Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

OCC Preemption, SEC ‘Big’ Participants, Taiwan: Compliance

The U.S. agency that oversees national banks released rules governing when federal regulations should trump state law, revising language that was faulted for ignoring the aims of the Dodd-Frank Act.

The Office of the Comptroller of the Currency’s final rules aim to eliminate ambiguity by removing language calling for preemption of state laws that “obstruct, impair or condition” national bank powers, the agency said yesterday in a statement. The measure also recognizes the authority of state officials to bring enforcement actions against national banks to enforce applicable laws, the OCC said.

Following an initial proposal released in May, the Treasury Department criticized the OCC’s initial interpretation, saying it didn’t align with Dodd-Frank’s requirement that preemption questions be resolved on a case-by-case basis.

The OCC, which operates as an independent bureau within the Treasury Department, said it will consult with the new Consumer Financial Protection Bureau before deciding whether to preempt some state consumer laws. The agency, which officially takes over the operations of the Office of Thrift Supervision today, said it will apply the preemption standards to federal thrifts.

Compliance Policy

SEC Weighs Approving System to Monitor Biggest Traders’ Activity

The U.S. Securities and Exchange Commission said it will decide July 26 whether to establish a system to watch the trading behavior of big market participants including high-frequency trading firms and hedge funds.

The system, proposed three weeks before the May 6 crash that temporarily erased $862 billion in market value of U.S. shares, would apply to firms that buy and sell at least 2 million shares a day. Traders that execute $20 million of equities a day or $200 million in a month also would qualify.

Under the plan, the SEC would assign identification codes to the firms. Non-public data would be available to the SEC the day after a trade, allowing the agency to investigate manipulative and abusive practices, according to the proposal originally released April 14, 2010.

The SEC said it also will consider at its July 26 meeting a rule requiring institutional investments managers to disclose how they voted in non-binding executive compensation votes that began this year and re-propose earlier rules related to shelf-eligibility for asset-backed securities.

Taiwan Financial Regulator to Ask Banks to Raise Loan Provisions

Taiwan’s financial regulator said it plans to ask banks to set aside more provisions for loans to strengthen their risk management systems.

Lenders may be ordered to increase provision ratios on corporate loans and syndicated loans, Kuei Hsien-nung, director-general of the Financial Supervisory Commission’s banking bureau, said in a telephone interview in Taipei yesterday, reiterating comments he made to the Economic Daily News and the Commercial Times earlier.

Growth in Taiwan’s consumer and housing loans is slowing after policy makers tightened mortgage lending rules to deter real-estate speculation, prompting banks to rely on providing credit to companies to boost earnings. The financial regulator aims to increase lending costs after some banks offered low interest rates to unprofitable companies, the Commercial Times said yesterday.

Compliance Action

Wells Fargo Fined $85 Million for Pushing Subprime Loans

Wells Fargo & Co., the largest U.S. home lender, agreed to pay a record $85 million fine to settle Federal Reserve claims it steered borrowers into costlier loans and falsified data in mortgage applications.

Employees at Wells Fargo Financial, the lender’s consumer-finance unit, pushed customers who may have been eligible for prime interest rates into loans carrying higher rates intended for riskier borrowers, the Fed said in a statement announcing the settlement yesterday.

The civil penalty is the largest issued by the Fed in a consumer-protection action, according to the statement. The accord requires Wells Fargo to re-evaluate qualifications of borrowers who received a subprime, cash-out refinancing loan between January 2006 and June 2008. Wells Fargo must compensate borrowers harmed by the practice, which may exceed 10,000, according to the statement.

The San Francisco-based bank didn’t admit wrongdoing in agreeing to yesterday’s action. The Fed also issued consent orders against 16 Wells Fargo employees that bar them from working in the banking industry, the regulator said in the statement.

The company shuttered Wells Fargo Financial in July 2010. Willis Fined $11 Million by U.K. FSA for Suspicious Payments

Willis Group Holdings Ltd., the world’s third-largest insurance broker, was fined 6.9 million pounds ($11 million) by financial regulators for failing to prevent $227,000 in possible bribes.

The suspicious payments were a portion of 27 million pounds the company paid “to overseas third parties who assisted it in winning and retaining business from overseas clients,” between 2005 and 2009, the Financial Services Authority said in a statement today.

Willis is conducting a “past-payment review” and must report any further findings of corrupt payments to the Serious Organised Crime Agency, said Sarah Bailey, an FSA spokeswoman.

The Serious Fraud Office, which prosecutes corruption in the U.K., didn’t open its own investigation. It discussed the case “early on” with the FSA and agreed the solution was a regulatory approach and the FSA took it forward, spokesman David Jones said.

Nick Oborne, a spokesman for London-based Willis, declined to immediately comment on whether the company reported the payments to the U.S. Department of Justice, which prosecutes overseas corruption under the Foreign Corrupt Practices Act.

