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☆ Citi Is Sued Over Sex Abuse. Before 2022, It Would Have Been a Secret.
▼ + stars: | 2023-11-29 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

Ardith Lindsey, a managing director at Citi, alleged that her 15-year career at the bank had increasingly become a “traumatizing” experience, especially after she ended a relationship with a former supervisor. The supervisor, Mani Singh, then sent her dozens of threatening text messages, according to her lawsuit. Mark Costiglio, a Citi spokesman, said the bank had opened an investigation shortly after Ms. Lindsey disclosed the relationship in November 2022 and complained about Mr. Singh’s alleged conduct and messages. “When she reported the vile text messages to us, she described the relationship as having been consensual,” Mr. Costiglio said. He added that years earlier, Citi had investigated a personal financial transaction between the two, and that Ms. Lindsey described Mr. Singh as a friend at the time.

Persons: Ardith Lindsey, Mani Singh, Lindsey’s, Mark Costiglio, Lindsey, Singh’s, Mr, Costiglio, Singh Organizations: Citigroup, Citi

☆ U.S. Case Details Binance’s Knowledge About Criminal Users
▼ + stars: | 2023-11-22 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

For years, the Binance founder Changpeng Zhao and other senior employees at the cryptocurrency exchange knew that some of its users were criminals. Yet, despite regular warnings from some of its own employees that some transactions on Binance.com were violating anti-money-laundering laws, the firm was reluctant to cut them off. Those allegations, which were made public on Tuesday in a sweeping federal case against Binance and Mr. Zhao, show how thoroughly he and his deputies understood that criminals were using their trading platform — and how little they did to stop them. Mr. Zhao and Binance pleaded guilty on Tuesday to violations of the Bank Secrecy Act and agreed to pay hefty fines. The Binance official acknowledged the report, then tried to persuade the tech company’s representatives to downplay Binance’s role in the transactions, according to the filing, which FinCEN posted on its website on Tuesday.

Persons: Changpeng Zhao, Zhao, Binance, FinCEN Organizations: Binance, Network, Treasury Department, FinCEN, Qassam

Customers from Iran, Cuba and Syria — all of which face sanctions — were able to access the Binance platform. In addition to the outlawed foreign transactions, Binance did business with firms based in the United States even though it was not supposed to have any U.S. customers on its Binance.com platform. Instead, a different platform, Binance.US, which Mr. Zhao also owned, was required to handle the business and abide by U.S. anti-money laundering laws. But Mr. Zhao and other Binance employees believed it would be better for the main cryptocurrency exchange to handle big U.S. customers, the court filings state. At times, Binance has processed two-thirds of all digital currency trades, making it a vital power broker and intermediary in the crypto world.

Persons: Zhao, Binance, —, ” Locations: Iran, Cuba, Syria, United States

☆ Citigroup Discriminated Against Armenian-Americans, Regulator Says
▼ + stars: | 2023-11-08 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

According to the regulator, Citi employees pegged the community, in Glendale, Calif., as a group whose members were likely to rack up huge debts and then flee the country. They warned new hires not to give credit card applicants with Armenian-sounding last names that ended in “ian” or “yan” the same rates that other customers received, and in some cases urged them to reject these applicants altogether. The people affected by the bank’s practice were not applying for Citigroup-branded cards; they were seeking cards offered by retailers, like Home Depot and Best Buy, that were underwritten by the bank. Eric Halperin, the consumer bureau’s enforcement director, said during the news conference that Citigroup was still trying to identify how many people were affected by the discrimination, but so far regulators had identified “hundreds.”Karen Kearns, a spokeswoman for Citigroup, said in a statement that the bank had been “trying to thwart a well-documented Armenian fraud ring operating in certain parts of California,” and that “a few employees took impermissible actions.”According to regulators, Citi managers knew excluding Armenians was illegal and warned employees “not to discuss it in writing or on recorded phone lines.” Even so, regulators found evidence of Citi employees discussing over email how to cover up their denial of applicants from Glendale. “It’s been a while since I declined for possible credit abuse/YAN — gimme some reasons I can use,” one employee wrote to another in 2016, seeking advice on how to tell a potential customer that a credit card application had been denied without revealing the real reason, according to the consumer bureau.

