Daily Archives: March 19, 2013

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Banks could face Libor cartel claims

Banks could face Libor cartel claims

BANKS could face another huge wave of claims amounting to hundreds of millions or even billions of pounds if the European Commission rules Libor fixing amounted to anti-competitive behaviour, City lawyers warned yesterday.

Solicitors from Collier Bristow believe any finding that low-balling Libor was anti-competitive or represented a cartel, could lead to a raft of claims relating to derivative contracts or loan products.

Low-balling was the practice early in the financial crisis where banks submitted falsely low interest rates to give a dishonestly positive impression of their health to the markets.

That would come on top of the PPI claims, which have cost the big four banks £12bn so far, and interest rate swap mis-selling claims which are set to cost several billion more.

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Central banks want Libor replaced with several rates

Central banks want Libor replaced with several rates

(Reuters) – The tarnished Libor interest rate benchmark should be replaced with a range of reference rates based on actual market transactions by banks, a global group of central bankers said on Monday.

Barclays (BARC.L), Royal Bank of Scotland (RBS) (RBS.L) and UBS (UBSN.VX) have all been fined for rigging the London interbank offered rate, which regulators are now reforming.

The rate is compiled by banks submitting quotes for the rates at which they believe they could borrow from another bank. It is used to price products worth trillions of dollars, ranging from home loans to credit cards,

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Hired by Citimortgage, Safeguard Properties’ Foreclosure Error Robs Texas Couple of $150K in Property

Hired by Citimortgage, Safeguard Properties’ Foreclosure Error Robs Texas Couple of $150K in Property

A Texas couple whose personal property was mistakenly scooped up in a foreclosure happening next door have yet to get their things back and were told by police that it doesn’t count as theft.

 

No Fence Can Hold Them Back

When workers from ironically-named Safeguard Properties, an Ohio company, showed up in Taylor, Texas, to ready the house next to Mike Moors’ property for foreclosure, they mistakenly also broke into his barn and took his boat, trailers and backhoe, as well as trunks of items with sentimental value, such as his wife’s wedding dress and the couple’s love letters, according to the Austin-American Statesman.

The Moors’ barn sits on property that is otherwise empty and is separated from his neighbor’s by a fence – or it was, until the workers removed the fence and broke into the barn, taking about $150,000 worth of property from the Moors. 

Moors discovered the problem in January and filed a report for theft with the police but was told that because the company was acting in good faith, the case would be closed. “This happens all the time, not that it makes it right, but it is not a crime,” Moors said a detective told him in an email.

Safeguard was hired by CitiMortgage, which foreclosed on the neighboring home. Safeguard has yet to respond to Moors, other than to tell him its insurance company is looking into the matter – not exactly comforting news.

BofA’s Countrywide Must Face FHFA’s Securities Fraud Claims

Bank of America Corp.’s Countrywide Financial unit must face securities fraud claims by the Federal Housing Finance Agency, which sued for damages as the conservator for Fannie Mae and Freddie Mac.

U.S. District Judge Mariana Pfaelzer in Los Angeles, in a March 15 decision, denied Countrywide’s request to dismiss the FHFA’s claims. Countrywide claimed that the agency failed to provide sufficient factual information that the offering documents for residential mortgage-backed securities contained misrepresentations.

“The amended complaint alleges that Countrywide expanded its underwriting guidelines through the ‘matching strategy,’ but did not disclose that information to investors,” Pfaelzer said. “The mere expansion of underwriting guidelines does not support a claim under the securities laws, but failing to disclose that expansion to investors constitutes a viable misstatement.”

Read on.

Senate Censors Part of Report on JPMorgan About Its Stock Trading

The 307-page report the Senate released last Thursday on JPMorgan’s cowboy culture was deeply unsettling; the testimony under oath at the related Senate hearing on Friday was equally shocking with eyewitness accounts confirming that CEO Jamie Dimon ordered the withholding of  financial data to a regulator while both he and the Chief Financial Officer at the time, Douglas Braunstein, presented an Alice in Wonderland version of facts to the public in April 2012.

But it now appears that the worst of this story may be so unsettling to the markets and the public perception of Wall Street that it must be censored from public viewing. Throughout the Senate Permanent Subcommittee on Investigation’s 98 exhibits of emails and internal memos on the wild trading schemes at JPMorgan, the word “Redacted” appears.  In a high number of the areas where the material is censored, it concerns trading in the stock market, not the credit market where Bruno Iksil, the trader known as the London Whale, was causing giant ripples and eventual mega losses for the largest bank in the U.S. To date, there has been no media attention to the issue of stock trading within the Chief Investment Office nor has the issue been raised by investigators.

That the words equity trading (meaning stock trading) appear at all in this investigative report raises more serious red flags for JPMorgan. As Wall Street on Parade has repeatedly reported, the Chief Investment Office at JPMorgan, which oversaw the London Whale trades, was using insured deposits of the bank to place its casino bets. Senator Carl Levin, Chairman of the Senate Permanent Committee on Investigations, confirmed on Friday that JPMorgan used insured deposits as well as funds corporations had placed on deposit. That’s clearly not compatible with the Nation’s safety and soundness rules for banks and likely explains why the FBI is involved in an investigation.

Read on.

LETTER | A.G. Schneiderman And A.G. Coakley Lead 9 State Coalition Demanding New Leadership Over Fannie Mae And Freddie Mac

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New York Community Bancorp eyes former IndyMac -sources

New York Community Bancorp eyes former IndyMac -sources

NEW YORK, March 7 (Reuters) – OneWest Bank, which emerged from the wreckage of failed lender IndyMac, has held informal discussions with New York Community Bancorp about a possible sale, three sources told Reuters this week.

OneWest’s owners, which include funds managed by billionaire investors John Paulson and George Soros, have been exploring an initial public offering, but could opt to sell if they felt they could get a good price, according to the sources, who declined to be named because they are not allowed to speak to the media.

Pasadena, California-based OneWest has held talks with a handful of banks to gauge buyout interest, the sources said, but New York Community Bancorp was the only ongoing suitor they identified.