BofA’s Merrill fined for mutual fund overcharges
(Reuters) – Bank of America Corp’s Merrill Lynch unit was fined $8 million and will reimburse $24.4 million to customers to settle allegations that it overcharged more than 47,000 retirement accounts and charities that invested in mutual funds.
The Financial Industry Regulatory Authority, Wall Street’s self-funded regulator, on Monday said the restitution is in addition to $64.8 million that Merrill has already repaid, making the total payout about $97.2 million including the fine.
Like many rivals, Merrill has offered mutual fund shares in multiple classes. Typically, Class A shares carry lower fees than Class B and C shares, but also carry upfront sales charges.
FINRA said Merrill failed to provide promised sales charge waivers on many retirement accounts for more than five years beginning in January 2006, relying instead on financial advisers it did not properly supervise to do so.
11th Circ. Dismisses JPMorgan Foreclosure Doc Fraud Suit
Linda Zimmerman, et al v. JPMorgan Chase Bank, NA, et al
Appellate – 11th Circuit
Law360, New York (June 16, 2014, 2:03 PM ET) — The Eleventh Circuit on Friday affirmed a district court’s dismissal of a lawsuit accusing JPMorgan Chase Bank NA of defrauding 58 plaintiffs during mortgage foreclosure proceedings, agreeing that the plaintiffs’ allegations were too broad and lacked specific evidence.
In an unpublished opinion released on Friday, a three-judge panel for the appeals court agreed with a Florida district court’s previous ruling that the plaintiffs failed to provide satisfactory evidence to back its claims that the bank used fradulent documents during foreclosure proceedings in violation of the Florida…
In a year when banks’ performance has been lackluster at best, Wells Fargo has been anything but.
The company’s shares have zoomed 13.6 percent higher in 2014, while the KBW Bank Index has slogged to a 1.6 percent gain, and S&P 500 financials have registered just a 2.9 percent increase.
As a result, Wells Fargo is about to become the most valuable bank ever, with its $272.36 billion market capitalization just short of the $282.75 billion record set by Citigroup in 2001, according to a Wall Street Journal analysis. Wells Fargo is third in the U.S. by total assets behind JPMorgan Chase and Bank of America, but it has become easily the best performer among the nation’s big financial institutions.
JPMorgan sued by city of Miami over alleged mortgage discrimination
How many other cities throughout US will sue the big banks for mortgage discrimination? This is just the beginning.
JPMorgan Chase & Co has been sued by the city of Miami, accusing the bank of predatory mortgage lending in minority neighborhoods that allegedly caused a wave of foreclosures during the last decade’s housing crisis.
The lawsuit, filed on Friday in federal court in Florida, said the country’s largest bank engaged in a continuous practice of discriminatory mortgage lending since at least 2004, violating the U.S. Fair Housing Act.
After issuing high-cost loans to minorities in the years before the housing crisis, JPMorgan later refused to refinance the loans on the same terms as it extended to whites, leading to defaults and foreclosures, the complaint said.
The lawsuit came just weeks after the city of Los Angeles filed similar claims against JPMorgan, seeking to recoup damages for lost tax revenue and increased city services needed in blighted neighborhoods.
“The Miami City Attorney’s claims are baseless and stand contrary to our long record of providing affordable housing to low- to moderate-income families across the region,” JPMorgan spokesman Jason Lobo said. The bank will defend itself against the claims, he said.
Bank of America : BofA to use NY state database to flag illegal payday loans
Bank of America Corp has become the first big bank to agree to use a New York regulator’s database to ensure it does not process illegal payments from payday lenders to state residents, Governor Andrew Cuomo said on Monday.
New York outlaws payday lending, or short-term consumer loans that mature the day the borrower receives his or her paycheck. New York’s Department of Financial Services began clamping down on such lenders in 2013 because the interest rates they charge can be high enough to be considered predatory.
Some lenders have tried to sidestep the prohibition by offering the loans over the Internet and using electronic payment and debit networks to collect on them.
To clamp down on this practice, the Department of Financial Services developed a database that identifies companies that may run afoul of the state’s ban on payday lending.
Bank of America plans to use this database to determine whether its merchant customers are using their bank accounts to make or collect on payday loans.
AIG’s Collapse: The Part Nobody Likes to Talk About
Earlier this month, American International Group announced the departure of Robert Benmosche, the CEO who led the company through most of its recovery from the financial crisis. Now that the company’s postcrisis chapter is underway, it is worth taking a fresh look at AIG’s downfall and rescue and the implications for reform.
The standard AIG story lays all the blame for the company’s problems on AIG Financial Products—an allegedly unregulated, irresponsible, derivatives dealer hiding within an otherwise solid insurance company.
Former Treasury Secretary Timothy Geithner repeats this traditional line in his recent book, where he recounts how an aggressive “hedge fund-like subsidiary called AIG Financial Products” brought the otherwise healthy insurance company to its knees and ultimately drove it into the Fed’s welcoming arms. Former Federal Reserve chairman Ben Bernanke made a similar claim when he told Congress how angry he was about AIG’s Financial Products unit—“a hedge fund attached [to] a large and stable insurance company.” And former Commodity Futures Trading Commission Chairman Gary Gensler, with typical dramatic flair, explained that AIG’s “subsidiary, AIG Financial Products, operating out of London, brought down the company and nearly toppled the U.S. economy.”
This widely repeated narrative ignores or downplays a critical aspect of AIG’s downfall—the insurer’s securities lending program run for the benefit of its regulated life insurance subsidiaries.
An endnote in Geithner’s tome explains that securities lending was one of “AIG’s major liquidity needs” at the time of its rescue. As I describe in a recent working paper, the company got itself into hot water by lending securities from its life insurance companies’ portfolios. AIG took the cash collateral it received for these short-term loans and—in a departure from insurance industry practice—invested much of it in longer term, illiquid residential mortgage-backed securities.
Congratulations to the San Antonio Spurs on defeating the Miami Heat on Sunday’s NBA finals. This is what results when individuals subdue their egos for the greater good. Too bad Congress and Senate won’t learn from the Spurs on how working together as a team for the benefit of the country is the best way to go.