۩ ۩ ۩
Peter Schiff
Bernanke Almost Comes Clean On "Exit" Strategy
۩ ۩ ۩
Showing posts with label Wall Street Banksters. Show all posts
Showing posts with label Wall Street Banksters. Show all posts
Saturday, March 2, 2013
Sunday, February 3, 2013
Max Keiser: Fake-It-Til-You-Make-It Economy
۩ ۩ ۩
Max Keiser
Keiser Report: Fake-It-Til-You-Make-It Economy
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the global yellow cake baking, talcum powder shaking, perpetual war making, balloon boy chasing, fake it til you make it economy in which spoof trading and a shadow banking system collateralized by a combination of liar loans and temporary workers consuming genetically modified food-like products produces such heroes for our times as Robb U, the guy who was handed $6 million in loans based on having a YouTube music video with a million plus views.
In the second half of the show, Max Keiser talks to former Scotland Yard fraud squad detective, Rowan Bosworth-Davies of Rowans-Blog.blogspot.co.uk about justice departments and regulators going after the 'little guy' because he is 'easier' to get than the too-big-to-fail.
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the global yellow cake baking, talcum powder shaking, perpetual war making, balloon boy chasing, fake it til you make it economy in which spoof trading and a shadow banking system collateralized by a combination of liar loans and temporary workers consuming genetically modified food-like products produces such heroes for our times as Robb U, the guy who was handed $6 million in loans based on having a YouTube music video with a million plus views.
In the second half of the show, Max Keiser talks to former Scotland Yard fraud squad detective, Rowan Bosworth-Davies of Rowans-Blog.blogspot.co.uk about justice departments and regulators going after the 'little guy' because he is 'easier' to get than the too-big-to-fail.
۩ ۩ ۩
Thursday, January 17, 2013
Max Keiser: Germany Wants Their Gold Back from UK & US!
۩ ۩ ۩
Max Keiser
Keiser Report: Goodbye, German Gold?
In this episode, Max Keiser and Stacy Herbert discuss how it is that Gordon Brown's Bottom turned into an audit the gold movement in Germany. They also discuss the mother of all bond bubbles getting set to burst and all that will be left in the Bank of England 'gold' vaults are a big pile of gilts. In the second half of the show, Max Keiser talks to Dominic Frisby, author of Life After the State, about Germany's gold quest, the future of relations between the US and Germany if the gold is not there and about 'life after the state.
In this episode, Max Keiser and Stacy Herbert discuss how it is that Gordon Brown's Bottom turned into an audit the gold movement in Germany. They also discuss the mother of all bond bubbles getting set to burst and all that will be left in the Bank of England 'gold' vaults are a big pile of gilts. In the second half of the show, Max Keiser talks to Dominic Frisby, author of Life After the State, about Germany's gold quest, the future of relations between the US and Germany if the gold is not there and about 'life after the state.
۩ ۩ ۩
Monday, January 14, 2013
Federal Reserve Issues 2 Cease & Desist Orders Against JPMorgan
۩ ۩ ۩
(Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency; January 14, 2013)
WASHINGTON -- The Federal Reserve Board on Monday issued two consent Cease and Desist Orders against JPMorgan Chase & Co., New York, New York (JPMC), a registered bank holding company. The first order requires JPMC to take corrective action to continue ongoing enhancements to its risk-management program and its finance and internal audit functions, particularly in regard to JPMC's Chief Investment Office (CIO). The Board's order follows the disclosure of significant losses in a large synthetic credit portfolio that was managed by the CIO. The second order requires JPMC to take corrective action to enhance its program for compliance with the Bank Secrecy Act and other anti-money laundering requirements at JPMC's various subsidiaries.
The Office of the Comptroller of the Currency on Monday issued two similar Consent Orders against JPMorgan Chase Bank, N.A., Columbus, Ohio.
Consent Cease and Desist Order #1
1. Source of Strength: The board of directors shall take appropriate steps to ensure that the Bank complies with the Consent Order issued by the OCC.
2. Board Oversight: Within 60 days of this Order, the board of directors shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to the board’s oversight of JPMC’s risk management, internal audit, and finance functions.
3. Risk Management: Within 60 days of this Order, JPMC shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to its risk management program, particularly with respect to the matters set forth below.
4. Finance: Within 90 days of this Order, JPMC shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to the finance function, particularly with respect to the CIO finance function.
5. Internal Audit: Within 90 days of this Order, JPMC shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to firmwide internal audit, particularly with respect to the matters set forth below.
6. & 7. Approval, Implementation, and Progress Reports to Federal Reserve
Consent Cease and Desist Order #2
1. Source of Strength: The board of directors shall take appropriate steps to ensure that the Bank complies with the Consent Order issued by the OCC.
2. Board Oversight: Within 60 days of this Order, JPMC’s board of directors shall submit to the Federal Reserve Bank of New York (the “Reserve Bank”) an acceptable written plan to continue ongoing enhancements to the board’s oversight of JPMC’s firmwide compliance risk management program with regard to compliance with BSA/AML Requirements.
3. Compliance Risk Management Program: Within 60 days of this Order, JPMC shall submit an acceptable written plan to the Reserve Bank to improve the firmwide compliance risk management program with regard to BSA/AML Requirements and the regulations issued by the Office of Foreign Assets Control of the United States Department of the Treasury
4. and 5. BSA/AML Compliance Program: Within 90 days of this Order, JPMC shall complete a review of the effectiveness of JPMC’s firmwide BSA/AML compliance program (the “BSA/AML Review”) and prepare a written report of findings and recommendations (the “BSA/AML Report”).
6. Progress Reports to Federal Reserve
7. Approval and Implementation of Plans to Federal Reserve
Consent Cease and Desist Order #1 (.pdf file)
Consent Cease and Desist Order #2 (.pdf file)
Federal Reserve Board Issues Two Consent Cease and Desist Orders Against JPMorgan Chase & Co.
(Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency; January 14, 2013)
WASHINGTON -- The Federal Reserve Board on Monday issued two consent Cease and Desist Orders against JPMorgan Chase & Co., New York, New York (JPMC), a registered bank holding company. The first order requires JPMC to take corrective action to continue ongoing enhancements to its risk-management program and its finance and internal audit functions, particularly in regard to JPMC's Chief Investment Office (CIO). The Board's order follows the disclosure of significant losses in a large synthetic credit portfolio that was managed by the CIO. The second order requires JPMC to take corrective action to enhance its program for compliance with the Bank Secrecy Act and other anti-money laundering requirements at JPMC's various subsidiaries.
The Office of the Comptroller of the Currency on Monday issued two similar Consent Orders against JPMorgan Chase Bank, N.A., Columbus, Ohio.
Consent Cease and Desist Order #1
1. Source of Strength: The board of directors shall take appropriate steps to ensure that the Bank complies with the Consent Order issued by the OCC.
2. Board Oversight: Within 60 days of this Order, the board of directors shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to the board’s oversight of JPMC’s risk management, internal audit, and finance functions.
