Salon.com > Marcy Gordon

Senate panel to question Obama’s SEC nominee

Tue, 12 Mar 2013 13:12:00 +0000

WASHINGTON (AP) — Mary Jo White, President Barack Obama's pick to be chairman of the Securities and Exchange Commission, will likely face tough questions Tuesday from senators about her decade of legal work representing some of the nation's largest banks and corporations.

But after the Senate Banking Committee hearing is over, White is ultimately expected to win confirmation from the full Senate and become the first former prosecutor to lead the top federal regulator overseeing Wall Street.

White would replace Elisse Walter, who has been interim SEC chairman since Mary Schapiro resigned in December.

The Senate panel will also question Richard Cordray, who was re-nominated by Obama to head the Consumer Financial Protection Bureau.

White, 65, would step into the job at a critical moment for the SEC.

Critics have complained that the agency has failed to act aggressively to charge top executives at the biggest U.S. banks who may have contributed to the 2008 financial crisis. The appointment of a former prosecutor could signal that Obama wants the government to get tougher with Wall Street.

US foreclosure filings hit 5-year low

Thu, 11 Oct 2012 12:25:00 +0000

U.S. foreclosure filings dropped to a five-year low in September as fewer homes were on track to be seized by lenders.

It was the second-consecutive monthly decline in filings, although there remains a sharp divergence along state lines, according to a report Thursday by foreclosure listing firm RealtyTrac Inc.

On a national level, overall foreclosure filings last month — including home repossessions — fell 7 percent from August and 16 percent from September 2011. There were 180,427 foreclosure filings reported for September, the fewest since July 2007 in the midst the housing market bust.

The number of homes entering the foreclosure process, so-called foreclosure starts, fell to 87,066 in September, down 12 percent from August and 15 percent from a year earlier. It was the second-straight month of declines following three months of increases, Irvine, Calif.-based RealtyTrac reported.

Foreclosure starts since peaked in April 2009 at around 203,000. But the current level is still well above the 34,000 starts recorded in May 2005, before the collapse of the housing market.

Overall foreclosure filings include notices of defaults on mortgages, scheduled auctions and repossessions. Foreclosure starts are either default notices or scheduled auctions, depending on the state's legal process.

Moody’s warns U.S. government on possible debt downgrade

Thu, 02 Jun 2011 20:54:00 +0000

A credit rating agency is warning the U.S. government that it could lose its sterling debt rating if Congress and the Obama administration don't reach an agreement to raise the nation's borrowing limit.

Moody's Investors Service said Thursday that if the parties fail to make progress soon, it would put the U.S. rating under review for a possible downgrade. That's because there's a "very small but rising risk" that the government will default on its debts.

Standard & Poor's, another major credit rating agency, issued a similar warning in April.

The U.S. government hit its $14.3 trillion borrowing limit on May 16. The debt limit is the amount the government can borrow to help finance its operations.

A lower credit rating could ripple through the U.S. economy and ultimately hurt consumers. That's because many loans, including mortgages, tend to follow yields on U.S. Treasury bonds. So interest rates could rise.

Moody's also warned the government could face a downgrade if it fails to come up with a long-term plan to reduce the country's deficit. The federal budget deficit is on pace to exceed $1 trillion for the third straight year.

Ex-Goldman director charged with insider trading

Tue, 01 Mar 2011 21:12:00 +0000

Federal regulators have charged a former Goldman Sachs board member with insider trading, saying he gave confidential information to the key figure in what prosecutors call the largest hedge fund insider-trading probe ever.

The Securities and Exchange Commission announced the civil charges against Rajat Gupta on Tuesday. The SEC said Gupta told Raj Rajaratnam, founder of the Galleon Group hedge fund, that Warren Buffett's Berkshire Hathaway planned to invest $5 billion in Goldman before it was publicly announced at the height of the financial crisis.

Gupta also is charged with giving Rajaratnam confidential earnings information from Goldman and Procter & Gamble. Gupta served on Goldman's board from 2006 until last May. He was a P&G board member from 2007 until resigning Tuesday, after the charges were announced.

Gupta was an investor in some of the Galleon hedge funds when he passed the information along, and he had other business interests with Rajaratnam, the SEC said. Rajaratnam used the information from Gupta to illegally profit in hedge fund trades, the SEC said.

Large banks earn billions, small banks struggle

Tue, 31 Aug 2010 19:30:00 +0000

U.S. banks are making money again, although a split picture of the industry has emerged since the financial crisis.

The largest banks are thriving, mostly because they can borrow on the cheap and have rid themselves of bad debt. Yet smaller banks lack those advantages and are failing at the fastest pace in years.

Overall, banks made $21.6 billion in net income in the April-to-June quarter, the Federal Deposit Insurance Corp. said. It was the highest quarterly level since 2007.

Banks with more than $10 billion in assets -- only 1.3 percent of the industry -- accounted for $19.9 billion of the total earnings.

At the same time, the number of banks on the FDIC's confidential "problem" list increased by 54 in the quarter -- growing to 829 from 775 in the first quarter. That's a little more than 10 percent of the 7,830 federally insured U.S. banks.

Most of the biggest banks have recovered with help from federal bailout money, record-low borrowing rates from the Federal Reserve and the ability to earn big profits from fees on banking services and investment fees. They also have been able to cut back on lending in troubled parts of the country, such as Florida and Nevada.

