Law and regulation

The federal agency that oversees Fannie Mae and Freddie Mac filed lawsuits Friday against 17 financial institutions, including some of the largest American banks, alleging that they made misrepresentations when they sold private-label mortgage-backed securities to Fannie and Freddie.

A single acquirer picked up the operations of two failed Georgia banks late Friday in a deal costing the Federal Deposit Insurance Corp. nearly $72 million.

The state attorneys general have a secret weapon in their negotiations with the largest mortgage servicers: the results of a HUD investigation into the banks' robo-signing practices.

Investor's stake in the future of Bank of America shows a boldness that banks now lack.

Regulators have pushed Bank of America Corp. to show what measures it could take if conditions worsen for the Charlotte, N.C., lender, according to people familiar with the situation.

The Treasury Department said Thursday that it did not pay any incentives for foreclosure prevention efforts to Bank of America Corp. and JPMorgan Chase & Co. in the second quarter, as the two banks still need "substantial improvement" in their mortgage servicing operations. But Wells Fargo & Co. did make the cut.

In the Dodd-Frank Act, Congress included an exemption from the five percent risk-retention requirements applied to residential mortgages. Unfortunately, in their proposal to define what qualifies as a "qualified residential mortgage" under that exemption, regulators included only a very narrow test of borrowers' credit risk.

The deals announced Tuesday paved the way for Goldman's sale of its Litton subsidiary to Ocwen Loan Servicing. Both Goldman and Ocwen agreed to reforms in response of allegations of loan-servicing improprieties.

The Federal Reserve Board's decision to hold public hearings and extend the comment period on Capital One Financial Corp.'s planned acquisition of ING Direct has drawn the ire of House Financial Services Chairman Spencer Bachus.

Cullen/Frost Bankers Chief Executive Dick Evans says he's "not interested" in making acquisitions outside of Texas, and derides mounting competitive threats from community bank rivals by comparing them to the "juvenile delinquents down the street."

Banks of all sizes are tackling changes in regulations such as RESPA. Bank of Billings is using loan documentation compliance software to meet the challenge.

The Federal Trade Commission is mailing more than 110,000 refund checks to consumers defrauded by an online operation that tricked payday loan applicants into paying for an unrelated debit card.

The international coordinating body for financial regulation announced Thursday that it has approved an initial set of recommendations for various countries to use to strengthen the oversight of their shadow banking systems.

The Capital One acquisition of ING Direct USA is, as far as we know, the first time size alone has been made an M&A approval criterion for the Federal Reserve.

The banking industry is anxiously awaiting a slew of regulations dealing with systemic risk, capital requirements, and liquidity.

The Federal Reserve on Thursday announced two written agreements and three civil money penalties.

Total U.S. demand deposits are around $1 trillion. China and Japan each hold around $1 trillion in U.S. Treasuries.

Federal Reserve Board Gov. Elizabeth Duke said Thursday that more must be done to ease payments on troubled borrowers to assist the still-struggling housing market.

When the policy-setting committee of the Federal Reserve forecasts the long continuation of a low-rate environment, the act of taking on additional interest-rate risk suddenly looks a lot less threatening. But banks that look at the FOMC's stance and feel emboldened to take on more interest-rate exposure than they already have may wind up finding their regulators once again sniffing around their securities portfolios for signs of trouble.

The proposal made to require all banks located within the U.S. to report interest payments to nonresident alien depositors would be detrimental to economic growth in local communities and expose those nonresident depositors to possible criminal activity aided by unstable and corrupt foreign governments.