3. Risk Management: Within 60 days of this Order, JPMC shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to its risk management program, particularly with respect to the matters set forth below.
4. Finance: Within 90 days of this Order, JPMC shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to the finance function, particularly with respect to the CIO finance function.
5. Internal Audit: Within 90 days of this Order, JPMC shall submit to the Reserve Bank an acceptable written plan to continue ongoing enhancements to firmwide internal audit, particularly with respect to the matters set forth below.
6. & 7. Approval, Implementation, and Progress Reports to Federal Reserve
Consent Cease and Desist Order #2
1. Source of Strength: The board of directors shall take appropriate steps to ensure that the Bank complies with the Consent Order issued by the OCC.
2. Board Oversight: Within 60 days of this Order, JPMC’s board of directors shall submit to the Federal Reserve Bank of New York (the “Reserve Bank”) an acceptable written plan to continue ongoing enhancements to the board’s oversight of JPMC’s firmwide compliance risk management program with regard to compliance with BSA/AML Requirements.
3. Compliance Risk Management Program: Within 60 days of this Order, JPMC shall submit an acceptable written plan to the Reserve Bank to improve the firmwide compliance risk management program with regard to BSA/AML Requirements and the regulations issued by the Office of Foreign Assets Control of the United States Department of the Treasury
4. and 5. BSA/AML Compliance Program: Within 90 days of this Order, JPMC shall complete a review of the effectiveness of JPMC’s firmwide BSA/AML compliance program (the “BSA/AML Review”) and prepare a written report of findings and recommendations (the “BSA/AML Report”).
6. Progress Reports to Federal Reserve
7. Approval and Implementation of Plans to Federal Reserve
Consent Cease and Desist Order #1 (.pdf file)
Consent Cease and Desist Order #2 (.pdf file)
۩ ۩ ۩
Tuesday, January 8, 2013
Bank of America Announces $10+ Billion Mortgage Settlement with Fannie Mae
Bank of America Announces Settlement with Fannie Mae to Resolve Agency Mortgage Repurchase Claims on Loans Originated and Sold Directly to Fannie Mae Through December 31, 2008
* Agreements Cover Mortgage Loans With $1.4 Trillion of Original Unpaid Principal Balance
* Agreements Also Substantially Resolve Outstanding Claims for Compensatory Fees
CHARLOTTE, N.C. -- (BUSINESS WIRE) -- Jan. 7, 2013 -- Bank of America today announced agreements with the Federal National Mortgage Association (Fannie Mae) to resolve outstanding and potential repurchase and certain other claims relating to the origination, sale and delivery of substantially all residential mortgage loans originated and sold directly to Fannie Mae from January 1, 2000 through December 31, 2008 by entities related to Countrywide Financial Corporation (legacy Countrywide) and Bank of America, National Association (BANA).
In addition, Bank of America announced that it signed definitive agreements to sell the servicing rights on 2.0 million residential mortgage loans totaling approximately $306 billion, as measured by the aggregate unpaid principal balance (as of November 30, 2012).
“As we enter 2013, we sharpen our focus on serving our three customer groups and helping to move the economy forward,” said Bank of America Chief Executive Officer Brian Moynihan. “Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time.”
"Our focus on strengthening the balance sheet continued this quarter," said Chief Financial Officer Bruce Thompson. "We ended the quarter with record Tier 1 common capital ratio of 11.41 percent and an estimated Basel 3 Tier 1 common capital ratio of 8.97 percent, up from 7.95 percent as of the second quarter of 20121. With these gains, we have turned our attention to driving core earnings."
Fannie Mae Agreements
The agreements with Fannie Mae cover loans with an aggregate original principal balance of approximately $1.4 trillion and an aggregate outstanding principal balance of approximately $300 billion. Unresolved claims by Fannie Mae for alleged breaches of selling representations and warranties with respect to these loans totaled $11.2 billion of unpaid principal balance at September 30, 2012. These agreements extinguish substantially all of those unresolved claims, as well as any future representations and warranties claims associated with loans sold directly to Fannie Mae from January 1, 2000 to December 31, 2008, subject to certain exceptions which Bank of America does not expect to be material.
As part of the agreement to settle representations and warranties claims, Bank of America will make a cash payment to Fannie Mae of $3.6 billion and also repurchase for $6.75 billion certain residential mortgage loans sold to Fannie Mae, which Bank of America has valued at less than the purchase price. These actions are expected to be covered by existing reserves and an additional $2.5 billion (pretax) in representations and warranties provision recorded in the fourth quarter of 2012.
Bank of America also agreed to make a cash payment to Fannie Mae to settle substantially all of Fannie Mae’s outstanding and future claims for compensatory fees arising out of past foreclosure delays. This payment is expected to be covered by existing reserves and an additional provision of $260 million (pretax) recorded in the fourth quarter of 2012.
Together, these actions described above are expected to reduce Bank of America’s pretax income by approximately $2.7 billion in the fourth quarter of 2012.
The Fannie Mae agreement also clarifies the parties' obligations with respect to mortgage insurance, including by establishing timeframes for certain payments and other actions, as well as parameters for potential bulk settlements and by providing for cooperation in future dealings with mortgage insurers.
Through these actions, Bank of America is addressing substantially all of its remaining exposure to repurchase obligations for residential mortgage loans sold directly to Fannie Mae. After giving effect to the settlement agreements with Fannie Mae announced today, the company expects to reduce the range of possible loss above existing accruals for both GSE and non-GSE representations and warranties exposures to up to $4.0 billion at December 31, 2012, compared to up to $6.0 billion at September 30, 2012.
Bank of America Announces Settlement with Fannie Mae to Resolve Agency Mortgage Repurchase Claims on Loans Originated and Sold Directly to Fannie Mae Through December 31, 2008
$BAC $XLF
Monday, January 7, 2013
Federal Reserve Announces $8.5 Billion Mortgage Settlement
۩ ۩ ۩
(Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency; January 7, 2013)
WASHINGTON -- Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.
The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.
Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.
This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.
Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance
Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance
(Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency; January 7, 2013)
WASHINGTON -- Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.
The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.
Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.
This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.
Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance
۩ ۩ ۩
U.S. Bancorp Announces $80 Million Foreclosure Settlement
۩ ۩ ۩
U.S. Bancorp Issues Statement in Response to Independent Foreclosure Review Settlement Agreement
MINNEAPOLIS -- (BUSINESS WIRE) -- Jan. 7, 2013 -- U.S. Bancorp issued the following statement in response to this morning’s announcement from the OCC and the Federal Reserve regarding the Independent Foreclosure Review settlement agreement:
U.S. Bancorp has long been committed to sound modification and foreclosure practices. We have always regarded foreclosure as a last resort, and have helped thousands of borrowers over the past several years to stay in their homes through a variety of modification programs.
U.S. Bancorp’s share of the settlement will include a cash payment of $80 million (pretax), which is expected to reduce fourth-quarter 2012 earnings per share by approximately 3 cents. In addition, the settlement includes a commitment to provide approximately $128 million of other mortgage assistance, such as loan modifications, which is covered by existing loan loss reserves.
