Wednesday, October 30, 2013
Prime Minister's Questions: 30 October 2013
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Breakingviews: Despite progress, Barclays to face more pain
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Code to Cash: 1st bitcoin ATM opens in Canada
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Keiser Report: Bitcoin - Resistance Starts Here! (E516)
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Tuesday, October 29, 2013
Sunday, October 27, 2013
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Thursday, October 24, 2013
Wednesday, October 23, 2013
Tuesday, October 22, 2013
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Sunday, October 20, 2013
Saturday, October 19, 2013
Tentative Deal Hands JPMorgan Chase a Record Penalty
Tentative Deal Hands JPMorgan Chase a Record Penalty
BY BEN PROTESS AND JESSICA SILVER-GREENBERG
Leslye Davis/The New York TimesA Chase branch in Manhattan. The multibillion dollar deal would represent something of a reckoning for Wall Street, whose outsize risk-taking in the mortgage business nearly toppled the economy in 2008.
Updated, 8:06 p.m. |
JPMorgan Chase and the Justice Department have reached a tentative $13 billion settlement over the bank’s questionable mortgage practices leading up to the financial crisis, people briefed on the talks said on Saturday. It would be a record penalty that would cap weeks of heated negotiating and underscore the extent of the bank’s legal woes.
The deal, which the Justice Department took the lead in negotiating and which came together after a Friday night call involving Attorney General Eric H. Holder Jr. and JPMorgan’s chief executive, Jamie Dimon, would resolve an array of state and federal investigations into the bank’s sale of troubled mortgage investments. That type of investment, securities typically backed by subprime home loans, was at the heart of the financial crisis.
While the deal would put those civil cases to rest, it would not save JPMorgan from a parallel criminal inquiry from federal prosecutors in California, the people briefed on the talks said. Under the terms of the preliminary deal, the people said, the bank would also have to assist prosecutors with an investigation into former employees who helped create the mortgage investments.
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The $13 billion deal, which could still fall apart over issues like how much wrongdoing the bank is willing to acknowledge, would represent something of a reckoning for Wall Street, whose outsize risk taking in the mortgage business nearly toppled the economy in 2008. It might also provide a measure of catharsis to the investing public, which suffered billions of dollars in losses from buying bad mortgage securities.
For the Justice Department, often criticized for being soft on big banks, the deal suggests that the Obama administration’s crackdown on Wall Street has gained some momentum in recent months.
It comes less than three months after federal prosecutors and the F.B.I. in Manhattan announced a criminal indictment of the hedge fund SAC Capital, which was accused of permitting a “systematic” insider-trading scheme to unfold from 1999 to 2010. The hedge fund, according to people briefed on the case, is currently negotiating a plea deal that would force it to plead guilty to criminal misconduct and pay more than $1 billion in penalties.
The cost to JPMorgan, the nation’s biggest bank, goes beyond the bottom line. The settlement would deal a reputational blow to the bank and Mr. Dimon, who steered JPMorgan through the crisis without a quarterly loss or major government scuffle. Now Mr. Dimon’s tenure is engulfed in turmoil, the consequence of fighting a multifront battle with federal authorities scrutinizing everything from a $6 billion trading loss in London last year to the bank’s hiring of well-connected employees in China.
In the mortgage case, the size of the penalty underpins its importance. The $13 billion penalty, according to one of the people briefed on the talks, would include about $9 billion in fines and $4 billion in relief for struggling homeowners.
Some defense lawyers question whether the government is going too far in demanding that sum. A $13 billion penalty would be more than half what JPMorgan earned in profits last year. The lawyers also note that some of the mortgage securities in question are not JPMorgan’s. Rather, the bank inherited the liabilities when it bought Bear Stearns and Washington Mutual in 2008, at the height of the financial crisis.
Jason Reed/ReutersJamie Dimon, JPMorgan’s chief and chairman, said the bank’s legal costs would be unpredictable in the coming quarters.
