Receiving Wide Coverage ...
Fiddling (and Looting) While Rome Burned: The FDIC is suing 17 former directors and officers of Silverton Bank, charging gross negligence and corporate waste related to the May 2009 collapse of the Buckhead, Ga., bank — the state's largest. As the economy fizzled, the bank continued to pursue real estate loans. But there were other questionable actions, as the Atlanta Journal-Constitution points out: the purchase of two airplanes and a hangar to store them, and a builiding called "The Medici," a lavish headquarters that cost $35 million and boasted 26 conference rooms.
Meanwhile, the trustee representing the FDIC and creditors of Guaranty Financial Group has filed suit against its former parent Temple-Inland charging that, in addition to weighing it down with toxic asset-backed securities before spinning it off, Temple-Inland stripped almost $600 million in dividends from the bank.
UBS Cutbacks: Swiss bank UBS will cut 3,500 jobs over two-and-a-half years, with about half the jobs coming from its investment banking unit. The rest of the losses will come from wealth management and asset management, the Times reported. The bank expects the restructuring will result in charges of 550 million francs, the lion's share (450 million francs) will be in the third quarter, the Journal noted. Wall Street Journal, New York Times
Wall Street Journal
Mortgage delinquencies edged up for the second straight quarter, according to a report released Monday, although the number of American households behind in their mortgages remains below the numbers posted last year.
Bank of America shares fell 55 cents Monday as Chinese bank officials said B of A will keep at least half of its 10% interest in China Construction Bank. Shareholders hoped the bank would get rid of the shares, valued at nearly $20 billion, to raise capital.
Goldman executives, including CEO Lloyd Blankfein, lawyered up earlier this year after the Senate sent the Justice Department a report on the investment bank's securitization activities. Blankfein hired criminal defense attorney Reid Weingarten, of Steptoe & Johnson. A Goldman spokesman told the paper, "As is common in such situations, Mr. Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department's inquiry into certain matters raised in the [Senate] report hired counsel at the outset." The paper noted, "Goldman faces multiple investigations and subpeonas on federal, state and local levels, though it isn't clear precisely why Mr. Blankfein hired a lawyer who focuses his practice on white-collar criminal defense."
New York Times
An editorial says New York state attorney general Eric Schneiderman and other state AGs should continue to oppose the deal cut between the feds and banks over fraudulent foreclosure practices. The settlement is not based on a thorough investigation and Schneiderman should continue his own investigations into the banks' practices. And while the Obama administration says support of the deal will lead to relief for borrowers who are underwater on their mortgages, or in default, there are other ways to provide mortgage relief without caving in to the banks, the unsigned editorial says.
Two outspoken banking industry analysts — Mike Mayo and Richard X. Bove — will soon publish books on the financial crisis. Mayo, who works for Crédit Agricole Securities, argues that the factors that led to the financial crisis are still happening. His book also details his fight to force banks to come clean about their practices. Bove's book will address how financial firms "have to hold more capital, have less leverage and are the subjects of a series of rules that have inhibited their ability to generate revenue."
The European Central Bank bought $20 billion worth of government bonds over the past week. Analysts think it was spent mostly on Italy and Spain, where interest rates had been rising and rescue risks were feared. The European stock markets responded well to the news.