Daily Archives: August 3, 2016

Why the Government is Getting Fed Up with Wall Street All Over Again

The next president could face another financial crisis unless the big banks get their act together. So far, they haven’t.

Democrats and Republicans agreed on almost nothing at their conventions except this: Both party platforms signaled support for resurrecting a version of the Depression-era Glass-Steagall law, a move designed to show they are willing to break up the big banks. In fact, such a law is unlikely to be enacted by either a President Hillary Clinton or a President Donald Trump. But major Wall Street firms still have reason to be concerned that the feds are getting fed up with them. And in the end the banks could get broken up anyway, even if the next president does nothing about it and there is no new Glass-Steagall act.

The new mistrust of the Street by regulators in Washington comes down to one main issue: The Federal Reserve and Federal Deposit Insurance Corp. are growing impatient with the banks’ failure to explain why they should remain so big. Eight long years after the financial collapse that almost took down the global economy, JPMorgan Chase, Bank of America, Wells Fargo, Bank of New York Mellon and State Street have failed to provide satisfactory “living wills,” or credible plans for how they would keep serving clients and markets if they ever needed to be reorganized in bankruptcy. Regulators handed down failing grades to the banks in April.

 

That’s the second time in two years that major banks have fallen short of regulators’ expectations in one of these tests. The banks must decide how much they are willing to sacrifice by an Oct. 1 deadline, when FDIC Chairman Martin Gruenberg says he wants to see “concrete changes.”

If they fail again, the government would have the authority to ratchet up regulation of the firms—which could make investors impatient, forcing the banks to divest more assets and make themselves smaller. And if that doesn’t work, the banks could simply be broken up. Regulators, in other words, don’t necessarily need another Glass-Steagall; they have the authority to do it now.

The bottom line is that regulators are not optimistic about how the U.S. economy would fare, even now, if one of these giant firms went through bankruptcy. And that is an option that the government and the banks will be expected to entertain under laws enacted after the unpopular 2008 bailouts. To satisfy the government, the banks must simplify their still mind-bogglingly complex businesses and do a better job of showing that they can tap liquid assets that can be turned into cash during a crisis.

“It requires the will to do so,” the FDIC’s Gruenberg told Politico. “These are not necessarily easy things to do. They require hard decisions by the firms.”

Read more: http://www.politico.com/magazine/story/2016/08/2016-elections-dnc-rnc-glass-steagall-wall-street-214131#ixzz4GIhZmCnj

Feds propose guidelines to replace expiring foreclosure relief efforts

Begun as the government’s response to the foreclosure crisis, the Treasury Department’s Home Affordable Modification Program wasn’t supposed to last forever.

The Dec. 31 end of the foreclosure relief program, which offered a more affordable payment by adjusting interest rates, extending the loan term, and reducing or forbearing principal, will leave a gap that the government is trying to fill.

The Consumer Financial Protection Bureau, created under the Dodd-Frank Act of 2010, is proposing consumer protection principles to guide mortgage servicers, investors, government housing agencies and policymakers as they develop foreclosure-relief solutions to replace what is better known by its acronym HAMP.

The Home Affordable Refinance Program, known as HARP, which was designed to help homeowners who’ve seen a drop in home values refinance with better mortgage terms, also expires Dec. 31.

Read on.

Goldman Sachs Fined $36 Million by Fed Over Leaked Documents

Another day, another fine…

  • Enforcement action targets bank and former employee Jiampietro
  • Fed also forces Goldman to beef up policies to prevent lapses

Goldman Sachs Group Inc. agreed to pay $36.3 million over allegations that former employees obtained confidential documents from the Federal Reserve in a settlement that requires the bank to beef up its policies to prevent another lapse.

The Fed is also pursuing a $337,500 fine and a permanent banking ban against a former Goldman Sachs managing director, Joseph Jiampietro, over his unauthorized use and disclosure of Fed secrets, according to a statement Wednesday from the agency. The Fed said Goldman Sachs’ employees used confidential supervisory information in presentations to clients to try to solicit business.

Starting in 2012, Jiampietro — an investment banker who formerly worked at the Federal Deposit Insurance Corp. — received bank regulators’ unauthorized supervisory information and used it for his work at Goldman Sachs, according to the Fed.

Read on.

Trump’s Lawyers Compare Trump U to Hamburger U … Judge Not Buying It

 

More from Law Newz:

“In all but a handful of states there are no limitations on the use of the word university in a business name,” Trump’s attorneys wrote in a motion, emphasizing that there is “no standard definition for University” in the United States. Trump’s attorneys, in order to show that there are plenty of online “universities” for professional development, compared Trump University to the Clinton Global Initiative University, Disney University, FedEx University, and, of course, Hamburger University. The motion was complete with a picture of Hamburger University in Illinois.

 

mcdonalds

In response to Trump’s motion, Judge Curiel wrote “Plaintiff points to evidence in the record that Defendant’s statements in the Main Promotional Video, as well as TU’s “Marketing Guidelines,” encouraged TU students to associate TU with accredited universities rather than so-called corporate ‘universities.’”

On a side note: Hamburger University is a corporate university not an accredited university. And what about Clinton Global Initiative University? From Wikipedia:

In 2007, President Clinton launched CGI U, which expanded the successful model of CGI to students, universities, and national youth organizations. CGI U includes two days of plenary sessions and hands-on breakout sessions, followed by a day-long service project.

CGI is a non-partisan organization that convenes global leaders to devise and implement innovative solutions to the world’s most pressing problems.

CGI is not exactly Trump U.And Disney University is not an accredited institution but a global training program. And of course, Fed-Ex is an corporation like McDonald’s.

Report: FBI Sat on Russia Suspicions in DNC Hack for Months

smh….

When the FBI began investigating the infiltration of the Democratic National Committee’s computers last fall, they neglected to tell the DNC that they suspected Russian hackers. In fact, they kept that information to themselves for months,sources told Reuters.

The FBI first contacted the DNC last fall, giving them a heads up to look for any suspicious network activity. The Committee’s staff didn’t notice anything unusual, and when they asked for more information, a source says the FBI wouldn’t give it to them. Reportedly, it wasn’t until March of this year that the DNC understood the nature of the cyber-attack. During the months in between, the DNC and FBI had multiple discussions, but the feds never disclosed their suspicion of Russian actors.

Read on.