Category Archives: Regulations and regulators

Bob Goodwin: Software Engineering in Crisis – Healthcare.gov is Just the Dead Canary

It has been a good generation to be involved with software. The scarcity of the skillset combined with the demand for the output have generated outsized incomes, while the work has been consistently rewarding. Our quirky group of builders has had an outsized influence on our industries, not to mention our culture and ideals. But that influence is looking less benign as the rigid procedures of computing are changing commercial relationships and the application of the law.

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David Dayen: IRS Confirms that $12 Billion in “Mortgage Relief” in National Mortgage Settlement Completely Worthless

The IRS settles something I noticed a while ago and has now been finally confirmed. In short: big banks who robbed homes from Americans got a penalty that entailed, quite literally, giving homeowners worthless allowances.

The issue concerns the Mortgage Forgiveness Debt Relief Act, which expires at the end of the year. After December 31, all mortgage relief that involves debt forgiveness of any kind will be taxable to the borrower. This affects principal reductions, of course, but also short sales, with the idea being that this involves the bank “forgiving” the difference between the total owed on the mortgage and the price of the short sale. There are hardships exemptions to this but they involve the functional equivalent of bankruptcy – you have to prove that your total liabilities exceed your total assets.

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CFTC’s Bart Chilton Takes it to the (Position) Limits One More Time

Yves here. This post is important not simply because it describes where the fight over position limits stands and why it’s important, but it also gives some insight into regulator processes. It makes clear how even as few as two well placed officials, Bart Chilton and Gary Gensler, did a great deal to hold the line against predatory large financial firms. It also shows how hard regulators have to fight to do their job.

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Bill Black:The Department of Justice’s Willful Blindness to the Willful Blindness of CEOs (Steve Cohen Edition)

Yves here. I’ve been loath to write about the prosecution of SAC Capital because I’ve viewed it as a misuse of scarce SEC and DoJ resources. We had a global financial crisis and they make their top priorities two hedgie insider traders, Raj Rajaratnam and Steve Cohen?

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Judge Rakoff Blasts Breuer, Prosecution of Companies Rather than Individuals in Bar Speech

Absent sitting on the Supreme Court, it is difficult for a single judge to effect much change. Yet Jed Rakoff, in sending the SEC back to the woodshed in two separate cases over its failure to get factual admissions, meaning admissions of misconduct, on civil settlements of SEC cases, singlehandedly embarrassed the SEC and the Department of Justice into seeking these statements (for instance, numerous media reports indicate that the Administration wants that sort of confession as part of its pending settlement with JP Morgan).

Rakoff threw down another gauntlet in a New York Bar Association speech on Tuesday.

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House Pushing Back on Trade Deal; More Detail on How Secret Arbitration Panels Undermine Laws and Regulations

Wow, this is amazing. Word has apparently gotten out even to Congressmen who can normally be lulled to sleep with the invocation of the magic phrase “free trade” that the pending Trans Pacific Partnership is toxic. But this isn’t over until the fat lady sings. So this is the time when it is REALLY important to call or e-mail your Representative and let him or her know how terrible this deal is and how firmly opposed to it you are.

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David Dayen: FHFA Will Secure Up to $28 Billion From Banks in Its MBS Lawsuit

An analysis at Bloomberg Law puts some numbers down that I hadn’t seen all in one place previously. The headline effort is to pin down what other banks being sued by the FHFA over mortgage-backed securities passed to Fannie and Freddie with poor underwriting will have to pay, given the standard set by the JPMorgan Chase settlement for $4 billion. The report, by Nela Richardson, actually botches that job by adding the $1.1 billion that FHFA simultaneously received from JPMorgan through reps and warranties on raw mortgages, and doing the calculations based on a $5.1 billion award. Only the $4 billion has anything to do with the lawsuit, which was about $33 billion in Fannie and Freddie purchases of MBS. In other words, FHFA netted about 12 cents on the dollar from JPMorgan. Redoing Richardson’s work, you can calculate how much that means other banks would be expected to pay FHFA in any settlement if they paid 12 cents on the dollar:

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Richard Alford: On Grading the Bernanke Fed

We are certain to hear more and more appraisals of Bernake’s tenure as Fed chairman as he approaches the end of his term. But will they use good benchmarks? We suggest measuring his performance against his claims for the Fed’s objectives and what he said the central bank could accomplish. Not surprisingly, we find that he came up short.

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