Thursday, 31 July 2014

Ho hum – just another billion dollar fine for a bank

Another day and another ruling against a bank for fraudulent practices. A New York judge has ruled that Bank of America’s Countrywide business must pay the US government $1.3bn for selling defective home loans. Former Countrywide executive Rebecca Mairone must also pay $1m.
BBC report says Countrywide was found guilty of selling bad loans, as part of a programme called “hustle”, to US mortgage giants Fannie Mae and Freddie Mac in 2007.
Bank of America has spent nearly $40bn on legal matters relating to the housing market collapse, and the bank is expected to announce a multi-billion dollar settlement with US regulators over similar charges in the coming weeks.
The “hustle” suit came about after Edward O’Donnell, a former Countrywide executive, issued a whistleblower complaint alleging fraud.
Mr O’Donnell said a programme Countrywide instituted in 2007 known internally as the “high-speed swim lane” (also known as “HSSL” or “hustle”) did not properly screen mortgage applications, and that employees – who were paid based on loan volume and speed of processing – were give incentives to approve loans.
The programme was overseen by Ms Mairone.

Tuesday, 29 July 2014

El Niño back to fifty fifty

2014-07-29_elninowatchThe odds of an  El Niño developing this year, and with it the chances of an ultra-hot year for the planet, have dropped considerably. The Australian Bureau of Meteorology reported this afternoon that despite the tropical Pacific Ocean being primed for an El Niño during much of the first half of 2014, the atmosphere above has largely failed to respond. Hence the ocean and atmosphere have not reinforced each other. As a result, some cooling has now taken place in the central and eastern tropical Pacific Ocean, with most of the key NINO regions returning to neutral values.
While the chance of an El Niño in 2014 has clearly eased, warmer-than-average waters persist in parts of the tropical Pacific, and the (slight) majority of climate models suggest El Niño remains likely for spring. Hence the establishment of El Niño before year’s end cannot be ruled out. If an El Niño were to occur, it is increasingly unlikely to be a strong event.
Given the current observations and the climate model outlooks, the Bureau’s ENSO Tracker has shifted to El Niño WATCH status. This means the chance of El Niño developing in 2014 is approximately 50%, which remains significant at double the normal likelihood of an event.
El Niño is often associated with wide scale below-average rainfall over southern and eastern inland areas of Australia and above-average daytime temperatures over southern Australia. Similar impacts prior to the event becoming fully established regularly occur.
The Indian Ocean Dipole (IOD) index has been below −0.4 °C (the negative IOD threshold) since mid-June, but needs to remain negative into August to be considered an event. Model outlooks suggest this negative IOD is likely to be short lived and return to neutral by spring. A negative IOD pattern typically brings wetter winter and spring conditions to inland and southern Australia.

The physical attributes that underpin our first impressions and other news and views for Tuesday 29 July

Synthesized face-like images illustrating the changes in facial features that typify each of the three social trait dimensions
Synthesized face-like images illustrating the changes in facial features that typify each of the three social trait dimensions
  • How facial features drive our first impressions – “Whether it’s a curled lip or a keen cheekbone, we all make quick social judgements based on strangers’ faces. Now scientists have modelled the specific physical attributes that underpin our first impressions. Small changes in the dimensions of a face can make it appear more trustworthy, dominant or attractive. The results, published in the journal PNAS, could help film animators or anyone looking to create an instant impression on a social network. Dr Tom Hartley, a neuroscientist at the University of York and the study’s senior author, said the work added mathematical detail to a well-known phenomenon.”
  • Transparency and central banking - More data, less gumption – “The Federal Reserve is ‘the most transparent central bank to my knowledge in the world,’ claims its chairwoman, Janet Yellen. Transparency is a commonly prescribed remedy for all manner of governmental failings. But is it always beneficial? A recent paper suggests that greater openness may turn central bankers into politicians, who show off their knowledge of economic data but are timid about recommending policy.”
  • Anti-Semitism comes back to haunt Europe
29-07-2014 dogsandcats

Japanese financiers no different? Fraud at the home of the mafia

29-07-2014 nomura
It seems appropriate somehow that the Japanese financial giant Nomura chose Sicily for what Italian police allege was a 175 million euros fraud. According to police Colonel Francesco Mazzotta, four Nomura employees from back in 2000 to 2006 are under investigation, along with three other people, for using complex financial products to defraud the regional government of Sicily in the years leading up to the financial crisis.
Bloomberg reports that Italy’s financial police have seized bank accounts and credit valued at 98 million euros from Nomura, along with 6 million euros in property, shares and cash belonging to the seven suspects.
The amount represents the profit the bank allegedly made from the trades, police said.
Nomura created three derivatives contracts to restructure Sicily’s debt that wound up costing the region 60 million euros, police said. Sicily also lost 115 million euros on the securitization, or bundling, of health-care debt in 2002 at an “onerous” interest rate, police said.

The Daily Mail gets it right - throw crooked bankers in jail

29-07-2014 jailbankers
London’s Daily Mail reports this morning that the clamour grows as the Bank of England chief says Lloyds traders ‘clearly broke the law’. In summary:
  • Mark Carney says Lloyds staff involved may be guilty of ‘criminal conduct’
  • Bank ripped off Treasury during financial crisis with creditworthiness lies
  • It gained access to tens of billions from Government at favourable rates
  • MP says public don’t understand why rogue bankers haven’t been jailed
29-07-2014 fixingrates
The Mail was not alone in taking a hard line on banking practices. That daily bible of the financial community The Financial Times reported how Lloyds Banking Group has been criticised for “highly reprehensible” behaviour by the Bank of England after it became the first lender to be fined for rigging rates to cut the cost of a financial crisis rescue scheme, effectively costing the taxpayer millions of pounds.

Monday, 28 July 2014

Eric Abetz a sure fire vote loser

I must have spent too much time behind that one way glass. I can’t help thinking when I see a politician on television how those ordinary swinging voters will be reacting. Not to the words coming out of the mouth. They don’t really count. But to the look and the sound of the person uttering them.
And if there is one thing this old political adviser is certain of it is that Eric Abetz is doing his team great harm every time he appears on the screen or is heard on the radio. The Minister for Employment is a Liberal disability of the highest order. He just looks and sounds frightening whether or not you agree with his work for the dole message. A guaranteed vote loser who Labor must be hoping is kept in his role as government leader in the Senate where he will be guaranteed frequent appearances as the Abbott team struggles with being a minority administration.