$USB $XLF
۩ ۩ ۩
NCUA Sues J.P. Morgan, WaMu Capital, Others for $2+ Billion in Faulty Securities
۩ ۩ ۩
NCUA Sues J.P. Morgan, WaMu Capital and Others over $2.2 Billion in Faulty Securities
Legal Action is the Agency’s 10th against Wall Street Investment Firms
NCUA has similar actions pending against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, and Bear, Stearns.
NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. To date, the agency has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.
ALEXANDRIA, Va. (Jan. 4, 2013) – The National Credit Union Administration (NCUA) has filed suit in Federal District Court in Kansas against J.P. Morgan Securities as successor-in-interest to Washington Mutual Bank, alleging violations of federal and state securities laws in the sale of $2.2 billion in mortgage-backed securities to three corporate credit unions.
Other defendants include WaMu Capital Corp., Long Beach Securities Corp., and WaMu Asset Acceptance Corp.
“The damage caused by the actions of firms like Washington Mutual has been extremely expensive to contain and repair, and that job isn’t finished, yet,” said NCUA Board Chairman Debbie Matz. “All the credit unions we supervise and insure have had to share this burden, so it’s only right that the people who caused the damage be required to pick up that burden, as well.”
NCUA’s suit alleges the firms made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate and Southwest Corporate federal credit unions. All three corporate credit unions became insolvent and were subsequently placed into NCUA conservatorship and liquidated as a result of losses from these faulty securities. These failures caused significant losses to the credit union system.
J.P. Morgan Securities acquired Washington Mutual in 2008.
The complaint alleges the firms made numerous misrepresentations and omissions of material facts in the Offering Documents of the securities sold to the failed corporate credit unions. The complaint states underwriting guidelines in the Offering Documents were “systematically abandoned,” and the misrepresentations caused the credit unions to believe the risk of loss was minimal. In fact, these securities were “significantly riskier than represented in the Offering Documents” and that the faulty securities “were destined from inception to perform poorly.”
NCUA has similar actions pending against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, and Bear, Stearns.
NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. To date, the agency has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.
ALEXANDRIA, Va. (Jan. 4, 2013) – The National Credit Union Administration (NCUA) has filed suit in Federal District Court in Kansas against J.P. Morgan Securities as successor-in-interest to Washington Mutual Bank, alleging violations of federal and state securities laws in the sale of $2.2 billion in mortgage-backed securities to three corporate credit unions.
Other defendants include WaMu Capital Corp., Long Beach Securities Corp., and WaMu Asset Acceptance Corp.
“The damage caused by the actions of firms like Washington Mutual has been extremely expensive to contain and repair, and that job isn’t finished, yet,” said NCUA Board Chairman Debbie Matz. “All the credit unions we supervise and insure have had to share this burden, so it’s only right that the people who caused the damage be required to pick up that burden, as well.”
NCUA’s suit alleges the firms made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate and Southwest Corporate federal credit unions. All three corporate credit unions became insolvent and were subsequently placed into NCUA conservatorship and liquidated as a result of losses from these faulty securities. These failures caused significant losses to the credit union system.
J.P. Morgan Securities acquired Washington Mutual in 2008.
The complaint alleges the firms made numerous misrepresentations and omissions of material facts in the Offering Documents of the securities sold to the failed corporate credit unions. The complaint states underwriting guidelines in the Offering Documents were “systematically abandoned,” and the misrepresentations caused the credit unions to believe the risk of loss was minimal. In fact, these securities were “significantly riskier than represented in the Offering Documents” and that the faulty securities “were destined from inception to perform poorly.”
۩ ۩ ۩
Monday, December 31, 2012
NCUA Sues J.P. Morgan and Bear, Stearns Over Faulty Securities
۩ ۩ ۩
NCUA Sues J.P. Morgan and Bear, Stearns Over $3.6 Billion in Faulty Securities
Legal Action is the Agency’s Largest to Date against Wall Street Investment Firms
NCUA has eight similar actions pending against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, and Wachovia.
NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. To date, the agency has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.
ALEXANDRIA, Va. (Dec. 17, 2012) – The National Credit Union Administration (NCUA) has filed suit in Federal District Court in Kansas against J.P. Morgan Securities and Bear, Stearns & Co., alleging violations of federal and state securities laws in the sale of $3.6 billion in mortgage-backed securities to four corporate credit unions.
NCUA’s suit — the largest the agency has filed to date—alleges Bear, Stearns & Co. made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions.
All four corporate credit unions became insolvent and were subsequently placed into NCUA conservatorship and liquidated as a result of losses from these faulty securities. These failures caused significant losses to the credit union system. J.P. Morgan Securities purchased Bear, Stearns & Co. in 2008, after the demise of Bear, Stearns & Co.
“Bear, Stearns was one of several Wall Street firms that sold faulty securities to corporate credit unions, leading to their collapse and enormous losses across the industry,” said NCUA Board Chairman Debbie Matz. “Firms like Bear, Stearns acted unfairly by ignoring the rules for underwriting. They packaged these securities and then told buyers the paper was sound. When the securities plunged in value, we learned the truth. NCUA is now working to hold these underwriters accountable and secure recoveries on behalf of federally insured credit unions.”
The complaint alleges Bear, Stearns & Co. made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint states underwriting guidelines in the offering documents were “abandoned” and the misrepresentations caused the credit unions to believe the risk of loss was minimal. In fact, these securities were “significantly riskier than represented” and “routinely overvalued.” The faulty securities, the complaint states, “were destined from inception to perform poorly.”
As liquidating agent for the four corporate credit unions, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
NCUA Sues J.P. Morgan and Bear, Stearns Over $3.6 Billion in Faulty Securities
NCUA has eight similar actions pending against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, and Wachovia.
NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. To date, the agency has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.
ALEXANDRIA, Va. (Dec. 17, 2012) – The National Credit Union Administration (NCUA) has filed suit in Federal District Court in Kansas against J.P. Morgan Securities and Bear, Stearns & Co., alleging violations of federal and state securities laws in the sale of $3.6 billion in mortgage-backed securities to four corporate credit unions.
NCUA’s suit — the largest the agency has filed to date—alleges Bear, Stearns & Co. made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions.
All four corporate credit unions became insolvent and were subsequently placed into NCUA conservatorship and liquidated as a result of losses from these faulty securities. These failures caused significant losses to the credit union system. J.P. Morgan Securities purchased Bear, Stearns & Co. in 2008, after the demise of Bear, Stearns & Co.
“Bear, Stearns was one of several Wall Street firms that sold faulty securities to corporate credit unions, leading to their collapse and enormous losses across the industry,” said NCUA Board Chairman Debbie Matz. “Firms like Bear, Stearns acted unfairly by ignoring the rules for underwriting. They packaged these securities and then told buyers the paper was sound. When the securities plunged in value, we learned the truth. NCUA is now working to hold these underwriters accountable and secure recoveries on behalf of federally insured credit unions.”
