(Reuters) – Citigroup Inc’s (>> Citigroup Inc) consumer bank has been ordered to pay $700 million in relief to borrowers for illegal credit card practices, the U.S. Consumer Financial Protection Bureau said.
The bank will also pay civil penalties of $35 million each to the consumer finance watchdog and the Office of the Comptroller of the Currency.
The $770 million total payout is about 1 percent of Citi’s estimated revenue for 2015, according to Thomson Reuters StarMine.
Goldman Sachs, Wells Fargo, Morgan Stanley, Bank of New York Mellon, State Street Bank, JPMorgan Chase, Citigroup and Bank of America.
WASHINGTON (AP) — Federal regulators are directing the eight biggest U.S. banks to hold capital at levels above industry requirements to cushion against unexpected losses and reduce the chances of future taxpayer bailouts.
The Federal Reserve’s action Monday means the eight banks together will be required to shore up their financial bases with about $200 billion in additional capital. The requirements also are aimed at encouraging the Wall Street mega-banks to shrink so they pose less risk to the financial system. The banks include JPMorgan Chase, Citigroup and Bank of America.
Most of the banks have already put away the additional capital. JPMorgan is the only one that doesn’t already meet the requirements, which will be phased in from 2016 through 2018 and take full effect on Jan. 1, 2019. It currently falls about $12.5 billion short, according to Fed officials.
The Fed governors led by Chair Janet Yellen voted 5-0 at a public meeting to impose the so-called “capital surcharges” on the eight banks.
Washington’s notorious revolving door was in full swing again last week as the health insurance industry snagged another top federal official to help it get what it wants out of lawmakers and regulators.
America’s Health Insurance Plans, the industry’s biggest lobbying and PR group, announced Wednesday that its new president, starting next month, will be none other than Marilyn Tavenner, who served as the chief administrator of the Centers for Medicare and Medicare Services from 2013 until she stepped down in February.
Tavenner’s appointment comes just a few months after the industry recruitedformer Congresswoman Allyson Schwartz, a Pennsylvania Democrat, to head its newest front group, the Better Medicare Alliance.
These two hires tell us all we need to know about where insurance companies see their pot of gold in the not-too-distant future. Some insurers, in fact, have already discovered that taxpayer-supplied pot of gold and want to make doubly sure that nobody in Washington dares take it away.
At the Netroots Nation convention on Friday, Senator Elizabeth Warren delivered a direct challenge to Hillary Clinton and all Democratic presidential campaigns to support legislation that would end the “revolving door” between top government positions and corporate America.
“Anyone who wants to be president should appoint only people who have already demonstrated they are independent,” Warren said to the progressive convention-goers, “who have already demonstrated that they can hold giant banks accountable, who have already demonstrated that they embrace the kind of ambitious economic policies that we need to rebuild opportunity and a strong middle class in this country.”
This is the first time Warren has decided to engage in the presidential election, which activists tried for months to get her to enter. Instead of asking candidates to endorse one of her particular policies on bank reform or student loans, Warren is focusing on the personnel who will implement those policies. It’s a notable choice that dovetails with Warren’s interest in ensuring that executive branch appointments will not tip the scales in favor of Wall Street or private industry, seen most directly in the fight to block Antonio Weiss from the No. 3 position in the Treasury Department. Warren raised the profile of Weiss, a longtime bank executive, enough for the administration to revoke his nomination.
“Sure, laws matter. But it also matters who interprets those laws, who enforces those laws,” Warren said. “Think of it this way: How would the world be different today if, when the economic crisis hit, Joe Stiglitz had been secretary of the Treasury and Simon Johnson and Robert Reich had been key economic advisers?”
There is broad agreement that predatory subprime lending – along with faulty securitization practices – were important causes of the recent financial crisis. Although the U.S. economy has improved significantly since 2008, it has not fully returned to normal, in part because the housing sector continues to lag. And while the foreclosure crisis been largely resolved in many states, other states – such as Florida, New Jersey and New York — continue to experience a high volume of foreclosures. The communities of color that were targeted for the worst subprime lending practices still experience their lingering effects. In addition, foreclosures remain cause for concern not only to immediately affected areas, but more broadly as well: they generate a host of adverse ripple effects, including declines in home prices and new home construction.
The stock of homes with mortgages in default, in foreclosure, or purchased by the lender after a foreclosure sale (REO, or real-estate-owned) and not put back on the market is called the shadow inventory. Economists generally believe that housing prices will not fully recover until the shadow inventory has been disposed of. Although investors have been purchasing foreclosed properties in more prosperous areas, driving down inventory and contributing to an upswing in housing prices, this has not occurred in many distressed markets.
Yet, in states like New York and New Jersey with judicial foreclosure systems and a large backlog of older cases, foreclosures are taking an average of more than two years to complete (though recent cases are taking considerably less time). Lately, judicial foreclosure regimes have been blamed: critics argue that judicial review creates lengthy processes that in turn only delay the inevitable. Since few borrowers can cure their arrears, some economists argue that costs outweigh benefits. Second, some blame borrowers who strategically default, although studies have found borrowers are averse to walking away, with the result that the percentage of strategic defaulters tends to be relatively low.