A spokesman for JPMorgan declined to comment. Brian Fallon, a Justice Department spokesman, also declined to comment.
The penalty, if approved, would surpass other major Wall Street settlements and represent the largest fine that a single company has ever paid in settling with the Justice Department. HSBC, for example, agreed to a $1.9 billion penalty last year over money laundering accusations. BP paid $4.5 billion for its role in the huge oil spill in the Gulf of Mexico.
The JPMorgan penalty also eclipses what the bank previously offered to pay. Until now, the bank was offering about $11 billion in total. And it refused to increase its offer unless the California authorities dropped the criminal investigation into the bank’s sale of troubled mortgage securities to investors.
But the bank, one of the people briefed on the talks said, tentatively backed down from that demand, a major victory for the government and one that allows the Justice Department to pursue its criminal investigation of JPMorgan.
The preliminary deal materialized late on Friday after Mr. Holder spoke on the phone to the bank’s top executives, including Mr. Dimon, and the general counsel, Stephen M. Cutler, one person said. Mr. Holder told Mr. Dimon that he could not shut down the criminal investigation, reiterating an argument he made when the two met last month in Washington. The associate attorney general, Tony West, was also at that meeting and on the phone call Friday night.
One significant obstacle stands in the way of a deal: whether JPMorgan will admit to all of the improper actions cited by the Justice Department. Banks are typically loath to acknowledge wrongdoing, fearing it could expose them to a raft of shareholder lawsuits.
Mr. West and Mr. Cutler are negotiating over a statement of facts in the case that would address the wrongdoing issue, the people briefed on the talks said. Those negotiations could hit a snag if JPMorgan seeks to limit the conduct that the Justice Department wants to include.
An eye-popping fine is a political no-brainer for the Justice Department, a move that could somewhat appease a public that is skeptical of Wall Street’s influence in Washington.
But some public interest groups continue to question why no top Wall Street executives have been charged criminally for the risky acts that triggered the crisis. The government also prefers to settle with big companies rather indict them, fearing that criminal charges could unnerve the broader economy.
The government investigations into JPMorgan, which focus on securities the bank sold from 2005 to 2007, raised questions about whether JPMorgan had failed to fully warn investors about the risks of the deals.
One of the largest pieces of the $13 billion deal could come from a settlement with the Federal Housing Finance Agency. The agency sued JPMorgan over loans it had sold to Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies.
The settlement would also resolve a case related to Bear Stearns, the people briefed on the matter said, a lawsuit that has pitted the New York attorney general against JPMorgan.
Eric T. Schneiderman, the New York attorney general, sued JPMorgan last October, saying Bear Stearns and its lending unit, EMC Mortgage, had duped investors who bought mortgage securities assembled by the companies from 2005 through 2007. Through a deal backstopped by the government, JPMorgan bought Bear Stearns in 2008.
Mr. Dimon has called the lawsuit unfair, arguing that JPMorgan should not be penalized for buying Bear Stearns.
Yet JPMorgan’s board, faced with regulatory problems, one more vexing than the next, is eager to strike a conciliatory stance. Toward that end, the bank’s board approved the payment of about $1 billion in fines to government authorities so it could resolve investigations into the trading loss in London and an inquiry into the bank’s credit card products.
JPMorgan admitted wrongdoing to the Securities and Exchange Commission, which cited the bank for a breakdown in controls, and the Commodity Futures Trading Commission, which accused the bank of “employing a manipulative device” with its high volume of trading.
While a settlement will go a ways toward wrapping up a number of JPMorgan’s mortgage-related issues, the bank is still weathering a broad wave of scrutiny. With the bank’s legal woes escalating — at least seven federal agencies, several state regulators and two foreign countries are investigating the bank — JPMorgan announced this month that it would have to allot $9.2 billion to cover legal expenses alone. The huge legal bill led the bank to report its first quarterly loss under Mr. Dimon’s leadership.
Amid the swirl of legal problems, some people within JPMorgan have privately questioned whether Mr. Dimon could survive a push by shareholders to divest him of the dual titles — chairman and chief executive — that he holds.
