Daily Archives: August 12, 2015

U.S. to Appeal Ruling in AIG Bailout Dispute

The U.S. government on Wednesday filed to appeal a judge’s ruling that it violated the law when it took a controlling stake in American International Group Inc. in 2008.

Judge Thomas C. Wheeler ruled in June that the government action, during the most dramatic stretch of the financial crisis, was unlawful. Still, he accepted the government’s arguments that without a Federal Reserve bank’s $85 billion loan to AIG, the company would have filed for bankruptcy and shareholders likely would have been left with nothing.

“The government’s unduly harsh treatment of AIG in comparison to other institutions seemingly was misguided and had no legitimate purpose,” Judge Wheeler of the U.S. Court of Federal Claims wrote in his opinion.

In addition to the government’s appeal, AIG’s former longtime chief executive Maurice “Hank” Greenberg said he would appeal the decision not to award shareholders any of the $40 billion in damages they were seeking.

Read on.

SEC is dealt fresh blow as NY judge halts enforcement case

A federal judge in Manhattan has handed the U.S. Securities and Exchange Commission a big defeat over its use of in-house judges, halting its case against a former Standard & Poor’s executive because the way SEC judges who handle such cases are appointed is likely unconstitutional.

U.S. District Judge Richard Berman issued a preliminary injunction on Wednesday stopping the regulator’s civil administrative proceeding against Barbara Duka, the former S&Pexecutive, over her role in an alleged fraud involving mortgage debt ratings.

Berman is at least the second federal judge to halt in-house SEC cases because of concern that the regulator’s practice of letting staff rather than commissioners appoint its five administrative law judges may be unconstitutional.

Read on.

Bernanke, Paulson and Geithner Join Yale Effort to Update Crisis-Response Playbook

NEW HAVEN, Conn.–Former Federal Reserve Chairman Ben Bernanke and former Treasury Secretaries Henry Paulson and Timothy Geithner gathered last week in an auditorium to reflect on their response to the 2008 financial crisis.

Their audience: A global group of government officials who might have to respond to the next one.

The closed-door reunion last week, which marks the trio’s first joint panel discussion since they left office, is part of a new effort at Yale University to update the playbook for dealing with financial panics. The scholars are calling it a “New Bagehot,” referring to Walter Bagehot’s famous 1873 book that central bankers still use as a guide for crisis management.

Mr. Geithner, who helped organize the gathering, called it “a master class in financial crises for the firefighter, focused on the very practical craft of making choices in the fog of war in the midst of a panic.” Rather than looking at how monetary policy or regulations might prevent a crisis, this class addresses another, less commonly asked question, he said: “What do you do when the system is burning?”

That Messrs. Geithner, Bernanke and Paulson, who have been vilified in some quarters for engineering Wall Street bailouts and emergency-lending programs, would be guest speakers at such a course unnerves some of their detractors.

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TRID pushes Wells Fargo out of home equity loans

Wells Fargo (WFC) stopped offering closed-end home equity loans in light of the upcoming TILA-RESPA Integrated Disclosure Rule taking effect on Oct. 3.

“Because closed-end loans were a small percentage of our overall home equity volume, we chose to focus on our line-of-credit offering and not to expend the resources required to retool our closed-end home equity disclosures to meet the new TRID regulations,” said Kelly Kockos, SVP, Home Equity Product Manager, Wells Fargo.

Instead, Wells Fargo decided to invest in other resources and made improvements to its home equity (non-TRID) line of credit product.

The enhanced HELOC product features:

  • A lower line limit with a new minimum of $10,000 for all states. (NC is the exception at $12,000)
  • Annual and account lifetime interest rate caps
  • Principal reducing payments that help rebuild equity

Read on.

Police suspect rape attacker targeted another Realtor

Arrest comes after crime spree

Police in Manatee County, Florida, arrested the suspect in an attempted rape of a Realtor at a home showing on Monday.

Investigators said that the suspect is Bruce Anthony Kotter, 63. They caught him on Tuesday afternoon, and he faces charges of kidnapping and attempted sexual battery.

Detectives think Kotter may have targeted a second female real estate agent about an hour after he attacked the first one. HousingWire is getting more details on the specifics of that attack.

Read on.

Hackers stole secrets for up to $100 million insider-trading profit: U.S

An alliance of mainly U.S.-based stock traders and computer hackers in Ukraine made as much as $100 million in illegal profits over five years after stealing confidential corporate press releases, U.S. authorities said on Tuesday.

Prosecutors announced charges against nine people in an insider-trading case that marks the first time criminal charges have been brought for a securities fraud scheme involving hacked inside information, in this instance 150,000 press releases from distributors Business Wire, Marketwired and PR Newswire.

“This is the story of a traditional securities fraud scheme with a twist – one that employed a contemporary approach to a conventional crime,” FBI Assistant Director-in-Charge Diego Rodriguez said at a news conference.

Read on.

Credit Suisse in talks to settle ‘dark pool’ allegations: WSJ

(Reuters) – Credit Suisse Group AG (>> Credit Suisse Group AG) is in talks to settle allegations related to its Crossfinder “dark pool” trading venue, which could result in a fine running in the high tens of millions of dollars, the Wall Street Journal reported, citing people familiar with the matter.

Dark pools are broker-run trading venues that let investors trade shares anonymously and only make trading data available afterwards, reducing the chance of information leaking about trade orders.

The case against Credit Suisse include allegations that it facilitated unfair advantages for some traders, didn’t follow rules against pricing of stocks and was not able to properly disclose how Crossfinder works to investors, the WSJ said.

The bank is in negotiations with the New York Attorney General and the Securities and Exchange Commission and a deal could come as early as the next several weeks, the paper said.

Read on.

So much for that tough talk about holding Wall Street accountable for its crimes

With the blessing of the White House and the Justice Department, the Department of Housing and Urban Development is attempting to sneak through a major policy change that would enable big banks convicted of felonies to continue lending through a federal mortgage program, according to federal records and government officials.

The housing agency wants to quietly delete a requirement for lenders to certify they haven’t been convicted of violating federal antitrust laws or committing other serious crimes. HUD proposed the move on May 15, without detailing the reasoning behind the change. It’s now considering public comment, with an eye towards finalizing the proposal.

Five years after lawmakers and the Obama administration said the Dodd-Frank financial reform law would end the problems caused by banks perceived to be “too big to fail,” HUD’s move could represent yet another capitulation from federal officials who want to appear to be tough on Wall Street’s crimes, but don’t want big banks to suffer the consequences typically associated with felony convictions.

The main beneficiaries of the proposal would be JPMorgan Chase, the nation’s largest bank with more than $2.4 trillion in assets, and Citigroup, the third-largest U.S. bank with $1.8 trillion in assets, according to Federal Reserve data.

Read on.