Law and regulation

The second half of December is generally a slow period for news, with many people on vacation and businesses and government closed on holidays. Still, banks made a number of significant announcements this holiday season. In many cases the timing of disclosures may have been driven by circumstance - regulators appeared eager to wrap up settlements by yearend.

Lawmakers are expected to forge ahead on several key initiatives in the New Year, including housing finance reform -- but must move quickly in the early part of 2014 before legislative action grinds to a halt ahead of the mid-term elections in November.

JPMorgan Chase agreed to settle a lawsuit brought by the Federal Home Loan Bank of Pittsburgh after a judge ordered the JPMorgan to turn over the government's draft complaint at the center of its $13 billion deal with regulators.

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Wells Fargo and U.S. Bank are among the institutions still offering the controversial loan product in the face of tough guidance that took effect in November.

Another Side of the Bitcoin Debate: Pamela J. Martinson and Christopher P. Masterson of Sidley Austin LLP took on one of 2013's hottest topics – Bitcoin – by warning there were hazards in lending to the cryptocurrency's users. "Owned Bitcoin has the potential to be collateral for loans, but creditors are likely more concerned with restricting Bitcoin acquisition or use by borrowers due to the uncertain regulatory landscape, irreversible nature of payments, extreme volatility of value and anonymity of the system," they wrote. One reader felt a borrower's use of Bitcoin wasn't always relevant. "If the debtor uses another asset, like a traditional bank account, and does not offer the bitcoin as collateral, what business is it of the bank whether that person or company owns or handles bitcoin?" he wrote. Another commenter thought the authors were selling the cryptocurrency short. "Bitcoin technology introduces some very new novel ways to use bitcoins in collateral and escrow transactions that simply have no parallel in today's banking system," the reader argued. "In a nutshell, because the authority to transfer Bitcoin is established through mathematics rather than institutions, it is possible to create elaborate mathematical equations … where control of the Bitcoins is spread across multiple parties." (Indeed, the economics and technology writer Eli Dourado has described "m of n" multi-signature transactions, in which bitcoins cannot be released from an account without the consent of at least one party plus an arbitrator.) Martinson and Masterson described loan agreements with covenants or reps and warranties that restrict borrowers' use of Bitcoin, and a commenter on Reddit smelled foul play, grumbling, "Here's another way in which banks are trying to squelch Bitcoin." But another Redditor had a more prosaic take: "Banks are so stupid, they can't change their paradigms so they are completely missing the boat."

Federal Reserve Board Chairman Ben Bernanke said Friday that the headwinds that have until now slowed down the U.S. recovery may be lessening, offering a positive signal the economy is likely to improve this year.

Federal Reserve Governor Jeremy Stein said banks that rely on deposits for funding have an advantage over counterparts that rely on the shadow banking system, such as repurchase agreements, to finance investments in illiquid assets.

Sandra Braunstein, the director of the Federal Reserve Board's division of consumer and community affairs, plans to retire on April 1, the agency announced Jan. 3.

Mackinac Financial (MFNC) in Manistique, Mich., has completed the redemption of stock originally issued to the Treasury Department under the Troubled Asset Relief Program.

WASHINGTON — Sandra Braunstein, the director of the Federal Reserve Board's division of consumer and community affairs, plans to retire on April 1, the agency announced Friday.

Regulators are hoping to release an interim final rule next week designed to satisfy banker demands to change a provision of the Volcker Rule that threatens to force smaller institutions to take millions of dollars in write-offs.

Regulators are hoping to release an interim final rule next week designed to satisfy banker demands to change a provision of the Volcker Rule that threatens to force smaller institutions to take millions of dollars in write-offs.

Fred Joseph retired from overseeing banks and securities firms last month. In a wide-ranging interview, he reflected on his career and provided perspective on the future of the banking industry.

Under Fincen's March 2013 guidance, companies that transmit virtual currency must register as money services businesses. De Castro was unsure whether his investment company would be treated the same way. According to the letter from Fincen, its rules are not meant to apply to De Castro's business.

Central Valley Community Bancorp in Fresno, Calif., has redeemed $7 million of preferred stock issued to the Treasury Department under the Small Business Lending Fund.

So far, the big mortgage servicers have received stellar report cards for their compliance with the $25 billion national settlement. That could change this year as testing gets tougher -- potentially costing these companies further embarrassment and penalties.

Fred Joseph retired from overseeing banks and securities firms last month. In a wide-ranging interview, he reflected on his career and provided perspective on the future of the banking industry.

While a bankruptcy court has traditionally been a "debtors’ court" committed to helping grant debtors a fresh start, it should not allow for unchecked opportunities to hold the whole process hostage.

The push to regulate payday lenders is expanding to the city of Houston, where officials have agreed to join the growing list of Texas cities to approve new regulations on the industry.