Receiving Wide Coverage ...
HSBC Hit with Foreclosure Suit: Eric Schneiderman has struck again. This time it's at HSBC, which, on Tuesday, became the latest bank on the receiving end of a lawsuit from the New York Attorney General. This lawsuit accuses HSBC of ignoring a state law by failing to file forms that would have entitled homeowners facing foreclosure to loan modification negotiations. The Journal reports Schneiderman "may bring actions against other banks over the behavior he alleged against HSBC." He is also still "eyeing" lawsuits against Bank of America and Wells Fargo for violating terms of the national mortgage settlement. (American Banker readers will recall the NY AG's initial attempt to pursue the litigation against Wells and B of A was hampered by his own paperwork problems.) For HSBC, the suit is the "latest legal setback in the U.S.", the FT notes, following last year's settlement with regulators over money-laundering charges. Regarding Schneiderman's lawsuit, "the good news is that alleged offense is the kind that banks habitually get in trouble over," the FT's Lombard column argues. "And for HSBC that marks a kind of moral rehabilitation."
On the Subject of Nonbanks: A few pundits are weighing in on the Financial Stability Oversight Council's decision to designate AIG, Prudential and GE Capital as systemically important. "New systemic-risk tags are better late than never," Reuters Breakingviews columnist Agnes T. Crane writes via Dealbook. "The trouble is, five years on, watchdogs are still bogged down in the last crisis rather than looking out for the next one." Meanwhile, the FT's Lex column argues the nonbanks on the receiving end of the designation have yet to determine how they will be affected by it. Namely, will the additional oversight prove a distraction or will the label help firms market themselves as less risky? "On Tuesday, the shares and credit default swaps did not show big moves," the article notes. "The three can contest the distinction, but knowing just how important it will be for investors can only come when the requirements are finalized."
Wall Street Journal
Investors are asking JPMorgan Chase and Morgan Stanley to assemble synthetic collateralized debt obligations, "a risky investment blamed for helping unleash the financial crisis." The banks declined to comment for the article, but, according to a source familiar with the matter, they are currently trying to line up more interested investors and "likely won't proceed" unless they succeed in doing so.
The European Central Bank is facing resistance on its banking union.
A previously undisclosed stress test has revealed the Federal Housing Administration's projected losses over 30 years could reach $115 billion in an extreme economic scenario. Emails reviewed as part of an investigation by the House Oversight and Government Reform Committee "suggest the FHA didn't want the bleaker forecast included due to the uproar it might create."
America owes a lot to Federal Reserve Chairman Ben Bernanke, argues columnist Martin Wolf. "Broadly speaking, the Fed has done the right thing in trying to bring the U.S. and world economies through the crisis. It deserves praise," he writes. "But the persistence of the global imbalances and the huge surpluses of the corporate sector will combine to make achieving a strong and sustained recovery difficult."
Here's a potential discussion point for future BankThink columns: A new study has found "mark to market" accounting is the best way to spot a bank in danger of failing.
New York Times
Reminder: Today's the day the Securities and Exchange Commission will vote on a proposal to overhaul the money market fund industry.
Boutique bank Gleacher & Company is shutting down its investment banking business. It also named "restructuring expert" Christopher Kearns as chief executive.