Daily Archives: March 14, 2016

Bonds backed by car loans made to subprime borrowers are showing cracks

This is the next US problem..

The market for bonds backed by car loans made to borrowers with low credit ratings is beginning to show some cracks.

Delinquencies on U.S. subprime auto asset-backed securities (ABS) climbed to a 20-year high in February, exceeding the levels seen in 2009 following the financial crisis, Fitch Ratings warned on Monday.

The number of subprime delinquencies of 60 days or more hit 5.16% in February, said Fitch, its highest level since October of 1996, when it hit 5.96%. The February number is 11.6% above February of 2015, and up 3.63% from January.

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Wall Street likes Kasich as president: CNBC Fed survey

Wall Street prefers Kasich

In a result at odds with national polls, the latest CNBC Fed survey of economists, fund managers and analysts finds Ohio Gov. John Kasich is viewed as having the best policies for the economy and for Wall Street.

A 42 percent plurality says a Kasich presidency would be best for the U.S. economy, followed by 16 percent choosing Democrat Hillary Clinton and 13 percent picking real estate developer Donald Trump. Not a single respondent chose Clinton’s Democratic rival Bernie Sanders.

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Former FCIC Chair wrote a letter to AG urging DOJ to immediately re-open the investigation into individual misconduct related to the packaging and sale of mortgage securities

Phil Angelides

Served as Chairman of the Financial Crisis Inquiry Commission

Huffington Post:

Five years ago at this time, the Financial Crisis Inquiry Commission (FCIC) presented the President and Congress with its final report on what caused the 2008 financial meltdown that devastated our economy and millions of American families. The report concluded that the financial crisis was avoidable and was caused by widespread failures of regulation, reckless risk taking on Wall Street, and a systematic breakdown in ethics and accountability.

The FCIC’s report included evidence of industry wide fraud and corruption in the mortgage markets, from loan origination to Wall Street’s bundling and sale of mortgage securities to investors. One study obtained by the Commission placed the losses resulting from fraud on mortgage loans made between 2005 and 2007 alone at $112 billion. The FCIC referred evidence of potential violations of law to the Department of Justice (DOJ) for further investigation and, if warranted, prosecution.

Five years later, DOJ has yet to hold a single senior Wall Street executive accountable. The unwillingness of DOJ under Attorney General Eric Holder to pursue misconduct by high ranking individuals will stand as a seminal failure of his tenure — undermining efforts to deter future wrongdoing and rightly breeding anger and cynicism about the fairness of our legal system.

The decision to give a pass to the Wall Street executives who drove the pervasively corrupt mortgage machine is particularly disconcerting when considered alongside of DOJ’s vigorous prosecution of more than 2,700 individuals at the local level — mortgage brokers, appraisers, borrowers — who were just small cogs in that machine.

But this need not be DOJ’s legacy when it comes to investigating and prosecuting the wrongdoing that led to financial and economic catastrophe.

Under Attorney General Loretta Lynch, DOJ has signaled a change in direction by adopting new policies that wisely seek accountability for wrongdoing from individuals, not inanimate corporate entities. Many have assumed that these policies came too late to affect illegal behavior committed in the run-up to the financial crisis. In fact, because of the 10-year statute of limitations for financial fraud affecting banks and other types of financial institutions, there is still time to investigate and prosecute crimes committed in 2006 and 2007 — the final period of wild excess before the mortgage market collapsed. But time is quickly running out.

Accordingly, I have sent a letter to Attorney General Lynch urging DOJ to immediately re-open the investigation into individual misconduct related to the packaging and sale of mortgage securities — and do so before the statute of limitations on such misconduct expires. How DOJ proceeds over the next 18 months will speak volumes about its commitment to its new policies and to seeing that justice is served.

BoE’s Bailey says banks are not too big to supervise

Britain’s top banking regulator has dismissed critics who say risks at banks cannot be fully understood and therefore lenders must hold far more capital.

Andrew Bailey, who heads the BoE’s Prudential Regulation Authority which supervises Lloyds, Barclays, HSBC, RBS and other lenders, said the best approach was the current mix of capital buffers, proper risk management, supervision, and tools for winding down a bank when in trouble.

“I do not accept the proposition that we can only abandon all hope of understanding the risks in banks,” Bailey said in a speech at a banking event hosted by Barclays on Wednesday.

“Likewise, I do not agree that large banks are unsupervisable and ungovernable. I simply do not believe that the alternative approaches are sufficiently credible.”

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Ex-employee sues VW in U.S. over data deletion: German media reports

A former employee of Volkswagen’s (>> Volkswagen AG)U.S. subsidiary is suing the company for damages, claiming he was unlawfully fired after flagging internally what he alleged was illegal deletion of data, a group of German media outlets said on Sunday.

