JPMorgan’s Dimon slams CFTC on Swaps Crackdown

Jamie Dimon, chief executive of Wall Street giant JPMorgan Chase, lashed out at efforts by U.S. regulators to police the $600 trillion swaps market, in which his bank is a big player. New regulations being implemented by the U.S. Commodity Futures Trading Commission, mandated under 2010′s Dodd-Frank Wall Street reforms, “would damage America,”... Read more...

CFTC Proposes Open Swaps Clearing for Small Banks

The Commodity Futures Trading Commission approved a proposed rule to force the world’s largest banks to offer swaps clearing services to smaller firms, a change that would promote competition in the $615 trillion market. The proposed rule comes after an industry group of more than 20 mid-size brokers such as Jefferies & Co., Imperial Capital LLC... Read more...

MBIA Reports $213 Million Third-Quarter Net Loss on Derivatives Contracts

MBIA Inc., the bond insurer seeking to jumpstart its business of guaranteeing municipal debt, reported a $213 million net loss in the third quarter on a change in the value of derivatives contracts that reduced an accounting benefit. The loss of $1.06 a share in the three months ended in September narrowed from $728 million, or $3.50 a share a year... Read more...

JP Morgan to Face SEC Probe Over CDO Transaction

The massive explosion that was the bursting of the housing bubble has left a toxic cloud that still hasn’t blown away.  On Monday, a report of an SEC investigation targeting J.P. Morgan over the creation of a complex mortgage instrument echoed the Abacus investigation where Goldman Sachs paid a record $550 million settlement fine.  J.P. Morgan stock,... Read more...

Europe Sovereign CDS Index at New High

The cost of insuring the bonds of developed European sovereign borrowers using a benchmark credit default swap index hit a fresh all-time high Monday, driven by continued weakness in peripheral euro-zone sovereigns. The iTraxx SovX Western Europe index, which allows investors to buy or sell default protection on a basket of 15 sovereign borrowers, rose... Read more...

Goldman, Natixis Fight Over Default Swaps Deal Heads to Trial in London

Goldman Sachs Group Inc. will ask a London court to prevent Natixis SA from terminating bond protection it sold to Goldman at a trial beginning today. The U.S. bank’s London unit, Goldman Sachs International, sued Natixis in July to stop the termination of three credit- default swaps with a potential value of around $530 million. Natixis, a unit of... Read more...

Ambac Files for Chapter 11

Ambac Financial Group has just filed for Chapter 11, using a filing which is so fresh it even forgot to lock the input forms (see attached). The case is 10-15973 in Southern District of New York. The actual filing is not surprising, as we noted earlier that Ambac was likely going to file imminently. What is also not surprising is that the form 1, erroneously,... Read more...

China Rejects ‘Naked Swimming’ with Default Swaps

The first yuan-denominated credit- default swaps insuring bonds and loans were signed today as China experiments with derivatives blamed by some European and U.S. officials for exacerbating the global financial crisis. Nine financial institutions, including Industrial & Commercial Bank of China Ltd. and Deutsche Bank AG as well as state-backed China... Read more...

Malaysia’s Bursa Derivatives to Start Accepting Yuan as Margin Collateral

Bursa Malaysia Derivatives Berhad, which sets the global benchmark for crude palm oil, will start accepting Chinese yuan as margin collateral for trading in the Malaysian derivatives market, Yusli Mohamed Yusoff, chief executive officer of the bourse, said today. Read more about derivatives…  Read More →

Fitch Puts Entire US Residential Mortgage Servicer Space on Negative Outlook

What’s that you say Bank of America and JPM, “it’s all contained?” Hey Fed, it’s not too late to add $8 trillion in MBS to QE2. On the other hand, now we know what QE3 will be buying. Fitch Ratings-New York-04 November 2010: Fitch Ratings has assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer... Read more...

How the Banks Put the Economy Underwater

This chapter of the financial crisis is a self-inflicted wound. The major banks and their agents have for years taken shortcuts with their mortgage securitization documents — and not due to a momentary lack of attention, but as part of a systematic approach to save money and increase profits. The result can be seen in the stream of reports of colossal... Read more...

Ambac Says May Go Bankrupt This Year

In March, Wisconsin Insurance Commissioner Sean Dilweg, who regulates the company’s Ambac Assurance Corp unit, seized $64 billion of Ambac’s worst assets. On October 8, he filed a rehabilitation plan for a segregated account containing those assets, which would pay policyholders a combination of cash and notes for their claims. Read more... Read more...

Court Voids Swaps in UniCredit Derivatives Case

An Italian court has cancelled interest rate swaps between UniCredit SpA (CRDI.MI) and the city of Rimini in the first ruling backing a local government in a  derivatives case, Rimini municipal government said on Friday. UniCredit, Italy’s biggest bank, has been ordered to pay back Rimini 651,632.43 euros ($906,600), the amount the city had lost... Read more...

Investors in MBS Deals Prepare to Fight Back

It just went from bad to worse for mortgage servicers: Bloomberg reports that investors who collectively hold over $500 billion in MBS, are huddling and preparing to fire back at the servicers. Mortgage-bond investors represented by Dallas lawyer Talcott Franklin will send letters to securities trustees complaining that they shouldn’t bear the costs... Read more...

Tighter Derivatives Rules Gain Headway in U.S., EU

The first global crackdown on the $615-trillion derivatives market gained momentum on Tuesday when U.S. regulators unveiled a new tool to police would-be fraudsters and European officials urged tighter controls. Moving to rein in vast markets that were only loosely policed going into the 2007-2008 financial crisis, the U.S. Commodity Futures Trading... Read more...

OTC Derivatives Not Centrally Cleared May Face Curbs

Regulators should consider limiting trades in some derivatives that aren’t centrally cleared in a bid to cut excessive risk, the Financial Stability Board said. Authorities may “limit or restrict trading in OTC derivatives products that are suitable for clearing but not centrally cleared,” the FSB said in a report on the over-the- counter derivatives... Read more...

Assured Guaranty Sues Deutsche Bank Over Mortgages

A unit of Assured Guaranty Ltd. sued affiliates of Deutsche Bank AG over $312 million of mortgage- backed securities that the bond insurer guaranteed and says were “plagued by rampant fraud and misrepresentations.” Assured Guaranty Corp. is asking a judge to force the bank to repurchase the loans, on which the insurer has already paid almost $60... Read more...

Professors Black and Wray Confirm that Bear Pledged the Same Mortgage to Multiple Buyers

I have repeatedly pointed out that mortgages were pledged to multiple buyers at the same time. Today, in another must-read piece, economics professors William Black and L. Randall Wray confirm: Several banks would go after the same homeowner, each claiming to hold the same mortgage (Bear sold the same mortgage over and over). As USA Today pointed out... Read more...

Credit Agricole Sued for Fraud in U.S. by Investors Over Debt Obligations

Credit Agricole SA, France’s third- largest bank, was sued for fraud in New York by investors alleging the lender tricked them into buying $70.5 million worth of collateralized debt obligations that were designed to fail. Loreley Financing claimed in the lawsuit filed Oct. 22 in New York State Supreme Court that Credit Agricole’s Calyon unit allowed... Read more...

A European Lynch Mob is Coming for Bank of America

The latest ugly news for Bank of America is actually coming from Europe, where big institutional money managers and other mortgage securities buyers are now beginning to organize for an assault. This information comes from  John Mauldin’s, Thoughts from the Frontline Weekly Newsletter. His e-letter is a must-read for many money managers and serious... Read more...

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