Tag Archives: FDIC

Congressional watchdog expands probe of lax Wall Street oversight

A U.S. congressional watchdog said on Tuesday it has formally added three agencies to its investigation into whether government regulators are too soft on the banks they are meant to police.

In March, Reuters exclusively reported that the Government Accountability Office (GAO) was preparing a probe of the U.S. Federal Reserve and other to-be-determined regulators, in response to a request by Democratic U.S. Representatives Maxine Waters and Al Green for it to look into “regulatory capture.”

The review, requested last October, is the first by an outside agency into the perception that financial regulators are “captured” by and too deferential toward the bankers they supervise, so that Wall Street benefits at the public’s expense.

Lawrance Evans, director of the GAO’s financial markets and community investment division, said in an email on Tuesday that the probe would include the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA). The GAO will also look back at work by the Office of Thrift Supervision, which merged with the OCC in 2011, and regulates savings and loan institutions.

Read on.

FDIC wins $190M settlement for toxic Countrywide mortgage bonds

The ghosts of Countrywide past just struck again, as the Federal Deposit Insurance Corporation announced Thursday that eight major financial institutions will pay $190 million total to settle a series of lawsuits tied to toxic Countrywide mortgage bonds that subsequently led to the failure of five banks during the housing crisis.

According to the announcement from the FDIC, Barclays Capital; BNP Paribas Securities Corporation; Credit Suisse Securities; Deutsche Bank Securities;Edward D. Jones & Co.; Goldman Sachs; RBS Securities; and UBS Securitieswill pay $190 million to settle claims that the banks made misrepresentations in the offering documents for 21 Countrywide residential mortgage-backed securities purchased by the five failed banks.

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Clock did not run out on FDIC lawsuit vs big banks – U.S. court

The U.S. government on Thursday won a victory in its effort to hold big banks liable for selling older toxic debt as a divided federal appeals court in New York revived a Federal Deposit Insurance Corp lawsuit over the 2009 collapse of Alabama’s Colonial BancGroup Inc.

In a 2-1 decision on Thursday, the 2nd U.S. Circuit Court of Appeals said the FDIC did not wait too long to sue Credit Suisse Group AG, First Horizon National Corp, Royal Bank of Scotland Group Plc, Wells Fargo & Co and seven other banks for selling or underwriting toxic mortgage securities that Colonial bought.

The 2-1 decision on Thursday confirmed the authority of federal agencies to pursue older claims, often predating the financial crisis, concerning the sale of shoddy debt to banks, finance companies and credit unions they oversee as receivers or conservators.

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FDIC, Fed Rulings Could See Five “Too-Big-to-Fail” Wall Street Firms Broken Up by 2018


Federal regulators announced Wednesday morning that Dodd-Frank-mandated resolution plans of five “too big to fail” banks were “not credible,” setting in motion a process that could see them broken up in thirty months.

The Federal Deposit Insurance Corporation (FDIC) and Federal Reserve on Wednesday announced that plans outlined by the quintet — Bank of America, JP Morgan Chase, Wells Fargo, New York Mellon, and State Street — were inadequate.

Because of the joint ruling, the firms are under pressure to revise their so-called “living wills.” The FDIC and Fed may subject the five banks to more strict regulations and reserve requirements on Oct. 1, if they fail to submit a satisfactory scheme by then. And if they haven’t submitted proper living wills by October 2018, the two agencies “may jointly require the firm to divest certain assets or operations to facilitate an orderly resolution of the firm in bankruptcy,” as the Fed noted onWednesday.

Federal regulators announced that 5 out of 8 big banks do not have credible plans for winding down operations during a crisis without the help of public money

Press Releases

Joint Release

  • Board of Governors of the Federal Reserve System
  • Federal Deposit Insurance Corporation
For Immediate Release
April 13, 2016

Agencies Announce Determinations and Provide Feedback on Resolution Plans of Eight Systemically Important, Domestic Banking Institutions

The Federal Deposit Insurance Corporation and the Federal Reserve Board on Wednesday jointly announced determinations and provided firm-specific feedback on the 2015 resolution plans of eight systemically important, domestic banking institutions.

The agencies have jointly determined that each of the 2015 resolution plans of Bank of America, Bank of New York Mellon, JP Morgan Chase, State Street, and Wells Fargo was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, the statutory standard established in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The agencies have issued joint notices of deficiencies to these five firms detailing the deficiencies in their plans and the actions the firms must take to address them. Each firm must remediate its deficiencies by October 1, 2016. If a firm has not done so, it may be subject to more stringent prudential requirements.

The agencies jointly identified weaknesses in the 2015 resolution plans of Goldman Sachs and Morgan Stanley that the firms must address, but did not make joint determinations regarding the plans and their deficiencies. The FDIC determined that the plan submitted by Goldman Sachs was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, and identified deficiencies. The Federal Reserve Board identified a deficiency in Morgan Stanley’s plan and found that the plan was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code.

Neither agency found that Citigroup’s 2015 resolution plan was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, although the agencies did identify shortcomings that the firm must address.

The deadline for the next full plan submission for all eight domestic, systemically important financial institutions is July 1, 2017. The agencies will evaluate all eight of the full plans submitted in 2017 under the statutory standard.

The agencies are issuing Resolution Plan Assessment Framework and Firm Determinations (2016), which explains the resolution planning requirement, and provides further information on the determinations and the agencies’ processes for reviewing the plans. Further, the Federal Reserve Board is releasing the feedback letters issued to each firm. Each letter details the deficiencies and shortcomings of each firm’s plan, as well as the specific remediation required of each firm. Additionally, the agencies are releasing new guidance for the July 2017 submission of all firms.

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Morgan Stanley to pay $63 million U.S. mortgage bond settlement: FDIC

Morgan Stanley has agreed to pay nearly $63 million to resolve claims over the sale of toxic mortgage-backed securities to three banks that later failed, the Federal Deposit Insurance Corp said on Tuesday.

The settlement resolves lawsuits the U.S. regulator filed as receiver for the three failed banks against Morgan Stanley and other defendants over what the FDIC said were misrepresentations in the offering documents for the mortgage-backed securities.

Morgan Stanley declined comment on the settlement. It was the latest step by the Wall Street bank to resolve U.S. government claims stemming from the sale of mortgage bonds before the financial crisis.

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Ex-FDIC Auditor Files Brief


Eric Mains, former FDIC Auditor who quit to defend his home and go after the banks for the “culpable” actions has filed a brief worth reading. Anyone following this blog should read it carefully.

The banks use the Rooker Feldman doctrine, res judicata, collateral estoppel and a variety of other devices to convince judges that any action for damages or other relief is barred if a judgment has been entered against the borrower. It is a cloud of legal fantasy that often obscures the vision of the court.

Among the points that are well made is that if the relief sought by the homeowner would not set aside or disturb the judgment that was entered, and the homeowner is complaining of external culpable actions that led the to the entry of the judgment, then the homeowner has in fact raised issues that can be heard in Federal or State Court or in Bankruptcy Court. It is simple logic based upon long-standing law.

see RESPONSE Brief Chase and Citi-Highlighted

Source: Livinglies website