J.P. Morgan Review Finds Errors in Debt-Collection Lawsuits (WSJ)
The bank studied roughly 1,000 lawsuits and found mistakes in 9% of the cases, said people familiar with the review. "Any rate above zero is high," said one person familiar with the bank's conversations with regulators. The errors ranged from inaccurate interest and fees applied by outside law firms to a "small number of instances" in which lawsuits listed higher balances than the amounts owed by borrowers, according to an internal document reviewed by The Wall Street Journal. In certain cases sworn documents were signed without knowledge of their accuracy, according to the document.
REITs Deepening Bond Losses as Leverage Forces Sales (Bloomberg)
REITs may have needed to sell about $30 billion of government-backed mortgage securities in just one week last month to maintain the amount of borrowing relative to their net worth, according to JPMorgan Chase & Co. Those types of sales deepened losses in the mortgage-bond market, which had the worst quarter since 1994, accelerated the exit from fixed-income funds and fueled a jump in home-loan rates to a two-year high. REITs “have been one of, if not the biggest contributors” to the underperformance and volatility in mortgage bonds, said Bryan Whalen, co-head of mortgage bonds at Los Angeles-based TCW Group Inc., which oversees about $131 billion of assets.
Stock 'fear gauge' flawed, Citi equity trading chief says (Reuters)
Citi's Mike Pringle, global head of equity trading at the third-biggest U.S. bank, told Reuters that the VIX volatility index .VIX, is now as much a traded asset as it is a guide to investors seeking protection from losses. ... "A big mistake the market makes is looking at the VIX as an indicator of stock market risk. Why? Because it's an asset class and it's more traded for yield than protection," Pringle said. "The growth of structured products around VIX drove that move. In most cases, the VIX is sold to generate yield but during some stress periods, the weakness in the spot level triggers significant computer-generated technical buying from these products," he said.
Brussels sets up clash with Berlin over banks (FT)
Brussels is confronting Berlin over the future of Europe’s banking union, with a fast-tracked plan for a powerful bank executioner in Brussels to wind up failed lenders, backed by a €60bn cross-border rescue fund. The resolution authority blueprint is an ambitious attempt to give teeth to eurozone financial integration, in effect pooling money and power to establish a common defence against bank crises. This “Single Resolution Mechanism” would empower the European Commission with ultimate authority over the eurozone’s 6,400 banks, with responsibility to pull the trigger on a shaky lender and the clout to overrule its home state.
Death Valley cracks down on sidewalk egg-frying (NBC)
With current temperatures hovering above 120 degrees, rangers in Death Valley National Park have some advice for would-be visitors: Drink plenty of water, avoid excessive outdoor activity and, please, stop trying to fry eggs on the pavement. It doesn’t work, it makes a mess and the staff has better things to do than clean up after you. In fact, the proliferation of broken shells, discarded cartons and accumulated goo has reached such a point that the park recently took to its Facebook page to implore people to stop — or at least use a pan or tin foil and dispose of the results when they’re done.
China Posts Surprise Drop in Exports (WSJ)
China's key export sector shrank 3.1% in June compared with a year earlier, down from 1% year-on-year growth in May and the first contraction in a non-holiday month since the height of the financial crisis in November 2009. Imports fell 0.7% year-on-year, pointing to weak demand at home as well as abroad. Coming after a raft of disappointing data in April and May, June's weak trade results add to fears that economic growth in the second quarter has continued to slow. The median forecast of 18 economists surveyed by The Wall Street Journal tips gross domestic product growth of 7.5% year-on-year in the second quarter, down from 7.7% in the first.
Saudi Arabia and UAE prop up Egypt regime with offer of $8bn (FT)
Saudi Arabia and the United Arab Emirates have pledged a total of $8bn to Egypt to help prop up its ailing economy, highlighting the shake-up in regional political power after last week’s military coup in Cairo. Riyadh has promised to send $5bn and Abu Dhabi $3bn in a mix of cash, central bank deposits and oil products, as the new Egyptian administration grapples to halt the slide in the pound and stave off a foreign exchange reserves crisis.
US Investor Wilbur Ross Likely to Buy Spanish Financial Assets (Reuters)
Wilbur Ross, the U.S. billionaire who has made 65 percent profit on his 2011 investment in a struggling Bank of Ireland (BOI), said he is likely to bid for banks or financial assets in Spain over the next few months. Ross, whose WL Ross & Co owns 9.9 percent of BOI, said in a telephone interview that he had spent a lot of time in Spain recently and had been impressed by banking sector reforms. "We haven't decided yet whether to buy assets or to invest in banks themselves, but the likelihood is that we'll show up bidding on something in Spain," he said.
U.S. Banks Seen Freezing Payouts as Harsher Leverage Rules Loom (Bloomberg)
The biggest U.S. banks, after years of building equity, may continue hoarding profits instead of boosting dividends as they face stricter capital rules than foreign competitors. ... “They have plenty of time to comply, and they have steady earnings they can hold onto,” said Mayra Rodriguez Valladares, managing principal at New York-based MRV Associates, which trains bank examiners and finance executives. “They can also divest more from hedge funds, commodities and other prop-trading bets, which is what the regulators are hoping will happen.”
Goldman Ex-Officer Tourre Seeks to Exclude Emails From Trial (WSJ)
Fabrice Tourre doesn't want to be known as "fabulous Fab" anymore. Lawyers for Mr. Tourre, a former Goldman Sachs Group Inc. vice president, asked a federal judge Tuesday to exclude several colorful emails that securities regulators say are pivotal to their case when his civil trial kicks off next week, including one in which he dubs himself "the fabulous Fab." ... "These emails have nothing to do with the case we're about to try," John Coffey, a lawyer for Mr. Tourre, said at Tuesday's hearing."
China ready to hand over audit documents to U.S. regulators (Reuters)
The U.S. Securities and Exchange Commission (SEC) has been struggling to get papers out of China to investigate possible accounting fraud at dozens of Chinese companies listed on U.S. stock exchanges. China, for years, has resisted turning over documents because of state secrets and sovereignty concerns. The China Securities Regulatory Commission (CSRC) is now ready to transfer audit papers to the U.S. Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB), a CSRC spokesman said, confirming local media reports. He did not identify the company whose audit documents the CSRC is turning over, or say when the handover will take place.
Mexico Gains on America to Top ‘Globesity’ List (ABC)
Mexico has knocked the U.S. off its hefty pedestal to claim the title as the World’s Fattest Developed Nation, according to a new United Nations Food and Agricultural Organization report. The report found that 32.8 percent of Mexican adults are now obese. That’s a slightly chubbier obesity rate than the 31.8 percent listed for Americans. ... However, neither Mexico nor the U.S. comes close to winning the overall world’s heavyweight title. That distinction belongs to the tiny island of American Samoa, where a whopping 75 percent of citizens are obese, and an additional 20 percent are merely overweight.