The complaint alleges Bear, Stearns & Co. made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint states underwriting guidelines in the offering documents were “abandoned” and the misrepresentations caused the credit unions to believe the risk of loss was minimal. In fact, these securities were “significantly riskier than represented” and “routinely overvalued.” The faulty securities, the complaint states, “were destined from inception to perform poorly.”
As liquidating agent for the four corporate credit unions, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
NCUA Sues J.P. Morgan and Bear, Stearns Over $3.6 Billion in Faulty Securities
۩ ۩ ۩
Thursday, October 4, 2012
NCUA Sues Credit Suisse over Faulty Securities
۩ ۩ ۩
NCUA Sues Credit Suisse over Faulty Securities
Legal Action is the Agency’s Eighth against Wall Street Investment Firms
NCUA has previously filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia, UBS Securities, and Barclay’s. NCUA has already settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC, making it the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.
Recoveries from these eight additional legal actions will further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions, so any recoveries would help reduce future assessments on credit unions.
(NCUA; September 25, 2012)
ALEXANDRIA, Va. (Oct. 4, 2012) – The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Kansas against Credit Suisse Securities (USA).
NCUA’s suit alleges Credit Suisse, a subsidiary of the Swiss-based financial services firm, violated federal and state securities laws through misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central Federal Credit Union (US Central), Western Corporate Federal Credit Union (WesCorp) and Southwest Corporate Federal Credit Union (Southwest).
The price paid for the securities by the three corporates exceeded $715 million. All three corporate credit unions subsequently failed.
“Credit Suisse is one of several firms that sold faulty securities to corporate credit unions, which led to their collapse,” said NCUA Board Chairman Debbie Matz. “These Wall Street firms ran a bait and switch operation, and the effects were felt not only in credit unions, but throughout the financial industry. NCUA and credit unions have successfully worked together to restore stability to the credit union system. Now we are holding responsible parties, like Credit Suisse, accountable for their actions.”
NCUA’s complaint alleges Credit Suisse made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused the credit unions to believe the risk of loss was minimal, when in fact the risk was substantial.
As liquidating agent for US Central, WesCorp and Southwest, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
NCUA Sues Credit Suisse over Faulty Securities
NCUA has previously filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia, UBS Securities, and Barclay’s. NCUA has already settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC, making it the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.
Recoveries from these eight additional legal actions will further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions, so any recoveries would help reduce future assessments on credit unions.
(NCUA; September 25, 2012)
ALEXANDRIA, Va. (Oct. 4, 2012) – The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Kansas against Credit Suisse Securities (USA).
NCUA’s suit alleges Credit Suisse, a subsidiary of the Swiss-based financial services firm, violated federal and state securities laws through misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central Federal Credit Union (US Central), Western Corporate Federal Credit Union (WesCorp) and Southwest Corporate Federal Credit Union (Southwest).
The price paid for the securities by the three corporates exceeded $715 million. All three corporate credit unions subsequently failed.
“Credit Suisse is one of several firms that sold faulty securities to corporate credit unions, which led to their collapse,” said NCUA Board Chairman Debbie Matz. “These Wall Street firms ran a bait and switch operation, and the effects were felt not only in credit unions, but throughout the financial industry. NCUA and credit unions have successfully worked together to restore stability to the credit union system. Now we are holding responsible parties, like Credit Suisse, accountable for their actions.”
NCUA’s complaint alleges Credit Suisse made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused the credit unions to believe the risk of loss was minimal, when in fact the risk was substantial.
As liquidating agent for US Central, WesCorp and Southwest, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
NCUA Sues Credit Suisse over Faulty Securities
۩ ۩ ۩
Wednesday, October 3, 2012
FDIC Penalizes American Express Centurion Bank for Deceptive Debt Collection Practices and Credit Card Marketing
۩ ۩ ۩
(FDIC; October 1, 2012)
The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.
This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.
The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:
=> Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
=> Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
=> Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.
In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.
In agreeing to the issuance of the Order, the Bank neither admits nor denies any liability
FDIC Announces Settlement With American Express Centurion Bank for Unfair and Deceptive Practices in Debt Collection and Credit Card Marketing
(FDIC; October 1, 2012)
The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.
This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.
The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:
=> Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
=> Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
=> Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.
In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.
In agreeing to the issuance of the Order, the Bank neither admits nor denies any liability
۩ ۩ ۩
Monday, October 1, 2012
Bank of America Reaches $2.43B Settlement Related to Merrill Lynch Acquisition
۩ ۩ ۩
Total Third-Quarter 2012 Litigation Expense Estimated to Be Approximately $1.6 Billion Litigation Expense, Valuation Adjustments for Improvement in the Company’s Credit Spreads and U.K. Tax Charge Are Expected to Negatively Impact EPS by Approximately $0.28 in Third Quarter 2012
(Bank of America; September 28, 2012)
CHARLOTTE, N.C., Sep 28, 2012 (BUSINESS WIRE) --Bank of America today announced it, and certain of its current and former officers and directors, have agreed, subject to court approval, to settle a class action lawsuit brought in 2009 on behalf of investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch.
Under terms of the proposed settlement, Bank of America would pay a total of $2.43 billion and institute certain corporate governance policies. Plaintiffs had alleged, among other claims, that Bank of America and certain of its officers made false or misleading statements about the financial health of Bank of America and Merrill Lynch. Bank of America denies the allegations and is entering into this settlement to eliminate the uncertainties, burden and expense of further protracted litigation.
“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” said Chief Executive Officer Brian Moynihan. “As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients.”
The proposed settlement will be reviewed by Judge Kevin Castel in the United States District Court for the Southern District of New York, where the class action is pending. Further information concerning the details of the settlement are available from the court’s docket, In Re Bank of America Securities Derivative & Employment Retirement Income Sec. Act (ERISA) Litigation, 09 MDL 2058 (PKC) or from plaintiffs’ lead counsel, Bernstein Litowitz Berger & Grossmann LLP; Kaplan Fox & Kilsheimer LLP; and Barroway Topaz Kessler Meltzer & Check, LLP.
The amount to be paid under the proposed settlement will be covered by a combination of Bank of America’s existing litigation reserves and incremental litigation expense to be recorded in the third quarter of 2012. The company estimates total litigation expense will be approximately $1.6 billion for the three months ended September 30, 2012, which includes the incremental costs of the related settlement above previous accruals and other litigation-related items.
The settlement agreement also contemplates that Bank of America will institute and/or continue certain corporate governance enhancements until January 1, 2015, including those relating to majority voting in director elections, annual disclosure of noncompliance with stock ownership guidelines, policies for a board committee regarding future acquisitions, the independence of the board’s compensation committee and its compensation consultants, and conducting an annual “say-on-pay” vote by shareholders.
