Is There a Jinx Test?
Maybe the industry should retire the name "New Century."
A Chicago bank with that name failed in April, a subprime mortgage lender with that named filed for bankruptcy in 2007 and now New Century Bancorp in Dunn, N.C., said it was defrauded by one of its directors.
The $663 million-asset company announced earlier this week that it had discovered apparent fraud in both the application for and the credit administration of one of its banking unit's largest borrowers. It will take a roughly $11 million impairment charge in the third quarter.
On Wednesday, the company's president and chief executive, William L. Hedgepeth 2nd, tried to shed more light on the situation in a press release.
Hedgepeth said the fraud was tied to an unnamed former director, took place over several years and was not a one-time occurrence. The director's scheme didn't stop at New Century, though. The fraud affected "a number of banks and many individuals in our communities," he said.
"It is alleged that New Century Bank, other banks, and individual investors were presented falsified financial information in the form of standard, customary financial documents," Hedgepeth said. "These documents were used by the banks to make credit decisions and by individuals to make credit and investment decisions."
Hedgepeth didn't return a call for comment.
A key reason for the persistent sluggishness of real estate is that sellers have simply been unwilling to accept that boom-time home values aren't coming back.
JPMorgan Chase & Co.'s Jamie Dimon, however, is no longer deluding himself. Crain's Chicago Business reported Wednesday that the CEO's mansion on Chicago's Gold Coast is now under contract after seeing its price slashed from $13.5 million, to $6.95 million, over 40-odd months.
That's quite a comedown, though Dimon did buy the property — featuring servant quarters and nine bathrooms — for $4.7 million in 2000, back when he was the CEO of Bank One Corp.
Though the ultra-luxury real estate market isn't an ideal barometer, perhaps the discount should be seen as a reminder that marks on real estate, whether made by banks or by their executives, are still a dicey business.
Sound Off and Win!
Lost: the will to put international cooperation ahead of national interests in the struggle for financial reform. Reward: $7,500.
The International Centre for Financial Regulation is offering its second annual research prize for ideas to help the Group of 20 overcome the more provincial concerns of its member countries and the waning support for the view that the broad objectives of an international forum can be translated into enforceable regulatory changes.
The competition, open to anyone willing to submit up to 3,000 words "examining the issues facing the G-20 as it looks to advance its agenda on regulatory reform," asks entrants to consider the differing priorities of developed and developing nations, the ways in which proposed regulatory structures can be put into practice, the degree to which regulatory convergence is a realistic goal, and other vexing questions on the international financial reform front.
Two runners-up will receive prizes of $1,500 each. The competition, co-sponsored by Financial Times, will close on Dec. 20, with winners announced Feb. 1. For more information, see www.icffr.org. That's the website for the ICFR, a London-based consortium of 19 major financial services companies working with the U.K.'s economics and finance ministry to promote dialogue and debate about financial regulation.
All in This Together
For all the talk about bankers turning against President Obama, guess which resident of Pennsylvania Avenue was being quoted this week — in a flattering way — by Vikram Pandit, as the Citigroup Inc. chief executive accepted an award in Washington?
Citi was being recognized by the Corporation for Enterprise Development, a national nonprofit trying to alleviate poverty through economic opportunity, for helping low-income families build assets through education, small business, savings and home ownership. The award ceremony on Thursday was a chance for Pandit to talk about Citi's promise to bring financial services to communities with limited access to them, and to promote the notion of responsible finance.
"As President Obama has said, 'Ultimately, there is no dividing line between Main Street and Wall Street. We will rise or we will fall together as one nation,'" Pandit said, according to the prepared text of his remarks. The quote came from the tough-love speech on financial reform that Obama delivered in April at Cooper Union in New York.
Ed Clark is giving back after exercising stock options in Toronto-Dominion Bank.
Clark, the president and CEO of its TD Bank Financial Group unit in the United States, plans to donate 35,000 shares of the Canadian company's stock to a variety of charities. Based on the company's current stock price and Clark's strike price, the shares have a value of about $1.3 million. The company did not disclose the specific charities, though the donation will be administered by Private Caring Foundation, an endowment created by TD Waterhouse.
In all, Clark is exercising up to 613,500 shares before the expire, the company said. Those holdings would have a total value of $23.8 million, with the donations making up 5.5% of that amount, again based on the company's stock price and the options' strike price.
Popular Inc. is sending its consumer lending chief to the mainland. On Tuesday, the company named Carlos Vazquez, who has run Popular's consumer lending group since 2004, as the new head of Banco Popular North America, a 97-branch operation that is trying to work its way back to profitability. Vazquez has been heading the company's U.S. retail operations since February.
The North American unit operates in Southern California, Florida, Illinois, New Jersey and New York.
Before joining Popular, Vazquez spent 15 years at JPMorgan Chase & Co., where he was the company's regional manager for parts of Central and South America and the Caribbean, according to a news release.