Willis qualified for a 30 percent reduction in its fine after cooperating with the FSA, the agency said.

Denmark Wins Ground in Basel Liquidity Spat Over Covered Bonds

Denmark won some ground on persuading the European Union to reconsider liquidity rules set by the Basel Committee on Banking Supervision that would have forced a sell-off of the country’s mortgage bonds.

Denmark’s banks may be able to avoid a cap on mortgage-backed covered debt holdings set by the Basel committee in December after the EU agreed to base liquidity assessments on tests instead of an asset’s class, the Copenhagen-based Economy Ministry said in a statement July 20. Basel’s original proposals had assigned government debt a higher liquidity status than non-government bonds.

The nation has been lobbying the EU to ease the Basel committee’s liquidity rules in an effort to protect the world’s third-largest covered-bond market. The country has argued that the so-called Basel III standards, which require banks to limit non-government bonds to 40 percent of their liquid assets and book the debt at 85 percent of its market value, will penalize nations with small government debt markets.

Without the EU’s changes, Denmark’s covered bond market would have faced “higher interest rates and higher costs for owning a house in Denmark,” Danske Bank A/S Chief Financial Officer Henrik Ramlau-Hansen said July 20 by phone.

For more, click here.

HBOS’s Near Collapse Will Get U.K. FSA Review, Turner Says

The U.K. Financial Services Authority plans a review of the near-collapse of HBOS Plc once an investigation into potential wrongdoing at the lender is complete.

The report will describe the events leading up to the financial crisis in 2008 which led HBOS to an “unsustainable position,” and identify “any deficiencies in the FSA’s regulation and supervision” of the lender, Adair Turner, the agency’s chairman, said in a letter today to U.K. Conservative lawmaker Andrew Tyrie.

HBOS became part of Lloyds Banking Group Plc in January 2009, in a government-brokered takeover that required more than 20 billion pounds ($32 billion) of taxpayer aid.

The FSA pushed back publication of a similar report on the 2008 bailout of the Royal Bank of Scotland Group Plc after a legal dispute over confidentiality.

A spokesman for Lloyds declined to immediately comment.


FSA Gets U.K. Freezing Order Against Swiss Asset-Management Firm

The Financial Services Authority won a court order freezing the U.K. assets of Da Vinci Invest Ltd., a Swiss asset-management firm, in a market-abuse case.

Judge Peter Smith in London agreed to extend a previous freezing order and accepted assurances from the defendants not to carry out improper activities. FSA lawyer Javan Herberg told Smith that Unterageri, Switzerland-based Da Vinci Invest and four individual defendants were suspected of market manipulation.

Da Vinci provides alternative investment products to wealthy individuals and institutional investors, according to its website. The Da Vinci Strategies UI Fund has $3.1 million under management.

Lawyers for Da Vinci didn’t attend the hearing. The firm said yesterday it was not at fault for actions carried out by third parties.

“We funded some Hungarian traders who traded on the London stock exchange and the FSA has the opinion that they broke some rules,” Hendrik Klein, the chief executive officer of Da Vinci said by phone. “We controlled their risk but we didn’t know exactly how they traded.”

The case is The Financial Services Authority v. Da Vinci Invest Limited & Ors, 11-02409.

For-Profit Colleges Sue to Block ‘Gainful Employment’ Rule

Rules designed to cut off federal aid to institutions whose students struggle the most to repay government loans were challenged by an organization representing for-profit colleges.

A lawsuit attacking so-called gainful employment measures was filed yesterday in federal court in Washington by the Association of Private Sector Colleges and Universities, or APSCU. The rules set benchmarks that educational programs must meet to remain eligible for government grants and loans, which can constitute as much as 90 percent of their revenue.

For-profit colleges allege the standards “emerged out of a notoriously flawed regulatory process” and are premised upon incomplete and unreliable data that will punish programs for “outcomes achieved by students” before the regulations were adopted.

The Department of Education exceeded its statutory authority when it issued the gainful employment regulations, Brian Moran, the association’s interim president and chief executive officer, said in an e-mailed statement.

Congress and state attorneys general are investigating education companies’ recruitment practices and use of government aid, which totaled $30 billion last year. The regulations seek to ensure that for-profit college graduates get jobs that allow them to repay student loans.

Justin Hamilton, a spokesman for the Education Department, didn’t immediately respond to an e-mail message seeking comment.

The case is Career College Association v. Duncan, 11-cv-01314, U.S. District Court, District of Columbia (Washington).

For more, click here.


Barney Frank, Shelley Moore Capito Comment on Dodd-Frank

U.S. Representative Barney Frank, a Massachusetts Democrat and co-author of the Dodd-Frank Act, talked about the future of the financial regulatory overhaul legislation and outlook for confirmation of Richard Cordray as head of the Consumer Financial Protection Bureau. Frank said that while he is concerned about underfunding of the Dodd-Frank regulations, the act is not in danger of repeal.

