Receiving Wide Coverage ...
Overturned: A $1.27 billion penalty against Bank of America was overturned Monday by a federal appeals court. A three-judge panel said federal prosecutors failed to prove Countrywide Financial, later acquired by B of A, had defrauded Fannie Mae and Freddie Mac when it sold them troubled loans in 2007 and 2008. While it found Countrywide knew it was selling faulty loans there was a lack of evidence of intent to deceive at the time the contract was written. Monday's ruling is seen as a blow to the Obama administration and future government attempts to prove fraud. The original verdict helped pave the way to nearly $45 billion in mortgage-securities settlements with Wall Street banks, and Monday's decision will not alter any of them, the papers said. While fighting the law doesn't often end well, the law doesn't always win, the FT says. Banks should look to B of A's example and perhaps show more resolve instead of readily paying whatever penalty the government demands, the papers say, although settling a case in court has its risks too.
Beefing Up Security: Swift will reveal a new set of security standards Tuesday for its bank members that will include security audit frameworks, certification requirements for third party vendors that help banks connect to the network and ways for the banks to identify payment pattern controls and identify suspicious behavior. The planned announcement follows attacks by cyberthieves in which they accessed the Swift system by fraudulently obtaining bank codes. The first was the $81 million cyberheist involving the New York Fed and Bangladesh Bank; others, reported last week took place in 2015 and involved banks in Ecuador and Vietnam, the latter was unsuccessful. Swift has said it was not made aware of the Ecuador incident and reminded banks of the need to report such incidents quickly. The chain of events brings to light the question of whether the network should be liable for security or its users should. Since the February attack involved the New York Fed, Swift remains adamant its systems were never breached, but the banks' systems were. Now, chief executive Gottfried Leibbrandt is framing these new standards as an effort by Swift to "step up to the plate" for its customers but says it won't work without banks and supervisors doing their part as well. Meanwhile, Rep. Carolyn Maloney, D-N.Y., pressed banking regulators for response to the series of
Libor Lawsuits Revived: A court ruling that dismissed claims against 16 banks accused of collectively manipulating the London interbank offered rate was overturned Monday. Plaintiffs claimed the alleged collaboration depressed the returns on their investments, but a U.S. District Court judge did not find the banks' alleged conduct to violate federal antitrust laws. On Monday, an appeals court reinstated the case, with a three-judge panel ruling the plaintiffs did successfully claim an antitrust injury "by alleging that they paid artificially fixed higher prices." The case was sent back to the lower court for further proceedings. Plaintiffs will still need to prove the allegedly rigged Libor rate influenced prices on their financial investments. Analysts said if the litigation is successful, it could cost banks billions of dollars.
Post-Scandal Bump: Lending Club shares increased 8.3% Monday after Chinese investment group Shanda increased its stake to 11.7% from about 7% – with an option to buy another 4.1%, according to a regulatory filing. Shares are still down 39% since the May 9 resignation of former chief executive Renaud Laplanche. Shanda, now the marketplace lender's largest investor, began building its stake before Laplanche's demise. It said in a statement this week it is "a strong believer" in LendingClub's business model and "positive on its long-term prospects as it continues to evolve and refine its business."
Wall Street Journal
JPMorgan's private banking unit has announced
Financial Times
Wells Fargo will continue lending to companies already
New York Times
Fintech companies are competing for the
Elsewhere ...
Reuters: Democratic U.S. Sen. Sherrod Brown wrote a letter to Treasury Secretary Jack Lew addressing concerns over the U.S.'s
Business Insider: Community Federal Saving Bank in New York is the second of fintech startup TransferWise's U.S. banking partners coming