But he survived such a push this year, having secured nearly 70 percent of the votes. And even if a majority of shareholders voted to split the roles, it would be a nonbinding measure.
Friday, October 18, 2013
Thursday, October 17, 2013
Republicans Back Down, Ending Crisis Over Shutdown and Debt Limit
Republicans Back Down, Ending Crisis Over Shutdown and Debt Limit
Doug Mills/The New York Times
Speaker John A. Boehner before voting Wednesday night. He told his members to hold their heads high, go home and regroup. More Photos »
By JONATHAN WEISMAN and ASHLEY PARKER
Published: October 16, 2013 3178 Comments
WASHINGTON — Congressional Republicans conceded defeat on Wednesday in their bitter budget fight with President Obama over the new health care law as the House and Senate approved last-minute legislation ending a disruptive 16-day government shutdown and extending federal borrowing power to avert a financial default with potentially worldwide economic repercussions.
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Editorial: The Republican Surrender (October 17, 2013)
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President Obama after speaking about the government shutdown Wednesday at the White House. More Photos »
Gabriella Demczuk/The New York Times
Senator Harry Reid of Nevada helped negotiate the deal Wednesday. More Photos »
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With the Treasury Department warning that it could run out of money to pay national obligations within a day, the Senate voted overwhelmingly on Wednesday evening, 81 to 18, to approve a proposal hammered out by the chamber’s Republican and Democratic leaders after the House on Tuesday was unable to move forward with any resolution. The House followed suit a few hours later, voting 285 to 144 to approve the Senate plan, which would fund the government through Jan. 15 and raise the debt limit through Feb. 7.
Mr. Obama signed the bill about 12:30 a.m. Thursday.
Most House Republicans opposed the bill, but 87 voted to support it. The breakdown showed that Republican leaders were willing to violate their informal rule against advancing bills that do not have majority Republican support in order to end the shutdown. All 198 Democrats voting supported the measure.
Mr. Obama, speaking shortly after the Senate vote, praised Congress, but he said he hoped the damaging standoff would not be repeated.
“We’ve got to get out of the habit of governing by crisis,” said Mr. Obama, who urged Congress to proceed not only with new budget negotiations, but with immigration changes and a farm bill as well. “We could get all these things done even this year, if everybody comes together in a spirit of, how are we going to move this country forward and put the last three weeks behind us?”
After the House vote, officials announced that the federal government would reopen on Thursday and that federal employees should return to work.
The result of the impasse that threatened the nation’s credit rating was a near total defeat for Republican conservatives, who had engineered the budget impasse as a way to strip the new health care law of funding even as registration for benefits opened Oct. 1 or, failing that, to win delays in putting the program into place.
The shutdown sent Republican poll ratings plunging, cost the government billions of dollars and damaged the nation’s international credibility. Mr. Obama refused to compromise, leaving Republican leaders to beg him to talk, and to fulminate when he refused. For all that, Republicans got a slight tightening of income verification rules for Americans accessing new health insurance exchanges created by the Affordable Care Act.
“We fought the good fight,” said Speaker John A. Boehner of Ohio, who has struggled to control the conservative faction in the House, in an interview with a Cincinnati radio station. “We just didn’t win.”
In a brief closed session with his Republican rank and file, Mr. Boehner told members to hold their heads high, go home, get some rest and think about how they could work better as a team.
Two weeks of relative cohesion broke down into near chaos on Tuesday when Republican leaders failed twice to unite their troops behind a last-gasp effort to prevent a default on their own terms. By Wednesday, House conservatives were accusing more moderate Republicans of undercutting their position. Representative Charlie Dent of Pennsylvania, a leading Republican voice for ending the fight, said Congress should have passed a bill to fund the government without policy strings attached weeks ago.
“That’s essentially what we’re doing now,” Mr. Dent said. “People can blame me all they want, but I was correct in my analysis and I’d say a lot of those folks were not correct in theirs.”
