Category Archives: Regulations and regulators

Ian Fraser: Something Sinister About the Lack of Prosecutions at Lehman Brothers

By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. .

This is the first interview that Chicago lawyer Anton Valukas has given since the publication of his 2,292 page report into the bankrutpcy of Lehman Brothers on March 11th, 2010. At that time, Valukas found strong evidence of financial and accounting fraud designed to deceive investors at the defunct New York-based investment bank. Valukas is surprised, especially given Lehman Brothers’ rampant abuse of Repo 105 to disguise its precarious financial position in the quarters ahead of its September 2008 collapse, that the former Lehman Brothers’ chief executive Dick Fuld or any other Lehman Brothers’ director has been charged with fraud or related offences.

The Persistent Power of Finance, Um, JP Morgan

By C.P. Chandrasekhar, Professor of Economics, School of Social Sciences, Jawaharlal Nehru University, New Delhi. Cross posted from Triple Crisis

In a move that went contrary to what is expected of regulators, the Securities and Exchange Commission of the US approved in mid-December a controversial JP Morgan-created exchange-traded fund (ETF) backed by physical supplies of copper.

Bank of America Foreclosure Reviews: Whistleblowers Reveal Extensive Borrower Harm and Orchestrated Coverup (Part II)

In the executive summary to this series, we provided an overview of OCC/Federal Reserve foreclosure reviews which were abruptly settled at the beginning of January. Critics anticipated that the flawed design, of having supposedly “independent” review firms hired by the banks themselves, meant the reviews were highly unlikely to find much if any damage to homeowners. Leaks during the course of the reviews confirmed these concerns, revealing that the review process at many of the major servicers was chaotic and the reviews were designed and scored so as to make a finding of harm virtually impossible.

As bad as that sounds, the reality is even worse.

Bank of America Foreclosure Reviews: Whistleblowers Reveal Extensive Borrower Harm and Orchestrated Coverup (Part I – Executive Summary)

After extensive debriefing of Bank of America whistleblowers, we found overwhelming evidence that the bank engaged in certain abuses frequently, in some cases pervasively, in its servicing of delinquent mortgages. This is the first in a series of posts discussing our findings and providing support for these charges.

Mirabile Dictu! Obama Likely to Nominate Mary Jo White to Head SEC

Obama’s likely nomination of Mary Jo White to head the SEC is such a departure from his normal picks that it is enough to make me believe in the claims that he plays 11 dimensional chess. There must be more here than meets the eye.

Schadenfreude Alert: Has Departing SEC Enforcement Chief Robert Khuzami Become Damaged Goods?

Reader Mrs. G. took note of how Khuzami’s effort to defend his record in the National Law Journal backfired.

Will New Consumer Financial Protection Bureau New Rules for Struggling Homeowner Stop Predatory Servicing?

The Wall Street Journal gives a teaser, in the form of excerpts from a speech to be made later today, on new rules the Consumer Financial Protection Bureau will be implementing to regulate how servicers treat homeowners who become severely delinquent on their mortgages.

Marcy Wheeler: Once Again, Jamie Dimon Gets Special Treatment

By Marcy Wheeler. Cross posted from emptywheel

Yesterday, the Office of the Comptroller of the Currency issued two orders to JP Morgan Chase, one related to its London Fail Whale, the other related to failures in its Bank Secrecy Act/Anti-Money Laundering compliance.

More Whistleblower Leaks on Foreclosure Settlement Show Both Suppression of Evidence and Gross Incompetence

No wonder the Fed and the OCC snubbed a request by Darryl Issa and Elijah Cummings to review the foreclosure fraud settlement before it was finalized early last week. What had leaked out while the Potemkin borrower reviews were underway showed them to be a sham, as we detailed at length in an earlier post. But even so, what actually took place was even worse than hardened cynics had imagined.

Richard Alford: To Learn or Not to Learn, That is the Question

By Richard Alford, a former New York Fed economist. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side.

The US has experienced numerous disasters both natural and man-made. Unfortunately, the authorities have not always availed themselves of the opportunity to learn from these episodes.

The CFPB’s New Stealth Usury Law on Mortgages and Why It’s Desirable

With the looming debt ceiling pigfight consuming a lot of financial media bandwidth, some important stories are not getting the attention they warrant. One is on the hard fought and finally settled qualified mortgage rules just finalized by the Consumer Financial Protection Bureau. Georgetown law professor Adam Levitin in a new post describes how the new QM rules are a defacto usury law for the 21st century. Despite his good discussion of the QM and the history of usury laws, however, he peculiarly does not explain why usury laws are a good thing. Perhaps it seems obvious, given the explosion of economically unproductive consumer debt since they’ve effectively been eliminated.

Let me give you the reason why well designed usury laws are desirable, then I’ll turn the mortgage-related issues specifically.

UBS Risk Management Fiasco Illustrates Hidden Big Bank IT Time Bombs

Yves here. One of the sources of risk in big and even moderately big banks that does not get the attention it deserves is information systems

Another Nightmare, “Zombie Title” Shows How Servicer Refusal to Foreclose Hurts Stressed Homeowners and Communities

One of the popular conservative memes is to fulminate that lots of Americans have been living “rent free” in homes slotted for foreclosure, taking advantage of the fact that court dockets are crowded. An important Reuters piece documents the flip side of this picture: what happens when the servicer starts foreclosure but keeps the property in limbo-land, and the homeowner has decamped, on the mistaken assumption that foreclosure was imminent? The Reuters tag phrase for this syndrome, “zombie title” doesn’t begin to do justice to the horrorshow that borrowers experience.

Former Deutsche Bank Employee Claims Bank Took Big Libor Bets During Crisis Because It Could Influence Rates

The Wall Street Journal has an exclusive story based on a whistleblower leak, apparently with supporting transaction records.