Receiving Wide Coverage ...
Sins of Financial Crises Past: The year of crisis-era legal reckoning may indeed be upon us. According to the Wall Street Journal, regulators have brokered another settlement with a financial firm over allegations it sold bad mortgage-backed securities to Fannie Mae and Freddie Mac leading up to the financial crisis. No, we're not talking about JPMorgan Chase, but Ally Financial, which said on Tuesday it will take a $170 million charge in the third-quarter related to settlements with the Federal Deposit Insurance Corp. and the Federal Housing Finance Agency. As for JPM and its widely known, but still unresolved, $13 billion mortgage-related settlement, well, that may not happen at all. The Journal reports that, per its anonymice, the settlement is "at risk of collapsing because of disagreements related to a criminal probe of the bank and its effort to get penalties reimbursed by a government-controlled fund." We're going to echo The Guardian's Heidi Moore here and say that it may be best, at this point, given all the twists and turns, not to talk about the JPM deal until, you know, it's actually a done one. Meanwhile, across the pond, regulatory relations aren't much better. Following a string of disclosures regarding future legal problems from foreign banks during earnings season, Dealbook concludes: "European banks still face years of effort and billions of dollars in legal charges before they can restore their reputations and reconcile accusations of past wrongdoing." This FT column notes: "The bad news for the sector is that the regulatory storm shows no sign of abating." Case in point: Barclays announced on Wednesday it was reviewing its foreign exchange trading operations after receiving inquiries related to an ongoing probe of currency market manipulation from global regulators.
Rabobank Libor Settlement Update: Speaking of atoning for the past, Rabobank CEO Piet Moerland went ahead and officially stepped down on Tuesday as the bank announced a $1.07 billion settlement with global regulators over Libor rate-rigging allegations. The settlement includes an admission of wrongdoing and a deferred prosecution agreement in which the bank will avoid criminal charges so long as it cooperates with investigators and behaves itself. Per the usual, settlement documents were riddled with incriminating messages from Rabobank personnel, rounded up here in Dealbook's latest edition of The Things Traders Say. The Rabobank agreement brings the Libor settlement tally to five, making the rate-rigging "one of the marquee financial scandals in recent history," notes the Journal. More Libor settlements may be on their way as several banks, including Deutsche Bank and Citigroup, remain under investigation. But anony-mice tell Dealbook "it is unclear whether any American banks will ultimately face action in the case."
Wall Street Journal
Investors are diving into Fannie and Freddie mortgage bonds, "the latest sign that housing risk is no longer a four-letter word on Wall Street."
The Commodity Futures Trading Commission had decided to drop a court appeal of its positions limits rule, designed to limit speculation in commodity markets, and instead will work to modify the Dodd-Frank-mandated rule to address court concerns.
New York Times
Pricewaterhouse Coopers is poised to buy Booz & Company. "The union of the two firms is likely to bring scrutiny from regulatory agencies around the world as it again raises the issue of an accounting firm's buildup of consulting businesses that could pose conflicts of interest," Dealbook notes.
Deal Professor Steven Davidoff takes issue with the Securities and Exchanges Commission's proposed crowdfunding rules. "The agency largely parroted what Congress did without addressing its own concerns about investor safety," he writes. "Because of Congress's straitjacket and the SEC's fear of innovation, we have a proposal that seems likely to have significant problems, if not with fraud than simply with how investors will get their money back, let alone make money."