Under the agreement to reopen the government, the House and Senate are directed to hold talks and reach accord by Dec. 13 on a long-term blueprint for tax and spending policies over the next decade. Mr. Obama said consistently through the standoff that he was willing to have a wide-ranging budget negotiation once the government was reopened and the debt limit raised.
Mr. Boehner and his leadership team had long felt that they needed to allow their restive conference to pitch a battle over the president’s health care law, a fight that had been brewing almost since the law was passed in 2010. Now, they hope the fever has broken, and they can negotiate on issues where they think they have the upper hand, like spending cuts and changes to entitlement programs.
But there were no guarantees that Congress would not be at loggerheads again by mid-January, and there is deep skepticism in both parties that Representative Paul D. Ryan of Wisconsin and Senator Patty Murray of Washington, who will lead the budget negotiations, can bridge the chasm between them.
“This moves us into the next phase of the same debate,” said Senator Richard J. Durbin of Illinois, the second-ranking Democrat. “Our hope is now that Speaker Boehner and his caucus have played out their scenario with a tragic outcome, perhaps they’ll be willing to be more constructive.”
As Republican lawmakers left the closed meeting Wednesday, some were already thinking of the next fight.
“I’ll vote against it,” said Representative John C. Fleming, Republican of Louisiana, referring to the Senate plan. “But that will get us into Round 2. See, we’re going to start this all over again.”
Senator Mitch McConnell of Kentucky, the Republican leader who was instrumental in ending the crisis, stressed that under the deal he had negotiated with the majority leader, Senator Harry Reid of Nevada, the across-the-board budget cuts extracted in the 2011 fiscal showdown remained in place over the objections of some Democrats, a slim reed that not even he claimed as a significant victory.
The deal, Mr. McConnell said, “is far less than many of us hoped for, quite frankly, but it’s far better than what some had sought.”
“Now it’s time for Republicans to unite behind other crucial goals,” he added.
Chastened Senate Republicans said they hoped the outcome would be a learning experience for the lawmakers in the House and the Senate who shut down the government in hopes of gutting the health law, Mr. Obama’s signature domestic achievement. Instead of using the twin issues of government funding and borrowing authority to address the drivers of the federal deficit, conservatives focused on a law they could never undo as long as Mr. Obama is president, several lawmakers said.
“Goose egg, nothing, we got nothing,” said Representative Thomas H. Massie, Republican of Kentucky.
Senator Richard Burr of North Carolina took a swipe at his fellow Republican senators Ted Cruz of Texas and Mike Lee of Utah, as well as House members who linked government financing to defunding the health care law, which is financed by its own designated revenues and spending cuts.
“Let’s just say sometimes learning what can’t be accomplished is an important long-term thing,” Mr. Burr said, “and hopefully for some of the members they’ve learned it’s impossible to defund mandatory programs by shutting down the federal government.”
While Mr. Cruz conceded defeat, he did not express contrition.
“Unfortunately, the Washington establishment is failing to listen to the American people,” he said as he emerged from a meeting of Senate Republicans called to ratify the agreement.
For hundreds of thousands of federal workers across the country furloughed from their jobs, the legislative deal meant an abrupt end to their forced vacation as the government comes back to life beginning Thursday.
In a statement late Wednesday, Sylvia Mathews Burwell, the director of the Office of Management and Budget, made the reopening official.
“Employees should expect to return to work in the morning,” she said, adding they should check news reports and the Office of Personnel Management’s Web site for updates.
For Mr. Boehner, who had failed to unite his conference around a workable plan, Wednesday’s decision to take up the Senate bill proved surprisingly free of conflict. Hard-line Republican lawmakers largely rallied around the speaker.
Representative Raúl R. Labrador of Idaho, said he was “really proud” of how Mr. Boehner had handled the situation. “I’m more upset with my Republican conference, to be honest with you,” he said.