Persons: Eric Halperin, ” Karen Kearns, “, “ It’s, YAN Organizations: Citi, Citigroup Locations: Glendale , Calif, California, Glendale, “

☆ Frustrated With New Rules, Bank Lobbyists Are Making Their Fight Public
▼ + stars: | 2023-11-02 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

Banks have become increasingly frustrated with their federal regulators and, in a break with tradition, have brought the battle out into the open. In an effort to overturn new rules and challenge the legitimacy of regulators’ powers, bank lobbyists have added legal threats and public attacks to the more usual lobbying efforts that once took place behind closed doors on Capitol Hill. In recent months, trade groups representing banks of all sizes, including the American Bankers Association, the Independent Community Bankers of America and the Bank Policy Institute, have accused federal regulators like the Consumer Financial Protection Bureau and the Federal Reserve of regulatory overreach. Cam Fine, a former longtime president of the community bankers group, said the cultural shift leading to the lawsuits was notable. In his 18 years at the group, he said, he could remember going to court only twice.

Persons: Banks, Cam Fine Organizations: American Bankers Association, Independent Community Bankers of America, Bank Policy Institute, Consumer Financial Protection Bureau, Federal Reserve

☆ Seeking the ‘Right’ Customers, an Insurer Is Accused of Discrimination
▼ + stars: | 2023-10-30 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

A spokesman for the Maryland Insurance Administration declined to comment. The dispute reveals how a long-used insurance industry technique, ostensibly aimed at managing risk, can open the door to bias. As they evaluate a customer, agents are expected to decide whether a potential customer seems honest or reliable, or judge how tidy or well maintained their home is. “There are all kinds of conscious and unconscious biases involved.”Insurers have also been accused of discriminating against Black and Hispanic customers in other ways. But the accusation against Erie is that its policies kept Black and Hispanic homeowners out of its customer rolls in the first place.

Persons: Matthew Cummings, ”, Daniel Schwarcz Organizations: Maryland Insurance, University of Minnesota Law School, State Farm, Erie Locations: Erie, Chicago

Yelling at Michael Barr, the Federal Reserve’s top banking regulator, has never been particularly effective, his friends and co-workers will tell you. That hasn’t stopped America’s biggest banks, their lobbying groups and even his own colleagues, who have reacted to his proposal to tighten and expand oversight of the nation’s large lenders with a mix of incredulity and outrage. The proposal would push up the amount of easy-access money that banks need to have at the ready, potentially cutting into their profits. Lawmakers sent worried letters to the Fed and peppered its officials with questions about what the proposal would contain. The Bank Policy Institute, a trade group, recently rolled out a national ad campaign urging Americans to “demand answers” on the Fed’s new capital rules.

Persons: Michael Barr, hasn’t, Kevin Fromer, Barr, Lawmakers Organizations: Federal, Financial Services, Mr, BNP Paribas, HSBC, TD Bank, Hill, Bank Policy Institute, Fed

☆ Federal Court Says Consumer Watchdog Can’t Check Banks for Discrimination
▼ + stars: | 2023-09-11 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +2 min

“A longstanding and straightforward federal law prohibits unfair acts and practices, stating that financial firms cannot subject consumers to substantial and unavoidable harm, Mr. Gilford said. Banks have long tried to limit the ways regulators can penalize them. The trade groups behind the lawsuit had originally stressed that their main impetus for suing the C.F.P.B. The regulator had added “discrimination” to a manual provided to financial firms explaining how to prepare for the agency’s periodic checks on their operations. Officials should have given them more warning, the groups argued, and a chance to submit public comments on the matter before finalizing the change.

