Schneiderman Promises More MBS Lawsuits; Bernanke Round-Up; UBS Trader Verdict

Receiving Wide Coverage ...

Schneiderman Strikes Again: More details have emerged regarding New York Attorney General Eric Schneiderman's mortgage-backed securities case against Credit Suisse, now that it has formally been filed, and while there are definite nuances and different key players, the general gist of the allegations may sound a bit familiar. To summarize, prosecutors allege the investment bank misled investors about the quality of the home loans that made up its mortgage securities back in 2006 and 2007. In another bout of déjà vu, there are also apparently incriminating staff emails to back these claims up. (See American Banker's candid crisis catchphrases slideshow for a good refresher on earlier examples of internal correspondence gone awry.) Credit Suisse is rejecting the complaint, saying (and this might also ring a bell) that it "recycles baseless claims from private lawsuits" and uses an "inaccurate and exaggerated" number. (Schneiderman is seeking damages related to $11.2 billion in losses.) But perhaps the most important thing to note, post-filing, is that the attorney general reinforced his pledge to pursue legal action against "other institutions" for mortgage-related wrongdoing. And a New York state law with a 10-year statute of limitations provides him with plenty of time to do so. Financial Times, Wall Street Journal, Washington Post, American Banker

The Bernanke Round Up: The big news to come out of Ben Bernanke's speech to the New York Economic Club yesterday was that the Federal Reserve chairman wants Congress to take quick action on the fiscal cliff, but, depending on the news outlet, there were also a few smaller takeaways buried within his remarks. Forbes points outs some of Bernanke's statements during the Q&A session indicate more QE is coming, while the Journal says he is also likely to keep long-term interest rates low in 2013. CNBC seems to believe, at least, Bernanke doesn't have any "new stimulus" measures up his sleeve. And Bloomberg took Bernanke's appearance as an opportunity to wonder if he "is the new Wizard of Oz?" thanks to economist Charles Calomiris's remark ""we aren't in Kansas anymore" due to the chairman's "ultra-easy monetary policy."

Rogue Trader Update: Former UBS trader Kweku Adoboli was convicted yesterday of two of the six counts brought against him regarding an unauthorized $2.3 billion trading loss at the Swiss bank. The two counts of "fraud by abuse of position" resulted in a seven-year prison sentence. He was acquitted of four counts of false accounting. Acquittal aside, prosecutors were quick to declare victory as Adoboli received a longer prison term than another rogue trader Jérôme Kerviel, who was convicted of a nearly $6.4 billion fraud while at Société Générale, the Journal reports. The judge had some harsh parting words for the former trader while delivering the sentence, telling Adoboli "your fall from grace as a result of these convictions is spectacular. Whatever the jury's verdicts would have been, you would forever have been known as the man responsible for the largest trading loss in British banking history." Those interested in better understanding Adoboli's fall can check out the FT's timeline on the topic. Wall Street Journal, New York Times, Washington Post

Wall Street Journal

Senior Editor Maxwell Murphy is predicting more bank CFO turnover may be on the way as the new complex regulatory environment has made the position all that more difficult.

India's central bank is banning banks from making loans for gold purchases as "a crackdown on the metal's heavy imports that have added to the country's current-account deficit."

Financial Times

U.S. banks are preparing for a showdown with the Consumer Financial Protection Bureau regarding "one of the toughest rules to come out of Dodd-Frank financial reform," specifically, remittance rules requiring them to "provide a series of new disclosures to customers wishing to send money abroad from the U.S."

New York Times

Lorraine O. Brown, founder and former president of DocX, formerly one of the U.S.'s largest foreclosure-processing companies, pleaded guilty to fraud charges related to the company's "preparation of improper documents used to evict troubled borrowers from their homes." The guilty plea is expected to lead to at least a two-year prison term.

Editor's Note ...

Morning Scan will not publish on Thursday, Nov. 22 or Friday, Nov. 23 in observance of the Thanksgiving holiday. We'll be back on Monday, Nov. 26. We wish everyone a safe and happy holiday!