Monthly Archives: February 2013


Barclays Imposes £450m Libor Bonus Hit

Barclays Imposes £450m Libor Bonus Hit

Barclays is imposing more than £450m of financial penalties on its employees in relation to the Libor-rigging scandal which last year triggered the departure of its chief executive.

I understand that the bank will disclose details in its forthcoming annual report of moves to reduce variable pay for staff by far more than the £291m in fines levied by UK and US regulators.

The disparity between the two figures underlines the determination of Antony Jenkins, Barclays’ chief executive, to demonstrate accountability across the bank for the reputational crisis that engulfed it last summer, according to insiders.

Investors said the move was a step in the right direction but questioned why Barclays had still decided to award £1.8bn in bonuses to its staff given the scale of the misconduct-related fines and charges taken by the bank during 2012.


Wal-Mart Situation “Getting Worse” New Leaks Reveal

Wal-Mart Situation “Getting Worse” New Leaks Reveal

Two weeks ago, Wal-Mart stunned the world when a leaked memo discloses that February sales had been a “total disaster” and the company was facing the worst February start since 2006. Today, Bloomberg’s deep throat in Bentonville strikes again, as a new leak emerges. “Wal-Mart Stores Inc (WMT), already struggling to woo shoppers constrained by higher taxes, is ““getting worse” at keeping shelves stocked, the retailer’s U.S. chief told executives, according to minutes of an officers’ meeting obtained by Bloomberg News. “We run out quickly and the new stuff doesn’t come in,” U.S. Chief Executive Officer Bill Simon said, according to the minutes of the Feb. 1 meeting. Simon called “self-inflicted wounds” Wal-Mart’s “biggest risk” and said an executive vice president had been appointed to fix the restocking problem, according to the minutes.”

So even as the market completely ignored the Wal-Mart revenue issue, which is “getting worse”, the bigger problem is that now it appears to be affecting the company’s supply-chain, which likely means that all of WMT’s upstream vendors are suffering from the same malaise that has gripped all those entities that still rely on such historical trivia as profitability and cash flow:


Wal-Mart’s inability to keep its shelves stocked coincides with slowing sales growth. Same-store sales in the U.S. for the 13 weeks ending April 26 will be little changed, Simon said in the company’s Feb. 21 earnings call. Comparable sales increased 1 percent in the fourth quarter, compared with an average of 1.4 percent from analysts surveyed by Bloomberg. This year the shares gained 4.2 percent through yesterday, compared with a 5 percent advance for the Standard & Poor’s 500 Index.


Evelin Cruz, a department manager at the Wal-Mart Supercenter in Pico Rivera, California, said Simon’s comments from the officers’ meeting were “dead on.”


“There are gaps where merchandise is missing,” Cruz said in a telephone interview. “We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business.”


Cruz, 41, who has worked at Wal-Mart for nine years and oversees the photo and wireless sections at her store, said it can take weeks or months for merchandise to be replaced after it sells out.


“My camera bar hasn’t had cameras since early January,” she said. “They let the merchandise phase out but nothing new comes in to replace them. We’re supposed to have 72 cameras but we maybe have 12. What are customers supposed to buy?”


Bernanke Takes Blame for Delay in Foreclosure Reviews

Bernanke Takes Blame for Delay in Foreclosure Reviews

WASHINGTON — Federal Reserve Board Chairman Ben Bernanke accepted responsibility on behalf of regulators Wednesday for a troubled independent foreclosure review process that has delayed payments to borrowers for nearly two years.

Testifying before the House Financial Services Committee in his second day of congressional appearances to deliver the Fed’s semi-annual monetary policy report, Bernanke told lawmakers that regulators had made a mistake by requiring banks to hire consultants to review the largest servicers loan-by-loan.

“It was a very expensive cost per file evaluated,” said Bernanke. “We take responsibility for this. We were on a track where the money going to the consultants would be some multiple of the money going to the borrowers.”


Wells Fargo calculates possible mortgage costs

Wells Fargo calculates possible mortgage costs

Wells Fargo, the largest U.S. home lender, said faulty mortgages could cost the company as much as $2.4 billion beyond its reserves, an increase of $300 million from a year earlier. The bank also trimmed its estimate of possible legal costs. – See more at:


Bank Of America Explains Why It Never Assumed Title To Squatter-Filled Foreclosure

Bank Of America Explains Why It Never Assumed Title To Squatter-Filled Foreclosure

Yesterday, we told you about the California man who said he lost his house to foreclosure but who is being held responsible for the squatters who have moved into his former house because Bank of America has yet to assume the title to the property. Today, we bring you the bank’s side of the story.


According to a statement from the bank, BofA could not complete the foreclosure process on this particular home because the homeowner filed for bankruptcy in 2010.

“As a result, title to the property remains in his name as the file has continued to show that the property is in an active bankruptcy proceeding,” explains the bank, which points out that collection activities are restricted during bankruptcy proceedings.

And while the homeowner seemed surprised in the CBS San Francisco story to learn that he still owned the property that he’d claimed was lost to foreclosure around two years ago, a rep for BofA says that the bank has had “several conversations” with him in which it was explained “that he still owns the property and is in the strongest legal position to ask authorities to evict the squatters.”