Persons: ”, Sam Gilford, Gilford, “, Banks, George Floyd’s, Wells, Trump, Obama Organizations: Bank of America Locations: Wells Fargo

This spring, Clive Kabatznik, an investor in Florida, called his local Bank of America representative to discuss a big money transfer he was planning to make. Rather, a software program had artificially generated his voice and tried to trick the banker into moving the money elsewhere. Mr. Kabatznik and his banker were the targets of a cutting-edge scam attempt that has grabbed the attention of cybersecurity experts: the use of artificial intelligence to generate voice deepfakes, or vocal renditions that mimic real people’s voices. The problem is still new enough that there is no comprehensive accounting of how often it happens. Another large voice authentication vendor, Nuance, saw its first successful deepfake attack on a financial services client late last year.

Persons: Clive Kabatznik, Kabatznik Organizations: Bank of America Locations: Florida

Bigger insurers might not feel squeezed immediately in Hawaii, as the state has been historically lucrative for them. Insurers are primarily concerned with two factors when deciding how much coverage to offer and where: the frequency of claims and the severity of those claims. The Maui fires are another data point of losses for insurers. Since the start of the year, insurers have paid out more than $40 billion in damage claims, on a pace for a record in yearly losses. The insurers for insurance companies, also known as reinsurers, are an important part of the equation.

Persons: Ge, they’ve Organizations: New York University, underwriters, Farm, Allstate Locations: Hawaii

☆ How a Small Group of Firms Changed the Math for Insuring Against Natural Disasters
▼ + stars: | 2023-08-16 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

As disasters like the wildfires that devastated the Hawaiian town of Lahaina and the storms that tore apart roofs from Alabama to Massachusetts last week intensify, insurance companies have pulled back from offering coverage in certain areas or cut the kinds of damage they will pay to repair. A little-noticed slice of the financial industry that provides insurance to insurers, called reinsurance, has helped drive the changes. These companies promise to step in with cash — usually huge amounts — when something like a hurricane, wildfire or other big disaster creates damage that is too costly and widespread for insurance companies to pay for on their own. And at the beginning of the year, nearly all of them raised prices. That led to a flurry of tense negotiations between those insurers and firms, like Swiss Re, Odyssey Re and other reinsurers, many of whom are headquartered outside of the United States.

Persons: reinsurers Organizations: Farmers, Swiss Locations: Lahaina, Alabama, Massachusetts, United States, Canada

☆ Citigroup Says Its Predecessors Likely Benefited From Slavery
▼ + stars: | 2023-07-27 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

A new review of historical documents has led Citigroup to acknowledge that slavery and slave labor most likely enriched the banks and other companies that eventually formed the present-day financial giant. The benefits were likely to have come to Citi’s predecessors “through financial transactions and relationships with individuals and entities located or operating in the United States before 1866,” the bank’s public affairs head, Edward Skyler, wrote in a blog post on Thursday. Mr. Skyler said the review also “reaffirmed our previous research in that it did not identify any records showing that Citi or a predecessor institution directly purchased, sold or held enslaved persons.”Citi hired an independent historical research firm to carry out the review as part of a racial equity pledge it made in 2020 after George Floyd, a Black man, was murdered by a white Minneapolis police officer. In the weeks after Mr. Floyd’s murder, American companies and the public grappled with a fresh reminder of the vast injustices that Black Americans had been experiencing since the United States began taking shape as a country.

Persons: Edward Skyler, Skyler, ”, George Floyd, Floyd’s Organizations: Citigroup, Citi, ” Citi, United States Locations: United States, Minneapolis, United

☆ How Regional Banks Got Healthy Again
▼ + stars: | 2023-07-26 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

After depositor runs led to the collapse of Silicon Valley Bank and Signature Bank this spring, investors and onlookers wondered how similarly sized institutions would fare. Would they have to merge with bigger banks? Then, when a third lender, First Republic Bank, flirted with destruction for weeks before being bought by JPMorgan Chase in May, it was hard to see how depositors would ever feel comfortable trusting midsize banks again. Quarterly earnings reports released this month detailing midsize banks’ performance from April through June have shown that their balance sheets look healthier than they did last quarter, with higher-quality loans and more money set aside to cover surprise losses. The KBW Nasdaq Regional Banking Index, a proxy for the industry, is rebounding after plunging 35 percent during the crisis.