Wednesday, October 16, 2013
Congress Passes Debt Deal
Congress Passes Debt Deal
Doug Mills/The New York Times
Speaker John A. Boehner returned to the Capitol on Wednesday night. More Photos »
By JONATHAN WEISMAN and ASHLEY PARKER
Published: October 16, 2013 2729 Comments
WASHINGTON — Congressional Republicans conceded defeat on Wednesday in their bitter budget fight with President Obama over the new health care law as the House and Senate approved last-minute legislation ending a disruptive 16-day government shutdown and extending federal borrowing power to avert a financial default with potentially worldwide economic repercussions.
Multimedia
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With G.O.P. Badly Divided, Boehner Is Left ‘Herding Cats’(October 16, 2013)
Debt Ceiling Deadline Clear, but Implications Are Not (October 17, 2013)
Signs Indicate That Obama’s Debt Ceiling Gamble May Be Paying Off (October 16, 2013)
Viewing U.S. in Fear and Dismay (October 16, 2013)
Related in Opinion
Editorial: The Republican Surrender (October 17, 2013)
Editorial: The Senate Tries to End the Crisis (October 15, 2013)
Op-Ed Contributor: Changing the Debt-Ceiling Game (October 15, 2013)
Readers’ Comments
Share your thoughts.
With the Treasury Department warning that it could run out of money to pay national obligations within a day, the Senate voted overwhelmingly Wednesday evening, 81 to 18, to approve a proposal hammered out by the chamber’s Republican and Democratic leaders after the House on Tuesday was unable to move forward with any resolution. The House followed suit a few hours later, voting 285 to 144 to approve the Senate plan, which would fund the government through Jan. 15 and raise the debt limit through Feb. 7.
Most House Republicans opposed the bill, but 87 voted to support it. The breakdown showed that Republican leaders were willing to violate their informal rule against advancing bills that do not have majority Republican support in order to end the shutdown. All 198 Democrats voting supported the measure.
Shortly after the Senate vote, Mr. Obama said he would sign the measure as he soon as he received it. While he praised Congress, he said he hoped the damaging standoff would not be repeated.
“We’ve got to get out of the habit of governing by crisis,” said Mr. Obama, who urged Congress to proceed not only with new budget negotiations, but with immigration changes and a farm bill as well. “We could get all these things done even this year, if everybody comes together in a spirit of, how are we going to move this country forward and put the last three weeks behind us.”
The result of the impasse that threatened the nation’s credit rating was a near total defeat for Republican conservatives, who had engineered the budget impasse as a way to strip the new health care law of funding even as registration for benefits opened Oct. 1 or, failing that, to win delays in putting the program into place.
The shutdown sent Republican poll ratings plunging, cost the government billions of dollars and damaged the nation’s international credibility. Mr. Obama refused to compromise, leaving Republican leaders to beg him to talk, and to fulminate when he refused. For all that, Republicans got a slight tightening of income verification rules for Americans accessing new health insurance exchanges created by the Affordable Care Act.
“We fought the good fight,” said Speaker John A. Boehner, who has struggled to control conservative faction in the House, in an interview with a Cincinnati radio station. “We just didn’t win.”
In a brief closed session with his Republican rank and file, Mr. Boehner told members to hold their heads high, go home, get some rest and think about how they could work better as a team.
Two weeks of relative cohesion broke down into near chaos on Tuesday when Republican leaders failed twice to unite their troops behind a last-gasp effort to prevent a default on their own terms. By Wednesday, House conservatives were accusing more moderate Republicans of undercutting their position. Representative Charlie Dent of Pennsylvania, a leading Republican voice for ending the fight, said Congress should have passed a bill to fund the government without policy strings attached weeks ago.
“That’s essentially what we’re doing now,” Mr. Dent said. “People can blame me all they want, but I was correct in my analysis and I’d say a lot of those folks were not correct in theirs.”
Under the agreement to reopen the government, the House and Senate are directed to hold talks and reach accord by Dec. 13 on a long-term blueprint for tax and spending policies over the next decade. Mr. Obama said consistently through the standoff that he was willing to have a wide-ranging budget negotiation once the government was reopened and the debt limit raised.
