Daily Archives: November 10, 2014

Low Information Nation (cartoon)

low information nation

Art imitates life…

Report: NY regulator Benjamin Lawsky set to exit Dept of Financial Services early next year

  • Department of FInancial Services Superintendent, and gadfly to the nonbank servicers – particularly the Ocwen Financial (OCN -0.4%) family – Ben Lawsky isexpected to head into the private sector early next year, reports the NY Post. His exit would be one of several occurring in wake of Governor Cuomo’s reelection last week, as top staffers look to exit the low pay and long hours of government work.

Source: Seeking Alpha

Mortgage-backed securities back in vogue?

The collapse of mortgage-backed securities drove the financial crisis, but many fund managers are snapping up the pre-crisis offerings.

“We’ve seen strong demand for those assets recently,” said Dan Adler, a senior portfolio manager at Amundi Smith Breeden, adding the demand has been broad-based across the subprime, alt-A and prime offerings.

Some of the pre-crisis securities are trading “significantly below par,” and offer yields ranging from 2-6 percent, when adjusted for potential defaults, Adler said.

Boom, Bust and Blame – The Inside Story of America’s Economic Crisis Residential mortgage-backed securities, or RMBS, were one of the main drivers of the Global Financial Crisis. Investment banks bought housing loans of increasingly questionable quality, packaged them into securities and re-sold them into the market. Although many of the securities were initially highly rated by agencies including Standard & Poor’s and Moody’s (MCO), poor loanstandards, outright fraud and a souring economy led to a slew of defaults, causing many RMBS to be viewed as essentially worthless. The domino effect took down storied investment banks such as Bear Stearns and Lehman Brothers and caused the worst recession since The Great Depression of the 1930s.

Revisiting the pre-crisis RMBS can be a difficult sell for some investors, Adler noted. “There is some reluctance for exposure to U.S. housing given the experience of 2008,” he said, noting that many tranches of the pre-crisis RMBS have little chance of ever paying out.

Why who owns which bonds is a risk But he believes these securities offer an attractive way to gain exposure to a mid-cycle housing market recovery, especially as further mortgage defaults become less of a risk.

More here…

Barclays, HSBC Sued by U.S. Soldiers Over Attacks in Iraq

Barclays Plc (BARC) and HSBC Holdings Plc were among six banks sued by U.S. soldiers and their relatives over claims they helped Iran process billions of dollars in transactions and support terrorists who attacked them while serving in Iraq.

Lenders including Standard Chartered Bank (STAN), Credit Suisse Group AG (CSGN) and Royal Bank of Scotland NV allegedly conspired with Iran and its banks to withhold data from transactions, enabling them to circumvent monitoring by U.S. regulators, according to a complaint filed today in Brooklyn, New York, federal court. The scheme dates to 1987, the soldiers claim.

Among those suing are soldiers who were wounded or the families of those killed. They say Iran was able to process billions of dollars in U.S. dollar-denominated transactions without scrutiny, including at least $150 million in transfers to terrorist groups such as Hezbollah.

Read on.

Two pension funds want Bank of America shareholders to have say on bank CEO’s combining roles

CHARLOTTE, NC (Deon Roberts/The Charlotte Observer) –

Two major pension funds have asked Bank of America to allow shareholders to vote on the board’s decision to hand the chairman’s title to CEO Brian Moynihan, creating a potential showdown over the issue at next spring’s annual meeting.

The California State Teachers’ Retirement System and New York City Comptroller Scott Stringer sent a letter Tuesday to the Charlotte bank asking for a vote on the bylaw change that directors made last month to allow Moynihan to hold both titles, said CalSTRS spokesman Ricardo Duran.

The move rolled back a proposal approved by shareholders in 2009 that led the bank to strip former CEO Ken Lewis of the chairman’s title. The bank had an independent chairman – which advocates say provides a better check on management – until the recent bylaw change.

“By unilaterally revoking the independent chair bylaw proposed and approved by shareowners, the bank’s board not only weakened its own independence, it also violated a fundamental investor expectation of responsive board conduct,” Stringer’s office said in a statement Friday.

“The board should treat this bylaw amendment like many others and put it up for shareowner approval, a message my office, in collaboration with CalSTRS, has delivered.”

Read on.