Receiving Wide Coverage ...
BofA's $16.7B Settlement: The Justice Department and Bank of America are expected to announce a $16.7 billion deal Thursday to settle charges the bank misrepresented the quality of its mortgage-backed securities. "The settlement amount is the largest ever reached between the U.S. and a single company, and is approximately equal to the bank's total profit for the past three years," the Wall Street Journal reports. Bank of America chief Brian Moynihan has said the deal will resolve the last of the big lawsuits against his bank tied to the financial crisis and its acquisitions of Merrill Lynch and Countrywide Financial. Settlements like this frequently spur outcries about the necessity of prosecuting top executives in order to affirm accountability, and it seems as if the U.S. attorney's office may agree. Federal prosecutors in Los Angeles are planning to bring civil lawsuits against Countrywide's former chief executive Angelo Mozilo and other ex-Countrywide executives, as Bloomberg News first reported Wednesday. Mozilo, "the figure most associated with the subprime mortgage boom," was fined $67.5 million by the Securities and Exchange Commission in 2010 but escaped criminal charges when the Justice Department dropped a probe in 2012, the Financial Times writes. Mozilo's lawyers have said their client "has a serious illness," according to the New York Times, and prosecutors have asked to see his health records.
Parsing Fed Minutes: Federal Reserve officials are increasingly butting heads over the question of when to raise interest rates, according to the minutes from the central bank's July meeting. Analysts disagree about whether the hawkish minority is gaining influence or if policy discussions are just becoming more polarized, according to the Times. The Journal says officials who want to raise rates earlier than mid-2015 remain outnumbered by those who want to see more proof of the labor market's recovery. The Fed will communicate more details about the wind-down of its stimulus campaign "well before" hiking rates, according to the FT.
Tangled Up in AML: You don't need to shake a Magic 8 Ball to know Standard Chartered's immediate outlook is not so good, according to news analyses. The British bank's $300 million settlement over alleged deficiencies in its system for reviewing transactions and flagging suspicious activity "reinforces the disturbing impression that Standard Chartered's top leaders are not on top of things," according to Reuters Breakingviews' George Hay. The Journal notes the challenges Standard Chartered is likely to encounter as it seeks to improve its anti-money laundering system: "If the system is set up to flag too many, the compliance department will be inundated with transactions that aren't actually suspicious
If a bank sets its system up to catch fewer transactions, it runs the risk of missing potentially suspicious activity and being scrutinized by authorities for the lapses." The FT takes a broader view of banks' recent AML compliance woes, noting Standard Chartered, HSBC and BNP Paribas face not only fines but also potentially harmful levels of increased risk aversion and "backlash from clients ditched as a result of regulatory scrutiny."
Go Buy Yourself Some Nice Bottle Service: Wall Street banks are boosting junior bankers' salaries in an attempt to better compete for the hearts, minds and spreadsheet skills of recent graduates. Goldman Sachs plans to raise starting salaries by about 20%, while Morgan Stanley already hiked pay. Wall Street Journal, Financial Times
Wall Street Journal
Citigroup may not have too much trouble finding a buyer if it decides to sell its retail banking business in Japan, according to the paper. While the business is hardly a "big moneymaker," "it is thought to have a relatively wealthy customer base."
New York Times
Bitcoin start-up Chain, "which aims to make it easier for developers to build Bitcoin applications, announced on Wednesday that it had closed a $9.5 million investment round led by Khosla Ventures, bringing its total funding to $13.7 million."
