Receiving Wide Coverage ...
Cracking the Tax Code: The taxman is the latest victim of identity theft. The Internal Revenue Service said hackers stole tax-return information for about 100,000 U.S. households, including Social Security numbers. The thieves used the IRS's own online services to penetrate its databases, cracking the code of multistep authentication processes. Interestingly, the IRS commissioner, John Koskinen, said the incident was "not a hack or data breach. These are imposters pretending to be someone who has enough information" to get more. "These are actually organized crime syndicates that not only we but everybody in the financial industry are dealing with," Koskinen said. The attack on the IRS is especially troublesome as "it particularly reflects crooks' ability to carefully aggregate vast amounts of personal data from multiple sources, and plan and execute highly sophisticated schemes," the Wall Street Journal article said. While the immediate damage from the attack appears to be limited, with only about 15,000 refunds, totaling about $50 million, paid out wrongfully, IRS officials are worried the hackers are simply sitting on their stolen trove of data and plan to use it for identity theft next tax season. New York Times, Wall Street Journal
Meet the 'Ringmaster': Former Citigroup and UBS trader Tom Hayes, whom prosecutors called the "ringmaster" of the scheme to rig the London Interbank Offered Rate, went on trial in London on Tuesday. Although Hayes has pleaded not guilty, the U.K.'s lead prosecutor said Hayes has already admitted he's guilty during the hours of voluntary testimony he previously submitted. Hayes led a group of about 25 traders at 16 separate banks in an effort to rig Libor. Hayes has previously explained the rigging went "much higher" than him and was directed by bank leaders, not rank-and-file traders. Hayes, who is married to a corporate lawyer who accompanied him to court on Tuesday, "was known as being so gifted but awkward that his colleagues nicknamed him 'Rain Man' and 'Kid Asperger,'" the Journal reported. New York Times, Wall Street Journal
Wall Street Journal
Banks that serve cross-border customers will soon get help and advice from a federal regulator on how avoid running afoul of anti-money laundering laws. The Office of the Comptroller of the Currency will join an existing program run by the Federal Deposit Insurance Corp. that gives banks a rundown of "best practices" on how to deal with customers along the U.S.-Mexico border. The OCC's move comes as businesses in many U.S. border towns complain banks are closing branches in their towns, or closing their accounts.
Student-loan servicers do not appear to be swindling active-duty service members, a U.S. Education Department investigation found. The agency launched its probe after the Justice Department last year fined servicer Navient Solutions $60 million for bilking military members on student loans by charging higher interest rates than allowed by law. The Education Department's investigation focused on the four largest student-debt servicers; the review of the remaining loan servicers will be completed later this year.
Milwaukee Journal-Sentinel: The $200 million agreement reached with Associated Banc-Corp is the largest redlining settlement ever procured by the U.S. Department of Housing and Urban Development, the agency said. The Green Bay, Wis., bank has agreed to provide hundreds of millions of dollars in mortgage financing in Chicago, Milwaukee, Minneapolis and other markets in Illinois and Wisconsin. For some of those mortgages, Associated Bank will provide reduced interest rates, downpayments or subsidized closing costs. Associated has already taken a number of steps to address the weaknesses that HUD found, such as opening branches in or near communities with large populations of minority groups, and opening loan-production offices in minority census tracts in Chicago and Milwaukee.
Houston Chronicle: An unsigned editorial calls for jail time for bankers who commit illegal acts. The fines doled out thus far to banks for various misdeeds from the financial crisis will do little to deter banks and bankers from continuing to cheat. "A slap-on-the-wrist $9 billion fine for an $85 billion fraud is not going to stop the banks from cheating. They will not stop until a living, breathing human being is held responsible and serves hard time," the editorial said.
The Hill: Now that it appears the U.S. Postal Service isn't likely to get into banking any time soon, banks are saying they weren't scared anyway. "These people are not that good at managing how to deliver the mail and they want to get into this business?" asked Francis Creighton of the Financial Services Roundtable. Creighton added his group "doesn't even take this as a serious issue." Camden Fine of the Independent Community Bankers Association quipped, "The idea of trying to salvage a floundering operation by venturing into a new business with inherent risks and for which the Postal Service has no qualifications or expertise defies logic, reason and prudence." Then there's Richard Hunt of the Consumer Bankers Association: "CBA has expressed and will continue to express concern in response to the idea of a federal agency, which has lost billions of taxpayer dollars over the years, entering the financial services space."