Foreclosure Settlement Said to Be Imminent

After weeks of negotiations, a $10 billion settlement over claims of foreclosure abuses by 14 banks is expected to be announced as early as Monday. The deal “covers abuses like flawed paperwork and botched loan modifications,” Jessica Silver-Greenberg reports in The New York Times, citing several people with knowledge of the discussions.

All 14 banks, including JPMorgan Chase, Bank of America and Citigroup, were expected to sign on to the deal. “An estimated $3.75 billion of the $10 billion is to be distributed in cash relief to Americans who went through foreclosure in 2009 and 2010, these people said,” according to The Times. “An additional $6 billion is to be directed toward homeowners in danger of losing their homes after falling behind on their monthly payments.” The talks almost fell apart over the weekend when some Federal Reserve officials insisted that banks pay an additional $300 million for their role in the 2008 financial crisis, but the officials ultimately backed down, according to The Times.

At first blush, the settlement looks like “another gift to the banks,” The New York Times columnist Gretchen Morgenson writes. “One could easily argue that this reported settlement was pushed by the banks so they could limit the damage they would have incurred if an aggressive review had continued.”

Some housing advocates said the deal would not provide enough relief. “It is still unclear how the monetary relief will be distributed among homeowners, but one immediate result of the settlement is the end of a troubled review of millions of loan files,” according to The Times. That program, which mandated that banks hire independent consultants to audit loan files, suffered from mounting costs. Only 323,000 homeowners submitted claims. Ms. Morgenson writes: “Stopping the reviews before they are finished means that the banks will be allowed to claim that abuses were rare and that $10 billion is an adequate penalty.”

 

BANKS GET EASING OF RULES ON ASSETS  |  A group of the world's top regulators and central bankers on Sunday gave banks more time to meet rules designed to prevent financial crises. The rules, which aim to ensure that banks have enough liquid assets on hand to weather crises, will now take full effect on Jan. 1, 2019, rather than the original deadline of Jan. 1, 2015. The committee, meeting in Basel, Switzerland, also loosened the definition of liquid assets.

“The decision marks the first time regulators have publicly backed away from the strict rules imposed by the Basel Committee in 2010,” Jack Ewing reports in The New York Times. Banks had complained that the new guidelines would harm lending. Mervyn A. King, governor of the Bank of England and chairman of the group, said the intention was not to make the rules “stronger or weaker” but rather “more realistic.” The decision, which was endorsed unanimously by participants, “was a public concession from the authors of the so-called Basel III rules that the regulations could hurt growth if applied too rigorously,” Mr. Ewing writes.

 

AFTER MADOFF, FRAUD STILL DEFIES POLICING  |  A wave of rules was enacted aft er the collapse of Bernard L. Madoff's giant Ponzi scheme in 2008. But there remain “persistent problems with policing the industry,” Jessica Silver-Greenberg and Susanne Craig report in DealBook. In one case, a financial adviser named Philip Horn pleaded guilty to defrauding more than a dozen clients and Wells Fargo. His scheme, in which he systematically executed and canceled trades in clients' portfolios, pocketing the profits, went on for more than two years, according to court documents.

“Banks have spent millions of dollars to beef up their compliance systems and improve their oversight,” DealBook writes. “Regulators, too, have bolstered their efforts, increasing enforcement and adopting new measures. Every month, the Financial Industry Regulatory Authority, a Wall Street watchdog, penalizes more than 100 brokers for various actions, including unauthorized trading and fraudulent activities, as well as smaller violations.”

Thomas Ajamie, a plaintiff's lawyer who represents two of Mr. Horn's clients, said, “Theft, Ponzi schemes and other financial scams continue to happen at an alarming rate.”

 

ON THE AGENDA  | 

The J.P. Morgan Health Care Conference kicks off in San Francisco. Richard Kovacevich, Wells Fargo's former chief executive, is on CNBC at 8 a.m. Martha Stewart is on CNBC at 10:45 a.m.

