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Aug 22, 2014

FDIC | Financial Institution Letter - August 22, 2014: Interagency Guidance Regarding Unfair or Deceptive Credit Practices.


Financial Institution Letter

Interagency Guidance Regarding Unfair or Deceptive Credit PracticesFIL-44-2014
Summary:The FDIC, the Board of Governors of the Federal Reserve System (Board), the Consumer Financial Protection Bureau (CFPB), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) (collectively, the Agencies) are issuing guidance regarding certain consumer credit practices. The authority to issue credit practices rules for banks, savings associations, and federal credit unions was repealed as a consequence of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act); however, institutions should not construe the repeal to indicate that the unfair or deceptive practices described in these former regulations are permissible. These practices remain subject to Section 5 of the Federal Trade Commission (FTC) Act.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised financial institutions.

Complete Financial Institution Letter:

DealBook P.M. edition - August 22, 2014: Weekend Reading: The Evolving Bank Settlement Documents

For the latest updates, go to »
Weekend Reading: The Evolving Bank Settlement Documents If it feels as though the billion-dollar settlements from the financial crisis are blurring together, you're not alone.

Our colleague Peter J. Henning, the White Collar Watch columnist,quizzed readers about Attorney General Eric H. Holder Jr.'s statements on various big bank settlements.

Now we're trying the same thing with excerpts from the "statements of fact" from the settlements reached with Bank of America, Citigroup and JPMorgan Chase.

See if you can figure out which bank is behind the malapropos below.

A. In marketing materials, [the bank] represented that the originators had a "solid underrating platform," and that [the bank] was familiar with and approved the originators' underwriting guidelines; that before purchasing a pool a "thorough due diligence is undertaken to ensure compliance with [underwriting] guidelines"; and that such due diligence was "performed by industry leading 3rd parties."

B. The trader stated that he "went thru the Diligence Reports and think that we should start praying... I would not be surprised if half of these loans went down. There are a lot of loans that have unreasonable incomes, values below the original appraisals (CLTV would be>100), etc. It's amazing that some of these loans were closed at all."

C. [The bank] refinanced a ... non-FHA loan into a government-backed FHA loan. The loan, which was in the amount of $156,491 for a 24-year-old mobile home, contained numerous unresolved incomes discrepancies. The borrower was also delinquent on his initial loans at the time of closing. In addition, the borrower was improperly permitted to roll $12,623 of credit card and auto debt into the new FHA loan. The borrower made only two payments before defaulting on the new FHA loan.

(Answers: A. JPMorgan Chase; B. Citigroup; C. Bank of America)

The "statement of facts" from the 2013 JPMorgan settlement is the most bland. Although it cites marketing materials, it contains no embarrassing emails and reads more like the legal document it is rather than a story of bad bank behavior.

The Citigroup "statement of facts" reached in July reads quite differently, almost as if it is written for a layperson. The document provides explanations of technical terms, cites specific examples and quotes an internal email from a Citigroup trader criticizing due diligence reports.

The "statement of facts" released on Thursday as part of the Bank of America settlement goes further by telling stories of specific bad loans and their outcomes. The document also cites critical memos and emails from bank executives.

These documents, which must be agreed upon with the banks, have their limitations. Banks know that they could be used in potential future lawsuits and are reluctant to include too many details. For example, the documents do not name any Wall Street executives. But Justice Department has become adept at using the "statements of facts" to show some of the questionable behaviors.

