Posts Tagged ‘banks’

Banking and finance roundup

  • “But the questions of fairness are real and seem to be bolstered by the S.E.C.’s win/loss record in its home court versus its performance in district courts.” [Gretchen Morgenson, New York Times, earlier here, etc.]
  • With Greece as with subprime crisis, same regulators who messed up credit markets will probably ask for and get more power [Arnold Kling]
  • “In fact an AIG-and-taxpayer bailout of Wall Street firms engineered by government officials and Wall Street professionals with deep and ignored conflicts of interest” [Lawrence Cunningham, National Interest via Bainbridge]
  • CSR by way of SEC? “Disclosure Rules Are the Wrong Way to Push Social Change” [Thaya Knight, American Banker/Cato]
  • “Supreme Court Blasts Maryland Taxman’s Double-Dipping” [Elizabeth BeShears, Heartland on this year’s Supreme Court decision in Comptroller v. Wynne, I’m quoted]
  • Dodd-Frank: “Are State Regulators A Source of Systemic Risk?” [Mark Calabria, Cato]
  • Feds’ latest round of mega-settlements against banks prompts usual demands to jail execs. Is it really that simple? [Scott Greenfield]

Banking and finance roundup

  • “FATCA: An American Tax Nightmare” [Stu Haugen, New York Times via TaxProf]
  • Following Iceland’s model? “Neither [Krugman nor Yglesias] mentions that a major part of the Icelandic recipe was letting *foreign* deposit holders twist in the wind.” [Tyler Cowen]
  • Wasting a Crisis: Why Securities Regulation Fails, new book by Virginia law dean Paul Mahoney [Thaya Knight, Cato, with video of Cato event]
  • Seventh Circuit reverses $2.46 billion judgment against HSBC Holdings in Household International case [Reuters/Business Insider]
  • “I’ve been with them 40 years and then they have this? It’s a pain.” Banks close longtime local accounts as anti-money-laundering rules squeeze economy in border town Nogales, Ariz. [W$J]
  • Six regulatory agencies issue diversity guidelines for financial institutions, implementing Dodd-Frank mandate [FDIC]
  • Judge to Labaton Sucharow, Bernstein Litowitz: you might at least want to talk to those “confidential informants” your case relies on [Daniel Fisher, Forbes]

The structuring law that tripped up Denny Hastert

I’ve written often on the surreal world of “structuring” law, in which keeping bank deposits or withdrawals below a reporting threshold is a federal crime whether or not you are aware of the structuring law and whether or not the underlying money flow is for or from any illegal activity or intended to evade any law. Of particular interest, I’ve written about who can get away with structuring (Eliot Spitzer) and who can’t (you). The law, along with a separate charge of lying to federal investigators, appears to have tripped up former U.S. House of Representatives Speaker Dennis (“Denny”) Hastert in what a federal indictment suggests were hush money payments over misconduct before he arrived in Congress. I’m quoted in Francine Kiefer’s coverage for the Christian Science Monitor. More commentary: Ken White, Popehat.

FIFA: “Use of an American bank”

The federal government is bringing charges against the leadership of FIFA, the international soccer association, and Switzerland has arrested them in accord with American wishes. But are the jurisdiction of U.S. courts and U.S. criminal law really proper for this alleged international wrongdoing? David Post:

…ask yourself: if you think that the “use of an American bank” is a sufficient basis for the exercise of US jurisdiction over foreign nationals residing and conducting business abroad, then presumably you’re OK with being hauled into court in Singapore because you have used, say, a Singaporean bank, or into a Mexican court because your money found its way to a Mexican mortgage broker, or into a Danish court because you have at times used a Danish Internet Service Provider. Yes? When you look at it that way it becomes a little more difficult to applaud wholeheartedly – shouldn’t we have been able to count on the Swiss, within whose jurisdiction FIFA undoubtedly lies, to do something?

