The Financial Industry Regulatory Authority (FINRA) recently issued a report outlining is its regulatory and examination priorities for 2012. The securities industry regulator is focusing on conduct and products meant to beat the market that are unsuitable investments for many investors.
To demonstrate that this blog is not just full of thoughts put to words, we offer the following link to an entertaining and thought provoking music video that proves that disappointment in, and anger against, Wall Street events over the last few years is not limited to this country.
Please welcome the acclaimed English acoustic duo Show of Hands, comprised of Steve Knightley and Phil Beer, performing their song Arrogance, Ignorance and Greed (AIG).
http://www.youtube.com/watch?v=T-n8ITk6UWM
Investors who bought toxic mortgage-backed bonds from Bank of America’s Countrywide, and homeowners seeking loan modifications are proposing drastic measures to better enable BofA to deal with the onslaught of their litigation without a bankruptcy or a receivership imposed by the Federal Deposit Insurance Corporation. According to a Reuters/CNBC.com article entitled “Will Bank of America Tale a Play Out of the Asbestos Handbook,” the proposed approaches include an asbestos litigation-style trust to deal with claims and litigation, a so-called “bad bank” managed by federal regulators, or the sale of litigation warrants by which public investors would purchase the right to receive whatever is left in a settlement trust. The bond investor litigants include American International Group (AIG) and the Federal Housing Finance Agency, among others.
The National Credit Union Administration (“NCUA”), acting as liquidating agent for failed corporate credit unions, has filed suit in a federal court in Los Angeles against Goldman Sachs. The complaint involves the sale of $1.2 billion of mortgage-backed securities that were "destined to perform poorly."
Continue reading "Credit Unions Sue Goldman Sachs for Misrepresenting Mortgage-Backed Securities" »
Bank of America plans to take another $13 billion in charges related to a pending settlement with private label mortgage-backed securities investors, including the Federal Reserve Bank of New York, Pimco Investment Management, and Blackrock Financial Management, according to a Reuters article entitled “BofA to take $13 billion more in charges: Bernstein.”
Continue reading "Mortgage-Backed Securities Problems Continue to Haunt Bank of America" »
J.P. Morgan Securities LLC has agreed to pay $153.6 million to settle SEC charges that it misled investors in a complex “built to fail” mortgage securities transaction just as the housing market was starting to plummet.
Best-selling “Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led To Economic Armegeddon,” by Gretchen Morgenson and Joshua Rosner, “calls out greedy guys behind mortgage mess,” according to a USA Today book review by Kathryn Caravan. See also “Home Truths,” by James Freeman of the Wall Street Journal. Both reviews provide examples of how the book peels back layer after layer of a bad onion to reveal how a nice-sounding idea (home ownership for all) turned into a house of cards that was doomed to collapse, after being propped up by private greed and public corruption.
Continue reading "The Subprime Mortgage Mess: How the American Dream Turned into a Nightmare" »
The National Credit Union Administration (“NCUA”) has filed suit against J.P. Morgan Chase and Royal Bank of Scotland seeking to recover more than $800 million in failed credit unions’ losses in residential mortgage-backed securities, and expects to file additional lawsuits against five to ten other Wall Street firms to recover billions of dollars in additional losses, according to a Wall Street Journal article by Ruth Simon and Liz Rappaport entitled “NCUA Sues J.P. Morgan, RBS Over Mortgage Bonds.”
Continue reading "Credit Union Administration Sues Wall Street Firms to Recover Investment Losses" »
Defense-minded institutions that have long remained on the sidelines when defrauded have finally woken up and are jumping on the plaintiff-recovery bandwagon as they seek to protect themselves against a variety of wrongdoing, according to Vanessa O’Connell’s Wall Street Journal article entitled “Company Lawyers Sniff Out Revenue.” These actions include waves of claims against Wall Street financial institutions for fraud in the sale of mortgage backed securities, CDOs and related exotic investments.
Continue reading "Institutional Investors Are Filing Big Claims Against Financial Services Firms" »
The Financial Industry Regulatory Authority (FINRA) has fined Credit Suisse Securities (USA) LLC $4.5 million, and Merrill Lynch $3 million. The fines arise out of FINRA’s findings that the firms misrepresented historical delinquency rates in connection with the residential subprime mortgage securitizations (RMBS) that the firms underwrote and sold. Upon learning of the errors, Merrill Lynch posted the corrected historical delinquency rates on its website, but Credit Suisse did not.