Goldman paying $550M to settle civil fraud charges

Fri, 16 Jul 2010 13:01:00 +0000

Resolving a high-profile government case linked to the mortgage meltdown, Goldman Sachs & Co. has agreed to pay a record $550 million to settle civil fraud charges that it misled buyers of complex investments.

The Securities and Exchange Commission announced the settlement Thursday with the Wall Street titan, just hours after Congress gave final approval to legislation imposing the stiffest restrictions on banks and Wall Street firms since the Great Depresssion.

For Goldman, it was a chance to put behind it a case that had tarnished its reputation after it emerged relatively unscathed from the financial crisis. For the SEC, emerging from the embarrassment of a series of lapses, the charges and the settlement were a high-stakes opportunity to prove it could be tough on Wall Street.

And the agency's sweeping investigation of the conduct of financial firms in the run-up to the mortgage market collapse could bring more cases.

The deal calls for Goldman to pay a $535 million fine and $15 million in restitution of fees it collected. Of the total $550 million, $300 million will go to the government and $250 million goes to compensate two European banks that lost money on their investments.

Geithner, Paulson make case for overhaul

Thu, 06 May 2010 21:50:00 +0000

The two leading architects of the financial bailout made the case Thursday that Congress must give regulators more power to curb risk-taking on Wall Street.

Treasury Secretary Timothy Geithner told a special panel investigating the financial crisis that the government should have acted more aggressively ahead of the crisis. He used his testimony to push for the Obama administration's financial regulatory overhaul, which has reached a critical point in the Senate.

His predecessor, Henry Paulson, also told the Financial Crisis Inquiry Commission that a reworking of the regulatory system was needed. But Paulson, who led the Bush administration's response to the crisis in 2008, cautioned that overly stringent regulation could stifle innovation.

A sobering reminder of how fragile the financial system remains came Thursday when stocks plunged on fears that the European debt crisis could spread. The Dow Jones industrials slid nearly 1,000 points in afternoon trading before recovering to a loss of 347 points.

Geithner testified that the financial crisis could have been "less severe" if the government had moved faster to limit the damage. When he became the Obama administration's Treasury secretary, Geithner continued the $700 billion bailout program for the financial system that began in the fall of 2008 under Paulson.

Goldman execs defend conduct under Senate barrage

Tue, 27 Apr 2010 20:11:00 +0000

Goldman Sachs officials strongly disputed barbed accusations Tuesday from U.S. senators that the firm cashed in on the housing meltdown by crafting a strategy to bet against home loan securities while misleading its own investors.

The investment bank officials ran into a wall of bipartisan wrath before the Senate panel investigating Goldman's role in the national financial crisis. Democratic Sen. Carl Levin of Michigan accused Wall Street firms of selling securities they wouldn't invest in themselves. That's "unbridled greed in the absence of the cop on the beat to control it," he said.

Democrats hope rising public anger with Wall Street will help them push new financial regulations past Republican objections -- a pending overhaul bill that Levin said would "put a cop back on the Wall Street beat."

Among the officials testifying Tuesday was Fabrice Tourre, a 31-year-old Goldman trader who, along with the firm, has been charged with civil fraud by the Securities and Exchange Commission.

The SEC says Tourre marketed securities without telling buyers they were chosen with help from a Goldman hedge fund client that was betting the investments would fail. The commission alleged that Tourre told investors the hedge fund, Paulson & Co., actually bought into the investments.

Rubin says he learned late of Citi’s risky bets

Thu, 08 Apr 2010 13:29:00 +0000

Robert Rubin, a senior adviser to Citigroup Inc. at the time of its deep losses from subprime mortgages, says he learned belatedly that Citi had $43 billion in high-risk securities on its books.

Rubin says, "I do not recall knowing before September 2007" that the bank had held onto the investments composed of repackaged mortgage bonds. In November 2007, Citigroup publicly estimated it would lose $8 billion to $11 billion in the fourth quarter that year from those securities.

Rubin, a former Treasury secretary, makes the statements in testimony to a panel investigating the roots of the financial crisis. He and other former Citigroup executives have been sharply criticized for allowing heavy investments in high-risk securities. Citi was a major subprime lender.

Critics have said Rubin, with his vast experience on Wall Street and as Treasury chief in the Clinton administration, should have picked up on the warning signs of the crisis and taken a more active role in preventing Citigroup's debacle.

New York-based Citigroup was one of the hardest-hit banks during the credit crisis and the recession. It received $45 billion in federal bailout money -- one of the biggest rescues in the government's program.

Bankruptcy reform close to OK in Congress

Thu, 14 Apr 2005 12:28:00 +0000

WASHINGTON (AP) -- Bankruptcy legislation that could make it impossible for thousands of people to wipe away their debts is nearing passage by Congress.

After eight years of failed efforts by banks and credit card companies, the biggest overhaul of bankruptcy laws in a quarter-century has been catapulted toward enactment by a Republican majority buttressed by the fall elections. The legislation, which garnered some Democratic votes, cleared the Senate last month 74-25.

The House was voting Thursday on the bill, which would require people with incomes above a certain level to pay credit-card charges, medical bills and other obligations under a court-ordered bankruptcy plan.

President Bush has said he will sign the bill into law. It marks a second victory for Bush this year on pro-business legislation.

Opponents say the change would fall especially hard on low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face crushing medical bills.

Between 30,000 and 210,000 people -- from 3.5 percent to 20 percent of those who dissolve their debts in bankruptcy each year in exchange for forfeiting some assets -- would be disqualified from doing so under the legislation, according to the American Bankruptcy Institute.