Law and regulation

Nomura Holdings Inc. and Royal Bank of Scotland Group Plc helped fuel a bubble that led to the collapse of the U.S. housing market, an attorney for the Federal Housing Finance Agency said at the opening of a trial over defective mortgage-backed securities.

Westamerica Bancorp. probably expected little trouble when it asked for regulatory permission to close a small branch in northern California. Wrong! Welcome to the world of online petitions and social media.

Frank Hamlin, CEO of Canandaigua National, suggested in a recent letter to shareholders that N.Y. Attorney General Eric Schneiderman's cases against Financial Institutions Inc. and Evans Bancorp were politically motivated.

A top Justice Department prosecutor said the U.S. is prepared to punish banks for violating criminal settlements, an unprecedented move designed to crack down on repeat offenders.

A recent Supreme Court decision means that one exemption to the Fair Labor Standards Act does not apply to mortgage salespeople, but their employers might still be able to take advantage of other exemptions.

Bipartisan legislation introduced in the Senate this week would make it easier for consumers to secure financing to purchase manufactured housing.

Ed DeMarco, the former chief regulator of Fannie Mae and Freddie Mac, warned that efforts under the Obama administration to expand access to credit could risk repeating mistakes that led up to the crisis.

A recap of the informed opinions (and the discussions they generated) on BankThink this week, including the benefits of regulating banks by complexity rather than size and how to make the Fed's stress tests more effective.

Bankers were jolted last month by an updated Office of the Comptroller of the Currency supervision handbook that suggested a major shift in how examiners view overdraft regulation.

Informing banks about the details of stress-test requirements in advance would help mitigate financial institutions' unnecessary costs. And conducting the tests on a quarterly basis would ensure that banks are unable to game the system.

WASHINGTON — Sen. Richard Durbin, D-Ill., renewed his push Thursday to allow bankruptcy judges to cram down private student loan debt, introducing a bill on the issue with 12 other Democrats.

American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and from our social media platforms.

Hencorp Becstone Capital in Miami has agreed to pay $3.8 million to settle allegations that it provided inaccurate statements and claims to the Export-Import Bank.

The Justice Department handed down its third bank settlement under Operation Choke Point Thursday, bringing a civil complaint against Plaza Bank of Irvine, Calif., for failing to report a payment processor's relationship with fraudulent merchants.

Commerzbank has been ordered to pay a total of $1.45 billion in penalties, fire employees and install an independent monitor after it cleared transactions for entities in Iran and Sudan and facilitated payments for a Japanese company accused of accounting fraud.

The Justice Department has come under fire in recent months for its efforts to root out consumer fraud through banks, but Operation Choke Point appears to be gaining new momentum.

There is a leadership void in payments innovation. The Fed has the ability and the historic precedent to take up the mantle.

Two foreign-owned banks — Santander and Deutsche Bank — failed the Fed's stress test. Two other foreign banks that failed last year, HSBC and RBS Citizens, passed this year.

Citigroup Chief Executive Michael Corbat will still have a job tomorrow (and probably several days after that). The bank's capital distribution plan was approved by the Federal Reserve on Wednesday, undoubtedly to the delight of shareholders who were surprised by last year's rejection.

JPMorgan Chase, Morgan Stanley and Goldman Sachs were each forced to resubmit their capital plans in order to pass the Fed's CCAR stress test, while Bank of America was publicly faulted for weaknesses in its capital planning process. While some saw that as a bad sign, others contended the banks appear more comfortable in pushing the limits of the stress testing process.