Daily Archives: September 29, 2012

Revealed: Barclays Urged Libor Anonymity

Data about banks’ ability to borrow from each other should be kept anonymous and based solely on real transactions between financial institutions, according to Barclays, the only lender to be fined so far for attempting to manipulate Libor rates.

The British bank set out a series of previously unreported ideas for overhauling Libor following its £290m fine by regulators in the UK and US in June.

In its submission to the Wheatley Review of Libor, which published its recommendations yesterday, Barclays said that regulators should compel submissions from “the widest possible range of relevant market participants, in order to remove the question of incentives to participate”.

Allowing banks to submit Libor rates anonymously – a central plank of the Barclays submission – was rejected by Martin Wheatley, who headed the Government-commissioned inquiry and who is proposing a three-month delay before the borrowing rates are made public.

Barclays argued that it would have “eliminated the signalling effect of the current process”, a reference to the actions of employees who in 2008 falsified rates to discourage the notion that Barclays was finding it more difficult than other banks to fund itself.

Read on.


(BLOOMFIELD) – A March 2013 jury trial date has been set for David Council Jr., of Solsberry, who is accused of pointing a loaded .12 gauge shotgun at a bank employee who was on his property on Washboard Road taking photographs as part of the foreclosure process.

Nick Schneider of the Greene County Daily World reports that Council is charged with pointing a firearm at another person, a Class D felony.

According to a probable cause affidavit Greene County Sheriff’s Deputy Leon Dunigan arrived at Council’s home on Sept. 20, and saw him standing at the driveway holding a loaded Saiga .12 gauge semi-automatic shotgun at waist level.

The deputy ordered Council to place the gun on the ground. Dunigan says there was on shotgun round in the chamber and four more in the magazine.

Council’s wife, Barbara, told police that the U.S. Bank employee Richard Haynes had identified himself as a bank employee and gave her a red card that contained telephone numbers to call to verify his assignment.

Haynes was there taking photos as part of a monthly inspection, part of the foreclosure action.

Rest here…

The Next Subprime Crisis Is Here: Over $120 Billion In Federal Student Loans In Default

Whereas earlier today we presented one of the most exhaustive presentations on the state of the student debt bubble, one question that has always evaded greater scrutiny has been the very critical default rate for student borrowers: a number which few if any lenders and colleges openly disclose for fears the general public would comprehend not only the true extent of the student loan bubble, but that it has now burst. This is a question that we specifically posed a month ago when we asked “As HELOC delinquency rates hit a record, are student loans next?” Ironically in that same earlier post we showed a chart of default rates for federal loan borrowers that while rising was still not too troubling: as it turns out the reason why its was low is it was made using fudged data that drastically misrepresented the seriousness of the situation, dramatically undercutting the amount of bad debt in the system.

Luckily, this is a question that has now been answered, courtesy of the Department of Education, which today for the first time ever released official three-year, or much more thorough than the heretofore standard two-year benchmark, federal student loan cohort default rates. The number, for all colleges, stood at a stunning 13.4% for the 2009 cohort. The number is stunning because it is nearly 50% greater than the old benchmark, which tracked a two year default cohort, and which was a “mere” 8.8% for the 2009 year. Broken down by type of education, and using the new improved, and much more realistic benchmark, for-profit institutions had the highest average three-year default rates at 22.7 percent, with public institutions following at 11 percent and private non-profit institutions at 7.5 percent. In other words, more than one in five federal student loans used to fund private for-profit education, is now in default and will likely never be repaid!

And while it is impossible using historical data to extrapolate with precision what the current consolidated federal student loan default rate is, we do know that there is now $914 billion in federal student loans (which also was mysteriously revised over 50% higher by the Fed just a month ago). Using simple inference, all else equal (and all else has certainly deteriorated), there is now at least $122 billion in federal student loan defaults. And surging every day.

Ladies and gentlemen: meet the new subprime.

Read on.

Judge on MERS: Law enforces deed of trust in TX

A U.S. District Court in Texas released an opinion this week defending theMortgage Electronic Registration Systems’ (MERS) role in certain foreclosure processes.

U.S. District Judge Sam Sparks with the Western District of Texas held that state law says “foreclosure enforces the deed of trust, not the underlying note.”

The distinction, while not necessarily precedential, gives an interpretation of how complaints against MERS when a foreclosure has taken place will be sized up under Texas law.

Read on.