Banking Industry

Former Lincoln Savings & Loan boss Charles H. Keating Jr. won a final victory Monday before the U.S. Supreme Court, defeating attempts to reinstate his 1991 state court conviction on charges of swindling elderly investors. Without comment, the high court refused to reopen the case, leaving intact lower court rulings that Los Angeles Superior Court Judge Lance Ito had allowed a flawed prosecution.

Former IndyMac Bancorp Chairman and Chief Executive Michael W. Perry has agreed to pay $1 million and be banished from the banking industry to settle government claims that he overloaded the Pasadena thrift with risky home loans before it collapsed in July 2008. The Federal Deposit Insurance Corp. is dropping its $600-million negligence lawsuit against Perry in return for the personal payment and the right to seek $11 million from IndyMac's insurance carriers, Perry's lawyers and the FDIC said in statements released Friday.

Ending months of speculation about its future, mortgage lending giant DiTech Funding Corp. of Irvine said Monday that it agreed to be acquired by GMAC Mortgage Corp., a unit of General Motors Corp. Terms were not disclosed. DiTech, one of the Southland's largest mortgage lenders and an aggressive marketer of higher-risk home equity loans, shelved plans for an initial public stock offering last fall that it had hoped would raise about $110 million for a minority stake in the company.

WASHINGTON -- While the majority of banks have improved their finances during the last four years, looming economic threats mean the outlook for the industry remains negative over the next 12 to 18 months, Moody's Investors Service said Tuesday. "Our negative outlook ... reflects a challenging domestic operating environment, with prolonged low interest rates, high unemployment, weak economic growth and fiscal policy uncertainties," said Sean Jones, Moody's senior vice president. "Additionally, the threat of contagion stemming from the European sovereign debt crisis undermines economic recovery in the U.S. and exposes banks to a heightened risk of shocks," he said.

The U.S. banking industry may suffer a net loss for the quarter ending June 30 because of billions of dollars in foreign debts that are not being repaid, federal bank regulators said Monday. The huge loss reserves being set aside by a handful of big money-center banks may be enough to offset profits in 14,000 other mostly profitable institutions, the regulators said.

The financial health of the U.S. banking industry improved slightly during the third quarter, with commercial banks and savings and loans posting net income of $2.8 billion. But the sector remains troubled, highlighted by the continued rise in the number of institutions in danger of failing, the Federal Deposit Insurance Corp. said today. The weak gain in earnings from July to Sept. 30 reverses a $4.3-billion loss in the second quarter of the year and more than triples the earnings of $879 million a year ago. But earnings could drop in the fourth quarter of the year as banks undergo their traditional end-of-the-year writedown of bad assets, the FDIC said.

With consolidation in the banking industry, neighborhood bank branches are becoming as scarce as drive-in movie theaters. Now with more banks encouraging customers to conduct transactions at automated-teller machines or on the Internet, is face-to-face banking all but bound for extinction? Richard Kovacevich, president and chief executive of Wells Fargo & Co.

Losses from bad loans and the burgeoning federal budget deficit topped the list of critical concerns of the top officers at the biggest banks in the United States, according to a survey conducted by Egon Zehnder International, a Zurich, Switzerland-based management consulting firm. There were 840 respondents to the survey, which contacted the 2,394 chief executives of all U.S. commercial banks with more than $100 million in assets.

U.S. banking industry officials are huddling with federal regulators in a hasty but determined effort to develop a system of early financial aid for troubled banks to avoid costly collapses and government takeovers, sources said Friday. The bankers have a dual goal: to ease public anxiety about the safety of America's financial system and to persuade Congress that it is safe to give banks expanded powers to enter new lines of business.

The groundwork was laid quietly at a recent Dallas meeting for the insurance industry to battle the banking industry over a vital territorial dispute. At issue is the attempt by banks, especially the large ones, to gain a foothold in the lucrative insurance market as they seek to expand their operations. If they succeed, all banks will be able to sell insurance to their customers. Sympathetic insurance regulators in various states see this as providing healthy competition.

