Daily Archives: February 1, 2013

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Two former UBS traders charged by U.S. government for involvement in Libor scandal

Two former UBS traders charged by U.S. government for involvement in Libor scandal

The U.S. Justice Department has formally filed charges against two former UBS AG traders for their involvement in manipulating Libor interest rates for the purpose of increasing profits for the bank. The charges against Tom Alexander, William Hayes and Roger Darin come on the heels of a $1.5 billion settlement between UBS and the governments of the United States, the United Kingdom and Switzerland. The UBS settlement follows Barclays PLC’s admission in June 2012 that it manipulated Libor rates in an effort to bolster a positive financial outlook during the global financial crisis. Barclays ultimately agreed to pay more than $450 million to settle all charges related to its involvement in the Libor scandal.

Hayes and Darin will both face charges of conspiracy, and Hayes will also face charges of price fixing and wire fraud. The U.S. government is currently seeking extradition of the men to face the charges, which include allegations that Hayes and Darin “conspired with others known and unknown within UBS to cause the bank to make false and misleading yen Libor submissions to the British Bankers’ Association.”

During their investigations, regulators discovered more than 2,000 instances where UBS had requested other banks and brokers to manipulate rates. U.S. Assistant Attorney General Lanny Breuer stated that “for UBS traders, the manipulation of Libor was about getting rich.” More than 45 bank employees, some in managerial positions, were aware of the widespread rate manipulation scheme, and more than 30 individuals have left the bank as a result of the investigation into wrongdoing.  

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United States Student Association Accuses Wells Fargo of Unjust Banking Practices, Withdraws Funds

United States Student Association Accuses Wells Fargo of Unjust Banking Practices, Withdraws Funds

After denouncing the corporation’s unethical business practices, the United States Student Association made the decision to boycott Wells Fargo by withdrawing all organization funds from the corporation.

The nation’s largest and oldest student run organization since 1947, the USSA advocates for student rights and affordable education by organizing grassroots movements and lobbying local, state and federal legislatures. According to USSA president Tiffany Loftin, the organization made the decision to boycott the bank after legal investigations into the corporation’s operations unveiled cases of predatory lending, racial discrimination and mortgage fraud.

Earlier this month, USSA hosted a demonstration along with a host of affiliated organizations at Wells Fargo’s corporate headquarters in San Francisco. Loftin said the organization wanted to put more pressure on the bank for their past injustices along with making current Wells Fargo customers aware of their allegedly unethical practices.

According to Loftin, Wells Fargo unfairly profits off of student loans by setting interest rates at unrealistic levels. Loftin hopes USSA’s decision to cut off ties with the corporation will help make students more aware of the potential risks when entering into private loans.

“We want to shed light on predatory lending practices on the corporate level. Wells Fargo’s interest rates go as high as fourteen percent,” Loftin said. “We believe students our age should not be taking out loans with interest rates that are that high. Making sure we won’t do business with them anymore is important, because our values do not align with the work that they do.”

Following its decision, USSA reallocated their organization funds to Amalgamated Bank, a credit union that Loftin claims is more progressively minded and reasonable in terms of student lending. According to Loftin, Amalgamated Bank provides its services to a number of non-profits, labor unions and progressive organizations and USSA believes that Amalgamated Bank’s services align with the organization’s values.

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Bank of America reaches separate settlements with Fannie Mae and regulators

Bank of America reaches separate settlements with Fannie Mae and regulators

Bank of America (BofA) has reached several multibillion-dollar settlements arising out its mortgage and lending practices during the credit crisis.

On January 7, 2013, BofA announced an $11.6 billion settlement with Fannie Mae, the government-backed mortgage agency, to resolve claims that it sold Fannie Mae mortgages that did not meet the agency’s origination standards in the run-up to the housing crisis. As a part of the settlement, BofA will pay $3.6 billion in cash and will also repurchase approximately 30,000 loans, valued at $6.75 billion, that the bank and its Countrywide Financial unit sold to the agency from 2000 through 2008. BofA has also agreed to pay an additional $1.3 billion to Fannie Mae related to the bank’s foreclosure practices.