 

PARSONS TRIES TO REVIVE A JAZZ CLUB  |  Richard D. Parsons, the former chairman of Citigroup and former chief executive of Time Warner, has always wanted to open a jazz spot in Harlem. He is now trying to make that dream a reality, with an effort to revive Minton's Playhouse, a shuttered dive on West 118th Street, according to The New York Times. Mr. Parsons, who is using his own money, plans to reopen Minton's in its original location, with the addition of a new dinner club alongside. “I took my senior prom date to a place called the Hickory House, and we heard Billy Taylor. And I still remember it. It was my first adventure in being a grown up, to listen to some good jazz,” Mr. Parsons said. Such clubs have disappeared, he said, and he aimed to “create that feel.”

 

WOLFE ON THE NEW WALL STREET  |  The Facebook I.P.O. was the “day Wall Street got vaporized,” according to Tom Wolfe, author of the classic 1980s no vel “The Bonfire of the Vanities.” Mr. Wolfe writes in Newsweek: “After Facebook Day, all that ‘Wall Street' had been a metonymy for, the big money, the Big Picture of America's economy, the excitement, the sense that this is where things are happening, was gone.” Traders once felt like “Masters of the Universe,” a phrase from his novel, Mr. Wolfe writes. “In real life, young men on trading floors all over Wall Street read that book and got a kick out of that name, Masters of the Universe. They said it aloud only in a jocular way - they weren't fools, after all - and never mentioned the wave of exaltation that swept through their very souls.”

“In terms of sheer pride,” the 2008 crash was “a godsend for the poor Masters of the Universe.” Mr. Wolfe refers to the main character of his novel, writing, “Sherman McCoy held his tongue, but what he said to himself was, ‘Oh, ye Eunuchs of the Universe.'”

 

 

 

Mergers & Acquisitions '

Compass Advisers to Combine With British Rival  |  Richmond Park Partners, a boutique firm co-founded by the former Goldman Sachs partner Scott Mead, is merging with the London business of Compass Advisers. FINANCIAL TIMES

 

IAC to Announce Acquisition of Tutor.com  |  IAC, the Internet and media company founded by Barry Diller, “is set to announce Mond ay it will acquire Tutor.com, an online service that matches students with educational professionals who help with everything from high-school algebra to advanced physics,” the Media Decoder blog reports. NEW YORK TIMES MEDIA DECODER

 

‘Grey's Anatomy' Star Would Be White Knight for Small Coffee Chain  |  Patrick Dempsey, best known for playing a doctor on “Grey's Anatomy,” said on Friday that he had prevailed in an auction of Tully's Coffee, a bankrupt coffee chain based in Seattle. DealBook '

 

Investor in Movie Soundtracks Picks Up a Record Label  |  The Cutting Edge Group and its partner Wood Creek Capital Management acquired the Varèse Sarabande record label, a purveyor of soundtracks, The New York Times reports. NEW YORK TIMES

 

Passport Health Communications Said to Approach Deal for Data Systems Group  | 
REUTERS

 

INVE STMENT BANKING '

Citigroup Said to Be Seeking Permission to Buy Back Shares  |  Citigroup plans to “seek permission for its first share buyback since 2007 as part of the latest Federal Reserve ‘stress tests,' according to people familiar with the company's plans,” The Wall Street Journal reports. The request this year is expected to be “minimal.” WALL STREET JOURNAL

 

Morgan Stanley Discloses Payouts to Senior Deal Maker  |  Morgan Stanley disclosed the timeline for some of its retirement awards to Paul J. Taubman, the senior deal maker who co-led its securities business. DealBook '

 

The Role of Physics on Wall Street  |  In a new book, “The Physics of Wall Street,” James Owen Weatherall argues that the financial industry would benefit from more mathematical sophistication. NEW YORK TIMES

 

PRIVATE EQUITY '

Terra Firma Said to Consider Selling Cinema Chain  |  The private equity firm Terra Firma “is planning to sell assets this year that are likely to include Odeon & UCI group, the European cinema chain,” which could fetch m ore than $1.6 billion, The Financial Times reports. FINANCIAL TIMES

