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MADISON, Wis. (2/13/12)
  • Federal and state officials are making it clear there's more legal action looming for banks involved in the $25 billion foreclosure settlement announced this week. The settlement addresses many robo-signing issues, but preserves federal and state officials' ability to pursue criminal suits as well as individuals' rights to file suits or participate in class action lawsuits (American Banker Feb. 9). President Barack Obama noted the mortgage fraud task force highlighted in his State of the Union address will still pursue investigations of mortgage packaging and selling practices. One analyst told the Banker that ongoing litigation could badger banks for a decade …
  • The $25 billion foreclosure settlement is more a pest than a menace to the five participating banks. Bank of America, JP Morgan Chase, Wells Fargo, Ally Financial and Citigroup all claim they can cover their share of penalties with cash currently held in reserves (American Banker Feb. 9). Some penalties can be addressed with "soft money" by shifting reserves designated to cover mortgage losses to pay for the settlement's requirements for mortgage refinancing and principal reductions in the next three years. The Banker reported that all five banks say the settlement will not impact future profitability or financial result …
  • The Federal Reserve Board will fine the parent firms of the five banks involved in the foreclosure settlement a combined $776.5 million for failing to provide proper oversight of subsidiaries. Bank of America will pay $175.5 million; JP Morgan Chase, $106.5 million; Wells Fargo, $87 million; Citigroup, $22 million; and Ally Financial, $17 million (American Banker Feb. 9). The Federal Reserve said it will levy fines against another six institutions that earlier received enforcement actions for foreclosure practices, although the amount will not be disclosed until a later date …
  • Visa's debit profits are slackening due to regulations enacted Oct. 1 to cap debit card interchange fees at 24 cents per transaction, roughly half the amount retailers previously paid to financial institutions. Visa's U.S. debit payments volume increased roughly 5% in its fiscal first quarter, which compares to 16% growth in the same period one year earlier. Visa blamed the slowing pace on debit card issuers opting to pull back on marketing and rewards for debit transactions as well as slower growth in PIN-based transactions (American Banker Feb. 9). New debit interchange rules also compel financial institutions to have relationships with at least two processing networks for debit transactions by April 1 to offer alternatives to merchants and spur competition. Visa plans to introduce an incentive plan to persuade merchants to use its network …
 
 
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