Litigation expense, improvements in the company’s credit spreads and the U.K. tax charge are expected to negatively impact reported third-quarter EPS by approximately $0.28
In addition to the litigation expense, the company expects that its third-quarter 2012 financial results will be adversely impacted by approximately $1.9 billion (pretax) in negative fair value option (FVO) adjustments and debit valuation adjustments (DVA) related to the improvement in the company’s credit spreads, and the previously reported charge of approximately $800 million to income tax expense for changes in the U.K. corporate tax rate and the related effect on the deferred tax asset valuation.
Bank of America is scheduled to report third-quarter 2012 financial results on October 17.
Bank of America Reaches Settlement in Merrill Lynch Acquisition-Related Class Action Litigation
Total Third-Quarter 2012 Litigation Expense Estimated to Be Approximately $1.6 Billion Litigation Expense, Valuation Adjustments for Improvement in the Company’s Credit Spreads and U.K. Tax Charge Are Expected to Negatively Impact EPS by Approximately $0.28 in Third Quarter 2012
(Bank of America; September 28, 2012)
CHARLOTTE, N.C., Sep 28, 2012 (BUSINESS WIRE) --Bank of America today announced it, and certain of its current and former officers and directors, have agreed, subject to court approval, to settle a class action lawsuit brought in 2009 on behalf of investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch.
Under terms of the proposed settlement, Bank of America would pay a total of $2.43 billion and institute certain corporate governance policies. Plaintiffs had alleged, among other claims, that Bank of America and certain of its officers made false or misleading statements about the financial health of Bank of America and Merrill Lynch. Bank of America denies the allegations and is entering into this settlement to eliminate the uncertainties, burden and expense of further protracted litigation.
“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” said Chief Executive Officer Brian Moynihan. “As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients.”
The proposed settlement will be reviewed by Judge Kevin Castel in the United States District Court for the Southern District of New York, where the class action is pending. Further information concerning the details of the settlement are available from the court’s docket, In Re Bank of America Securities Derivative & Employment Retirement Income Sec. Act (ERISA) Litigation, 09 MDL 2058 (PKC) or from plaintiffs’ lead counsel, Bernstein Litowitz Berger & Grossmann LLP; Kaplan Fox & Kilsheimer LLP; and Barroway Topaz Kessler Meltzer & Check, LLP.
The amount to be paid under the proposed settlement will be covered by a combination of Bank of America’s existing litigation reserves and incremental litigation expense to be recorded in the third quarter of 2012. The company estimates total litigation expense will be approximately $1.6 billion for the three months ended September 30, 2012, which includes the incremental costs of the related settlement above previous accruals and other litigation-related items.
The settlement agreement also contemplates that Bank of America will institute and/or continue certain corporate governance enhancements until January 1, 2015, including those relating to majority voting in director elections, annual disclosure of noncompliance with stock ownership guidelines, policies for a board committee regarding future acquisitions, the independence of the board’s compensation committee and its compensation consultants, and conducting an annual “say-on-pay” vote by shareholders.
Litigation expense, improvements in the company’s credit spreads and the U.K. tax charge are expected to negatively impact reported third-quarter EPS by approximately $0.28
In addition to the litigation expense, the company expects that its third-quarter 2012 financial results will be adversely impacted by approximately $1.9 billion (pretax) in negative fair value option (FVO) adjustments and debit valuation adjustments (DVA) related to the improvement in the company’s credit spreads, and the previously reported charge of approximately $800 million to income tax expense for changes in the U.K. corporate tax rate and the related effect on the deferred tax asset valuation.
Bank of America is scheduled to report third-quarter 2012 financial results on October 17.
۩ ۩ ۩
Federal Reserve Penalizes American Express for Deceptive Debt Collection Practices
۩ ۩ ۩
(FRB; October 1, 2012)
The Federal Reserve Board on Monday announced a formal enforcement action, including a $9 million civil money penalty, against American Express Company (Amex) and American Express Travel Related Services Company, Inc. (TRS) to address deceptive marketing and debt collection practices and associated deficiencies in compliance risk management and internal audit. Amex and TRS are both registered bank holding companies based in New York.
TRS provides debt collection and marketing services to its subsidiary banks, American Express Centurion Bank (AECB) and American Express Bank, FSB (AEFSB), and also services its own credit card portfolio. In providing those services, TRS allegedly led customers to believe that their defaulted debt would be "waived" or "forgiven" by acting on a settlement offer without also disclosing the effect that settling for less than the full debt would have on the customers' future credit opportunities. TRS also allegedly made deceptive representations in credit card solicitations concerning the benefits customers would receive by acting on the offer. The Federal Reserve also found that deficiencies in compliance risk management and internal audit, which are firm-wide functions at Amex, allegedly allowed these practices to occur.
The Board's action was taken in coordination with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Utah Department of Financial Institutions. Each agency is announcing formal enforcement actions against entities in the American Express organization that they supervise, which include AECB and AEFSB. TRS's credit card customers affected by the allegedly deceptive practices will be compensated according to the CFPB's enforcement action against TRS.
In addition to the $9 million civil money penalty, the Board's enforcement action requires Amex and TRS to improve consumer compliance oversight and compliance risk-management and internal audit programs.
Federal Reserve Board Issues Consent Order and Order of Assessment of a Civil Monetary Penalty
(FRB; October 1, 2012)
The Federal Reserve Board on Monday announced a formal enforcement action, including a $9 million civil money penalty, against American Express Company (Amex) and American Express Travel Related Services Company, Inc. (TRS) to address deceptive marketing and debt collection practices and associated deficiencies in compliance risk management and internal audit. Amex and TRS are both registered bank holding companies based in New York.
TRS provides debt collection and marketing services to its subsidiary banks, American Express Centurion Bank (AECB) and American Express Bank, FSB (AEFSB), and also services its own credit card portfolio. In providing those services, TRS allegedly led customers to believe that their defaulted debt would be "waived" or "forgiven" by acting on a settlement offer without also disclosing the effect that settling for less than the full debt would have on the customers' future credit opportunities. TRS also allegedly made deceptive representations in credit card solicitations concerning the benefits customers would receive by acting on the offer. The Federal Reserve also found that deficiencies in compliance risk management and internal audit, which are firm-wide functions at Amex, allegedly allowed these practices to occur.
The Board's action was taken in coordination with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Utah Department of Financial Institutions. Each agency is announcing formal enforcement actions against entities in the American Express organization that they supervise, which include AECB and AEFSB. TRS's credit card customers affected by the allegedly deceptive practices will be compensated according to the CFPB's enforcement action against TRS.
In addition to the $9 million civil money penalty, the Board's enforcement action requires Amex and TRS to improve consumer compliance oversight and compliance risk-management and internal audit programs.
۩ ۩ ۩
OCC Penalizes American Express for Deceptive Debt Collection Practices
۩ ۩ ۩
(OCC; October 1, 2012)
WASHINGTON - The Office of the Comptroller of the Currency (OCC) today announced a $500,000 civil money penalty against American Express Bank, FSB, for violations of section 5 of the Federal Trade Commission Act and ordered the bank to provide approximately $6 million in restitution to an estimated 17,000 affected customers.