U.S. Representative Shelley Moore Capito, a West Virginia Republican, who also talked about Dodd-Frank, said she believes that while the transparency brought about by the overhaul law was positive, some aspects of it burdened business with too many costs and there will be a “chipping-away” of Dodd-Frank. She also talked about Cordray’s nomination.

Capito spoke with Lisa Murphy on Bloomberg Television’s “Fast Forward.” Frank spoke on Bloomberg Television’s “InBusiness With Margaret Brennan.”

For the Frank video, click here.

For the Capito video, click here.

Wolin Says Global Regulators Will Create ‘Level Playing Field’

U.S. Deputy Treasury Secretary Neal Wolin said global regulators will create a “level playing field” for financial rules because major economies share the same objectives.

“It’s not in the interests of any country to have a weak financial system and to be the source of global risk,” Wolin said in an interview on Bloomberg Television yesterday. “We think that we will get a level playing field.”

The U.S. has been a global leader by approving the Dodd-Frank financial overhaul law and will try to ensure that “the rest of the world comes along with us so that we all have a strong, stable financial system,” Wolin said. Dodd-Frank’s one-year anniversary is today.

“I think there’s been very good agreement among the leadership” of the Group of 20 nations on objectives for a regulatory framework, Wolin said. “I think we’ve made a lot of progress in our discussions globally.”

For video of Wolin’s interview, click here.

Schapiro, Bernanke to Testify on Dodd-Frank Anniversary

The U.S. Securities and Exchange Commission will delay rules for the derivatives markets and will have only a “skeleton crew” tracking hedge funds if it doesn’t receive a 2012 budget increase, Chairman Mary Schapiro said.

“The new responsibilities assigned to the agency under the Dodd-Frank Act are so significant that they cannot be achieved solely by wringing efficiencies out of the existing budget,” Schapiro said in testimony prepared for a hearing of the Senate Banking Committee on the anniversary of Dodd-Frank enactment today.

Citing its many new duties under Dodd-Frank, Schapiro requested a $1.4 billion 2012 budget for her agency after a 2011 budget debate resulted in a $74 million increase to $1.2 billion. A budget bill crafted by House Republicans would keep the SEC at its current spending level next year.

In the SEC’s new responsibility to oversee security-based swaps, Schapiro said, market participants will face “further delays and uncertainty” without more staff to process registration requests. A “handful of staff” would monitor 750 advisers to hedge funds and private-equity funds.

Separately, Federal Reserve Chairman Ben S. Bernanke said the central bank will in the coming months propose regulations on the oversight of systemically important financial institutions.

“The Federal Reserve expects to issue proposed rules on the oversight of SIFIs later this summer” and is “on schedule” with other banking agencies to implement the Basel III bank-capital requirements, Bernanke said in testimony prepared for today’s hearing that was posted on the Fed’s website.

Bernanke, who will appear with other bank-agency chiefs, said the Fed is committed to making rules that “promote the sound extension of credit in the service of economic growth and development.”

“We must not lose sight of the reason that we began this process: ensuring that events like those of 2008 and 2009 are not repeated,” Bernanke said. “Our long-term economic health requires that we do everything possible to achieve that goal.”

At the same Dodd-Frank hearing, Federal Deposit Insurance Corp. Acting Chairman Martin J. Gruenberg will tell lawmakers that banks deemed too big to fail must hold additional capital requirements to cushion any losses during a failure and minimize any reliance on the government for bailouts.

Comings and Goings

Warren Calls on Democrats to Fight House Bill to Change CFPB

Elizabeth Warren, the Treasury Department and White House adviser assigned to set up the Consumer Financial Protection Bureau, told House Democrats they must keep fighting for the agency as it begins operations.

Warren made the remarks yesterday to Democrats before a meeting on the Dodd-Frank Act in House Minority Leader Nancy Pelosi’s office.

Warren’s comments came a day before the Republican-led House is scheduled to consider a bill to make changes to the leadership structure and oversight of the bureau. Republicans, who almost unanimously opposed the Dodd-Frank Act last year, have pushed to restrict the agency’s authority.

The consumer bureau officially begins work today, exactly one year after President Barack Obama signed Dodd-Frank into law. Obama announced on July 17 that he had chosen Richard Cordray, the former Ohio attorney general, as his nominee for director of the bureau.

Republican lawmakers have argued for replacing the director position with a five-member board and lowering the threshold for bank regulators to veto the bureau’s rules.

Senator Richard Shelby of Alabama, the senior Republican on the Banking Committee, told reporters July 19 that Cordray’s nomination to head the bureau would likely be stalled “unless there are some fundamental changes in its structure.”

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.