Bank of America expects to face legal losses this year for anywhere from $145 million to $1.5 billion. And that is just what it can reasonably estimate. Most of these losses stem from the underwriting of mortgage-backed securities.
Continue reading "Mortgage-Backed Securities Problems Continue to Haunt Bank of America" »
Gretchen Morgenson reports that the battle for the safety and soundness of U.S. financial markets is far from won, despite the Dodd-Frank financial reform act, as Wall Street lobbies Congress to relax certain key provisions of that act in an attempt to restart the “assembly line for selling toxic waste to investors.” See “Note to Banks: It’s Not 2006 Anymore.”
Continue reading "Wall Street Banks Lobby to Undercut Financial Reform" »
Four of the nation’s largest Wall Street banks are facing threatened lawsuits by the National Credit Union Association (“NCUA”) and, possibly, regulators if they do not refund approximately $50 billion that five “wholesale” or “corporate” credit unions used to purchase bonds backed by risky subprime mortgage loans, according to a Wall Street Journal article by Liz Rappaport called “Banks Hit for Credit Union Ills.” NCUA accuses the banks of misrepresenting the risks associated with the mortgage-backed securities.
According to a recent article in the Wall Street Journal, the SEC is looking into United States banks that have restructured troubled loans in order to make them appear healthier than they actually are. The SEC is looking into practices such as “extend and pretend” or “amend and pretend” in which a bank gives a borrower more time to repay a loan.
The Securities and Exchange Commission and the Justice Department are investigating whether Bank of America Corp., Citigroup Inc., UBS AG, and other banks submitted inaccurate data in an attempt to manipulate the London Interbank Offered Rate (LIBOR), according to a Wall Street Journal article by David Enrich and Jean Eaglesham called “U.S. LIBOR Probe Includes BofA, Citi, UBS.” The U.S. Commodity Futures Trading Commission, as well as British and Japanese regulators, are also investigating possible LIBOR manipulation, according to the article.
Continue reading "Did Big Banks Manipulate LIBOR Rates?" »
The asset-backed securities market – “the Wall Street credit machine that helped set off the financial crisis” – has come back to life, according to a New York Times article called “Wall Street Securitization Machine Back Into Gear?” Securities backed by commercial real estate, which apparently did not reach expected lows, are leading the pack. Bankers are calling the resurgence C.M.B.S. 2.0, referring to new versions of commercial mortgage-backed securities. But securities backed by bundles of car loans and collateralized loan obligations are also on the upswing.
Sophisticated institutional investors are bringing claims in waves against Wall Street financial institutions for fraud in the sale of mortgage backed securities, CDOs and related exotic investments. Most recently, Charles Schwab Corp. is among a group of financial institutions suing Goldman Sachs for making material misrepresentations and omissions in connection with the offer and sale of mortgage-related securities, according to Liz Moyer and Brett Philbin in their Wall Street Journal article, “Goldman Tallies Possible Litigation Losses.”
First it was Florida and the Southwest watching their housing prices plummet, now Seattle, Atlanta and Minneapolis have followed suit. The ongoing correction has yet to end as the housing market goes into a double-dip cycle. Mortgage applications are at a 15-year low. These developments do not bode well for the rest of the winter and into spring.
Continue reading "No Market is Immune to the Real Estate Crash" »
Real estate prices across the country are dropping even further according to the S&P/Case-Shiller Index. As reported on CNNMoney.com by staff writer Les Christie, recent results show prices in all 20 key cities dropped 1.3% for an annualized decline of 15%. Six markets reached their lowest price levels since the beginning of the bust in mid-2006. They are Atlanta, GA, Charlotte, NC, Miami, Portland, OR, Seattle and Tampa, FL. Sales volume is down by 25%. If we are not already in a double-dip slump we may be soon.
Continue reading "Falling Real Estate Prices Threaten Economic Recovery" »
A public hearing was scheduled by New York state lawmakers to “gather information on whether certain banks intentionally defrauded bond insurers about the creditworthiness of subprime mortgage-backed securities,” according to the Wall Street Journal. Joseph Morelle, who is the chairman of the New York State Assembly, said that he doesn’t “want to get ahead of (himself),” but if people were being mislead it's “obviously problematic.”