Banking and finance roundup

Banking and finance roundup

  • Critics say by naming payment processors in massive enforcement action over debt collection practices, CFPB is implementing its own version of Operation Choke Point [Kent Hoover/Business Journals; Barbara Mishkin, Ballard Spahr; Iain Murray, CEI]
  • Green sprout in Amish country: “Bank of Bird-in-Hand is the only new bank to open in the U.S. since 2010, when the Dodd-Frank law was passed” [WSJ via Tyler Cowen; Kevin Funnell on smothering of new (de novo) bank formation; Ira Stoll (auto-plays ad) on growth of non-bank lenders]
  • “Quicken Loans Sues DOJ; Claims ‘Political Agenda’ Driving Pressure to Settle” [W$J; J.C. Reindl, Detroit Free Press]
  • Shocker: after years of Sen. Warren’s tongue-lashings, some banks consider not giving to Democrats. Is that even legal? [Reuters] “Elizabeth Warren’s Extraordinarily Bad Idea For A Financial Transactions Tax” [Tim Worstall]
  • Still raging on: Delaware debate about fee-shifting corporate bylaws as deterrent to low-value shareholder litigation [Prof. Bainbridge first, second, third posts]
  • “How a Business Owner Becomes Criminally Liable for How Customers Spend ATM Withdrawals” [Elizabeth Nolan Brown, Reason]
  • New York financial regulator pushes to install government monitors at firms where no misconduct has been legally established [Robert Anello, Forbes]

Finally, reform of structuring forfeiture — and the farm story that helped

This is welcome news from the U.S. Department of Justice, and rather than try to rewrite I’ll just quote at length what my Cato colleague Adam Bates wrote:

[On March 31] Attorney General Eric Holder issued new guidelines to federal prosecutors tightening the rules for seizing assets for so-called “structuring” offenses.

Under the Bank Secrecy Act, structuring occurs when someone is suspected of arranging their financial transactions as to avoid triggering a report to the federal government by the financial institution. Some of civil asset forfeiture’s most egregious abuses are the result of federal prosecutors utilizing this nebulous statute to empty the bank accounts of unwitting citizens and small businesses who are never charged with any crime or even aware that their transactions are considered illegal.

The new rules require:

1. That structuring seizures against people for whom there is no criminal charge be based upon probable cause that the funds were either generated by unlawful activity or intended for use in anticipated unlawful activity. Alternatively, prosecutors must procure a warrant from a court and with the approval of either the U.S. Attorney (for Assistant U.S. Attorneys) or the Chief of the Asset Forfeiture and Money Laundering Section (AFMLS) (for Criminal Division trial attorneys).

2. That when the prosecutor determines subsequent to a structuring seizure that the government lacks the necessary evidence to succeed at either a civil or criminal trial, the seizing agency must return the full amount.

3. That when a prosecutor seizes property pursuant to suspicion of structuring, the prosecutor must file either a criminal indictment or a civil complaint, or receive an exception from either a U.S. Attorney or Chief of AFMLS within 150 days or else return the seized assets.

4. That all settlements must be complete and in writing. Informal settlements are expressly prohibited.

Here’s the Justice Department memo, and Kent Hoover at the Business Journal chain has more coverage.

I’ve been writing about the outrages of these structuring cases for years, especially the feds’ ambush of Randy and Karen Sowers’s successful Middletown, Md. dairy farm and ice cream maker, South Mountain Creamery. In yesterday’s Washington Post, Rachel Weiner tells how the Sowers’ story “gave civil forfeiture reformers a powerful symbol”, especially after the Institute for Justice got involved. I’m quoted:

“The South Mountain case happened to be one of these that captured the imagination,” said Walter Olson, a blogger for the libertarian Cato Institute who has written about the Sowers case. “Once you’ve bought ice cream for your kids from one of their little trucks, the name sticks in your memory.”

Prosecution roundup

  • Florida court blocks drug-related seizure of house as violation of Constitution’s Excessive Fines Clause [Orlando Weekly, opinion in Agresta v. Maitland]
  • Deferred- and non-prosecution agreements (DPAs/NPAs) have ushered in a little-scrutinized “shadow regulatory state” [Jim Copland and Isaac Gorodetski, “Without Law or Limits: The Continued Growth of the Shadow Regulatory State,” Manhattan Institute report]
  • Politicized prosecution: New York Attorney General Eric Schneiderman throws book at bankers for not lending in Buffalo [Conrad Black via Tim Lynch, Cato]
  • Would it improve prosecutors’ incentives if localities rather than state governments paid for incarceration? [Leon Neyfakh, Slate, via David Henderson]
  • Andrew Pincus on the growing danger of enforcement slush funds [U.S. Chamber, more]
  • “The Department of Justice, if it succeeds on its new theory, may have criminalized many instances of dull employee misconduct.” [Matt Kaiser, Above the Law; Peter Henning, N.Y. Times “DealBook”]
  • A Brooklyn mess: new D.A. looking into 70 convictions obtained with evidence from retired detective Louis Scarcella [Radley Balko]