Banks

Distancing himself from Republicans on housing issues, President Obama pitched a $5-billion to $10-billion plan to help a key segment of struggling homeowners — those still making monthly payments, but on underwater mortgages. Obama proposed Wednesday to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages. He argued that those homeowners — and the country — couldn't afford to let the housing market bottom out, as many Republicans, including presidential candidate Mitt Romney, have advocated.

A Los Angeles County Superior Court judge has reversed the 2002 rape and kidnapping conviction of former Long Beach Poly football standout Brian Banks. Banks, now 26, was wrongly convicted of the charges based on the testimony of Wanetta Gibson, an acquaintance. Gibson testified that Banks raped her on the Poly campus. Banks said the encounter was consensual. Rather than face a prison term of from 41 years to life, Banks accepted a plea deal that destroyed his dream of playing college football.

The alarm over potential bank runs in Greece and Spain this week has highlighted an often-overlooked fact: Europe's debt crisis is also, in many ways, a major banking crisis. In capitals such as Athens, Madrid and Rome, large portions of the sovereign debt racked up by spendthrift governments are owed to the countries' own banks, locking governments and the banks in an embrace so tight that disaster for one would almost certainly spell doom for the other. International bailouts for Greece, Ireland and Portugal have helped to keep not just their governments but also their banks afloat, as well as financial institutions in other parts of Europe with large exposure to those nations' debts.

The U.S. banking industry posted a $35.3-billion profit in the first quarter of the year, its best performance since 2007, the Federal Deposit Insurance Corp. said Thursday. The industry continued to recover from the financial crisis and deep recession, with just 16 FDIC-insured banks failing in the first three months of the year, according to the agency's quarterly banking profile. It was the fewest failures since the fourth quarter of 2008. Overall, 438 banks have failed since the end of 2007, when the recession hit. There are about 7,300 banks and savings and loans covered by FDIC insurance.

More than 100,000 struggling homeowners could get help from a $2-billion program that California is launching, including about 25,000 borrowers who owe more than their properties are worth and could see their mortgages shrink. The Keep Your Home California program, which uses federal funds reserved for the 2008 rescue of the financial system, has the potential to make a sizable dent in California's foreclosure crisis and help the general housing market. State officials hope to fend off foreclosure for about 95,000 borrowers and provide moving assistance to about 6,500 people who do lose their homes.

If you give millions of seriously underwater homeowners a new equity position in their properties by reducing their principal mortgage debt, will they keep paying on their loans and avoid foreclosure? Call it a pipe dream or a significant model for other lenders and investors, but one company says it has found an important combination: Modify underwater borrowers' loans so that their payments are reduced to a manageable amount and cut their principal debt over time, but make the deal dependent on their scrupulous on-time monthly payments of the new amount plus sharing of a portion of any future profit they make on the house sale.

ATHENS - Eva, a well-groomed pensioner, grasps her creamy white purse, glancing impatiently at her gold Cartier watch as she waits for the manager of an Athens bank. She is offered tea, cookies and orange juice, none of which the state bank usually provides, and none of which Eva accepts. "I'm concerned," says the 82-year-old, who declined to give her last name because she was involved in a private transaction. "I'm thinking of withdrawing all my savings. " Greek banks have been bleeding money since inconclusive elections this month, and the rise of a Marxist-Leninist leader bent on bustingBerlin'sausterity crusade, plunged the country into the biggest political crisis in decades and raised the specter of a devastating default.

As many as 9,000 struggling homeowners in California could see their mortgages slashed under changes to a program aimed at people who owe more on their loans than their homes are worth. By dropping a requirement that banks match taxpayer funds, state officials are hoping to make it easier for homeowners to reduce their mortgages through the Keep Your Home California program. Rolled out last year, the initiative uses federal funds reserved for the 2008 Wall Street bailout to aid borrowers at risk of foreclosure.

Deep in debt and short on cash, California on Thursday churned out its first batch of IOUs in nearly two decades amid grumbles from bankers, growing public outrage and scant progress in negotiations to resolve the state's widening budget deficit. The state controller's office fired up a pair of printing presses and began rolling out nearly 29,000 IOUs totaling more than $53 million, most of them destined for residents around the state still awaiting income tax refunds.

Homeowners more deeply underwater on mortgages handled by five major U.S. banking firms are prime candidates for getting help from a $25-billion nationwide settlement over alleged foreclosure abuses. That's because the settlement gives the nation's largest mortgage servicers more incentives to help those who owe 40% to 75% more than the value of their homes, according to details of the settlement filed Monday in U.S. District Court in Washington. In a complex series of formulas designed to maximize the effect of the deal reached last month, banks will get more than six times the credit for reducing loans for severely underwater borrowers than they would for helping those who owe 5% to 15% more than the value of their homes.

