Law and regulation

WASHINGTON - Two Florida bank executives and one bank borrower were sentenced to federal prison Tuesday and ordered to pay nearly $100 million for attempting to defraud the Troubled Asset Relief Program.

WASHINGTON - Lawmakers are questioning Bank of America's recent transfer of derivatives from its Merrill Lynch subsidiary to its retail bank subsidiary.

Thirty-three Senate Democrats said the Obama administration should "quickly and diligently" analyze industry comments to finalize a plan to help turn foreclosures into rental properties.

A key Republican released a new set of reforms designed to encourage the return of the private mortgage market after the eventual elimination of Fannie Mae and Freddie Mac.

A U.S. district court halted a collection operation that allegedly deceived and abused consumers, including making bogus threats that consumers had been sued or could be arrested over debts they often did not owe.

Roughly 400 banks remain in Tarp, and it's not at all clear how they're going to get out, the special inspector general for Tarp said in a new report.

The Volcker rule included in the Dodd-Frank Act was intended to eliminate "proprietary trading" at universal banks. This was largely motivated by the massive losses incurred by the proprietary trading desks of Wall Street investment firms that securitized mortgages. In the rush to mitigate systemic risk in the wake of the subprime lending debacle, banking charters and the Fed's protective umbrella were extended to the remaining investment banks. The thinking was that trading is risky, and hence not appropriate for insured banks, but establishing rules to prevent trading at universal banks was never going to be easy.

I'm hoping William Dudley would consider a meander down the street to Zuccotti Park, with the Fed's consent order against Goldman Sachs in hand. Let the crowd know that the Fed not only shares your pain, but has a few analgesics that might make you feel a bit better.

Ocwen Financial Corp., which this week agreed to buy Morgan Stanley's Saxon Mortgage Services Inc., isn't planning on stopping its shopping spree anytime soon.

Both the chief executive officer and the chairman of the board of Freddie Mac are stepping down within the next few months, the Federal Housing Finance Agency said Wednesday.

As hundreds of national banks disappear and community banks increasingly chose a state charter, policymakers must consider the impacts.

The Obama Administration, including the Consumer Financial Protection Bureau and Department of Education, unveiled initiatives this week aimed at bringing transparency to the student lending market and making repayment easier for recent college graduates.

A top political prognosticator said the Occupy Wall Street crowd has a long way to go before they evolve into a political movement on par with the Tea Party.

The Federal Deposit Insurance Corp. has ordered West Coast Bank in Lake Oswego, Ore., to improve oversight of its overdraft program and reimburse customers who incurred overdraft fees last year using their debit or ATM cards.

First Midwest Bancorp Inc. in Itasca, Ill., said Wednesday that it had received approval from the Treasury Department to redeem $193 million in preferred stock issued in December 2008 under the Troubled Asset Relief Program.

The bureau has teamed up with the Department of Education on a financial aid shopping sheet that would help students compare offers from different schools, distinguish between scholarships and loans, and estimate their monthly debt payments after graduation.

Acting FDIC Chairman Marty Gruenberg reiterated his agency's support for small banks, but many bankers are unsure if it will lead to real change.

The huge debt of Fannie Mae, Freddie Mac, other government-sponsored enterprises and Ginnie Mae fully relies on the credit of the United States. It is in fact government debt, but it is not accounted for as government debt. It is not "considered officially to be part of the total debt of the federal government," the Federal Reserve coyly notes.

Bank executives, audit committees and shareholders risk additional scrutiny and unwelcome publicity under the best-case scenario – and audit failures under the worst case – if their auditor picks a fight with the PCAOB.

New fees from big banks are raising the questions of whether they will lead to an exodus of customers or if the cost of moving institutions is just too high. American Banker's Kevin Wack set out to answer that question by switching banks himself.