Daily Archives: January 30, 2013

GERMAN REGULATOR BAFIN PROBES LENDERS DEUTSCHE BANK OVER EURIBOR – PAPER

FRANKFURT (Reuters) – German regulator BaFin has launched a special probe against four lenders including Deutsche Bank as part of an investigation into possible manipulation of the Europe Interbank Offered Rate (Euribor), the Sueddeutsche Zeitung newspaper reported on Monday.

A special probe is the most severe kind of investigation the regulator can launch against a bank.

The German regulator is also investigating Portigon AG, Sueddeutsche Zeitung said, without citing sources. Portigon is what remains following the breakup of the bank that used to be known as WestLB.

Officials at Deutsche Bank and BaFin were not available for comment. Portigon officials were also not available for comment.

The special probes were launched after BaFin had asked for information from all German banks involved in setting Euribor rates, Sueddeutsche said.
Read on.

‘Free house’ after foreclosure case, according to attorney

BOCA RATON, Fla. – The Williams family purchased at the top of the housing market to accommodate their growing family. Unable to sell their previous home for much of a profit when the housing bubble burst, their cash flow was crippled.

“I was worrying every night. I was crying. We were fighting,” Candace Williams said.

She and her husband, Scott, asked their lender for a modification twice, but were denied both times.

“I stopped paying my mortgage. I never once, nor did my wife, want a handout. We never once were trying to cheat the system,” Scott Williams said.

Eventually in foreclosure, the Williams had their day in court, and won.

“In my opinion they get the house for free,” Roderick Coleman, the Williams’ attorney, said.

“The bank sued them, not only for foreclosure, but also sued them on the promissory note. Since they sued them on the promissory note trying to obtain the entire indebtedness on the note, plus interest etc., and lost, now it’s res judicata , and they can’t sue them again,” Coleman said.

He said the bank lost the case because it couldn’t prove it’s the holder of the note and mortgage, but it is.

Read more: http://www.wptv.com/dpp/news/region_s_palm_beach_county/boca_raton/free-house-after-foreclosure-case-according-to-attorney#ixzz2JT6qXDKw

JPMorgan Bet Against Itself In London ‘Whale’ Trading Scandal

This should not be a surprise for anyone…

* Investment bank bet against CIO in derivatives market

* Bank said to have discussed merging opposing trade books

* Opposing bets could fuel claim JPM is too big to manage

By Emily Flitter

NEW YORK, Jan 29 (Reuters) – There is a new twist in the London Whale trading scandal that cost JPMorgan Chase $6.2 billion in trading losses last year. Some of the firm’s own traders bet against the very derivatives positions placed by its chief investment office, said three people familiar with the matter.

The U.S. Senate Permanent Committee on Investigations, which launched an inquiry into the trading loss last fall, is looking into the how different divisions of the bank wound up on opposite sides of the same trade, said one of the people familiar with the matter.

The committee is expected to release a report on its investigation in the next few weeks.

Read on.

SIGTARP Report: Treasury Continues Approving Excessive Pay at Bailed-Out Companies

Link

San Francisco Supervisor Calls for Hearing on Libor-Related Losses

San Francisco Supervisor Calls for Hearing on Libor-Related Losses

A legislator in San Francisco is seeking a review of possible losses to the city from banks’ alleged manipulation of a benchmark that determines the price at which banks lend to one another.

John Avalos, a member of the Board of Supervisors, called Tuesday for a hearing to examine losses from investments by the city that tied to the London interbank offered rate.

“We know the banks colluded to rig interest rates resulting in significant losses to taxpayers across the nation,” Avalos said in a press release. “We owe it to our city residents to find out how much this type of bank fraud cost San Francisco.”

Avalos’ allegation comes amid a series of lawsuits in California and elsewhere in which municipalities claim that their investments suffered as a result of banks colluding to keep the Libor artificially high or low.

SENS. BROWN, GRASSLEY PRESS JUSTICE DEPARTMENT ON “TOO BIG TO JAIL”

The full text of the letter from Brown and Grassley to Holder can be found below.

January 29, 2013

The Honorable Eric H. Holder, Jr.
United States Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530

 

Dear Attorney General Holder:

The large number of private and government lawsuits since the global financial crisis continues to undermine public confidence in our financial markets.  This confidence can only be restored by demonstrating that there are consistent rules in place that provide accountability for wrongdoing and deter financial predators.

Unfortunately, many of the settlements between large financial institutions and the federal government involve penalties that are disproportionately low, both in relation to the profits which resulted from those wrongful actions as well as in relation to the costs imposed upon consumers, investors, and the market. 

The nature of these settlements has fostered concerns that “too big to fail” Wall Street banks enjoy a favored status, in statute and in enforcement policy.  This perception undermines the public’s confidence in our institutions and in the principal that the law is applied equally in all cases. 

On settling with Swiss Bank UBS for Libor manipulation, for example, you said, “[t]he impact on the stability of thefinancial markets around the world is something we take into consideration.  We reach out to experts outside of the Justice Department to talk about what are the consequences of actions that we might take, what would be the impact of those actions if we want to make particular prosecutive decisions or determinations with regard to a particular institution.”

In an interview with Frontline, outgoing Assistant Attorney General Lanny Breuer defended the Department of Justice’s inability to prosecute large financial institutions by saying, “but in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.”

These statements raise important questions about the Justice Department’s prosecutorial philosophy.  In order to explore the Justice Department’s treatment of potential criminal activity by large financial institutions, please answer the following questions and provide the following information:

 

             1. Has the Justice Department designated certain institutions whose failure could jeopardize the stability of the financial markets and are thus, “too big to jail”?  If so, please name them.

             2. Has the Justice Department ever failed to bring a prosecution against an institution due to concern that their failure could jeopardize financial markets?

             3. Are there any entities the Justice Department has entered into settlements with, in which the amount of the settlement reflected a concern that markets could be impacted by such a settlement?  If so, for which entities?

             4. Please provide the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.

             5. Please provide any compensation contracts for these individuals.

             6. How did DOJ ensure that these experts provided unconflicted and unbiased advice to DOJ?

 

Our markets will only function efficiently if participants believe that all laws will be enforced consistently, and that violators will be punished to the fullest extent of the law.  There should not be one set of rules that apply to Wall Street and another set for the rest of us. 

Thank you for your cooperation and attention in this matter.  We would appreciate a response by February 8, 2013.  If you have any questions, please do not hesitate to contact Graham Steele for Senator Brown at (202) 224-2315 or Chris Lucas for Ranking Member Grassley at (202) 224-5225.

 

                                                                        Sincerely,

 

 

            Sherrod Brown                                                  Charles E. Grassley

            Chairman                                                        Ranking Member

            Banking Committee,                                          Judiciary Committee

            Subcommittee on Financial Institutions

            and Consumer Protection

Link

Sen. Menendez, Boxer plan bill, again, to help struggling homeowners

Sen. Menendez, Boxer plan bill, again, to help struggling homeowners

Underwater homeowners may get additional federal assistance for refinancing government-backed loans under a proposal being revived in the U.S. Senate.

Democratic Senators Robert Menendez of New Jersey and Barbara Boxer of California plan to introduce a bill as soon as this week that would expand the existing Home Affordable Refinancing Program by promising lenders they won’t be forced to absorb the loss on refinanced loans that default, according to a person with knowledge of the matter. The person asked not to be identified because the timing is not final.