 

Cerberus to Sell Shares in Japanese Bank  | 
REUTERS

 

HEDGE FUNDS '

For British Hedge Fund Manager, Bet on Banks Pays Off  |  Bloomberg Markets magazine writes: Crispin Odey “hardly looks like a renegade investor. Yet in 20 years of managing h is hedge fund, Odey has stood out for contrarian bets that produced outsize gains. His flagship $1.8 billion Odey European Inc. fund returned 24.1 percent in the first 10 months of 2012.” BLOOMBERG NEWS

 

Investors Stick With Hedge Funds, Despite Mixed Results  |  “Investors say the benefits that hedge funds offer in portfolios outweigh their drawbacks,” The Financial Times writes. FINANCIAL TIMES

 

Unit of Elliott Management Draws Scrutiny in France  |  Bloomberg News reports: “Elliott Management C orp., the $21.5 billion hedge fund run by Paul Singer, said a French regulator is investigating possible insider trading by its U.K. unit in Autoroutes Paris-Rhin-Rhone SA in 2010.” BLOOMBERG NEWS

 

I.P.O./OFFERINGS '

German Property Firm Backed by Goldman Plans I.P.O.  |  LEG Immobilien, a German real estate company owned by the Goldman Sachs investment fund Whitehall, is expected to raise up to $1.3 billion in one of the first initial public offerings in Europe this year. DealBook '

 

Online Branch of Xinhua, China's State News Agency, Applies for I.P.O.  | 
REUTERS

 

VENTURE CAPITAL '

Crowdfunding Rules for Small Businesses Remain Uncertain  |  The New York Times reports that the “Securities and Exchange Commission has delayed rules allowing crowdfunding that were supposed to take effect this month as part of the JOBS Act (Jump-Start Our Business Start-Ups), signed by President Obama in April. The S.E.C. is wary of loosening investor protections that have been in place since the 1930s.” NEW YORK TIMES

 

An Influx of Money for Reddit?  |  TechCrunch, citing a “source,” writes that “Reddit is raising money. And the company's valuation has jumped to $400 million.” TECHCRUNCH

 

LEGAL/REGULATORY '

Google's Critics Say Antitrust Ruling Missed the Point  |  After the Federal Tr ade Commission found that Google had actually helped consumers, “some critics of the inquiry now contend that the commission found no harm in Google's actions because it was looking at the wrong thing,” The New York Times writes. NEW YORK TIMES

 

Hostess Said to Be in Talks to Sell Bread Brands  |  Flowers Foods and Grupo Bimbo “are in discussions to acquire pieces of Hostess Brands Inc.'s bread business, as the maker of Wonder Bread and Twinkies sells off assets and liquidates, said people familiar with the talks,” The Wall Street Journal reports. WALL STREET JOURNAL

 

Zipcar Makes S.E.C. Filing After Executive's Twitter Message  |  A Twitter message by Scott Griffith, the chief executive of Zipcar, led the car-sharing firm to promptly make a filing with the Securities and Exchange Commission, lest it face any scrutiny about fair disclosure. DealBook '

 

Federal Judge Steps Down to Join Law Firm  |  Barbara S. Jones, a federal judge in Manhattan who oversaw several prominent cases, is joining the boutique law firm Zucker man Spaeder. DealBook '

 

For Law Firm Partners, a New Reality of Cuts  | 
WALL STREET JOURNAL

 

Judge Orders Revision of $20 Million Settlement in Bank of America Suit  |  The New York Times reports: “Two pension funds that agreed to a relatively small settlement with the directors of Bank of America over its acquisition of Merrill Lynch are being ordered by a federal judge to strike a better deal beginning on Monday.” NEW YORK TIMES

 

A.I.G.'s Chief on the Bailout  |  Robert H. Benmosche, chief executive of A.I.G., defends his company in a letter to the editor of The New York Times, saying “what is not debatable is that the people of A.I.G. persevered and have repaid that assistance plus a profit.” NEW YORK TIMES