Receiving Wide Coverage ...
B of A Lawsuit Looming? And the financial crisis reckoning continues. Bank of America disclosed in a regulatory filing on Wednesday that a U.S. attorney's office (no word on which one yet) plans to recommend the Justice Department file a civil lawsuit against the bank over bad mortgage-backed securities. The bank also said it has raised its estimate of potential losses from litigation to $5.1 billion, from $2.8 billion. News of a potential lawsuit shouldn't come as too much of a surprise. American Banker's Rob Blackwell and Kate Berry predicted B of A would face the hatchet next, following reports of JPMorgan's (now possibly defunct) $13 billion mortgage-related settlement. According to the FT, "the threat of new civil action is fuelling speculation that B of A will seek to settle U.S. government mortgage cases against it in one hit, like rival JPMorgan."
What Did the Fed Say? The short answer is not much and nothing too unexpected. Essentially, during its two-day policy meeting this week, the central bank elected to press forward with its bond-buying program and, while it may start tapering in December, it also may wait until next year. Per the Times' Binyamin Appelbaum, the Fed's latest statement "amounted to a declaration that the Fed is not yet ready to decide, and it shed little light on how soon changes may come." The Journal says more clues may come in November when Fed chairman nominee Janet Yellen appears before the Senate Banking Committee for her confirmation hearing as Republicans are expected to press her about the bond-buying program. "U.S. equities declined from record territory [and] bond yields inched higher while the dollar attracted buyers," the FT reports, indicating investors had expected the central bank to adopt a more dovish outlook. "Although markets have assumed the Fed will not 'taper' its asset purchases until March, the statement implied it could still slow its asset purchases earlier than that," the paper explains.
Approved: The House passed a bill on Wednesday that would roll back a swaps provision of Dodd-Frank. The legislation, which would reduce restrictions requiring big banks to spin off risky swaps to subsidiaries not backed by the government's insurance fund, has little chance of becoming law due to lack of White House and Senate support. However, "the banks and lawmakers who support the proposal hope that the bipartisan support the bill received in the House will send a strong message to the administration to tread carefully as it drafts the remaining regulations necessary to fully enforce Dodd-Frank," notes Dealbook. Meanwhile, the Commodity Futures Trading Commission voted to finish consumer protection rules proposed a year ago, including "measures to close loopholes, reinforce internal risk controls and force brokers to provide more information to clients," Dealbook also reports.
Wall Street Journal
U.K. banks are considering bonus alternatives for staffers in order to comply with a new EU law that, starting in 2014, limits annual bonuses to no more than a year's salary. One alternative is to offer a monthly allowance in lieu of a big annual payout.
Rohan Ramchandani of Citigroup and Richard Usher of JPM, both of whom served on a committee that helps oversee U.K. foreign exchange markets, have been placed on paid leave amid a global probe into potential currency market manipulation, anonymice tell the paper.
New York Times
Meet Leon W. Weidman, the Scourge of Wall Street, "an unassuming 69-year-old career prosecutor," whose "pioneering use" of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 underpins many of the recent mortgage-related lawsuits/settlements.
Some entrepreneurs, investors and merchants think cryptocurrency bitcoin, frequently associated with its popularity in the black market, could serve more mainstream purposes. "They are convinced that bitcoin, though not widely understood, offers a path to lower payment processing and more secure transactions," the paper notes. "Instead of using bitcoin to buy illegal guns in the recesses of the web, they say, ordinary consumers will use it to buy legal goods from legal retailers and as easily as they now swipe their credit cards or exchange paper bills." Hmmm, we feel like we've heard a (albeit less mainstream, more privacy-driven) version of this before.