The former employee at Volkswagen Group of America’s data processing center in Michigan is seeking unspecified damages for losing his job after he tried from Sept. 18 last year to stop a co-worker from deleting data, German broadcasters WDR and NDR as well as newspaper Sueddeutsche Zeitung, which are working together on the case, cited court documents as saying.

The reports did not say what kind of data was being deleted.

However, the media reports said that the former VW employee was alleging that VW in the United States had destroyed evidence in relation to the emissions scandal.

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Former U.S. Treasury Robert Rubin Was Targeted for DOJ Investigation by Financial Crisis Commission

And didn’t know that… Interesting…

Phil Angelides, the former chairman of the Financial Crisis Inquiry Commission, who recently called on the Department of Justice to finally act on his commission’s recommendations said, “It’s been a disappointment to me and others that the Justice Department has not pursued the potential wrongdoing by individuals identified in the matters we referred to them. At the very least, they owe the American people the reassurance that they conducted a thorough investigation of individuals who engaged in misconduct.”

Yahoo Finance:

In late 2010, in the waning months of the Financial Crisis Inquiry Commission, the panel responsible for determining who and what caused the financial meltdown that lead to the worst recession in decades voted to refer Robert Rubin to the Department of Justice for investigation. The panel stated it believed Rubin, a former U.S. Treasury Secretary who has held top roles at Goldman Sachs and later Citigroup , “may have violated the laws of the United States in relation to the financial crisis.” Rubin, the commission alleged, along with some other members of Citi’s top management, may have been “culpable” for misleading Citi’s investors and the market by hiding the extent of the bank’s subprime exposure, stating at one point that it was 76% lower than what it actually was.

No government action was ever brought against Rubin. And there is no evidence that Department of Justice acted on the crisis commission’s recommendations. A source close to Rubin says the former Wall Street executive was never contacted by the Justice Department in relation to the commission’s allegations. Nonetheless, the fact that Rubin was among a relatively small group of top bankers who the crisis commission referred to the Justice Department for potential wrong-doing sheds new light on the financial crisis, and the government’s effort to pursue those who may have broken the law.

Seven years after the bankruptcy of Lehman Brothers, the fact that no major Wall Street figure was ever prosecuted for crimes related to the financial crisis remains an sticking point for many. It is regularly brought up by presidential candidate Senator Bernie Sanders. When the Financial Crisis Inquiry Commission released its 662-page nearly five years ago, members of the commission said they had formerly referred evidence of possible misconduct of a number of individuals to the Department of Justice. But it declined to say who. Brooksley Born, a member of the commission and a former regulator, said at the time, “Our mandate was to refer to the attorney general any individual that our investigation found may have violated US laws. We did make several such referrals, but we are not going to talk about any of those.”

On Friday, the National Archives released a trove of previously unreleased documents from the Financial Crisis Inquiry Commission, including minutes of meetings and transcripts of interviews with a number of key figures in the financial crisis as well as journalists and Warren Buffett. According to the minutes, the commission voted on September 29, 2010, on whether to refer persons related to an item titled “Potential Fraud and False Certifications: Citigroup” to the office of the Attorney General of the United States. The staff notes that describe the item names Rubin, along with then Citi CEO Charles Prince, as having potentially violated the law. At the meeting, the commission’s general counsel Gary Cohen said that what the commissioners were voting on was just a referral and “not a recommendation for prosecution.” The vote was unanimous to refer the Rubin matter among the commission members present at the meeting, 6-to-0.

A spokesman for Rubin says, “We hadn’t heard anything about this and have no knowledge of it.” Fortune reached out but was not able to contact Prince. The Department of Justice declined to comment.

Government releases Financial Crisis Inquiry Commission (FCIC) interviews

The federal government has posted hundreds of pages of interviews and research from the government’s official effort to get to the bottom of the financial crisis.

The National Archives Friday made public research documents from the Financial Crisis Inquiry Commission (FCIC), a governmental panel charged with finding who was to blame for the financial collapse of 2008 and 2009.

The newly released documents include a host of interview notes and transcripts with FCIC staff and major players in the world of finance. Among the transcripts released are former Treasury Secretary Hank Paulson, former Federal Reserve Chairman Alan Greenspan and Goldman Sachs chief executive Lloyd Blankfein.

The documents are coming to light now because the country recently passed the five-year anniversary of the FCIC issuing its official report, which came out in January 2011. The Archives noted that Friday’s release was just a sample of the FCIC’s work, which eventually took up 250 cubic feet of paper records and 13 terabytes of electronic records.

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