout program that would have helped lenders like Countrywide. Similar VIP treatment was granted to Kent Conrad, chairman of the Senate Committee on the Budget.

In 2009, before the committee’s evidence was gathered, both Dodd and Conrad were exonerated of any unethical behavior by the Senate Ethics Committee, which nevertheless thought they “should have exercised more vigilance” in their dealings with Countrywide.

The exasperating reason for the acquittal? The Senate Gift Rule allows senators to receive benefits “in the forms of loans from banks and other financial institutions on terms generally available to the public.” Since the Countrywide VIP program was not reserved just for senators, the Senate interpreted that the Gift Rule was not violated.

So, who were the other VIPs who gave the senators cover? One was Rep. Edolphus Towns, a Brooklyn Democrat who is retiring after 30 years in office with this one last kiss-off to his constituents.

In 2003, Countrywide gave Towns a $182,972 mortgage on a vacation home in Lutz, Fla., and a $194,540 mortgage on his home in Cypress Hills, Brooklyn. Though the report did not say how much Towns saved, it said that the Countrywide loans to VIPs — which Towns was — had an interest rate 0.5 percent lower than for that of the general public, and “junk fees” were waved. The report also noted that underwriters even questioned Towns’ credit score — whether he should have gotten the loan at all — but Countrywide waved such worries away.

Towns has blocked the investigation into Countrywide, issuing a subpoena to Bank of America — which bought the mortgage company — only after “several months of resistance,” the report said.

What’s particularly galling is that Towns benefitted while the voters in his district suffered. The highest foreclosure rate in the city is in East New York, the people he represented. In 2010, there were 1,139 foreclosure filings there, a rate of 16.8 percent.

How many of those homeowners would love to have gotten Towns’ low interest rate and lack of fees?

Another city going bankrupt in CA? San Bernardino facing bankruptcy if deep cuts aren’t made.

First the city of Stockton, then Mammoth Lakes,  and now San Bernardino may be next:

SAN BERNARDINO – The city must immediately make substantial cuts to its budget or prepare for bankruptcy, the interim city manager and the finance director have warned the City Council.

Spending is projected to be $45million more than revenues for the fiscal year that began July 1, and the city’s reserve fund is empty, Interim City Manager Andrea Travis-Miller and Finance Director Jason Simpson wrote in a budget plan sent to the mayor and council on June 26.

More than 250 workers – 20percent of the city’s work force – have been laid off and employee unions have given $10million in concessions over the past four years, they noted in the budget plan.

“Yet, the city is still facing the possibility of insolvency due to a variety of issues including accounting errors, deficit spending, lack of revenue growth and increases in pension and debt costs,” they wrote. “The city has reached a breaking point and faces the reality of deficient cash on hand to meet its contractual and debt obligations due in July 2012.”

Cartel of global banks conspired to rig Yen Libor in 2007-10. Big surprise?

Check out this article from WSJ (sub. req.) in February:

A group of traders and brokers successfully managed to manipulate an interest rate that affects loans around the world, one of the banks being investigated has told regulators.

In a court filing in Ottawa, Canada’s Competition Bureau said a bank it didn’t identify has told the agency’s investigators that people involved in the alleged scheme “were able to move” interest rates.

People familiar with the situation said the “cooperating party” is UBS AG.

The Swiss bank has said it is assisting regulators in a sprawling interest-rate probe in North America, Europe and Asia, which has led to a score of …

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Potential liability from the Libor suits could wipe out Barclays, RBS and other banks

Unfortunately, the big banks have taken inadequate reserves against litigation risks.

Sandy Chen, banking analyst at Cenkos Securities, said that based on the methodology outlined in two legal cases in America Barclays alone could face billions of pounds of claims.

Indeed, at face value, the claims could wipe out both Barclays and Royal Bank of Scotland, dwarfing their respective market values of £20bn and £12bn.

The legal cases in question are a class-action led by the City of Baltimore in New York and a lawsuit filed by brokerage Charles Schwab in California. They are being brought against the world’s biggest banks, with Barclays, RBS, HSBC and Lloyds Banking Group named among the defendants in both cases.

Read on.