Persons: depositor Organizations: Silicon Valley Bank, Signature Bank, First Republic Bank, JPMorgan Chase, Nasdaq, Banking Locations: Silicon

☆ Insurer’s Retreat in Florida Signals Crisis With No Easy Fix
▼ + stars: | 2023-07-14 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

Insurers are trapped in a riddle: In a world where the risk of costly disasters is rising but high premiums are squeezing policyholders and angering state regulators, how can they continue to make money? Farmers, one of America’s biggest home insurers, didn’t say what specifically led to its decision. Was the cost of payouts too high in recent years, which saw record-setting numbers of billion-dollar disasters, just as rates charged by reinsurers, which sell insurance to insurers, were rising? Or is Farmers playing a game of chicken with state regulators, hoping that walking away now will give it leverage to charge customers more in the future? “A lot of insurers have been losing a lot of money in Florida and they’ve been threatening to leave for years,” said Daniel Schwarcz, a professor at the University of Minnesota Law School who specializes in insurance.

Persons: they’ve, ”, Daniel Schwarcz Organizations: Farmers Insurance, reinsurers, Farmers, University of Minnesota Law School Locations: Florida

☆ Bank of America Fined $150 Million Over ‘Junk Fees’ and Fake Accounts
▼ + stars: | 2023-07-11 | by ( Emily Flitter | More About Emily Flitter | ) www.nytimes.com time to read: +1 min

“These practices are illegal and undermine customer trust,” Rohit Chopra, the director of the consumer bureau, said in a statement. will be putting an end to these practices across the banking system.”Regulators said that Bank of America imposed improper overdraft fees by double-charging customers over the same transaction. The first charge would be a $35 “insufficient funds” penalty levied against a customer who tried to pay for something by check or automated transaction without having the funds necessary to do so. A Bank of America spokesman said the bank had “voluntarily” reduced overdraft fees from $35 to $10 in early 2022 and had eliminated its $35 “insufficient funds” penalty. In addition to the action on overdraft fees taken together by the two regulators, the consumer bureau said it had discovered two other areas where it said the bank was mistreating customers.

Persons: ” Rohit Chopra, “ Organizations: Regulators, Bank of America, of America

The overhaul would require the largest banks to increase their holdings of capital — cash and other readily available assets that can be used to absorb losses in times of trouble. Mr. Barr predicted that his tweaks would be “equivalent to requiring the largest banks hold an additional two percentage points of capital,” if they are implemented. “The beauty of capital is that it doesn’t care about the source of the loss,” Mr. Barr said in his speech previewing the proposed changes. If the Fed Board votes to institute them, their implementations will involve transition time. But the sweeping set of changes that he set out meaningfully tweak both how banks police their own risks and are overseen by government regulators.

Persons: Michael S, Barr, ratcheting, Mr Organizations: Federal, Monday Locations: ”

☆ Stress Tests Show Largest Banks Are Sturdy, Fed Says
▼ + stars: | 2023-06-28 | by ( Emily Flitter | ) www.nytimes.com time to read: +1 min

Senior Fed officials said on Wednesday that they did not expect the banks to announce any plans to distribute cash to shareholders until Friday. “Today’s results confirm that the banking system remains strong and resilient,” said Michael S. Barr, the Fed’s vice chair for supervision. “At the same time, this stress test is only one way to measure that strength. Fed regulators are following a set of rules put in place during the Trump administration that critics say weakened oversight of banks in a certain size range — those smaller than the too-big-to-fail giants but larger than some regional and community banks. One sign of that reduced oversight was clear in Wednesday’s results: Not all the banks tested in 2022 were tested again in 2023.

