Daily Archives: May 28, 2014

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How The Congressional Black Caucus Went To War With Itself Over Wall Street

How The Congressional Black Caucus Went To War With Itself Over Wall Street

Gwen Moore does not seem like anybody’s idea of a corporate stooge. The Milwaukee Democrat, a single mom who once survived on welfare, has sponsored efforts to boost public housing, reproductive freedom, food-stamp benefits, Social Security payments, environmental protection, veterans benefits and the minimum wage. And that’s just in the past year.

So it’s strange to see Moore associated with one of the more noxious campaigns underway on Capitol Hill: the Wall Street effort to unravel key sections of Dodd-Frank. After all, the 2010 financial reform was meant to curb the very same excesses that, not so long ago, devastated the economy and put many of Moore’s constituents out of their jobs and their homes.

The assault on Dodd-Frank relies on support from three different groups. The GOP isn’t shy about its antipathy to government regulations, and a pro-business coalition known as the New Democrats has come to its aid. But there is also a third, lesser-known faction: the Congressional Black Caucus. Moore, along with colleagues such as New York’s Gregory Meeks, Georgia’s David Scott, Missouri’s Lacy Clay and Alabama’s Terri Sewell, has pushed for a host of seemingly arcane measures that would undermine Dodd-Frank’s rules on financial derivatives, the complex contracts at the heart of the 2008 meltdown. She is the co-sponsor of multiple measures that would once again allow Wall Street to shift its riskiest transactions out of the view of regulators.

The CBC is not an organization known for airing its dirty laundry in public. But over the last year, the tawdriness of its pro-Wall Street votes has become so blatant that several members have started to push back, led by Maxine Waters, the veteran Los Angeles legislator who serves as the top Democrat on the financial services panel. To many in the CBC, it feels like a battle for the storied caucus’s soul — and the result could dictate the direction of economic policy for the Democratic Party at large.

“People are sick about what they’re doing,” says one CBC member. “Some things are just uncharacteristic of certain people. Everybody here has a brand. If your brand is down with the people, standing up for the little guy, then all of a sudden you’re on some bills that have got you helping Goldman Sachs have looser regulations on derivatives? It’s like — wait, what the hell is that?”

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About a decade after the CBC’s 1971 founding, some 20 black lobbyists started holding informal gatherings around Washington. The Civil Rights movement had ushered more African-Americans into Congress, and those lawmakers brought black staffers with them. Many of them, like former staffers all over Capitol Hill, wound up on K Street.

The CBC had always focused on social justice, but the lobbyists — who eventually named themselves the Second Wednesday Group — had more prosaic aims. “It was just a networking group of African-American lobbyists, to maybe be an inspiration for African-American lobbyists entering the lobbying field,” says David Warr of the International Trademark Association, who ran the organization in the 1990s. Over time, it built a vibrant community of black lobbyists and Hill staffers.

Today, the organization — now known as the Washington Government Relations Group — is a significant nexus of influence. At its regular policy gatherings, lobbyists can interact with lawmakers and staffers. Last year’s annual gala was held at the French Embassy.

But Capitol Hill is still overwhelmingly white, and even with a former CBC member in the White House, the power class is far from fully integrated. One white former representative told us he was stunned the first time he attended a black colleague’s fundraiser during President Barack Obama’s first term. “It was very much a standard fundraiser in a townhouse on Capitol Hill, probably on South Capitol Street, nicely catered, everything was identical, except I was the only white guy there,” he recalls. “There were lots of African-American lobbyists, most of them had probably worked as a staffer for somebody, and then they were hired by whoever it was they lobbied for specifically to lobby the CBC.”

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Senators Tell Obama: Fed Nominees Should Aim to Take On Wall Street

Senators Tell Obama: Fed Nominees Should Aim to Take On Wall Street

The White House has been getting an earful in the past year from members of theSenate Banking Committee, who haven’t been shy about suggesting criteria for nominees at the  Federal Reserve.

On Wednesday, Sens. Jeff Merkley (D., Ore.) and Elizabeth Warren (D., Mass.) continued with such unsolicited advice, sending a letter to President Barack Obamaurging him to fill two vacant seats on the Fed’s seven-member board with nominees possessing an interest in financial regulation and a desire to address the problems revealed by the 2008 financial crisis.

“With [the Fed’s] responsibilities for oversight of the financial system, it is critical that the two remaining nominees for the Board be leaders who possess expertise in financial regulation and have demonstrated a strong commitment to financial reform,” the senators wrote in the letter.