For the latest updates, go to »
A look back on our reporting of the past week's highs and lows in finance.
A number of high-ranking employees have left Point72 Asset Management.
Richard Handler of Leucadia to Join Board of Ex-SAC Executive's New Fund Richard Handler is joining the board of Folger Hill Asset Management, which was started by Solomon Kumin and Leucadia National.
Carl Icahn, the billionaire activist investor.
Reuters Breakingviews: Carl Icahn Looks to Take the Wheel at Hertz The rental car company has been a perennial investor plaything. Maybe Uber could even be next, wonders Kevin Allison of Reuters Breakingviews.
A horse carriage passes RWE's Niederaussem coal power plant in Rheidt, Germany.
Germany Approves Sale of Utility's Oil and Gas Unit to Russians The decision comes despite the tensions between the European Union and Russia because of the crisis in Ukraine.
Attorney General Eric H. Holder Jr. announcing the settlements with JPMorgan Chase, Citigroup and Bank of America.
White Collar Watch: Blurred Lines in Big Bank Mortgage Settlements The Bank of America settlement may close a chapter of the financial crisis, but the Justice Department can still pursue civil cases against former Countrywide executives, writes Peter J. Henning in the White Collar Watch column.
Dynegy's headquarters in Houston in 2006.
Dynegy to Buy Power Assets for $6.25 Billion The power producer is buying ownership stakes in coal and natural gas plants from Duke Energy and the private equity firm Energy Capital Partners.
A branch of the Co-operative Bank in London.
Co-operative Bank Narrows First-Half Losses and Shrinks Work Force The British bank said that it posted a pretax loss of about $126 million and shed 13 percent of its employees in the first six months of the year.
Sherborne Investor Seeks 2 Seats on Board of British Private Equity Firm The activist investor Edward J. Bramson has called for a shareholder meeting as he seeks seats on Electra Private Equity's board of directors.
The London Stock Exchange in 2011.
As I.P.O.s Doubled, London Stock Exchange Operating Profit Rose 36% The exchange also confirmed its plans to raise about $1.6 billion to help fund its $2.7 billion acquisition of Russell Investments, the owner of the Russell 2000 stock market index.
Bank of America's $16 Billion Mortgage Settlement Less Painful Than It Looks The company's financial burden for the settlement may not exceed $12 billion - certainly a large amount, but one significantly less than the number the government trumpets.
Countrywide Financial became one of the nation's largest mortgage lenders before Bank of America acquired it in 2008.
Bank of America Papers Show Conflict and Trickery in Mortgages Documents in a settlement between the Bank of America and the Justice Department read like a highlight reel of mortgage sins.
Gerard Cassidy introduced the
Europe Fears Banks Lack Cash Cushion to Cover Bad Loans Applying the ratio of bad loans to equity and set-aside cash - the so-called Texas ratio - suggests a number of eurozone lenders are at risk of collapse.
Howard Levine, foreground, head of Family Dollar, rejected a rival's more lucrative takeover bid.
Family Dollar Rejects Takeover Bid by Dollar General, Citing Antitrust Concerns Instead, Family Dollar Stores is holding firm to its earlier $8.5 billion merger deal with Dollar Tree, arguing that it poses far less regulatory risk.
Philip A. Piro, left, formerly of Deutsche Bank, at the Piro home in the Hamptons. He founded Captains Neck & Co., a beverage maker, with Merritt Piro, his sister, and Pat Cascarano, a friend.
Wall St. Banks Dig Deeper to Keep Best and BrightestBanks fear competition for top talent from companies like Google and Facebook that can offer similarly high pay combined with luxurious benefits.
Brian T. Moynihan, the chief of Bank of America. He spoke on the phone with Attorney General Eric H. Holder Jr.
$16.65 Billion Mortgage Settlement Nears for Bank of America Even as the accord nears completion, prosecutors are preparing a separate civil case against Angelo Mozilo, the man who came to embody the risk-taking for which Bank of America is now paying dearly.
