Wall Street Journal
JPMorgan Chase won a key legal battle in its effort to avoid paying billions of dollars stemming from Washington Mutual's alleged misdeeds. A federal judge on Wednesday ruled the Federal Deposit Insurance Corp., not JPMorgan, which acquired the thrift in 2008, is liable for legal claims related to WaMu. The agency can appeal the ruling; an FDIC spokesman declined to comment. If the ruling survives appeals, JPMorgan is likely to avoid having to set aside more money into legal reserves, and likely will only be responsible for a small portion of WaMu liabilities, analysts said. The ruling does not affect a $13 billion fine assessed on JPMorgan by the Justice Department in 2013 related to second mortgages. The ruling Wednesday comes from a lawsuit filed by Deutsche Bank on behalf of trusts that held WaMu bonds.
MasterCard has teamed up with Somalia's Premier Bank to begin distribuing credit cards there, after other banks pulled out of the war-torn country amid worries about money-laundering liability. "We're not lowering our standards, we are keeping with all anti-money-laundering regulations," a MasterCard executive said on Wednesday at the World Economic Forum in Cape Town, South Africa. "If the country's not under sanctions, it's open for business," he said of Somalia. MasterCard expects its credit cards will first be used primarily for ATM cash withdrawals. Somalia's population has struggled with basic financial needs ever since banks have pulled out of the country, as the population has relied almost exclusively on remittances from abroad. Banks have left Somalia on concerns they could be held responsible for unwittingly processing transactions for groups involved in terrorism. Abdirahman Yusuf Ali Aynte, a Somali government official, praised MasterCard's decision. "It is a major signal that
there is now a safer, formal, more secure and more traceable way of transferring funds to Somalia."
A recent report from the Brookings Institution expressing worries about loan-to-deposit ratios is misguided, "Heard on the Street" says. The typical reasons for an increase in deposits doesn't apply now and banks' loan growth has been strong.
Sen. Elizabeth Warren, D-Mass., this week sent a letter to Securities and Exchange Chairman Mary Jo White, excoriating her for the lack of progress on implementing Dodd-Frank reforms. A Journal piece takes a closer look and cites bickering among SEC commissioners as a primary factor for the delays in approving rules mandated by Dodd-Frank. "You have rarely had the kind of fractures among commissioners you are seeing now," said William McLucas, a WilmerHale attorney and a former SEC lawyer.
If fellow insurer MetLife is successful in its lawsuit to have its designation as a systemically important financial institution removed, Prudential may file its own lawsuit. "Prudential would join a short but growing list of nonbanking firms seeking to extricate themselves from what they consider an onerous moniker," the paper said.
"When employment grows, wages will start to grow," Loretta Mester, president of the Federal Reserve Bank of Cleveland, told the Journal in an interview. So why isn't that happening? Economists are stumped by the situation, throwing out all sorts of possibilities.
New York Times
In March 2010, during the throes of the financial crisis, assistant attorney general Lanny Breuer met with representatives from Goldman Sachs in Washington. The reason for the meeting: to discuss terrorism financing and how to prevent money laundering. Breuer and his associates did not ask Goldman about mortgage securities, leading to questions about the Justice Department's priorities at that time. The PBS show "Frontline" recently criticized Breuer and the Justice Department for its investigation of the financial crisis and the lack of criminal charges filed against prominent Wall Street bankers.
Elsewhere ...
Reuters: Abacus Federal Savings Bank in New York was found not guilty after a three-month trial related to its sale of hundreds of millions of dollars of allegedly fraudulent mortgages to Fannie Mae. Abacus, a Chinese-American bank, is believed to be the only bank to face a criminal trial on charges related to the mortgage crisis, Reuters said. Abacus had been accused of grand larceny and conspiracy. The thrift still faces charges of mortgage fraud and falsifying business records.
New Orleans Times Picayune: Regions Financial "made some mistakes" when it charged overdraft fees to customers who had not opted in to the service, CEO Grayson Hall said Wednesday at a conference in New Orleans. "There were mistakes made, but we self-identified them, self-corrected and are working to issue refunds to all those affected," Hall said. The Birmingham, Ala., company is issuing refunds to those customers affected, he said. The Consumer Financial Protection Bureau recently fined Regions $7.5 million for the illegal overdraft fees.