The letter reflects the long-running concern of the senators that, with the exception of Fed Governor Daniel Tarullo, the highest-ranking Fed officials aren’t paying enough attention to the central bank’s considerable bank oversight responsibilities. They worry that too much of the work is delegated to staff as opposed to the officials who are accountable to Congress debating and engaging on these issues.

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SHAREHOLDER ALERT: Investigation on Behalf of Ocwen Financial Corporation Investors Announced by Law Offices of Howard G. Smith

SHAREHOLDER ALERT: Investigation on Behalf of Ocwen Financial Corporation Investors Announced by Law Offices of Howard G. Smith

BENSALEM, Pa., May 28, 2014 (BUSINESS WIRE) — Law Offices of Howard G. Smith announces that it is investigating potential claims on behalf of investors of Ocwen Financial Corporation (“Ocwen” or the “Company”) OCN +2.93% . The investigation concerns possible violations of federal securities laws and focuses on the Company’s business and operations.

Ocwen, through its subsidiaries, originates and services mortgage loans in the United States and internationally. The investigation is related to the Company’s January 22, 2014, announcement that its mortgage servicing arm had signed an agreement withWells Fargo Bank, N.A. for the purchase of residential mortgage servicing rights on a portfolio consisting of approximately 184,000 loans with a total principal balance of $39 billion. Following that announcement, on February 6, 2014, the Company disclosed that, at the request of the New York Department of Financial Services, its mortgage servicing arm agreed to put an indefinite hold on the purchase. Then, on May 2, 2014, the Company reported that the New York Regional Office of the Securities and Exchange Commission is investigating the recent surrender of certain stock options by the Company’s executive chairman. The Company had granted him the options in August 2012 for the purchase of common stock.

Did the SEC just drop a big hint about pay-to-play prosecutions?

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CFPB fines real estate firm over RESPA violations

CFPB fines real estate firm over RESPA violations

Alabama-based RealtySouth must pay half a million dollars to the Consumer Financial Protection Bureau for inadequate disclosures that could leave consumers unaware of their rights to choose service providers when they buy a home.

According to the CFPB, the practices identified illegally benefited TitleSouth, an affiliated company owned by the same holding company that owns RealtySouth.

RealtySouth violated the Real Estate Settlement and Practices Act, which protects consumers during the home-buying process by prohibiting kickbacks for referrals of real estate settlement services.

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Banks Urge Supreme Court To Reject Libor Appeal

Banks Urge Supreme Court To Reject Libor Appeal

Law360, New York (May 27, 2014, 9:04 PM ET) — A slew of major banks asked the U.S. Supreme Court on Tuesday to deny an appeal from bondholder plaintiffs who were part of multidistrict litigation over alleged Libor rigging, arguing that taking up the petition would hamper trial courts’ abilities to manage their own schedules in complicated suits.

Barclays Bank PLC, Bank of America Corp. and a several other large banks contend that the high court should reject a petition for a writ of certiorari filed by lead bondholder plaintiffs Ellen Gelboim and Linda Zacher, who…

A very handy chart of Libor penalties

EFinancialnews.com website:

The always-good-value analysts at Bernstein have created a Libor-penalties chart. The conclusion is that there have been a lot of fines.

But for those suffering from Libor-fatigue, there are also plenty more to come. Note the big ‘zero’s in the US column. From the note:

U.S. regulators have handed out the largest portions of overall penalties to banks that have resolved their exposures to the major global authorities. So far, U.S. regulators (through the DOJ and CFTC) have accounted for anywhere between ~43% (RBS) and 80% (Barclays) of total settlements from individual banks that have resolved their exposures to multiple global regulators. Although this does not necessarily imply that the largest penalties for banks in our coverage will come from the U.S., we think it’s worth pointing out since none of the U.S. banks have settled withdomestic regulators for Libor-related wrongdoing.

So how many penalties are left out there? Nobody knows:

Unlike in mortgage-related legal actions, we don’t have a specific amount of MBS issuance, direct market size, or segment revenue to reference as we attempt to gauge potential Libor-related exposures at the banks… Similar to FX legal issues, we maintain that it’s still early days for our banks with regard to Libor, but we continue to monitor the progress as we view Libor as one of the remaining “big ticket” legal items that the universal banks will need to resolve before a fading of elevated legal costs can gain traction.