Wall Street Fees, Swiss Banks, Clydesdale Fined: Compliance
(Bloomberg) — Wall Street banks and other financial firms should pay new fees to bankroll their own government oversight, according to a member of the top U.S. derivatives regulator.
Sharon Y. Bowen, a Democrat on the Commodity Futures Trading Commission, said Congress should let the agency set fees on banks and other companies that trade derivatives. Fees on firms that register with the CFTC and on specific trades would help the agency — which says its $250 million budget is inadequate — respond faster to industry requests, she said in testimony for a House Agriculture subcommittee hearing Tuesday.
Bowen said the agency’s lack of resources is hampering its ability to function.
CFTC Chairman Timothy Massad, Bowen and Commissioner Mark Wetjen, a fellow Democrat, have said the agency needs more money to handle new oversight duties granted after the 2008 financial crisis. While President Barack Obama’s administration has backed fees to finance the agency, Congress has yet to take up legislation and any effort would face stiff opposition from Republicans and the financial industry.
Terrence Duffy, executive chairman of CME Group Inc., told the agriculture committee at a March 25 hearing that fees on the industry would raise trading costs and encourage business to go overseas.
Compliance Action
Swiss Banks Urge Clients to Disclose in U.S. Tax-Evasion Endgame
Swiss banks, for decades the bastions of secrecy, are pressuring U.S. clients to disclose their accounts, in an effort to head off billions of dollars in potential fines for helping Americans evade taxes.
Faced with the threat of penalties that could bankrupt some of them, almost 100 of the country’s banks are calling thousands of U.S. clients in an 11th-hour push to get them to disclose any offshore accounts they may be hiding. Customers are being asked to prove they have paid any taxes due, according to a dozen lawyers for banks or their customers. Some have even had their accounts partially blocked to force them to comply, according to the Swiss banking ombudsman.
As the U.S. government’s largest crackdown on offshore tax evasion enters its final stretch, the banks are trying to reduce any fines they face. Under the amnesty program, if banks can’t show clients paid any taxes owed, the government will assume they didn’t — and fines will be larger.
The U.S. wants to conclude all cases this year, Acting Assistant U.S. Attorney General Caroline Ciraolo said when she announced a deal with a Swiss bank earlier this year.
Several banks are using tactics clients view as strong- arming, such as blocking funds or threatening to reveal names, said Thierry Boitelle, a lawyer with Bonnard Lawson in Geneva. He has advised U.S. taxpayers and Swiss private banks involved in the program.
Clydesdale Gets Record $30 Million FCA Fine for PPI Failings
Clydesdale Bank Plc was fined a record 20.7 million pounds ($30 million) by the U.K. Financial Conduct Authority for serious failings in how it handled clients’ complaints over payment protection insurance.
Clydesdale mishandled PPI grievances, and of the 126,600 decided upon between May 2011 and July 2013, almost 75 percent may have been rejected unfairly or been paid less than they deserved, according to the FCA. It also misrepresented its policies when asked about the redress process, the FCA said Tuesday.
U.K. banks have spent years reimbursing clients who’d been sold PPI they didn’t want or need. The Clydesdale penalty, which was reduced because the bank agreed to settle early, dwarfs past fines for mishandling PPI redress.
“In 2011 we introduced changes to our policies and procedures that were designed to help us respond to PPI complaints,” Debbie Crosbie, acting chief executive officer at Clydesdale, said in an e-mailed statement. “A number of these changes were inappropriate and have disadvantaged some of our customers. We got this wrong and I am sorry for that.”
Courts
JPMorgan Loses Bid to Renew Security of $1.5 Billion GM Loan
JPMorgan Chase & Co. lost another bid to reclaim security it gave up by mistake on a $1.5 billion loan to General Motors Co.’s bankrupt predecessor.
A federal appeals court Monday declined to reconsider a ruling that the bank had forfeited its collateral. In the long- running case, JPMorgan argued its lawyers gave up rights to most of GM’s assets when they accidentally terminated the security on the $1.5 billion financing while dealing with a payoff on a separate $300 million loan.
Joseph Evangelisti, a JPMorgan spokesman, declined to comment on the latest decision.
JPMorgan might fight the decision, or try to recover losses from lawyers and fellow lenders.
The appeals court case is Official Committee of Unsecured Creditors of Motors Liquidation Co. v. JPMorgan Chase Bank NA, 13-2187, U.S. Court of Appeals for the Second Circuit (Manhattan). The bankruptcy is In re Motors Liquidation Co., 09- bk-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The switch suits are In re General Motors LLC Ignition Switch Litigation, 14-md-02543, U.S. District Court, Southern District of New York (Manhattan).