Richard Cordray, director of the Consumer Financial Protection Bureau, at a House panel last month.
Texas Car Lender Is Accused of Distortion in Subprime Inquiry First Investors Financial Services Group is accused of giving credit reporting agencies flawed data about thousands of car buyers.
A currency exchange store in Buenos Aires displays the Argentine national flag.
Argentina Proposes End Run Around U.S. Court in Bond Dispute A draft bill would allow foreign investors holding Argentine debt to swap their defaulted bonds for new ones subject to local law, a move intended to bypass a United States court.
For every pair of shoes TOMS sells, it donates a pair to a child living in poverty.
After Sale to Bain, Toms's Chief Wants to Expand Global Reach The deal with Bain Capital is said to value the retailer at about $625 million, including debt.
Standard Chartered's offices in London. The bank was fined for not abiding by an agreement that settled charges that it worked with blacklisted countries.
Caught Backsliding, Standard Chartered Is Fined $300 Million Standard Chartered will also be prevented from processing payments in dollars for "high-risk retail business clients" in Hong Kong, with the bank's monitor determining which clients are "high risk."
Deal Professor: Grappling With the Cost of Corporate Gadflies Three activists specialize in bringing shareholder proposals at annual meetings, but these proposals are costing companies tens of millions of dollars.
Bank of America named Thomas K. Montag, left, its chief operating officer, and David C. Darnell a vice chairman.
Bank of America Co-Chief Operating Officer Will Become Sole C.O.O. The personnel moves strengthen Mr. Montag's position as a potential successor to Brian T. Moynihan, chief executive of the bank.
BHP Billiton's Mount Newman iron ore mine in Western Australia.
BHP Billiton to Spin Off Units, Reversing Consolidation Trend Responding to a softening commodities market, the mining giant will put several assets into a new metals and mining company, largely undoing the merger of BHP and Billiton in 2001.
Family Dollar has been under pressure from activist investors both outside and inside its boardroom.
Rival Bids for Family Dollar Stores as Retailers Fight to Sell to Working Poor Dollar General offered to buy Family Dollar Stores for $8.9 billion, hoping to break up its fellow deep-discount retailer Family Tree's agreed-upon $8.5 billion merger with Family Dollar.
The offices of PricewaterhouseCoopers in New York.
Altered Bank Study Draws Fine for Giant Auditor PwCThe fine is tied to a review PricewaterhouseCoopers did in 2007 for the Bank of Tokyo-Mitsubishi UFJ of its transactions with Iran and other countries under sanctions.
Prof. Edward Kleinbard says that despite the American tax code's high tax rate, loopholes make United States corporations more competitive than their overseas competitors, not less.
Sorkin: Tax Burden in U.S. Not as Heavy as It Looks, Report Says An academic paper argues that the American tax code's loopholes result in effective rates that make United States corporations more competitive than their competitors based overseas, not less.
The headquarters of Point72 Asset Management in Stamford, Conn.
Departures Mount in Executive Ranks of Steven Cohen's Family Office The timing of Thomas Conheeney's departure, just four months after a federal judge accepted SAC's guilty plea to insider trading charges, may come as a surprise to some within the firm.
Bitcoin's Price Falls 12%, to Lowest Value Since MayBitcoin's price has been noticeably falling in recent weeks after a period of relative stability, though those who trade in the virtual currency say the drop is par for the course.
The offices of PricewaterhouseCoopers in New York.
Bank Overseer PwC Faces Penalty and Sidelining of Regulatory Consulting Unit PricewaterhouseCoopers is said to have agreed to pay a $25 million fine in New York for obscuring misconduct it was supposed to unearth.
In Silicon Valley, Mergers Must Meet the Toothbrush Test Companies like Google are employing unorthodox criteria - say, whether a product is used daily, like a toothbrush - to size up their deal targets, and without the advice of Wall Street bankers.
For the latest updates, go to »