WASHINGTON - As JPMorgan Chase & Co. Chief Executive Jamie Dimon prepares for another day on the congressional hot seat this week, the U.S. Chamber of Commerce warned lawmakers and regulators not to overreact to the bank's huge trading loss. "Hiding money in a mattress isn't a strategy for a growing, prosperous, economy, but that seems to be the road some want us to go down," Thomas Quaadman, vice president of the U.S. Chamber's Center for Capital Markets Competitiveness, wrote on the business group's blog Monday.

Jamie Dimon again proved himself Wall Street's able frontman in Washington, but his testimony on Capitol Hill may not head off tougher banking regulations in the wake of JPMorgan Chase & Co.'s risky trading losses. Dimon, JPMorgan's chairman and chief executive, appeared at ease with lawmakers as he fielded questions -- some aggressive, but most deferential -- at a Senate Banking Committee hearing Wednesday about his bank's trading losses of more than $2 billion. Although the hearing focused on how JPMorgan's embarrassing loss occurred, the two-hour session veered into larger debates over financial regulations -- putting Dimon in a familiar role of Wall Street's savvy, shoot-from-the-hip spokesman.

"Bring back Glass-Steagall!" That's the cry you hear most often for restoring regulatory stringency to our misbehaving financial sector. The 1933 law, which barred commercial banks from underwriting or investing in stocks - in effect, from owning investment banks - was repealed in 1999, and reinstating it is a good proposal for several reasons. But what the 2008 financial crash and misadventures such as JPMorgan Chase's multibillion-dollar derivatives loss tell us is that reinstatement of the old law isn't enough.

In case you were wondering, big banks are doing really, really well, thank you very much. U.S. bank earnings rose in the first quarter to the highest level in nearly five years. Meanwhile, the number of troubled banks fell for the fourth straight quarter. This is particularly noteworthy because our friends in the banking industry raised a considerable ruckus over a slew of new regulations. Despite driving the global economy to the brink of collapse a few years ago, industry representatives argued that increased oversight would mess up their business and hurt customers.

It's a measure of how successful Wall Street has been at eviscerating the so-called Volcker Rule that in its current guise it would not have prevented JPMorgan Chase from making the derivatives trades that produced the stunning $2-billion trading loss disclosed this week. Even in its weakened loophole-ridden state, the rule, which prohibits banks from making risky trades for their own accounts, has been raked with gunfire from Jamie Dimon, the JPMorgan chairman who presided over that loss.

Wells Fargo & Co. and JPMorgan Chase & Co. kicked off the bank earnings season by reporting higher than expected profits Friday, with strong mortgage results helping to boost revenue higher than analysts had anticipated at the two largest home lenders. Fourth-quarter profit rose 13% at Wells Fargo while JPMorgan Chase's net income fell by 3% -- a smaller decline than analysts had expected from record earnings in the fourth quarter of 2011. The results bode well for the banking industry, according to Keefe, Bruyette & Woods analyst Fred Cannon, who said in a note to investors that JPMorgan Chase also exceeded expectations in its huge investment banking and trading businesses.

Bank of America's decision to start charging certain customers each time they withdraw money from one of its automated teller machines reflects a trend that is sweeping the banking industry, leaving consumers facing rising fees for services that once were free. Banks used to be so eager for customer business that they gave services away. Checking accounts were free, and so were the checks. Safe-deposit boxes cost nothing, and neither did money orders or cashier's checks.

A battle between bankers and consumer groups is brewing over a little-noticed move by a House subcommittee late last week to virtually eliminate federal regulations that require banks to lend money to minorities and small businesses, both sides said Wednesday.

The Consumer Financial Protection Bureau has opened investigations into the practices of some large banks, the agency's director said. "We do have open matters we're looking at involving a range of institutions, large banks, smaller banks and non-banks," Richard Cordray said Friday in an interview taped for C-SPAN's "Newsmakers," which is to air Sunday. Cordray would not give details of the investigations, but in the interview with reporters from the Los Angeles Times and Dow Jones Newswires he said the agency was "active on all fronts.