Daily Archives: March 21, 2015

‘SOB’ bankers should be punished: Wall St watchers


How do you improve the culture of Wall Street and restore faith in finance? Personally punish the industry’s bad apples, according to two longtime observers.

“I think we need to personalize the penalties for those who are sinners. It’s got to hurt them individually,” Charles Ellis, a prominent investment consultant and author, said at an event this week in New York on improving the financial industry.

Ellis, who founded institutional advisor Greenwich Associates, said that new laws after the financial crisis didn’t go far enough because companies—usually via public stock owners—still pay penalties for misbehavior, not people.

“We’ve got to get past the idea of sending it against shareholders and writing it off the balance sheet,” Ellis said.

John Rogers, former CEO of the CFA Institute and previously a topInvesco executive, agreed.

“Making senior management personally responsible resonates with me. That’s true for actors down inside the banks too. They need to be apprehended, tried and punished,” Rogers explained, speaking alongside Ellis.

Rogers added that misbehavior would happen again, making existing oversight mechanisms important.

“To think that the banking system is ever going to have just white hats on is unfortunately not going to happen. That’s why there are safety nets in place to help deal with that,” he said. The safety nets that Rogers referred to include federal oversight put in place after the financial crisis, including higher cash reserve requirements for banks.

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Fed whistleblower quits Wall Street, weighs book

Carmen Segarra, the Wall Street whistleblower who secretly recorded 46 hours of private conversations with her fellow regulators — casting a light on the sometimes too cozy relationship between the New York Fed and the banks it oversees — is considering writing a book, The Post has learned.

Segarra, a lawyer, left her job at Barclays in New York earlier this month after Federal Reserve Chair Janet Yellen, in a March 3 speech, appeared to refer to Segarra’s rocky relationship with her then-Fed colleagues.

“It is important that anyone serving the Fed feel safe speaking up when they have concerns,“ Yellen said in her speech in New York City before the Citizens Budget Commission.

“It’s been an ongoing drain [for Segarra],” a person familiar with Segarra told The Post, talking about the publicity following her going public with her New York Fed issues.

Segarra does not yet have a book deal or even an agent, according to one person familiar with her plans.

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Missing Citigroup Checks Spur Lawmaker to Call for Investigation

(Bloomberg) — Citigroup Inc.’s failure to pay 24,000 people owed money as part of a settlement with the government over foreclosure abuses has prompted a U.S. lawmaker to call for an investigation into whether banks missed other borrowers.

Maxine Waters, the senior Democrat on the House Financial Services Committee, sent a letter Friday to the inspectors general of the Federal Reserve and the Treasury Department seeking an examination. Her request pertains to a 2013 accord in which lenders agreed to pay $10 billion to resolve allegations that they improperly initiated hundreds of thousands of foreclosures following the housing bust.

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Ocwen settles class action over mortgage interest tax breaks

(Reuters) – Ocwen Loan Servicing has agreed in principle to settle a nationwide class action accusing it of causing homeowners to lose valuable tax breaks by misreporting mortgage interest to U.S. tax authorities, according to a court filing on Wednesday.

“If the deal goes through, it will be very good for the class,” plaintiffs’ lawyer David Vendler at Morris Polich & Purdy said in an emailed message. Ocwen is represented by lawyers at Greenberg Traurig. A spokesman for Ocwen declined comment.

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Citigroup Fires Trader for Alleged Mismarking

Citigroup Inc. has ousted a banker for allegedly mismarking his trading book, according to a person familiar with the situation.

The bank fired Carl Bonde after discovering that he had been exaggerating his trading performance, according to the person. Mr. Bonde, who declined to comment, traded inflation derivatives at the bank’s New York office. The bank also fired Mr. Bonde’s boss, Keith Price, for failure to supervise. Mr. Price couldn’t be reached for comment.

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HSBC sued by U.S. credit union group over mortgage-backed securities

The credit union group filed the suit in federal court in Alexandria, Virginia, in its role as liquidating agent for five failed corporate credit unions and on behalf of some NCUA guaranteed notes trusts. It is seeking damages to be determined at trial.

The NCUA said some $1.97 billion in residential mortgage-backed securities from the trusts were purchased by the U.S. Central, WesCorp, Members United, Southwest and Constitution credit unions between 2004 and 2007. The complaint said HSBC did not properly monitor loan servicers or take timely action on bad loans.

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Bank of America must face Chicago-area predatory lending lawsuit

(Reuters) – A federal judge rejected Bank of America Corp’s request to dismiss a lawsuit in which Cook County, Illinois, accused the lender of targeting black and Hispanic borrowers in the Chicago area with subprime mortgages.

In a decision dated Thursday, U.S. District Judge Elaine Bucklo in Chicago said Cook County could pursue allegations that the bank steered minority borrowers into an outsized number of high-cost home loans, resulting in more foreclosures, lower property taxes and greater urban blight.

“The county has asserted an adequate injury-in-fact that is plausibly connected to defendants’ alleged discriminatory lending,” Bucklo wrote. She did not rule on the case’s merits.

Cook County, the nation’s second most populous county after Los Angeles, had accused Bank of America of “reverse redlining,” in which credit is often extended on unfair terms in specific geographic areas based on borrowers’ race, ethnicity or income.

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