Receiving Wide Coverage ...
Not So Fast: So now that Standard & Poor's has signed off on a $1.5 billion settlement, you'd think the credit ratings agency would be able to move on from the incident and reclaim the industry's reputation? Not so fast, my friend. The Journal takes a closer look at a statement of facts signed by the Justice Department and S&P, and finds troubling signs. The New York Times, on the other hand, looks at whether S&P and the other ratings agencies, Moody's and Fitch, have cleaned up their acts. The Journal piece highlights DOJ evidence that the head of an internal group at S&P complained to colleagues "she was prevented by S&P executives from downgrading subprime" mortgage bonds "because of concern that S&P's rating business would be negatively affected." S&P executives also expressed a desire internally to change the way it rated complex securities, in order to win more market share, the WSJ reported. The Times suggests, despite the expensive settlement and the criticism levied at S&P during the settlement talks, it, Moody's and Fitch all reclaimed their influence although "signs of trouble have re-emerged." S&P, for example, settled accusations made by the Securities & Exchange Commission that it misled the public about how it rates certain commercial mortgage investments. S&P also bestows its top ratings on subprime auto bonds, while at the same time publicly raising concerns about the quality of the loans. Also troubling, according to the Times piece, is that many groups still rely on ratings agencies to help them pick bonds. A quote pulled from a lawsuit filed in 2013 by California's attorney general sums up the point of the Times' article: "S&P refuses to change its ways."
Wall Street Journal
Christy Romero, the special inspector general for the Troubled Asset Relief Program, defends her agency's request for a $2 million budget increase, despite the fact that the TARP program itself is shrinking. Most of Romero's office's budget will be devoted to civil and criminal investigations, now that many of its audit programs are winding down, she said. "It takes time to find crime," she said, pointing to recent cases her office has successfully pursued. Romero expects her office to remain up and running until 2023, when the Treasury Department's TARP-related housing-assistance programs expire. The Journal article quotes an anti-tax activist, "As the overall program winds down, so should the special inspector general's office."
The World Bank is investigating a potential conflict of interest, involving when the bank's chief financial officer helped China lend $1 billion in cash to one of the bank's units.
The paper boldly proclaims Bitcoin is nearly dead, thanks to a collapse in prices, negative comments about the virtual currency on online message boards, and usage of bitcoin by drug dealers and money launderers. The article wraps up with a comment from Richard Brown, the executive architect for banking industry innovation at IBM: "There are lots of claims made for this technology, many of which don't stand up to scrutiny."
New York Times
Green Dot's decision to stop selling its MoneyPak paper prepaid card is going to chop between $10 million and $40 million off its yearly operating revenue, the company said on Tuesday during its earnings release. The revenue loss was "larger than expected," a JPMorgan Chase equity analyst wrote. MoneyPak is being replaced with a new technology that lets customers add money to existing prepaid cards by swiping them at special machines in stores that used to sell MoneyPak. The paper MoneyPak cards had been victimized by scam artists, leading to Green Dot's decision to drop the product.
Charlotte Observer: A federal judge has denied Bank of America's request to overturn a jury's decision to levy $1.27 billion in civil penalties related to activities in the so-called "Hustle" program, in which B of A's Countrywide unit generated mortgage loans with a focus on speed and volume over quality, and in which Countrywide touted the mortgages as investment-grade, despite their low quality. B of A is now expected to file a formal appeal.
Newport News Daily Press: In other Bank of America news, the bank will fire more than 200 workers at a loan-servicing unit in the Norfolk, Va., area, amid a decline in delinquent mortgages. Brian Moynihan, B of A's CEO, had been questioned during the bank's fourth-quarter earnings report, about details on future cost-cutting plans, after the bank's previous expense-cutting plan had wrapped up. Perhaps this is the next chapter?