Daily Archives: August 25, 2015

How Eric Holder’s Corporate Law Firm Is Turning Into a ‘Shadow Justice Department’

The revolving door between the Department of Justice and a certain corporate law firm is spinning faster than ever. On July 6, former Attorney General Eric Holder returned to his previous employer, Covington & Burling — a firm that’s represented the biggest banks on Wall Street, and is internationally known for its white-collar defense practice. A week later, his DOJ chief of staff Margaret Richardson announced that she would be following him there.

Meanwhile, the latest data from the DOJ reveals that criminal prosecutions for white-collar crimes are at a 20-year low. This decline and the rapid circulation of personnel between Covington and the DOJ has raised questions about the Obama administration’s handling of the banking industry and the 2008 financial crisis.

Under Obama, the DOJ decided not to pursue criminal charges against most of the executives and financial institutions behind the economic collapse, opting instead to impose hefty fines that were paid out by shareholders, not the employees or executives of the banks. In contrast, some 1,100 individuals faced criminal prosecution during the savings and loan crisis of the 1980s, and the heads of several major banks served jail time.

“I’m not accusing anyone of anything specific, but we’re looking at a gigantic built-in conflict of interest revolving in and out of the attorney general’s office,” Ted Kaufman, a former Delaware senator who went on to chair the Congressional Oversight Panel tasked with monitoring the $700 billion bailout of the financial industry during the crisis, told VICE News.

Read on.

Freddie Mac, Principal Seek To Update 2nd Circ. Libor Brief

Law360, New York (August 25, 2015, 2:01 PM ET) — Freddie Mac and Principal Financial Group Inc. asked the Second Circuit Monday to allow them to supplement its amicus brief supporting investors aiming to revive antitrust claims against the world’s top banks for manipulating Libor, saying the recent dismissal of their own antitrust claims is relevant to the investors’ appeal.

Freddie Mac, also known as The Federal Home Loan Mortgage Corporation, and various Principal entities had initially asked the Second Circuit in May for permission to file an amici curiae brief supporting a host of investors…

Source: Law360

BREAKING: GOP Challenge To SEC Pay-To-Play Rule Nixed By DC Circ.

Law360, New York (August 25, 2015, 10:43 AM ET) — The D.C. Circuit refused Tuesday to revive a First Amendment challenge to the U.S. Securities and Exchange Commission’s investment adviser “pay to play” rule by New York and Tennessee Republican groups, concluding that the case was time-barred and could be decided only by a federal appeals court.

The SEC’s “pay to play” rule has been spared from a First Amendment challenge from Republican groups, as the D.C. Circuit refuses to revive the time-barred case. (Credit: Law360) The panel heeded the SEC’s call to apply the 60-day…

Source: Law360

Fannie Mae Unveils Mortgage Program to Help Minority Borrowers

Fannie Mae wants to make it easier for working-class and multigenerational households to get mortgages.

The mortgage-finance company said Tuesday that it will roll out a program this year that lets lenders include income from nonborrowers within a household, such as extended family members, toward qualifying for a loan.

The move is expected to open up mortgage access to a segment of the population that doesn’t fit the typical family structure and has had trouble obtaining mortgages. In households of some minority groups, such as Hispanics, it is common to have extended family members contributing income to the cost of housing, though until now that income couldn’t be used to help qualify for a loan.

The new program, which is only open to low-income borrowers or those living in low-income or minority-dominated areas, will also in some cases let nonoccupant borrowers, such as parents, contribute income toward qualifying for a loan. Families with boarders will also be allowed to count that rent toward qualifying.

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CFPB Considers Suing Student Loan Giant Navient For Cheating Borrowers

The federal consumer bureau has enough evidence to indicate the company violated federal consumer protection laws.

Federal regulators are considering suing Navient Corp., the nation’s largest student loan company, for allegedly cheating borrowers, the company said Monday.

The Consumer Financial Protection Bureau, which has been investigating the company for nearly two years, sent Navient a letter on Aug. 19 telling its executives that the agency’s enforcement staff had found enough evidence to indicate the company violated consumer protection laws, Navient disclosed Monday in a filing with the Securities and Exchange Commission. The CFPB also told Navient that the agency’s senior officials would now consider whether to sue the company in court.

The agency sent similar letters to for-profit college chains Corinthian Colleges Inc. and ITT Educational Services before it later sued them. Representatives for the CFPB didn’t respond to requests for comment.

Concerns are mounting among policymakers that the nation’s growing $1.3 trillion student loan tab risks slowing economic growth, as millions of households either struggling to make payments or cut back in other ways. And regulators and experts worry that shoddy loan servicing may be partly responsible, as many borrowers complain they’re routinely mistreated and forced to stump up larger monthly payments than required.

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Class action overtime complaint against Compass Bank and BBVA Compass Insurance Agency

Courthouse News:

SAN FRANCISCO – A federal judge preliminarily approved a $500,000 settlement of a class-action overtime complaint against Compass Bank and BBVA Compass Insurance Agency.

Here is the court document. Click here.

China’s Central Bank Injects $23.4 Billion as Yuan Intervention Drains Funds

China’s central bank added the most funds to the financial system in open-market operations since January 2014 as currency-market intervention to prop up the yuan strained the supply of cash.

The People’s Bank of China auctioned 150 billion yuan ($23.4 billion) of seven-day reverse-repurchase agreements, according to a statement on its website. That compares with 120 billion yuan maturing Tuesday, leaving a net injection of 30 billion yuan. The PBOC also sold 60 billion yuan of three-month treasury deposits on behalf of the Ministry of Finance at 3 percent, according to a trader who bid at the auction.

The overnight repurchase rate climbed to a four-month high of 1.85 percent Monday, and was at 1.83 percent as of 9:52 a.m. in Shanghai Tuesday, according to a weighted average compiled by the National Interbank Funding Center. The seven-day rate fell two basis points to 2.51 percent.

“Banks have become more reluctant to lend and we expect the PBOC to offer liquidity support,” said Liu Dongliang, a Shenzhen-based analyst at China Merchants Bank Co. “The amount was smaller than expected.”

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