Persons: ”, Michael S, Barr, “, Trump Organizations: Regulators, Silicon Valley Bank Locations: Silicon

☆ How Local Officials Seek Revenge on Their Hometown Newspapers
▼ + stars: | 2023-06-18 | by ( Emily Flitter | ) www.nytimes.com time to read: +1 min

Two of the most powerful women in the village of Delhi in central New York sat face to face in a brick building on Main Street for what would become a fight over the First Amendment. It was the fall of 2019. Tina Molé, the top elected official in Delaware County, was demanding that Kim Shepard, the publisher of The Reporter, the local newspaper, “do something” about what Ms. Molé saw as the paper’s unfair coverage of the county government. Ms. Shepard stood her ground. Not long after, Ms. Molé struck where it would hurt The Reporter the most: its finances.

Persons: Tina Molé, Kim Shepard, Molé, Shepard Locations: Delhi, New York, Delaware County

☆ Binance Moved Billions Through Two U.S. Banks, Regulators Say
▼ + stars: | 2023-06-07 | by ( Emily Flitter | Matthew Goldstein | ) www.nytimes.com time to read: +1 min

accountant, Sachin Verma, detailed a tangle of transactions that companies associated with the giant cryptocurrency exchange had made through two banks: Silvergate Bank and Signature Bank, both of which failed this year. separately said it estimated unpaid taxes by Binance over the past four years carried an interest penalty of more than $13 million. Though it estimated that Binance earned almost $225 million from 2019 to 2023, the regulator didn’t say how much the company paid in taxes over the period, or how much it should have paid. sued Binance in federal court in Washington, D.C., accusing the company of mishandling customer funds, lying to regulators and investors about its operations and engaging in manipulative trading. U.S. regulators have asked a federal judge to temporarily freeze assets tied to Binance’s subsidiary in the United States, and Wednesday’s filing was in support of that request.

Persons: Sachin Verma, Changpeng Zhao, Binance Organizations: Securities and Exchange, Silvergate, Signature Bank, Washington , D.C Locations: Kazakhstan, Lithuania, Seychelles, Washington ,, U.S, United States

“Coinbase has elevated its interest in increasing its profits over investors’ interests, and over compliance with the law and the regulatory framework that governs the securities markets and was created to protect investors and the U.S. capital markets,” the filing said. said Coinbase has made billions facilitating the sale of crypto assets as an unregistered exchange, but deprived investors of significant protections. “You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Gurbir S. Grewal, the director of the S.E.C.’s enforcement division, said in a statement. The action is consistent with the S.E.C.’s long-held view that most crypto products are no different from stocks, bonds and other securities and must comply with U.S. laws. That means the firms that operate as exchanges and provide a platform for trading and selling crypto products must be registered like any exchange or brokerage that facilitates stock or bond trading.

Persons: “, Coinbase, Grewal Locations: U.S, Manhattan

The Securities and Exchange Commission has accused Binance, the world’s largest cryptocurrency exchange, of mishandling customer funds as well as lying to regulators and investors about its operations in a sweeping case filed in federal court on Monday. The Wall Street regulator said Binance had been mixing billions of dollars in customer funds and secretly sending them to a separate company called Merit Peak Limited, which is controlled by Binance’s founder, Changpeng Zhao. The charges included misleading investors about the adequacy of its systems to detect and control manipulative trading and about its efforts to restrict U.S. investors from trading on its unregulated platform. In its court filing, the S.E.C. cited a 2018 email from Binance’s chief compliance officer saying “we do not want [Binance.com] to be regulated ever.”

