Receiving Wide Coverage ...
'Eternal' Lobbying: Banks got a big win on Thursday when the Fed agreed to delay a part of the Volcker Rule. And former Fed Chair Paul Volcker was none too pleased. In a statement distributed on Friday, Volcker criticized banks for their "eternal" lobbying to avoid having to comply with the rule. "It is striking, that the world's leading investment bankers, noted for their cleverness and agility in advising clients on how to restructure companies and even industries, however complicated, apparently can't manage the orderly reorganization of their own activities in more than five years," Volcker said, after the Fed gave banks an extension until 2017 on a requirement limiting their ownership of hedge funds and private-equity funds. Banks had argued they'd be at risk of suffering huge losses if they were required to sell their stakes in the funds now. Volcker's statement was a rare example of the former Fed chair commenting on the rule named for him. The Times notes now that banks have won an extension until 2017, they'll likely fight for an additional five-year extension to 2022.
Wall Street Journal
William Erbey has agreed to resign as chairman of Ocwen Financial as part of a settlement with the New York state banking regulator, anonymous sources tell the Wall Street Journal. Ocwen has been facing regulatory heat for months over its mortgage-servicing practices, from charging consumers unnecessary fees to allegations of backdating notices sent to consumers on possible foreclosures. Last week, Joseph Smith, monitor of the national mortgage settlement, said he was investigating potential conflicts of interest in Ocwen's compliance with the national settlement, based on claims from a whistle blower. In the settlement agreement with New York state banking regulator Benjamin Lawsky, Erbey will step down in mid-January (Erbey remains the company's largest shareholder); Ocwen will pay $150 million to programs that help foreclosed homeowners; a new monitor will be named to "scrutinize nearly every aspect of the company's operations to insure they are changed to better protect borrowers"; and Ocwen will admit to a laundry list of mistakes and errors, including that it "didn't properly deal with distressed homeowners." Another stipulation Ocwen will agree to, and which is somewhat hard to believe wasn't already in place, is giving current and former borrowers their entire loan files, including comments made by Ocwen officials, free of charge upon request. Although Ocwen is headquartered in Atlanta, the company is subject to Lawsky's regulation because it's registered as a New York state-licensed mortgage servicer.
Senior executives at Citigroup expressed concern about a plan to engage in metal-financing deals in China, but the company moved ahead on the deals anyway, anonymous sources told the Journal. Citi is now expected to face losses because of fraud at two Chinese ports where the metal used as collateral in Citi's financing deals was stored. Citi holds a position of about $270 million in copper and aluminum at the Chinese ports. Citi itself hasn't been charged with wrongdoing, but the bank may be forced to demand early repayment on the metals next summer, likely resulting in a loss.
Stock investors in Fannie Mae and Freddie Mac may see their shares decline in value, the result of the dismissal of a series of lawsuits challenging the government's taking of the two GSEs' profits, according to an analysis by from the "Heard on the Street" column.
New York Times
New documents that were produced after the trial in the AIG lawsuit raise troubling questions about the government's bailout of the insurance giant, and seem to bolster Maurice Greenberg's case, Gretchen Morgenson writes in a column for the Times. Among the troubling disclosures: the extensive connections, and possible conflicts of interest, among the Goldman Sachs executives that former Treasury Secretary Hank Paulson (himself an ex-Goldman CEO) appointed to AIG. Oh by the way, Goldman, as one of the insurance giant's trading partners, received $13 billion from the Fed's bailout of AIG.