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RBS Eyes £100m Bonus Clawback Over Libor Fine

RBS Eyes £100m Bonus Clawback Over Libor Fine

Royal Bank of Scotland (RBS) is examining proposals to claw back up to £100m from pay deals previously awarded to executives in its investment bank as it prepares to settle allegations that it played a key role in the Libor rate-rigging conspiracy.

I understand that the bank’s remuneration committee, which is chaired by Penny Hughes, a non-executive director, is assessing plans for a “flat tax” on the pay packets of hundreds of directors and managing directors in its markets business.

The idea would involve about 15% of prior-year pay awards to the relevant individuals being clawed back, netting a total

The proposal is one of several being scrutinised by the pay committee as it attempts to demonstrate that RBS staff are being held sufficiently accountable for the latest in a series of scandals involving the state-backed lender.

No decisions have been taken yet about the precise structure of the plan to reclaim bonuses previously awarded to staff, but if the RBS board gives the new proposal the green light, it would mean a far larger number of the bank’s employees having their bonuses docked than was previously thought.

RBS is expected to pay between £250m and £300m to staff in its Markets and International Banking (M&IB) unit for their work in 2012, a figure that has also been reduced in anticipation of the imminent Libor settlement.

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Ex-Countrywide executive added as defendant in BofA fraud lawsuit

Ex-Countrywide executive added as defendant in BofA fraud lawsuit

(Reuters) – The Justice Department has added a former top executive at Countrywide Financial Corp as a defendant in a lawsuit accusing Bank of America Corp of causing taxpayers $1 billion in losses to Fannie Mae and Freddie Mac.

Rebecca Mairone was added as a defendant in an amended civil lawsuit dated January 11 and filed in U.S. District Court in New York. The filing was not made available in electronic court records until later in the month.

The complaint says it was at Mairone’s direction that the bank implemented a program to speed up the processing of home loans and remove barriers intended to ensure loans are not tainted by fraud. The program was known internally at Countrywide as the “Hustle,” the Justice Department said in the complaint.

Mairone is now a managing director at JPMorgan Chase & Co. In a statement on Thursday, her lawyer said the government “has trumped up a meritless civil case.”

“Rebecca Mairone has always been a loud voice for ethics and integrity in the mortgage business and she will be vindicated because she never did anything improper,” said Marc Mukasey, of law firm Bracewell & Giuliani.

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JPM’s Whale Tried to Alert Bosses on Bets: Report

JPM’s Whale Tried to Alert Bosses on Bets: Report

A Senate panel is said to be looking into warnings by a former trader at JPMorgan Chase (JPM) months before his bets ballooned into a $6 billion loss for the company.
 
Hesitation expressed by Bruno Iksil, whose outsize bets earned him the moniker the “London Whale,” is among areas being examined by the Senate Permanent Subcommittee on Investigations, the Wall Street Journal reported late Thursday.
 
The subcommittee, which has been probing last year’s trading loss at the nation’s biggest bank by assets, is said to be reviewing emails sent by Iksil to superiors, according to the publication, which cited unnamed people familiar with the probe.
 
An internal report on the incident that was released on Jan. 16 by the company cites an email by an unnamed trader who warned colleagues in January 2012 that his bets were “becom[ing] scary” and that the bets would expose JPMorgan to “larger and larger drawdown pressure” as a result.
 
The bank redacted names from the emails cited in its report.

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Elizabeth Warren pushes for info on halted foreclosure reviews

Elizabeth Warren pushes for info on halted foreclosure reviews

Sen. Elizabeth Warren isn’t wasting time wading into banking policy.

Less than a month into her new job, the Massachusetts Democrat, a new member of the Senate Banking Committee, is seeking information from regulators on why federal bank regulators halted a detailed review of foreclosure files this month.