Persons: Binance, Changpeng Zhao, Zhao “, ” Organizations: Securities, Exchange, Binance’s, Regulators, Court Locations: Washington

☆ Regulators Rebut Claims by Silicon Valley Bank’s Ex-C.E.O.
▼ + stars: | 2023-05-18 | by ( Emily Flitter | Alan Rappeport | ) www.nytimes.com time to read: +1 min

When asked in a Senate hearing this week who was to blame for the demise of Silicon Valley Bank, the lender’s former chief executive, Greg Becker, had plenty of ideas, blaming regulators, the bank’s board and its own customers for bringing it down. On Thursday, senior officials from two of the bank’s main regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, told members of the same Senate panel that some of the impressions Mr. Becker had left lawmakers with were false. James N. Kramer, a lawyer for Mr. Becker, said Mr. Becker stood by the statements he had made. The regulators’ statements were part of a hearing held by the Senate Banking Committee on how bank oversight should look in the future in light of the failures of three regional banks this spring. It came two days after Mr. Becker appeared alongside former senior leaders of Signature Bank, a New York lender that collapsed just after Silicon Valley Bank did and prompted the federal government to take drastic steps to prevent widespread panic in the banking system.

☆ Goldman Says U.S. Is Investigating Its Work for Silicon Valley Bank
▼ + stars: | 2023-05-04 | by ( Emily Flitter | ) www.nytimes.com time to read: +1 min

U.S. authorities are investigating the work Goldman Sachs did for Silicon Valley Bank in the weeks before it failed, including its advice that the smaller lender sell a large portfolio of securities at a loss, according to a regulatory filing by Goldman on Thursday. Goldman said it was “cooperating with and providing information to various governmental bodies in connection with their investigations and inquiries” into Silicon Valley Bank, which collapsed suddenly on March 10, touching off a crisis of confidence that has led to the failure of two more regional lenders, and a panic in the stock market over the fate of others. Investment bankers at Goldman advised Silicon Valley Bank’s leaders to sell a $21 billion portfolio of U.S. government debt whose value had been greatly diminished by rising interest rates. Silicon Valley Bank did so in a matter of hours, then revealed it had taken a $1.8 billion loss on the move. Goldman also tried to arrange the sale of Silicon Valley Bank’s stock.

☆ How JPMorgan Became Banking’s Regular Rescuer
▼ + stars: | 2023-05-02 | by ( Emily Flitter | ) www.nytimes.com time to read: +1 min

It was well before dawn on Monday when federal regulators notified JPMorgan Chase executives that they had beaten out three smaller rivals in their bid to buy the doomed First Republic Bank. By the time the sun rose, JPMorgan’s longtime chief executive, Jamie Dimon, was once again illuminated as the industry’s savior — and the architect of yet another government-brokered deal to help his gargantuan institution grow even larger. First Republic was the third institution that Mr. Dimon had agreed to buy in a federally backed transaction, following its takeovers of Bear Stearns and Washington Mutual during the 2008 financial crisis. All three deals have helped defuse panics, but they have also benefited JPMorgan, which, with $2.6 trillion in assets and 14 percent of all deposits in the United States, enjoys unparalleled reach inside the world’s largest economy. JPMorgan’s agreement to buy First Republic is expected to boost the bank’s profits by $500 million this year and will give it access to a stable of wealthy clients.

That is how bank regulators appeared to view their duties in the lead-up to last month’s banking crisis, at the center of which were the failures of Silicon Valley Bank in California and Signature Bank in New York. For years, federal regulators overseeing Silicon Valley Bank pointed out its many flaws using language whose impact appeared heavily blunted by technical jargon. They gave the bank’s leaders long timelines to fix things, delivered overall safety and soundness ratings at a plodding pace and seemed unwilling to draw big conclusions about the many accumulating problems. A similar story unfolded in New York, where supervisors in charge of monitoring Signature Bank’s activities slow-walked regulatory reports and failed to spur the bank’s senior leaders to fix problems they had identified. Here are some takeaways from reviews released on Friday by the Federal Reserve, the Federal Deposit Insurance Corp. and the U.S. Government Accountability Office.

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