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Citi ‘Negative’ On Subprime Mortgages As Early As 2006, Yet Continued To Pump Them Out

April 8, 2010 By Leave a Comment

Shahien Hasiripour, Huffington Post

A top Citigroup official testified Wednesday that the firm was reducing its risk to subprime mortgage products as early as 2006, fully expecting housing prices to decline. Yet a review of industry figures shows that in 2007 Citi underwrote billions in subprime mortgage securities and was the nation’s top lender of subprime mortgages.

It also purchased insurance on those holdings in 2007 in the form of credit default swaps in case they soured, regulatory filings show.

“We were negative on subprime, as a matter,” Thomas Maheras, the bank’s former trading chief, who served as co-CEO of Citi Markets and Banking, told the panel created by Congress to investigate the roots of the financial crisis. “We were, from the very earliest part of ’07 and the end of ’06, we were in most of our business areas reducing our risk around subprime.”

Yet despite the firm’s efforts to mitigate those risks as early as 2006, Citigroup, which is about 27 percent owned by taxpayers in the wake of the 2008 bailout, still proceeded to originate an estimated $19.7 billion in subprime mortgages, according to Inside Mortgage Finance, a leading trade publication whose data is used extensively by the federal government. Citigroup was the nation’s top subprime mortgage lender that year, according to Guy Cecala, CEO and publisher of Inside Mortgage Finance.

Read more here: http://www.huffingtonpost.com/2010/04/08/citi-negative-on-subprime_n_531130.html?ref=twitter

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Dodd Financial Reform Bill Passed By Senate Banking Committee

March 22, 2010 By Leave a Comment

From The Huffington Post

The Senate Banking Committee has approved Democratic legislation overhauling Wall Street regulations on a party-line vote. The bill now goes to the Senate, where its prospects remain in doubt.

The committee vote Monday was 13-10.

The bill was written by Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut. It would give the government unprecedented powers to split up firms considered a threat to the economy, put together a council of regulators to watch for risks in the financial system and create an independent consumer watchdog.

Sen. Richard Shelby, the committee’s top Republican, said Republicans decided not to seek changes to the bill in committee. He said such an effort would not have been productive.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

WASHINGTON (AP) – Republicans abandoned hope of altering Wall Street legislation in a key Senate committee Monday, clouding prospects for a bipartisan bill and leaving the fight for the full Senate.

Republicans had offered more than 300 amendments to legislation proposed by Senate Banking Committee Chairman Christopher Dodd, but they withdrew them over the weekend. That cleared the way for a quick party-line committee vote on Dodd’s proposal late Monday or early Tuesday.

The surprise development did nothing to mend the partisan fissures over the legislation and adds even more uncertainty to Congress’ ability to pass a sweeping rewrite of financial regulations this year. The Senate would not take up the bill until April at the earliest.

From The Huffington Post

“You’ll have Easter recess, and that’s when, I guess, over the course of the next several weeks when the real negotiations will be taking place,” said Sen. Bob Corker, R-Tenn., a member of the committee who had held negotiations with Dodd. Corker spoke on CNBC.

Read more here: http://www.huffingtonpost.com/2010/03/22/dodd-bill-passed-by-senat_0_n_508935.html

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Fight For The CFPA Is ‘A Dispute Between Families And Banks,’ Says Elizabeth Warren

March 3, 2010 By Leave a Comment

Shahien Nasiripour, Huffington Post

While members of the Senate Banking Committee debate proposals to fix the nation’s broken financial system and ineffective approach to protecting consumers, Elizabeth Warren has one message: Pass a strong bill or nothing at all.

“My first choice is a strong consumer agency,” the Harvard Law professor and federal bailout watchdog said in an interview with the Huffington Post. “My second choice is no agency at all and plenty of blood and teeth left on the floor.”

There’s been a steady leak of Senate proposals to fix the dysfunctional way federal regulators protect consumers from abusive lenders. One was an independent unit housed within the Treasury Department; another was a new entity, housed in the Federal Reserve, with little independence or power.

The Senate shouldn’t waste its time, asserts Warren, explaining that current proposals fail to address some of her key priorities such as arming the proposed agency with independent rule-making authority, without interference by bank regulators.

Read more here:  http://www.huffingtonpost.com/2010/03/03/fight-for-the-cfpa-is-a-d_n_483707.html

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FDIC Chairman Sheila Bair Committed To Independent Consumer Agency

March 2, 2010 By Leave a Comment

Shahien Nasiripour, Huffington Post/AP

One of the nation’s top banking regulators reiterated her support for an independent agency to protect borrowers from predatory lenders, putting her at odds with her fellow regulators and the industry she oversees.

“Consumer abuses were one of the root causes of the financial crisis and regulatory reform legislation should address this problem,” Andrew Gray, a spokesman for Federal Deposit Insurance Corp. Chairman Sheila Bair, wrote in an e-mail to Huffington Post. “The FDIC has been on the record that the ideal way to do this is through an independent agency with the power to write rules for the banks and non-banks alike.”

The statement follows Bair’s remarks Monday on consumer protection before a conference of state attorneys general in which she said that the proposed agency “would help community banks, not hurt them,” reports The Associated Press.

Read more here:  http://www.huffingtonpost.com/2010/03/02/fdic-chairman-sheila-bair_n_482556.html

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