The OCC also ordered the bank to establish an effective vendor management program to oversee the provision of products to the bank’s customers.
The OCC based its penalty on the bank’s failure to properly manage vendors who engaged in deceptive debt collection practices in violation of the statute. The estimated $6 million in restitution will be paid to compensate consumers for the injury suffered as the result of these violations.
The OCC is taking these actions in coordination with separate actions by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (CFPB), and Federal Deposit Insurance Corporation against American Express companies under their jurisdictions. In addition to the penalty assessed by the OCC against American Express Bank, FSB, the CFPB is assessing a $1.2 million penalty which covers both violations of the Truth in Lending Act, for which the bureau has exclusive enforcement authority, and the deceptive debt collection practices addressed by the OCC penalty and order.
Restitution payments made by the bank pursuant to the OCC’s order will also satisfy identical payment obligations required by the CFPB. The civil money penalties assessed by the OCC are payable to the U.S. Treasury.
OCC Assesses Civil Money Penalty Against American Express, Orders $6 Million in Restitution
(OCC; October 1, 2012)
WASHINGTON - The Office of the Comptroller of the Currency (OCC) today announced a $500,000 civil money penalty against American Express Bank, FSB, for violations of section 5 of the Federal Trade Commission Act and ordered the bank to provide approximately $6 million in restitution to an estimated 17,000 affected customers.
The OCC also ordered the bank to establish an effective vendor management program to oversee the provision of products to the bank’s customers.
The OCC based its penalty on the bank’s failure to properly manage vendors who engaged in deceptive debt collection practices in violation of the statute. The estimated $6 million in restitution will be paid to compensate consumers for the injury suffered as the result of these violations.
The OCC is taking these actions in coordination with separate actions by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (CFPB), and Federal Deposit Insurance Corporation against American Express companies under their jurisdictions. In addition to the penalty assessed by the OCC against American Express Bank, FSB, the CFPB is assessing a $1.2 million penalty which covers both violations of the Truth in Lending Act, for which the bureau has exclusive enforcement authority, and the deceptive debt collection practices addressed by the OCC penalty and order.
Restitution payments made by the bank pursuant to the OCC’s order will also satisfy identical payment obligations required by the CFPB. The civil money penalties assessed by the OCC are payable to the U.S. Treasury.
۩ ۩ ۩
Tuesday, September 25, 2012
NCUA Sues Barclay’s Capital for Misrepresentations
۩ ۩ ۩
NCUA Sues Barclay’s Capital
Legal Action Is the Agency’s Seventh Against Wall Street Investment Firms
NCUA has previously filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia and UBS Securities. NCUA has already settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC, making it the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.
(NCUA; September 25, 2012)
ALEXANDRIA, Va. (Sept. 25, 2012) – The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Kansas against Barclay’s Capital, Inc.
NCUA’s suit alleges Barclay’s, the U.S. subsidiary of the British financial services firm, violated federal and state securities laws through misrepresentations in the sale of mortgage-backed securities to U.S. Central Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp). The price paid for the securities by US Central and WesCorp exceeded $555 million. Both corporate credit unions subsequently failed.
“Trust and accountability are two cornerstones of our financial system,” said NCUA Board Chairman Debbie Matz. “As clearly outlined in our complaint, Barclay’s violated that trust by issuing faulty disclosures on securities underwritten by the firm. As a result, two corporate credit unions collapsed, and the entire credit union industry experienced a crisis. Since then, NCUA has successfully worked to restore stability to the credit union system. Now we are working to hold Barclay’s, and other responsible parties, accountable for their actions.”
NCUA’s complaint alleges Barclay’s made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused US Central and WesCorp to believe the risk of loss was minimal, when in fact the risk was substantial.
As liquidating agent for US Central and WesCorp, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry. Recoveries from these seven additional legal actions would further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions. Thus, any recoveries would help to reduce the amount of future assessments on credit unions.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
NCUA Sues Barclay’s Capital
NCUA has previously filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia and UBS Securities. NCUA has already settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC, making it the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.
(NCUA; September 25, 2012)
ALEXANDRIA, Va. (Sept. 25, 2012) – The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Kansas against Barclay’s Capital, Inc.
NCUA’s suit alleges Barclay’s, the U.S. subsidiary of the British financial services firm, violated federal and state securities laws through misrepresentations in the sale of mortgage-backed securities to U.S. Central Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp). The price paid for the securities by US Central and WesCorp exceeded $555 million. Both corporate credit unions subsequently failed.
“Trust and accountability are two cornerstones of our financial system,” said NCUA Board Chairman Debbie Matz. “As clearly outlined in our complaint, Barclay’s violated that trust by issuing faulty disclosures on securities underwritten by the firm. As a result, two corporate credit unions collapsed, and the entire credit union industry experienced a crisis. Since then, NCUA has successfully worked to restore stability to the credit union system. Now we are working to hold Barclay’s, and other responsible parties, accountable for their actions.”
NCUA’s complaint alleges Barclay’s made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused US Central and WesCorp to believe the risk of loss was minimal, when in fact the risk was substantial.
As liquidating agent for US Central and WesCorp, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry. Recoveries from these seven additional legal actions would further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions. Thus, any recoveries would help to reduce the amount of future assessments on credit unions.
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
NCUA Sues Barclay’s Capital
۩ ۩ ۩
FDIC & CFPB Penalize Discover for Deceptive Marketing
۩ ۩ ۩
Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing
Discover Pays Additional $14 Million Penalty for Deceptive Marketing of Credit Card 'Add-On Products
(FDIC; September 24, 2012)
WASHINGTON, D.C. – Today, the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) announced a joint public enforcement action with an order requiring Discover Bank to refund approximately $200 million to more than 3.5 million consumers and pay a $14 million civil money penalty. This action results from an investigation started by the FDIC, which the CFPB joined last year. The joint investigation concerned deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection.
The agencies jointly determined that Discover engaged in deceptive telemarketing tactics to sell the company’s credit card add-on products. Payment Protection was marketed as a product that allows consumers to put their payments on hold for up to two years in the event of unemployment, hospitalization, or other qualifying life events. Discover also sold its Credit Score Tracker, designed to allow a customer unlimited access to his or her credit reports and credit score. The third product was Identity Theft Protection, which was marketed as providing daily credit monitoring. Lastly, Discover’s Wallet Protection product was sold as a service to help a consumer cancel credit cards in the event that his or her wallet is stolen.
Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product. Discover’s telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed. Because of the misleading language in thescripts and the actions of Discover’s telemarketers, consumers were:
=> Misled about the fact that there was a charge for the products: Discover’s telemarketing scripts often used language implying that the products were additional free “benefits,” rather than products for which a fee would be applied to their accounts.
=> Misled about whether they had purchased the products: The telemarketing scripts frequently suggested that consumers would not be charged for the products until after having a chance to review printed materials from Discover. Discover, however, did not provide consumers with the information until after Discover had already initiated the consumer’s purchase of a product.
