Daily Archives: March 22, 2015

New York regulator Lawsky aims at Deutsche Bank over Libor

Benjamin Lawsky, New York state’s financial services regulator, has added himself to the regulators investigating Deutsche Bank AG for manipulation of the Libor benchmark borrowing rate, the Financial Times reported on Sunday, citing unnamed sources.

The New York Department of Financial Services’ probe of the German bank marks the first Libor investigation for the regulator. Deutsche Bank is currently negotiating a settlement with the U.S. Justice Department, the newspaper said.

Lawsky’s department regulates banks with charters in New York as well as foreign banks with branches in the state. He is not investigation other banks, which have already settled with the government, the Financial Times said.

Read on.

U.S. court authorizes Citigroup to process Argentine bond payments

Citigroup Inc has been authorized by a U.S. judge to process two Argentine debt payments, the bank said, which could ease tensions between the bank and the default-hit nation.

The U.S. bank, which acts as custodian of some Argentine bonds, has been embroiled in a court battle between the South American country and a group of New York-based hedge funds seeking full payment on their defaulted sovereign bonds.

U.S. District Judge Thomas Griesa had ruled that the hedge funds must be paid in full before any payments to the large majority of investors who accepted significant writedowns on their debt holdings.

Read on.

Bear Stearns sued

PHILADELPHIA – The collapse of the auction-rate securities market led Reading Health System to sue Bear Stearns & Co., now known J.P. Morgan Securities, in Federal Court over its issuance of nearly $519 million of ARS debt.

Source: Courthouse News

Defunct mortgage lender, Home America Mortgage and Taylor, Bean & Whitaker can’t duck fraud claims

ATLANTA (CN) – The owner of a now-defunct mortgage lender cannot duck claims that he defrauded the United States of millions of dollars by falsifying loan applications, a federal judge ruled.
Home America Mortgage, a former private lender based in Atlanta, and Ocala, Fla.-based Taylor, Bean & Whitaker Mortgage Corp., which acted as the underwriter for Home America’s mortgage loans, faced claims that they induced the United States to insure dozens of bad mortgage loans.
Two whistleblowers brought a false claims action against the two companies in December 2006, alleging they had caused the government to lose more than $131 million.
Greg Hicks, who owned 90 percent of Home America, and Carl Wright, an Atlanta-based closing attorney, were also named as defendants.
According to the complaint, Home America originated mortgage loans and immediately sold them to Taylor, Bean & Whitaker, which applied for federal mortgage insurance for the loans. The whistleblowers claimed that Hicks and Home America changed borrower and property information on loan applications, fabricated documents and overrode safeguards on rejected applications, causing the government to insure high-risk loans.

Read on.

The End of Glass Steagal: Mr Weill Goes to Washington

It’s a reminder and good article to reference in today’s financial crisis. What most people don’t know is that Citigroup was in violation of the Glass-Steagall Act.

Snap!

Here’s an informative  account of Sandy Weill’s creation of the first full-service superbank, Citigroup, and the repeal of the Glass-Steagall Act that stood in his way .

This is from a report by Frontline that discusses the end of Glass Steagal and  interviews of former SEC Chairman Arthur Levitt, former Federal Reserve Board member Alan Blinder, New York State Attorney General Eliot Spitzer, financial historian Charles Geisst, the Precusor Group’s Scott Cleland, and Kenneth Guenther of the Independent Community Bankers of America.

Excerpt: Arthur Levitt,  SEC chairman  from 1993 to 2001:

 “It was apparent to me that the protections of Glass-Steagall had already largely eroded. But Congress, at several times, nearly passed a bill to do away with Glass-Steagall. It was clear that it was a question not of whether but when Glass-Steagall would go. Millions of dollars were pouring in the campaign coffers of senators…

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Deutsche Bank Board Favors Consumer Unit Spinoff, Reuters Says

(Bloomberg) — Deutsche Bank AG will probably spin off its consumer bank to help it meet capital requirements, Reuters reported, citing people with knowledge of the proposal whom it didn’t identify.

The German lender’s supervisory board was briefed on three restructuring scenarios proposed by the management board at a meeting on Friday and favors one in which Deutsche Postbank AG and other consumer businesses would be grouped and spun off as a separate public company, Reuters reported Saturday. All of the scenarios would have an impact on the consumer bank, and no decision is expected until the end of April, one person cited by Reuters said.

Read on.

Dallas whistleblower wants someone to go to jail for Citigroup’s mortgage mess.

Here, here.. And I concur…

You may remember my recent column on Richard Bowen, the Dallas banker who blew the whistle on Citigroup and is considered by many to be an unsung American hero.

The 68-year-old senior lecturer of accounting was once a top executive with Citigroup’s mortgage lending organization. When his warnings of internal malfeasance got him sacked, Bowen filed a complaint under Sarbanes-Oxley and later testified before Congress.

He has nothing to show for his efforts.

Well, he’s not done.

On Friday morning, Bowen appeared on Bloomberg Television’s Market Makers hosted by Stephanie Ruhle. He announced that he’s requested a congressional investigation into possible cover-ups he says he witnessed at the Financial Crisis Inquiry Commission.

But time is running out for charges to be filed.

Read on.