Banks accused over ‘rip-off’ rates on small loans
Britain’s biggest banks are short-changing millions by charging “sky high” interest rates of up to 24.9 per cent for small personal loans, experts claimed today.
Experts revealed that while interest rates were coming down for five-figure loans the banks were “extremely uncompetitive” on smaller amounts.
Customers wanting to borrow £3,000 from Halifax would end up paying back a total of £5020.80 over a five-year period given an annual percentage rate (APR )of 24.9 per cent.
For the same amount, Barclays charge an APR of 19.9 per cent, NatWest 19.9 per cent, HSBC 18.9 per cent, Santander, 14.9 per cent, Tesco Bank 12.8 per cent and Sainsbury’s 12.7 per cent.
Halifax charges an APR of 7.4 per cent on a loan of £7,500 over five years, with Santander at 6.5 per cent and Barclays at 5.1 per cent
Moneycomms said for smaller sums it would be cheaper for someone to use a peer to peer lender or an MBNA ‘Rate for Life’ credit card, which offers a 6.9 per cent rate as long as a customer meets a minimum monthly repayment schedule.
U.S. sues J.P. Morgan, others over Libor: report
LOS ANGELES (MarketWatch) — U.S. regulators are suing J.P. Morgan Chase & Co.JPM -0.16% , Barclays PLC UK:BARC +1.92% , Credit Suisse Group AG CH:CSGN -0.54%CS -1.17% and 10 other international banks over their alleged role in manuipulating the London interbank offered rate, Bloomberg News reported late Monday. The National Credit Union Administration sued the banks at a federal court in Kansas, the report said, but added it couldn’t immediately confirm the filing. The regulator accuses the banks of giving false information for the British Bankers’ Association’s daily survey used to set the Libor.
ICAP Staff Face Criminal Charges Tied to Libor
U.S. prosecutors are preparing to announce criminal charges against past or present employees of ICAP IAP.LN +1.70% PLC for their alleged roles in rigging benchmark interest rates, according to people familiar with the planned charges.
The Justice Department’s expected criminal charges could be filed as early as Wednesday, coinciding with U.S. and British authorities’ expected announcement of civil settlements with ICAP, a big London-based brokerage firm. U.S. officials are continuing to investigate other activity related to alleged rate-rigging, according to people familiar with the probe.
Bank of America Executive Faces Criticism in Libor Case
LONDON—In January, former UBS AG UBSN.VX +0.16% executive Alex Wilmot-Sitwell told British lawmakers that he didn’t recall the bank’s effort to retain a star trader named Tom Hayes, who is accused of being a central figure in alleged efforts to rig benchmark interest rates. In fact, he said he didn’t remember the man at all.
“I don’t recall him,” Mr. Wilmot-Sitwell said at the parliamentary hearing. “I never met him.” He said Mr. Hayes’s subsequent departure from UBS “may well have predated my engagement” as co-head of the company’s investment bank.
Now, however, information has surfaced that Mr. Wilmot-Sitwell was one of the recipients of emails about Mr. Hayes and was asked to help in a charm offensive to prevent the then-29-year-old math whiz—who generated hundreds of millions of dollars in revenue for the Swiss bank—from defecting to rivalCitigroup Inc. C -1.23%
As a result, Mr. Wilmot-Sitwell—who today is president of Bank of America BAC -0.35% Merrill Lynch for Europe, the Middle East and Africa—faces criticism from a British lawmaker, who says the executive’s parliamentary testimony was misleading.
Internal UBS emails, reviewed by The Wall Street Journal and not previously disclosed publicly, were obtained by British authorities investigating manipulation of the London interbank offered rate, or Libor, according to people familiar with the probe. The emails shed light on a campaign by top UBS executives to hang on to a trader who would soon become radioactive.
Goldman Sachs, Wells Fargo Sued by Regulator
(CN) – Goldman Sachs and Wells Fargo ignored underwriting standards when selling or issuing mortgage-backed securities, a U.S. regulator claims in court.
As liquidating agent of Southwest Corporate Federal Credit Union, the National Credit Union Administration Board filed separate actions in Manhattan Federal Court Tuesday, accusing the banks of violating state and federal securities law when they underwrote and sold the securities.
The National Credit Union Administration is an independent government agency that charters and regulates federal credit unions, among other things.
It claims Goldman Sachs, GS Mortgage Securities Corp. and Wachovia Capital Markets “systematically abandoned” their underwriting guidelines with certain residential mortgage-backed securities, which “were significantly riskier than represented.”
Residential mortgage-backed securities, or RMBS, are securities that use a pool or pools of home mortgage loans as collateral.
Southwest allegedly bought $40 million of the “highest-rated” tranches of RMBS from Goldman Sachs and more than $25.5 million from Wachovia, the regulator says. (Wachovia merged with Wells Fargo & Co. in 2009 and is now known as ells Fargo Advisors.)
GSEs Failed to Pursue Judgments on Foreclosed Borrowers, Watchdog Says
Fannie Mae and Freddie Mac failed to pursue and collect deficiencies from foreclosed borrowers who had the ability to repay, according to an inspector general’s report released Tuesday.
A deficiency exists when the proceeds of a foreclosure sale are less than the borrower’s loan balance. Many lenders continue to track down borrowers long after a foreclosure or they sell the debt to a third party that tries to collect a deficiency judgment.
The Office of Inspector General for the Federal Housing Finance Agency, which oversees Fannie and Freddie, released two reports detailing how the government-sponsored enterprises failed in their oversight of debt collectors. But the IG admits that only a portion of the deficiency claims would have been recoverable anyway.
BofA’s Countrywide Sold Thousands of Bad Loans, U.S. Says
Well, no kidding! Ah, duh?
Bank of America’s Countrywide unit sold thousands of bad loans, defrauding Fannie Mae and Freddie Mac out of more than $1 billion in mortgages, the U.S. said at the start of a federal trial.
“Why did Countrywide do this?” Assistant U.S. Attorney Pierre Armand said today in opening statements in Manhattan. “They did it for the money.”
The U.S. sued Bank of America in October, joining a whistle-blower action filed by a former Countrywide executive, Edward O’Donnell. The U.S. claims Bank of America and Countrywide, which it acquired in 2008, sold thousands of defective loans from 2007 to 2009 to the home-mortgage finance companies. The case is the first brought by the U.S. against a bank over defective mortgages to go to trial.
According to Reuters, JPMorgan Chase (JPM) is trying to make a last-minute effort to settle a case that was to be filed on Tuesday, accusing the bank of violating U.S. laws in its sale of mortgage bonds in California.
The case, which was to be filed by U.S. prosecutors in the Eastern District of California, deals with the bank’s sale of bonds backed by subprime mortgages and other risky home loans between 2005 and 2007.
Wells Fargo fails to get government mortgage case dismissed
Wells Fargo (WFC) wanted to rid itself of a toxic-mortgage case filed against the bank by the government, but a federal judge kept the suit alive this week.
U.S. District Judge Jesse Furman denied Wells Fargo’s motion to dismiss a series of statutory claims filed by the U.S. government back in October 2012.
The claims accuse Wells Fargo of misleading the U.S. Department of Housing and Urban Development into believing its loans qualified for insurance from HUD’sFederal Housing Administration. The government seeks damages and civil penalties under the False Claims Act, which could lead to hundreds of millions of dollars in potential losses.
The judge did dismiss the government’s mistake of fact and unjust enrichment claims in their entirely. The court noted that claims filed before 2004 are untimely, while those made after 2004 are barred because HUD was aware of Wells Fargo’s misconduct at the time.