Finance

Capital One pays $3.5M in fines for deceiving regulators

Capital One and two former senior executives paid financial regulators a total of more than $3.5 million to settle charges they manipulated auto loan losses leading up to the 2008 financial crisis.

The Securities and Exchange Commission (SEC) said on Wednesday that the U.S. bank, which reported $21.4 billion in revenue last year, understated the losses the company took from subprime auto loans that could have otherwise been a signal to the looming credit bubble burst.

Losses from Capital One’s auto finance business in the second and third quarters of 2007 vastly exceeded the company’s internal estimates, the SEC says. In financial reports, however, the bank underreported the numbers by 18 percent and 9 percent during those quarters, respectively, or by as much as $72 million and $51 million.

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Credit union chief: 'Too big to fail still exists'

The nation's top advocate for credit unions doesn't think that reforms under the Dodd-Frank financial law have ended the United States's dependence on major Wall Street banks.

"At this point I fail to see how anything that has been done so far has changed too big to fail," said Bill Cheney, CEO of the Credit Union National Association (CUNA) in an interview with The Hill on Tuesday.

If another financial crisis emerged, he said, "the people in the positions who made the decisions to bail out the big banks before would probably have to do the same thing today."

He added, "I think too big to fail still exists."

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News bites: SEC joins AP Twitter hacking probe

The Securities and Exchange Commission (SEC) is investigating a hack of the Associated Press's Twitter account used to falsely report explosions Tuesday at the White House, Reuters reports. The FBI is also on the case, according to The Hill’s Hillicon Valley blog.

The SEC is under mounting pressure to force companies to disclose their political donations to shareholders, The New York Times reports.

A Federal judge in California ordered the Food and Drug Administration (FDA) to move forward with enacting regulations meant to overhaul the country’s food safety system, according to The Wall Street Journal. The long anticipated rules were delayed in February, prompting criticism from a Democratic lawmaker, RegWatch reported. The regulations themselves have drawn fire from consumer advocates, who say they do not go far enough, according to RegWatch.

Federal financial regulators will warn this week about the growing amount of student debt piling up around the country and its potential economic implications, The Huffington Post reports. 

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SEC returns more than $147M to foreigners promised U.S. investors visas

The Securities and Exchange Commission will be returning more than $147 million to hundreds of foreign investors scammed by a Chicago man promising them special U.S. visas given to international financiers.

A 29-year-old created two companies and, over about 18 months, allegedly coaxed millions from mostly Chinese investors.

On Friday, a federal court modified an emergency court ruling in February that froze the accounts under investigation in order to move the $147 million in defrauded funds back to more than 250 investors.


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Former prosecutor picked to lead SEC’s enforcement division

The Securities and Exchange Commission (SEC) is bringing in a former federal prosecutor to lead its enforcement division.

Andrew Ceresney, a former New York prosecutor, will join his friend, current Acting Director George Canellos, as a co-director of the SEC’s Division of Enforcement.

“George and Andrew are two of the best lawyers and finest people I know," said SEC Chairwoman Mary Jo White in a statement. "They are a perfect combination to lead the talented Enforcement Division professionals who protect investors and keep our markets safe and vibrant."

White started her tenure at the agency this month after a speedy confirmation in the Senate. The appointment of Ceresney is her first major personnel move.

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With Warren absent, lawmakers take it easy on housing agency chief

The embattled acting chief of the Federal Housing Finance Agency (FHFA) got a vote of confidence Thursday from lawmakers, who urged quicker action to transition mortgage lending giants Fannie Mae and Freddie Mac out of federal conservatorship.

For months, Edward DeMarco has taken fire from Democrats and left-leaning groups over his decision not to allow Fannie and Freddie to reduce loan principals for underwater borrowers, those who owe more than their homes are worth.

But on Thursday, Republican and Democratic members of the Senate Banking Committee had mostly kind words for DeMarco during a hearing to take stock of the agency’s efforts to help bring the mortgage market back from a national foreclosure crisis.

“You have been an extraordinary person in this job, despite what some people say,” Sen Richard Shelby (R-Ala.) said.

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Fed proposes charging banks $440M to fund Dodd-Frank oversight

The Federal Reserve Board of Governors is proposing hitting large banks with a $440 million charge to finance their own regulatory supervision, under a section of the Dodd-Frank financial reform law.

The Fed wants to implement a section of the 2010 law that calls for it to charge the large financial institutions that it regulates the amount that it spends having to oversee them.

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News bites: Regulators pressed on what constitutes a ‘grave threat’ to banks

Republican lawmakers want to know what would make financial regulators step in and force troubled banks to sell its assets or take other drastic steps, Reuters reports.

Food and Drug Administration (FDA) Commissioner Margaret Hamburg got the third degree from House lawmakers over how to deal with compounding pharmacies linked to a deadly meningitis outbreak, according to The Hill’s Healthwatch blog.

A new slate of eight GOP bills is aimed at curtailing the president’s authority to set aside land under the Antiquities Act, RegWatch reports.

The chairman of the Federal Trade Commission (FTC) said regulators would pounce if Google violates the terms of its recent antitrust settlement, according to Reuters.

The American Civil Liberties Union filed a complaint with the FTC accusing wireless carriers of “deceptive” practices for failing to keep Android smartphones updated, leaving them susceptible to hackers, The Washington Post reports.

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News bites: Obama wants major funding boost for financial regulators

The President’s 2014 budget proposal seeks a 27-percent increase in funding for the Securities and Exchange Commission (SEC) and a whopping 54-percent spike in funding for the Commodity Futures Trading Commission, The Hill’s On the Money blog reports. The two regulators have increased responsibilities under the Dodd-Frank Wall Street reform law.

Meat packers say proposed labeling regulations would shutter plants and hinder international beef trade across North America, RegWatch reports.

A report to be released Monday by U.S. Rep. Ed Markey (D-Mass.) finds that compounding pharmacies are going untracked by state regulators, according to The Washington Post. The report comes ahead of a congressional hearing on compounding pharmacies, slated for this week.

Boeing is facing more regulatory troubles, as the FAA is ordering inspections of more than 1,000 U.S.-registered 737s manufactured by the firm, Reuters reports. The directive, which follows high-profile battery troubles on Boeing’s “Dreamliner,” stems from concerns over potentially faulty pins.

The Wall Street Journal weighs in on the fight over the dairy industry’s push to drop “diet milk” labels from chocolate milk and other artificially sweetened products. Consumer watchdogs are opposed to the proposal, RegWatch reported last month.

Have a regulatory News tip? Send it along to RegWatch via, bgoad@thehill.com, mwilson@thehill.com or jhattem@thehill.com.

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House agency names new regs chief

The Federal Housing Finance Agency (FHFA) announced Friday that Fred C. Graham will serve as deputy director of the agency’s division of Federal Home Loan Banks.

Graham, who has been with the agency since its inception in 2008, previously served as acting director of the Office of Risk Analysis.

In the new position, Graham will oversee the regulation and supervision of the Federal Home Loan Banks, which, together with government-backed lenders Fannie Mae and Freddie Mac, provide more than $5.7 trillion in funding for the nation’s mortgage markets.

He will take on the new role immediately, according to a statement issued by acting FHFA Director Edward J. DeMarco. 


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