=> Enrolled without their consent: Discover representatives processed the add-on product purchases without some consumers’ consent. These consumers were then charged for the product on their Discover card.
=> Withheld material information about eligibility requirements for certain benefits: Discover’s telemarketers typically did not disclose critical eligibility requirements for certain payment protection benefits, such as exclusions for pre-existing medical conditions and certain limitations concerning employment.
Enforcement Action
=> Stop deceptive marketing: Discover is required to institute certain changes to its telemarketing of these products that are designed to ensure that these unlawful acts do not occur again. Discover has also agreed to submit a compliance plan to the FDIC and the CFPB for approval, and to take specific corrective actions related to the products.
=> Pay restitution to consumers who purchased the products: Discover will pay approximately $200 million in restitution to more than 3.5 million consumers who were charged for one or more of the products between December 1, 2007 and August 31, 2011. Generally, all consumers affected by Discover’s deceptive practices regarding these products, except those who affirmatively made use of Payment Protection, will receive restitution, with amounts varying depending on when they purchased, and how long they held, the add-on products. All consumers will receive at least 90 days’ worth of fees paid (minus any refunds they have already received), with approximately 2 million consumers receiving full restitution of all of the fees they paid (minus any refunds they have already received).
=> Provide refunds or credits without any further action by consumers: Consumers are not required to take any action to receive their credit or check. If an affected consumer is still a Discover customer, he or she will receive a credit to his or her account. If an affected consumer is no longer a Discover credit card holder, the consumer will receive a check in the mail or have any outstanding balance reduced by the amount of the refund.
=> Submit to an independent audit: Compliance with the restitution terms of the order will be assured through the work of an independent auditor, who will report to the FDIC and the CFPB on Discover’s compliance with the joint FDIC-CFPB Consent Order.
=> Pay a $14 million penalty: The FDIC and the CFPB imposed civil money penalties of $14 million. Discover will pay $7 million of that penalty to the U.S. Treasury and $7 million to the CFPB’s Civil Penalty Fund.
Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing
(FDIC; September 24, 2012)
WASHINGTON, D.C. – Today, the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) announced a joint public enforcement action with an order requiring Discover Bank to refund approximately $200 million to more than 3.5 million consumers and pay a $14 million civil money penalty. This action results from an investigation started by the FDIC, which the CFPB joined last year. The joint investigation concerned deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection.
The agencies jointly determined that Discover engaged in deceptive telemarketing tactics to sell the company’s credit card add-on products. Payment Protection was marketed as a product that allows consumers to put their payments on hold for up to two years in the event of unemployment, hospitalization, or other qualifying life events. Discover also sold its Credit Score Tracker, designed to allow a customer unlimited access to his or her credit reports and credit score. The third product was Identity Theft Protection, which was marketed as providing daily credit monitoring. Lastly, Discover’s Wallet Protection product was sold as a service to help a consumer cancel credit cards in the event that his or her wallet is stolen.
Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product. Discover’s telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed. Because of the misleading language in thescripts and the actions of Discover’s telemarketers, consumers were:
=> Misled about the fact that there was a charge for the products: Discover’s telemarketing scripts often used language implying that the products were additional free “benefits,” rather than products for which a fee would be applied to their accounts.
=> Misled about whether they had purchased the products: The telemarketing scripts frequently suggested that consumers would not be charged for the products until after having a chance to review printed materials from Discover. Discover, however, did not provide consumers with the information until after Discover had already initiated the consumer’s purchase of a product.
=> Enrolled without their consent: Discover representatives processed the add-on product purchases without some consumers’ consent. These consumers were then charged for the product on their Discover card.
=> Withheld material information about eligibility requirements for certain benefits: Discover’s telemarketers typically did not disclose critical eligibility requirements for certain payment protection benefits, such as exclusions for pre-existing medical conditions and certain limitations concerning employment.
Enforcement Action
=> Stop deceptive marketing: Discover is required to institute certain changes to its telemarketing of these products that are designed to ensure that these unlawful acts do not occur again. Discover has also agreed to submit a compliance plan to the FDIC and the CFPB for approval, and to take specific corrective actions related to the products.
=> Pay restitution to consumers who purchased the products: Discover will pay approximately $200 million in restitution to more than 3.5 million consumers who were charged for one or more of the products between December 1, 2007 and August 31, 2011. Generally, all consumers affected by Discover’s deceptive practices regarding these products, except those who affirmatively made use of Payment Protection, will receive restitution, with amounts varying depending on when they purchased, and how long they held, the add-on products. All consumers will receive at least 90 days’ worth of fees paid (minus any refunds they have already received), with approximately 2 million consumers receiving full restitution of all of the fees they paid (minus any refunds they have already received).
=> Provide refunds or credits without any further action by consumers: Consumers are not required to take any action to receive their credit or check. If an affected consumer is still a Discover customer, he or she will receive a credit to his or her account. If an affected consumer is no longer a Discover credit card holder, the consumer will receive a check in the mail or have any outstanding balance reduced by the amount of the refund.
=> Submit to an independent audit: Compliance with the restitution terms of the order will be assured through the work of an independent auditor, who will report to the FDIC and the CFPB on Discover’s compliance with the joint FDIC-CFPB Consent Order.
=> Pay a $14 million penalty: The FDIC and the CFPB imposed civil money penalties of $14 million. Discover will pay $7 million of that penalty to the U.S. Treasury and $7 million to the CFPB’s Civil Penalty Fund.
Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing
۩ ۩ ۩
Saturday, August 18, 2012
Wall Street Banksters: Ongoing Bailouts & No Criminal Prosecutions!
۩ ۩ ۩
Neil Barofsky on the Ongoing Bailout of Wall Street and the Lack of Criminal Prosecutions
Welcome to Capital Account. The legacy of the financial crisis and the response from the government is still making headlines. It has turned into a legacy with taxpayers footing the bill and Wall Street paying less for its crimes. Today the SEC charged Wells Fargo's brokerage firm, as well as a former Vice President, for selling investments tied to Mortgage-Backed Securities without fully understanding their complexity or disclosing the risk to investors. Wells Fargo agreed to settle the charges. However, a fine of $6.5 million, no admission of guilt, and a 6-month suspension of the Vice President sounds like a handslap playing on a broken record. We talk to Neil Barofsky, the man who helped prosecute the CEO and President of Refco, and the watchdog for TARP -- the government-sposered bailout of Wall Street.
Neil Barofsky discuses the costs associated with the taxpayer funded bailouts of wall street doled out through tarp and the false promises made under the pretense of bailing out main street. He provides an in-depth account of his experience behind the scenes, as he tried to negotiate what he initially believed, was a program designed to save main street, but that he later discovered was really created with the full intention of bailing out wall street. That man is Neil Barofsky, the former Special Inspector General for TARP and author of "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street."
