Financial Regulatory Forum

New York charges Bank of America, ex-CEO with fraud; SEC settles

By Jonathan Stempel and Joe Rauch

NEW YORK/ORLANDO, Fla., Feb 4 (Reuters) – New York’s attorney general charged Bank of America Corp former Chief Executive Kenneth Lewis and former Chief Financial Officer Joe Price with fraud for allegedly misleading shareholders about the acquisition of Merrill Lynch & Co.

The U.S. Securities and Exchange Commission separately said Bank of America agreed to pay a $150 million civil fine and bolster disclosure and governance practices to settle its two lawsuits alleging poor disclosure of Merrill’s losses and $3.6 billion of bonus payouts. That accord requires court approval.

Thursday’s civil lawsuit by New York Attorney General Andrew Cuomo could complicate efforts by new Bank of America CEO Brian Moynihan to revive the largest U.S. bank.

Moynihan replaced Lewis, who retired under pressure at the end of 2009 after four decades at the bank.

Lewis, 62, joins Countrywide Financial Corp’s Angelo Mozilo among major U.S. financial services chief executives to face civil regulatory fraud charges over conduct since a global credit crisis began in the middle of 2007.

Barons of Wall St concede failures, defend pay

By Kevin Drawbaugh

WASHINGTON, Jan 13 (Reuters) – Top executives of Wall Street’s biggest banks acknowledged broad failures as they testified to a U.S. commission looking into the financial crisis, while the White House said an industry apology was in order.

With U.S. unemployment near a 26-year-high after the worst recession in decades, public fury is growing over the cost of taxpayer bailouts and huge bonuses for bankers, now that the industry has rebounded from the 2008 meltdown.

The top executives acknowledged mistakes in managing risk but defended their pay packages and called for modest regulatory changes.

Bank of America’s Moynihan urges focus on “contagion risk,” not breakups

CHARLOTTE, North Carolina, Jan 13 (Reuters) – Bank of America Corp Chief Executive Brian Moynihan said on Wednesday banking regulation needs to focus more closely on limiting “contagion risk” between financial firms, rather than breaking up the biggest U.S. banks.

Moynihan called for broader changes in banking industry regulation — from accounting rules to leverage and capital requirements — to shore up a system that he said created a mix of combustible elements during the crisis.

“That starts with recognizing that ‘interconnectedness’ and not ‘bigness’ is what led to the need for taxpayer bailouts,” Moynihan said in testimony prepared for his appearance before the Financial Crisis Inquiry Commission, a 10-member panel formed by the U.S. Congress to examine the causes of the financial meltdown.

FACTBOX-Witnesses for U.S. financial crisis hearings

WASHINGTON, Jan 11 (Reuters) – The Financial Crisis Inquiry Commission, a 10-member panel formed by the U.S. Congress to examine the causes of the financial meltdown, will hold its first public hearings on Wednesday and Thursday this week. Here is a list of the witnesses scheduled to appear.


Wednesday, Jan 13:

Panel one, financial institution representatives:

* Lloyd Blankfein, chief executive of Goldman Sachs Group Inc.

* Jamie Dimon, chief executive of JPMorgan Chase & Co.

* John Mack, chairman of Morgan Stanley

* Brian Moynihan, chief executive of Bank of America Corp.


Panel two, financial market participants:

* Michael Mayo, managing director and financial services analyst at Calyon Securities (USA) Inc

* Kyle Bass, managing partner at Hayman Advisors

* Peter Solomon, chairman of Peter J. Solomon Co


Panel three, financial crisis impacts on the economy:

* Mark Zandi, chief economist at Moody’s

* Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California,Berkeley