“[The homeowner] had been made aware last fall that in order to resolve his concerns, we would need information that the property was no longer part of an active bankruptcy,” writes BofA, which says it finally received this notification in December 2012. Since then, the bank claims to have been working with the former homeowner and the mortgage owner to “expedite an acceptable liquidation of the mortgage that would lead to transfer of the title from his name.”

The bank says that the homeowner recently agreed to a deed-in-lieu (DIL) transaction, in which he would transfer the home over to the mortgage-owner rather than go through the standard foreclosure process, but that the investor holding the mortgage on the property did not initially go along with that proposal.


JPMorgan Chase CEO Jamie Dimon: ‘We Actually Benefit From Downturns’

JPMorgan Chase CEO Jamie Dimon: ‘We Actually Benefit From Downturns’

Like most soft-spined Americans, you probably have painful memories of the financial crisis and consequent recession. Perhaps you even think of those things as “bad.” Fortunately, Jamie Dimon is not like the rest of you losers.

That is because, unlike you, Jamie Dimon is CEO of JPMorgan Friggin’ Chase, America’s greatest bank, which just so happens to snack on financial crises and recessions like so much KIND bar.

“This bank is anti-fragile, we actually benefit from downturns,” Dimon bragged to his bank’s investors at a conference on Tuesday.

And it is true! The bank definitely benefited from the last downturn. It got to buy Bear Stearns in a government-backed fire sale, getting itself a brokerage business on the cheap in exchange for shouldering only a few tiresome legal burdens. It also got billions of dollars in government handouts, from $25 billion in TARP funds to billions in savings from low-interest-rate borrowing programs to a permanent subsidy arising from the idea that the government will bail out the bank if it ever gets in trouble.

That permanent subsidy amounts to about $17 billion per year, according to a recent Bloomberg View study, representing nearly all of the bank’s profits. No other bank gets such a large subsidy, according to Bloomberg’s study (although, to be fair, some find Bloomberg’s methods unsound, to quote from Jamie Dimon’s favorite movie).

New robo-signing brief: Misconduct by AG Masto’s office could ‘seriously damage public confidence’ in that office

BULLETIN: Nevada’s 8th Judicial District Court dismisses all charges against LSI title officers.

LAS VEGAS — New evidence bearing on allegations that Attorney General Catherine Cortez Masto and her top deputies engaged in repeated and systemic prosecutorial misconduct to indict two Lender Processing Services employees is scheduled to go before Nevada’s Eighth Judicial District Court today.

Defense attorneys for the employees say photographs now submitted to the court provide “potent proof” of the falsity of sworn testimony by Masto’s former chief deputy and head criminal prosecutor in the case, John P. Kelleher — as well as the falsity of assurances that Masto’s office gave to the court.

Gary Trafford and Gerry Sheppard, two LPS title officers, were indicted by a Clark County grand jury in November 2011 on charges of so-called robo-signing “forgery,” having authorized certain LPS employees they supervised to sign the title officers’ names to legal documents.

Although Nevada law actually appears to permit “surrogate signing,” Kelleher, say the defense attorneys, got the indictments by misleading the grand jury “on the legal requirements for the crimes charged” and by using “inflammatory hearsay.” Then, “when grand jurors attempted to probe the factual basis for this testimony, the prosecutors improperly precluded any questioning on the subject.”

Read on.


U.S. regulator says settlements with banks are appropriate

U.S. regulator says settlements with banks are appropriate

WASHINGTON, Feb 26 (Reuters) – A top U.S. bank regulator on Tuesday offered a lengthy defense of entering into settlements with banks, taking a swipe at critics who have questioned whether regulators are aggressive enough in taking banks to trial.

Comptroller of the Currency Thomas Curry said his agency’s main goal as a prudential supervisor is to fix problems and make sure that federal banks operate in a safe and sound manner.

“The purpose of our actions is not to punish banks or make examples of anyone,” Curry said in a speech before state attorneys general in Washington.

“We are very different from agencies like the Department of Justice, which is authorized under the law to bring actions for punitive purposes, including criminal actions, against institutions and individuals,” he said, according to prepared remarks.

– See more at:


Top WaMu execs in mortgage biz again

Top WaMu execs in mortgage biz again

From the “If at First You Don’t Succeed” Department: David
Schneider, who headed Washington Mutual’s home-loans unit during the peak of the mortgage bubble, was running another sizable mortgage company until this past Friday.

Though Schneider is now out, several other WaMu veterans, including former chief operating officer Stephen Rotella, are still involved with the company, Vericrest Financial of Irving, Texas.

Vericrest, wholly owned by private equity firm Lone Star, specializes in servicing subprime mortgages and delinquent or otherwise troubled loans, of the sort that WaMu became notorious for peddling. It services some 55,600 mortgages with total outstanding principal balances of $10.1 billion.

Schneider, who was kept on by JPMorgan Chase after it acquired WaMu’s operations from the Federal Deposit Insurance Corp. in 2008, became Vericrest’s CEO just over a year ago.

But after reports earlier this month in the trade press that Schneider had left, and a direct inquiry from The Seattle Times, Vericrest issued a statement late Friday that Schneider had previously announced his intention to resign and that Feb. 22 was his last day. (Confusingly, though, Vericrest still lists Schneider as CEO on its website.)

In-House Counsel’s Role in the Structuring of Mortgage-Backed Securities