Hedging …
Glass-Steagall fans may want to hold their applause: American Banker has learned that Citigroup Inc., which is supposed to be shedding businesses, is building a new hedge fund business, this time within its private bank as opposed to its asset management division.
We will report more details as they become available. But for now it appears Citi still thinks the hedge fund world is plenty attractive — and it wants the business close to the ultrawealthy clients who presumably would invest in it.
… Pledging
Bank of America Corp. is getting a “push” from a high-profile activist to make more changes to its mortgage business.
Jesse Jackson, president of the Rainbow PUSH Coalition, attended the Charlotte company’s shareholder meeting Tuesday, urging CEO Brian Moynihan during a question-and-answer session to suspend mortgage payments for unemployed borrowers and military personnel serving in Afghanistan and Iraq.
(The special meeting was scheduled to allow investors to vote on a plan to increase common stock as part of the company’s exit from the Troubled Asset Relief Program.)
“I agree with you that we need to get more people at the table to figure out the next step,” Moynihan responded during the meeting. “I agree that we need to be more comprehensive in our approach.” He added, “My pledge to you is to do everything we can to support you.”
Later, during a question-and-answer session, Moynihan told another shareholder that the company was willing to discuss alternative solutions to resolve mortgage issues.
Bank of America said in mid-February that it had modified about 700,000 mortgages since January 2008, including 12,700 through the Home Affordable Modification Program.
Manhunt
An illegal tire dump recently got the attention of Atlanta City officials, who demanded that those the city deemed responsible for the property’s cleanup answer charges in a local court.
When no one from JPMorgan Chase showed up, the Atlanta City Solicitor’s Office reportedly issued an arrest warrant — for the bank and its CEO, Jamie Dimon.
Apparently the officials got Dimon’s attention. The bank said the matter has been resolved, and a local judge canceled the arrest warrant Wednesday.
Taking Fork in Road
Through the months it took to forge an agreement, fun was the last thing U.S. District Court Judge Jed Rakoff seemed to be having handling the Securities and Exchange Commission’s proposed settlement with Bank of America.
That didn’t stop him from citing “The Jurisprudence of Yogi Berra,” a law journal article whose title references the eminently quotable Yankees Hall of Fame catcher, in his opinion’s first footnote.
While permitting the company and the SEC to bring the case to a close — reluctantly — the opinion treated both parties with the same measure of scorn as the judge’s previous rejection.
“The apparent working assumption of the bank’s decision makers and lawyers … was to not disclose information if a rationale could be found for not doing so,” Rakoff wrote.
The result was a “fraud by management” that “appear[s] never to have considered at all the impact that the accelerated payment of over $3.6 billion in bonuses might have on a company that was verging on financial ruin.”
The SEC didn’t get off any easier, with its “modest and misdirected sanctions” leaving Rakoff’s court “shaking its head.”
Still, at least the agency and the bank can now put their mutually embarrassing experience in the judge’s courtroom behind them, right?
Not quite.
In a statement issued the same day as Rakoff’s ruling, Ohio Attorney General Richard Corday, who is suing Bank of America over some of the same disclosure issues at the heart of the SEC’s case, suggested that the judge’s opinion “validates and reinforces” his case.
To cite Berra: “It ain’t over till it’s over.”
Doing Its Part
There are many knights at the Financial Services Roundtable helping people in distress. The organization announced this week that its Community Service 2009 program, made possible by the support of 300,000 Roundtable member-company employees, helped 9.4 million Americans through more than 77,000 community service projects.