Mr. Boehner and his leadership team had long felt that they needed to allow their restive conference to pitch a battle over the president’s health care law, a fight that had been brewing almost since the law was passed in 2010. Now, they hope the fever has broken, and they can negotiate on issues where they think they have the upper hand, such as spending cuts and changes to entitlement programs.
But there were no guarantees that Congress would not be at loggerheads again by mid-January and there is deep skepticism in both parties that Representative Paul D. Ryan of Wisconsin and Senator Patty Murray of Washington, who will lead the budget negotiations, can bridge the chasm between them.
“This moves us into the next phase of the same debate,” said Senator Richard J. Durbin of Illinois, the second-ranking Democrat. “Our hope is now that Speaker Boehner and his caucus have played out their scenario with a tragic outcome, perhaps they’ll be willing to be more constructive.”
As Republican lawmakers left the closed meeting Wednesday, some were already thinking of the next fight.
“I’ll vote against it,” said Representative John C. Fleming, Republican of Louisiana, referring to the Senate plan. “But that will get us into Round 2. See, we’re going to start this all over again.”
Senator Mitch McConnell of Kentucky, the Republican leader who was instrumental in ending the crisis, stressed that under the deal he had negotiated with the majority leader, Senator Harry Reid of Nevada, the across-the-board budget cuts extracted in the 2011 fiscal showdown remained in place over the objections of some Democrats, a slim reed that not even he claimed as a significant victory.
The deal, Mr. McConnell said, “is far less than many of us hoped for, quite frankly, but it’s far better than what some had sought.”
“Now it’s time for Republicans to unite behind other crucial goals,” he added.
Chastened Senate Republicans said they hoped the outcome would be a learning experience for the lawmakers in the House and the Senate who shut down the government in hopes of gutting the health law, Mr. Obama’s signature domestic achievement. Instead of using the twin issues of government funding and borrowing authority to address the drivers of the federal deficit, conservatives focused on a law they could never undo as long as Mr. Obama is president, several lawmakers said.
“Goose egg, nothing, we got nothing,” said Representative Thomas H. Massie, Republican of Kentucky.
Senator Richard Burr of North Carolina, took a swipe at his fellow Republican senators, Ted Cruz of Texas and Mike Lee of Utah, as well as House members who linked government financing to defunding the health care law, which is financed by its own designated revenues and spending cuts.
“Let’s just say sometimes learning what can’t be accomplished is an important long-term thing,” Mr. Burr said, “and hopefully for some of the members they’ve learned it’s impossible to defund mandatory programs by shutting down the federal government.”
While Mr. Cruz conceded defeat, he did not express contrition.
“Unfortunately, the Washington establishment is failing to listen to the American people,” he said as he emerged from a meeting of Senate Republicans called to ratify the agreement.
For hundreds of thousands of federal workers across the country furloughed from their jobs, the legislative deal meant an abrupt end to their forced vacation as the government comes back to life beginning Thursday.
With strict orders not to check government e-mail while on furlough, workers were left to their own devices to figure out whether the shutdown had ended. The furlough notices that went out on Sept. 30 told workers to monitor television broadcasts and to keep an eye on the Web site of the Office of Personnel Management for instructions.
For Mr. Boehner, who had tried but failed to unite his conference around a workable plan, Wednesday’s decision to take up the Senate bill proved surprisingly free of conflict. Hard-line Republican lawmakers largely rallied around the speaker, instead blaming their more moderate colleagues who they said had not had the backbone to stand strong in the fight against the health care law.
And Representative Raúl R. Labrador of Idaho, said was “really proud” of how Mr. Boehner had handled the situation.
“I’m more upset with my Republican conference, to be honest with you,” he said. “It’s been Republicans here who apparently always want to fight — but they want to fight the next fight — that have given Speaker Boehner the inability to be successful in this fight.”
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