Daily Archives: August 5, 2015

Fed IG: CFPB headquarters’ renovation costs “reasonable”

An audit released on Wednesday by the Federal Reserve Inspector General regarding the controversial cost of renovating the Consumer Financial Protection Bureau’snew headquarters says that “construction costs are reasonable” and that controls for oversight are designed appropriately.

The report, entitled “CFPB Headquarters Construction Costs Appear Reasonable and Controls Are Designed Appropriately” can be read here.

“We are pleased that the report found that the construction costs for the bureau’s headquarters’ renovation appear reasonable and that we have designed and implemented appropriate controls for approving, managing, and documenting renovation costs and project decisions,” says CFPB CFO Stephen Agostini, in the text of the report.

The CFPB’s $216 million renovation of a $150 million building that it is leasing has been a constant point of attack for conservatives in Congress for more than a year.

Read on.

Lawsuit says State Ignores Due Process in Tax Foreclosures, Could Affect Legislation

A class action lawsuit claims Michigan ignores due process when overseeing tax foreclosures. The Gongwer news service first reported on the lawsuit. Plaintiffs say the state does not hold impartial hearings so that people can appeal foreclosure decisions.

“Despite the Michigan Legislature’s 1999 overhaul of the tax foreclosure process, the State is stuck in time and completely disregards one of the opportunities for a delinquent taxpayer to make the case that the State should not be allowed to take their property for delinquent taxes via a show cause hearing,” the lawsuit reads. “Instead, the State convenes its own non-judicial mass meetings with delinquent taxpayers in Lansing, Michigan. “

The state handles tax foreclosures for several counties. The state lists Branch, Clinton, Dickinson, Iosco, Keweenaw, Livingston, Luce, Mecosta and Shiawassee counties, and the lawsuit claims Michigan also oversees tax foreclosures in Eaton County.

The Michigan Department of Treasury declined to comment on the lawsuit and attorneys for the plaintiffs did not return a request for comment.

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SEC debates rule governing waiver process for swap dealing firms

The debate over granting waivers to people with a history of regulatory violations heated up on Wednesday, when U.S. securities regulators proposed a process that would permit swap dealers to do business with those who have broken the law.

The plan would permit large swap-dealing banks like Goldman Sachs (>> Goldman Sachs Group Inc) or Morgan Stanley (>> Morgan Stanley) to petition the SEC for waivers so they can employ or do business with individuals who have criminal convictions or were found liable for civil violations, such as fraud.

The issue of granting waivers has been controversial at the SEC since last year, when Democratic Commissioner Kara Stein started questioning whether the agency was too often granting waivers to big banks that break the law.

Such waivers permit them to continue normal business operations, even if they have been convicted of a crime or found liable for civil fraud.

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SEC passes CEO Pay Ratio Rule on 3-2 partisan vote

Public firms must disclose CEO-to-median worker salary ratio

A new federal rule first passed under the Dodd-Frank Act will require public companies to list their chief executives’ total annual compensation as a ratio to their workers’ median pay.

The 3-2 party line vote at the Securities & Exchange Commission comes five years after Congress approved Dodd-Frank. The vote today comes nearly two years after the SEC formally proposed the requirement.

Financial Services Committee Chairman Jeb Hensarling, R-Texas, along with Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Scott Garrett, R-N.J., and Monetary Policy and Trade Subcommittee Chairman Bill Huizenga, R-Mich., wrote a letter to SEC Chair Mary Jo White encouraging her and the Commission not to prioritize the completion of this controversial rule ahead of other much-needed rules, including many within the bipartisan JOBS Act.

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Simpson Thacher, JPMorgan Sued Over $1.5 Billion GM Loan

Law360, New York (July 31, 2015, 11:45 AM ET) — JPMorgan Chase Bank NA and Simpson Thacher & Bartlett LLP were slapped with a pair of suits Thursday by putative classes of more than 400 lenders in New York federal court, claiming they negligently authorized the termination of security interest in a $1.5 billion bankruptcy loan to General Motors LLC.

(Credit: AP) JPMorgan served as the administrative agent on the 2006 loan to GM and had an obligation to the syndicate of lenders to maintain and monitor the loan collateral. But in 2008, the bank and…

Source: Law360

Judge Trims Libor Claims Against Banks In NY Lawsuits

Law360, New York (August 4, 2015, 9:01 PM ET) — Credit Suisse and Citigroup came out the biggest winners in the latest major ruling on claims that the world’s biggest banks manipulated the London Interbank Offered Rate, as each was dismissed from five suits in New York federal court in a sprawling 430-page opinion.

The ruling by U.S. District Judge Naomi Reice Buchwald addressed 27 individual actions against banks including Citigroup Global Markets Inc., Credit Suisse (USA) Inc., HSBC Securities (USA) Inc., JPMorgan Securities LLC, Merrill Lynch Inc., RBS Securities Inc. and UBS Securities LLC….

Source: Law360

Ex-Deutsche Bank Employee Wins $3 Million FINRA Award

A former senior employee of Deutsche Bank Securities who claimed to have been fired by the firm for blowing the whistle on what he saw as improper transactions was vindicated last week.

Jorge Daniel Usandivaras was awarded $3 million in an action he filed against his former employer with FINRA.

Usandivaras claimed that he was dismissed for making reports to management about conduct that he thought was improper and potentially illegal or fraudulent, said his attorney John Crossman of New York law firm Zukerman Gore Brandeis & Crossman.

The alleged improper conduct involved post-tax hedge transactions, which Usandivaras resisted and prevented from occurring, Crossman said. The proposed two-part transactions were to be done in two countries and take advantage of the interplay between the laws in the two countries, according to Crossman.

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