WASHINGTON — The public won't be protected from the type of risky bets that led to the huge trading loss at JPMorgan Chase & Co. until new rules are approved to allow better monitoring of complicated derivatives transactions, two key federal regulators told a Senate committee. As it was, the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission said Tuesday that they learned of the unusual trading activity that led to JPMorgan's $2.3-billion trading loss through media reports.

WASHINGTON - The consumer financial watchdog is taking aim at reloadable prepaid cards, moving to regulate a fast-growing product that has become a popular alternative to checking accounts for lower-income Americans and a new source of fees for some banks. Consumer advocates have been pushing for regulation of the cards, which look like conventional credit cards or debit cards tied to bank accounts. But the prepaid cards are not required to offer the same consumer protections, such as clear disclosure of fees and caps on losses if stolen.

WASHINGTON — Already grappling with regulatory reviews of its troubled initial public offering, Facebook Inc. and the Wall Street banks that shepherded the deal are now under fire from lawmakers and lawyers. Two congressional committees said Wednesday that they would conduct preliminary inquiries into the IPO. And attorneys filed two separate lawsuits alleging that average investors were misled in the days before Facebook shares began trading Friday. "Shareholders suffered billions of dollars in losses," said Darren Robbins, a partner in the San Diego law firm of Robbins Geller Rudman & Dow, which filed one of the suits.

Directors at the Federal Reserve's regional banks saw a pickup in the pace of economic growth last month as housing, motor vehicle sales and consumer spending gained strength. "Directors noted further improvement in economic activity, and they anticipated growth would continue at a moderate pace," according to minutes released Tuesday in Washington summarizing discussions of meetings in April. Board members of the 12 banks "saw the incoming data on consumer spending as a bit more robust than they had expected but cautioned that these gains might be attributable to unseasonably warm winter weather," the minutes said.

Addiction counselors tell their clients, "We can't help you until you admit you have a problem. " It's time for American financial institutions to admit they have a gambling problem. JPMorgan Chase & Co. last week announced losses, perhaps greater than $5 billion, from bad derivatives bets. Last year we saw UBS suddenly lose $2.3 billion and the hedge fund MF Global implode from derivatives trading. And let's not forget the 2008 failures of American International Group Inc. and Lehman Bros., which triggered an economic crisis we're still recovering from.

ATHENS - Eva, a well-groomed pensioner, grasps her creamy white purse, glancing impatiently at her gold Cartier watch as she waits for the manager of an Athens bank. She is offered tea, cookies and orange juice, none of which the state bank usually provides, and none of which Eva accepts. "I'm concerned," says the 82-year-old, who declined to give her last name because she was involved in a private transaction. "I'm thinking of withdrawing all my savings. " Greek banks have been bleeding money since inconclusive elections this month, and the rise of a Marxist-Leninist leader bent on bustingBerlin'sausterity crusade, plunged the country into the biggest political crisis in decades and raised the specter of a devastating default.

A nationwide settlement on foreclosure practices has ended one headache for the banks involved, but there are signs that it is only the beginning of many others. The agreement between 49 states and five large banks gives the financial giants immunity from future complaints about some aspects of their foreclosure practices. The banks had previously made changes to improve the way they foreclose on homeowners and had put aside most of the funds necessary to pay for the $25-billion settlement.

In a rational world, a corporate chairman who presided over a huge unexpected loss would be raked over the coals at his next shareholder meeting and his job would be up for grabs. It's not likely that will happen to JPMorgan Chase Chairman and Chief Executive Jamie Dimon at the firm's annual shareholder meeting today. Partly that's because "shareholder democracy" is a joke at almost all big companies. Dissident shareholders typically rejoice at getting a 40% backing for their proposals.

The alarm over potential bank runs in Greece and Spain this week has highlighted an often-overlooked fact: Europe's debt crisis is also, in many ways, a major banking crisis. In capitals such as Athens, Madrid and Rome, large portions of the sovereign debt racked up by spendthrift governments are owed to the countries' own banks, locking governments and the banks in an embrace so tight that disaster for one would almost certainly spell doom for the other. International bailouts for Greece, Ireland and Portugal have helped to keep not just their governments but also their banks afloat, as well as financial institutions in other parts of Europe with large exposure to those nations' debts.

WASHINGTON — JPMorgan Chase & Co. Chief Executive Jamie Dimon has agreed to testify at a hearing about the bank's $2-billion trading loss. The Senate Banking Committee has scheduled hearings with regulators for Tuesday and June 6 to discuss implementation of the 2010 financial reform law. Panel Chairman Tim Johnson (D-S.D.) said this week that JPMorgan's huge trading loss would be looked at during those hearings. But after aides of Johnson and the committee's top Republican, Sen. Richard Shelby of Alabama, were briefed by regulators and JPMorgan about the trading loss over the last week, Johnson said he decided to invite Dimon to testify.