Daily Archives: January 10, 2013

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California Counties Want Millions From Banks for Fixing LIBOR

California Counties Want Millions From Banks for Fixing LIBOR

Wow!

(CN) – Bank of America and other heavy hitters defrauded cities and counties by conspiring to fix, and lie about, the LIBOR rates, four California counties and cities and a Bay Area utilities district claim in separate federal antitrust complaints.
     The London Interbank Offered Rate is the rate banks charge one another for short-term loans necessary to carry on their business. More than $300 trillion in financial derivatives are tied to LIBOR rates.
     Barclays Bank last year settled criminal allegations of fixing LIBOR rates, leading to multiple lawsuits and investigations of major banks on at least two continents.
     Barclays’ plea agreement is attached as an exhibit to Riverside’s 156-page filing.
     Many many banks were accused of profiting by misreporting LIBOR rates, inflating or deflating them to profit from trades – in essence, picking advantageous rates after trades had been concluded.
     The five federal complaints, all filed this week, came from the City of Riverside and the Riverside Public Financing Authority, in Los Angeles Federal Court; the County of San Diego, in San Diego Federal Court; San Mateo County, in Oakland Federal Court; and the City of Richmond and the East Bay Municipal Utility District, in separate complaints in San Francisco Federal Court. All have similar defendants and make similar charges.
     They all seek disgorgement, restitution and treble damages for antitrust violations, fraud and deceit, negligent misrepresentation, interference with economic advantage, breach of faith and unjust enrichment.
     Here are the defendants in Riverside’s complaint: Bank of America Corp.; Bank of America NA; Bank of Tokyo-Mitsubishi UFJ Ltd.; Barclays Bank PLC; Citigroup Inc.; Citibank NA; Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (Rabobank); Credit Suisse Group AG; Deutsche Bank AG; HSBC Holdings PLC; HSBC Bank PLC; JPMorgan Chase & Co.; JPMorgan Chase Bank NA; Lloyds Banking Group PLC; HBOS PLC; Royal Bank of Canada; The Norinchukin Bank; Societe Generale SA; The Royal Bank of Scotland Group PLC; UBS AG; Westlb AG; and Westdeutsche Immobilienbank AG.

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Execs of Failed Va. Bank Accused of Hiding Loan Losses

Execs of Failed Va. Bank Accused of Hiding Loan Losses

Securities regulators have charged three executives of a failed bank in Virginia with deceiving investors about the health of its loan portfolio at the apex of the financial crisis.

The executives of the $985 million-asset Bank of the Commonwealth in Norfolk, Va., underreported its nonperforming loans over a roughly two-year period starting in November 2008, the Securities and Exchange Commission said Wednesday in a complaint filed in U.S. District Court in Norfolk.

The defendants are: Edward Woodard, the bank’s founder and chief executive; Cynthia Sabol, its chief financial officer; and commercial loan officer Stephen Fields, who also had been an examiner with the Federal Reserve Bank of Richmond and oversaw the bank’s biggest portfolio of construction and development loans.

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JPM Chase Will Pay Nearly $2B in Foreclosure Settlement with OCC

JPM Chase Will Pay Nearly $2B in Foreclosure Settlement with OCC

JPMorgan Chase (JPM) will pay nearly one-fifth of the total cost of the settlement reached this week between regulators and 10 of the nation’s biggest lenders.

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FANNIE MAE, FREDDIE MAC SUED IN MARYLAND FOR UNPAID TAXES

FANNIE MAE, FREDDIE MAC SUED IN MARYLAND FOR UNPAID TAXES

Fannie Mae (FNMA) and Freddie Mac were sued for unpaid transfer taxes by a Maryland county, which argued in a federal court filing that the home-mortgage finance companies can’t claim a government exemption from property fees.

Fannie Mae and Freddie Mac aren’t qualified for the exemption because they have been federally chartered, publicly traded, private-stock corporations since March 31, 2003, according to the complaint filed by Montgomery County yesterday in U.S. District Court in Beltsville, Maryland.

The companies “are not and have not been agencies, departments or instrumentalities of the United States for any time applicable to the claims made in the action,” according to the complaint.

The complaint also names the Federal Housing Finance Agency, which took Fannie Mae and Freddie Mac(FMCC) into U.S. conservatorship in September 2008.

“As conservator, FHFA stepped into the shoes of Fannie Mae and Freddie Mac and, to the extent that the defendant FHFA is responsible for the acts of defendants Fannie Mae and Freddie Mac, plaintiffs seek judgment against defendant FHFA,” the county said.

Rest here…

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FORMER DEUTSCHE BANK EMPLOYEE CLAIMS BANK TOOK BIG LIBOR BETS DURING CRISIS BECAUSE IT COULD INFLUENCE RATES

FORMER DEUTSCHE BANK EMPLOYEE CLAIMS BANK TOOK BIG LIBOR BETS DURING CRISIS BECAUSE IT COULD INFLUENCE RATES

The Wall Street Journal has an exclusive story based on a whistleblower leak, apparently with supporting transaction records.

In 2008, Deutsche Bank made very large bets instruments linked to one, three, and six month dollar, euro, and sterling Libor, that differential between one month rates versus the three and six month tenors would widen as the crisis became more severe. The German bank reportedly made over €500 million on these trades.

What is significant is that these were very large wagers, particularly at a time when most banks were desperate to shed risk. This is the guts of the story:

The documents from the former Deutsche Bank employee set out how traders in Londonand New York working for the German bank’s global-finance unit successfully bet that borrowing costs in euros, U.S. dollars and British pounds over three- and six-month periods would rise faster than one-month interest rates because of deepening stress throughout the global financial system.

The interest-rate bets included an estimated potential profit of €24 million for each hundredth of a percentage point that the three-month U.S. dollar Libor increased compared with the one-month U.S. dollar Libor, according to the documents.

The former employee has told regulators that some employees expressed concerns about the risks of the interest-rate bets, according to documents. He also said that Deutsche Bank officials dismissed those concerns because the bank could influence the rates they were betting on.

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Bank of America lets go nearly 500 local contractors who worked in the Independent Foreclosure Review program

Bank of America lets go nearly 500 local contractors who worked in the Independent Foreclosure Review program

TAMPA — Nearly 500 local contractors who reviewed Bank of America foreclosures are out of a job after regulators and banks announced an $8.5 billion settlement, the bank confirmed Tuesday.

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Promontory lays off hundreds in Denver foreclosure settlement

Promontory lays off hundreds in Denver foreclosure settlement

Promontory Financial Group has fired “several hundred” temporary workers in Denver after the federal Office of the Comptroller of the Currency shut down the Independent Foreclosure Review, which was formed to investigate big banks’ foreclosure processes.