WSJ | Biggest Gainers Closing on August 22, 2014.

Biggest Gainers Closing
Biggest Gainers
4:47 pm ET 08/22/2014
CHC Group (HELI)1,919,197$7.100.9114.70
Autohome ADS (ATHM)1,596,35549.545.8813.47
Leju Holdings ADS (LEJU)1,948,27118.412.1613.29
Dynegy (DYN)15,399,87432.322.608.75
TRC Cos. (TRR)29,1705.810.458.40
Roundys (RNDY)1,025,1493.850.298.15
TravelCenters of America (TA)2,086,18210.520.798.12
Veeva Systems (VEEV)1,229,55524.421.777.81
New York (NWY)332,6803.510.257.67 (CRM)24,766,60559.804.097.34
AK Steel Holding (AKS)9,680,14510.680.676.69
voxeljet ADS (VJET)1,292,34116.871.056.64
SeaWorld Entertainment (SEAS)9,631,58320.271.266.63
Penn Virginia (PVA)3,212,76914.270.876.49
China Ming Yang Wind Power Group ADS (MY)2,979,1833.360.195.99
GameStop Cl A (GME)8,521,04242.902.415.95
Eros International (EROS)187,98316.220.875.67
Paycom Software (PAYC)450,83217.450.915.50
Gap (GPS)8,832,19445.432.255.21
Bitauto Holdings ADS (BITA)1,288,25281.713.985.12
GrafTech International (GTI)1,154,4528.820.414.88
ServiceNow (NOW)2,077,98259.622.724.78
Fabrinet (FN)353,42615.700.704.67
King Digital Entertainment (KING)3,539,04013.960.624.65
PowerSecure International (POWR)625,25111.800.524.61
Peregrine Semiconductor (PSMI)12,047,099$12.534.8462.94
Cadiz (CDZI)777,96013.311.6313.96
Keurig Green Mountain (GMCR)10,747,939133.3615.6113.26
TrueCar (TRUE)2,174,73320.902.1711.59
China HGS Real Estate (HGSH)1,962,9346.190.5910.54
Bon-Ton Stores (BONT)990,90011.200.999.70
Amicus Therapeutics (FOLD)7,252,1375.870.468.50
Agios Pharmaceuticals (AGIO)436,03843.663.318.20
Fresh Market (TFM)4,235,63532.892.468.08
ChinaCache International Holdings ADS (CCIH)415,61215.651.137.78
Himax Technologies ADS (HIMX)10,781,1518.350.597.60
Fairway Group Holdings Cl A (FWM)484,3224.690.337.57
Ross Stores (ROST)5,775,58874.375.127.39
Integrated Electrical Services (IESC)94,3787.610.507.03
Carrols Restaurant Group (TAST)816,4477.040.446.67
Tarena International ADS (TEDU)1,218,52014.450.906.64
Tuesday Morning (TUES)2,918,10218.211.126.55
T2 Biosystems (TTOO)92,57721.741.316.41
CyberOptics (CYBE)95,42111.170.676.38
Sky-mobi ADS (MOBI)817,7418.470.496.14
SMART Technologies (SMT)170,3062.140.125.94
Qunar Cayman Islands ADS (QUNR)4,102,00530.721.685.79
MobileIron (MOBL)534,0079.370.515.76
China Finance Online ADS (JRJC)20,106,80110.290.555.65
Ovascience (OVAS)42,35111.870.635.60
Direxion Daily Russia Bear 3x Shares (RUSS)297,536$11.520.645.88
Direxion Daily Brazil Bear 3X Shares (BRZS)12,57125.900.923.68
ELEMENTS ETN-SPECTRUM Large Cap U.S. TR (EEH)25,59813.430.372.83
ProShares UltraShort MSCI Brazil Capped (BZQ)5,89454.001.272.41
Direxion Daily Natural Gas Related Bear 3x Shares (GASX)3,14218.290.432.41
Direxion Daily Real Estate Bear 3x Shares (DRV)101,89134.400.792.35
Global X Pure Gold Miners ETF (GGGG)13,39312.650.282.26
Direxion Daily Energy Bear 3x Shares (ERY)284,54413.690.272.01
VelocityShares 3x Inverse Natural Gas ETN linked to the S&P GSCI Natural Gas Index Excess Return (DGAZ)3,549,1844.380.091.98
Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST)2,246,48211.150.201.83
ProShares Ultra SmallCap600 (SAA)3,869106.451.901.81
Direxion Daily Gold Bull 3X Shares (GLDL)7,20536.370.621.73
Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF)333,05368.381.141.70
ProShares UltraShort Bloomberg Natural Gas (KOLD)5,64351.660.861.69
PowerShares DB 3x Long 25+ Year Treasury Bond Exchange Traded Note (LBND)4,43845.390.731.63
Direxion Daily Developed Markets Bear 3x Shares (DPK)4,70329.760.471.59
ProShares UltraShort Real Estate (SRS)47,62914.710.221.52
ProShares Ultra 20+ Year Treas (UBT)46,88469.170.951.39
Market Vectors Vietnam ETF (VNM)307,38922.340.301.36
iPath Dow Jones -UBS Coffee Subindex Total return Coll ETN (CAFE)6,04323.310.311.35
iShares MSCI Global Silver Miners ETF (SLVP)103,20312.790.171.35
Direxion Daily Retail Bull 3x Shares (RETL)3,37975.681.001.34
Teucrium Wheat Fund (WEAT)96,99512.800.161.27
First Trust Taiwan AlphaDEX (FTW)4,66638.490.481.26
ProShares UltraShort Oil&Gas (DUG)61,20138.940.481.25
Peregrine Semiconductor (PSMI)12,047,099$12.534.8462.94
Heat Biologics (HTBX)1,287,5616.681.3826.04
CHC Group (HELI)1,919,1977.100.9114.70
Vapor (VPCO)865,5402.680.3314.04
Cadiz (CDZI)777,96013.311.6313.96
Autohome ADS (ATHM)1,596,35549.545.8813.47
Leju Holdings ADS (LEJU)1,948,27118.412.1613.29
Digital Ally (DGLY)7,700,7077.940.9313.27
Keurig Green Mountain (GMCR)10,747,939133.3615.6113.26
Trio-Tech International (TRT)42,2124.550.4811.79
Repros Therapeutics (RPRX)1,010,98017.011.7911.76
TrueCar (TRUE)2,174,73320.902.1711.59
NF Energy Saving (NFEC)402,6433.210.3311.46
Dehaier Medical Systems (DHRM)777,9846.080.6111.15
China HGS Real Estate (HGSH)1,962,9346.190.5910.54
Bon-Ton Stores (BONT)990,90011.200.999.70
Adept Technology (ADEP)296,74410.350.889.29
Dynegy (DYN)15,399,87432.322.608.75
Amicus Therapeutics (FOLD)7,252,1375.870.468.50
TRC Cos. (TRR)29,1705.810.458.40
Agios Pharmaceuticals (AGIO)436,03843.663.318.20
Roundys (RNDY)1,025,1493.850.298.15
TravelCenters of America (TA)2,086,18210.520.798.12
Fresh Market (TFM)4,235,63532.892.468.08
Delcath Systems (DCTH)403,4912.290.178.02
See All Gainers
Includes common, closed end funds, ETFs, ETNs and REITS with prior day close of $2 a share or higher, with volume of at least 2,000.
x - stock is trading ex-dividend
Source: WSJ Market Data Group