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B of A Has Countrywide Problems; QE3 Continues; Barclays Board May Be Overhauled

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Receiving Wide Coverage ...

A Countrywide Haunting: Bank of America found itself on the receiving end of a $1 billion mortgage lawsuit filed by the federal government on Wednesday. Federal prosecutors are accusing the bank of carrying out a scheme ("called the 'Hustle' and 'High Speed Swim Lane'") started by its Countrywide unit that defrauded government-backed mortgage agencies Fannie Mae and Freddie Mac "by churning out loans at a rapid pace without proper controls." B of A is denying wrongdoing. The case appears to be the latest move in the government's renewed crusade to punish mortgage lenders for their part in the 2008 financial crisis. JPMorgan Chase found itself on the receiving end of a civil lawsuit related to Bears Stearns' bad lending practices earlier this month with New York Attorney General Eric Schneiderman promising more cases were on the way. But many people — including former FDIC chairman Sheila Bair, who said in a meeting with American Banker recently she doubted the effectiveness of lawsuits and enforcement actions brought against institutions and not individuals — see the actions as a "too little, too late" scenario. "If Countrywide committed 'spectacularly brazen' fraud, why can't the [government] identify any individual perpetrators?" Times reporter Binyamin Appelbaum tweeted following the lawsuit's announcement. Federal prosecutors could apparently identify individuals involved (which, perhaps, can be seen as more of an issue). As a follow up tweet from Reuters blogger Alison Frankel noted: "The complaint actually identifies two Countrywide officials by name but they're not named as defendants." Washington Post, New York Times,Wall Street Journal, Financial Times

QE3 Continues: The Federal Reserve voted yesterday to continue its most recent stimulus plans — which includes purchasing $85 billion in long-term bonds a month through the rest of the year and an additional $40 billion of mortgage-backed debt per month in 2013 — citing the continued need to aid a jobs market recovery. The decision to keep policy accommodative may be infuriating to some. (One Journal commenter wrote "Let's stop calling it 'quantitative easing' and start calling it by its true description: currency debasement.") However, it shouldn't be all that surprising that the Fed kept things steady since unlimited QE3 was announced just last month, with only one (albeit improved) jobs reports released since then. ("This is news?" Another Journal commenter asked. "We already know the Fed plans on suppressing rates, oh ... forever.") The committee next meets December 11 and 12. Wall Street Journal, Washington Post, New York Times

A Barclays' Board Clear Out?: The Journal and the FT are at odds over just how much of a purge incoming Barclays board chairman David Walker is planning upon his takeover, as he moves to revamp the bank's tarnished image. The FT seems to believe a "clean sweep" of board members is forthcoming after unnamed associates disclosed Walker is "set to steadily replace most non-executives over the next six to 12 months" and also "keen to bring in several new top executives." But the Journal believes Walker is, instead, looking to fill three gaps and also reports that Peter Levene — former chair of Lloyd's of London and a potential replacement cited in the FT article — has not been approached about becoming a board member. A source "close to Barclays" also denied the overhaul.

Wall Street Journal

Credit Suisse is planning more cutbacks after net profit fell in the third quarter. Specifics on how many jobs will be cut have yet to be provided.

Financial Times

FHFA acting director Edward DeMarco's days may be numbered. The paper reports senior White House officials have been "quietly telling housing industry activists in recent weeks that he will be replaced" should President Obama win re-election. DeMarco's position at FHFA has been in question since he went against the Obama administration's wishes and refused to allow principal reductions on Fannie Mae and Freddie Mac home loans to underwater borrowers.

The U.S Treasury and the Federal Reserve rejected a call to stop using the London interbank offered rate in their bailout programs, following a request from Sigtarp Christy Romero earlier this month. The Fed said "98% of its loans that relied on Libor have been repaid," while the Treasury said "it lacks evidence that Libor is currently misstated."

New York Times

Former Goldman Sachs director Rajat K. Gupta was sentenced Wednesday to two years in prison for insider trading.

This article takes a look at "for whom the golden parachute" really shines. (Spoiler alert: it shines on those who favor acquisitions.)

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Big Winners and Losers for Banks on Election Night

Republicans won a sizable victory late Tuesday, retaking the Senate after losing it eight years ago. Banks, too, largely benefited, as an ally of the industry captured a Senate seat in West Virginia, two credit union allies fell and a key Democratic senator squeaked past. Here's how election night played out for banks.

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