Also, Bloomberg reports that Russell Wasendorf Sr., the CEO of the bankrupt Peregrine Financial Group, was indicted on 31 counts for making false statements to regulators. We ask Neil Barofsky if, even without blatant confessions of guilt, there are legitimate criminal cases that could be built around executives at major firms. He cites the LIBOR scandal as the most current, and most obvious example of an opportunity for criminal charges and prosecutions to be filed by authorities.
Neil Barofsky discuses the costs associated with the taxpayer funded bailouts of wall street doled out through tarp and the false promises made under the pretense of bailing out main street. He provides an in-depth account of his experience behind the scenes, as he tried to negotiate what he initially believed, was a program designed to save main street, but that he later discovered was really created with the full intention of bailing out wall street. That man is Neil Barofsky, the former Special Inspector General for TARP and author of "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street."
Also, Bloomberg reports that Russell Wasendorf Sr., the CEO of the bankrupt Peregrine Financial Group, was indicted on 31 counts for making false statements to regulators. We ask Neil Barofsky if, even without blatant confessions of guilt, there are legitimate criminal cases that could be built around executives at major firms. He cites the LIBOR scandal as the most current, and most obvious example of an opportunity for criminal charges and prosecutions to be filed by authorities.
۩ ۩ ۩
Saturday, October 29, 2011
Bank Fees Charged to Consumers (Video) *Big Banks offend customers with debit card fee*
۩ ۩ ۩
Big Bank Fees Bank of America, with $2.2 trillion in total assets and earnings of $6.23 billion in the latest quarter, offended consumers with the announcement of a $5 debit card fee. Now Bank of America and other banks are maneuvering to mitigate this public relations disaster. Bank of America is now saying the debit card fee will be waived if the customer 1) uses direct deposit on their paycheck, 2) use a Bank of America credit card, and 3) maintain a minimum (undisclosed, but probably $1,000+) balance. SunTrust Banks and Regions Financial have also announced debit card fees. Some banks have explicitly stated they will not charge a debit card fee, including U.S. Bancorp, PNC Financial Services, Citibank, and KeyCorp. JPMorgan Chase has announced they are abandoning their debit card fee plan.
Watch Out for Stealth Fees Debit card fees aren't the only way a customer pays. Other fees are for receiving a paper statement, for using a teller, for not using your account enough, and for not maintaining a minimum balance.
Dodd–Frank Wall Street Reform and Consumer Protection Act This Act limited the swipe fees banks could charge merchants for accepting debit cards. The Federal Reserve set the new fee at a maximum of $0.24 per transaction, down from an estimated average of $0.44. The lower merchant fee, and lower bank revenues, went into effect in October 2011. Richard Hunt, President of the Consumers Bankers Association, maintains this regulation will cost the banking industry $8 billion and it is "the consumer who will be the big loser". Other analysts have estimated this reduction in fee income at less than $7 billion per year. In addition, limitations were placed on some overdraft fees, but this is controversial and litigation continues in the courts.
Big Bank Alternatives Local community banks and credit unions may not charge as many fees or as high a fees as the larger banks. Consider the services you use at your existing financial institution.. Ask for a fee schedule and comparison-shop prospective financial institutions. Some local community banks and credit unions do in fact charge high fees. Be careful with overdraft protection and courtesy pay programs offered by any bank or credit union. A fee-based plan is very expensive to the consumer, compared to an interest-based plan. ATM fees can be potentially expensive at any bank or credit union and may include a balance inquiry fee.
Some Big Banks Back Down From Debit Card Fee Bank of America triggered outrage among customers last month when it announced plans to impose a $5 monthly fee next year for using a debit card. Even President Barack Obama weighed in, saying banks shouldn't take advantage of their customers. But other big banks are not following in the steps of the nation's No. 2 bank. And now Bank of America itself seems to be wavering in its resolve. Bank of America appears to be responding to criticism over their plan to implement a $5 monthly debit card fee. NBC's Tom Costello has more.
Watch Out for Stealth Fees Debit card fees aren't the only way a customer pays. Other fees are for receiving a paper statement, for using a teller, for not using your account enough, and for not maintaining a minimum balance.
Dodd–Frank Wall Street Reform and Consumer Protection Act This Act limited the swipe fees banks could charge merchants for accepting debit cards. The Federal Reserve set the new fee at a maximum of $0.24 per transaction, down from an estimated average of $0.44. The lower merchant fee, and lower bank revenues, went into effect in October 2011. Richard Hunt, President of the Consumers Bankers Association, maintains this regulation will cost the banking industry $8 billion and it is "the consumer who will be the big loser". Other analysts have estimated this reduction in fee income at less than $7 billion per year. In addition, limitations were placed on some overdraft fees, but this is controversial and litigation continues in the courts.
Big Bank Alternatives Local community banks and credit unions may not charge as many fees or as high a fees as the larger banks. Consider the services you use at your existing financial institution.. Ask for a fee schedule and comparison-shop prospective financial institutions. Some local community banks and credit unions do in fact charge high fees. Be careful with overdraft protection and courtesy pay programs offered by any bank or credit union. A fee-based plan is very expensive to the consumer, compared to an interest-based plan. ATM fees can be potentially expensive at any bank or credit union and may include a balance inquiry fee.
Some Big Banks Back Down From Debit Card Fee Bank of America triggered outrage among customers last month when it announced plans to impose a $5 monthly fee next year for using a debit card. Even President Barack Obama weighed in, saying banks shouldn't take advantage of their customers. But other big banks are not following in the steps of the nation's No. 2 bank. And now Bank of America itself seems to be wavering in its resolve. Bank of America appears to be responding to criticism over their plan to implement a $5 monthly debit card fee. NBC's Tom Costello has more.
More Charts and Analysis!
USA and Global Economic News and Analysis
Apple (AAPL) financial performance and stock charts
Google (GOOG) financial performance and stock charts
Largest USA tech companies
Microsoft (MSFT) financial performance charts
Intel (INTC) financial performance charts
Intel (INTC) financial performance charts
VMware (VMW) financial performance charts
SalesForce.com (CRM) financial performance charts
Rackspace (RAX) financial performance charts
Cisco (CSCO) financial performance charts
Oracle (ORCL) financial performance charts
HP (HPQ) financial performance charts
IBM (IBM) financial performance charts
HP (HPQ) financial performance charts
IBM (IBM) financial performance charts
USA failed and problem banks
Largest USA banks
Federal Reserve statistical releases
FDIC quarterly banking profile
FDIC quarterly banking profile
JPMorgan Chase & Co. (JPM) financial performance charts
Citigroup (C) financial performance charts
Goldman Sachs (GS) financial performance charts
Wells Fargo (WFC) financial performance charts
Bank of America (BAC) financial performance charts
S&P 500 (SPX) charts and review
China economic, Internet, and technology news
Baidu (BIDU) financial performance and stock charts
Select news regarding the Universe, Earth, Humanity, Future
Apple, Google, Baidu, China, technology, financial system, stocks, markets, economy, science, environment, future
Follow Financial Controls (@FinConInc)
۩ ۩ ۩
Subscribe to:
Posts (Atom)
Seeking Alpha
