Wall Street's top cop just blacklisted a Washington consulting firm

Promontory Financial Group, the influential Washington, D.C. consulting firm, was fined $15 million by New York regulators for sanitizing a report on Standard Chartered's violation of US sanctions on Iran.

While it was investigating Standard Chartered, the New York State Department of Financial Services relied on reports produced by Promontory.

Those reports included testimony that "lacked credibility," the regulator has found. Standard Chartered was Promontory's client, the DFS explained, and so the consultant changed language in the report for the bank's benefit. From the report:

There are numerous instances where Promontory, at the direction of the Bank or its counsel, or at its own initiative, made changes to “soften” and “tone down” the language used in its reports, avoid additional questions from regulators, omit red flag terms or otherwise make the reports more favorable to the Bank.
In addition to the fine, the regulator is also banning Promontory from having access to confidential information.

Accordingly, the Superintendent has determined that the ends of justice and the public advantage would not be served by providing Promontory with access to confidential supervisory information. The Department intends to deny all such requests until further notice.
Promontory was founded by an ex-regulator in 2001 and has since grown to include dozens of people formerly employed by Washington agencies responsible for overseeing Wall Street.

Founder Eugene Ludwig has poached top names from bank boards and from D.C. regulators including the Treasury Department's Office of the Comptroller of the Currency and the Federal Reserve to advise banks on regulatory matters, among other issues.

It's not the first time DFS has smacked down a consultant for not disclosing enough information. Deloitte LLP also paid a fine in 2013 after accusations it watered down a separate report on Standard Chartered and PricewaterhouseCoopers paid $25 million in fines after it reportedly sanitized documents involving Bank of Tokyo-Mitsubishi UFJ.



Read more: http://www.businessinsider.com/wall-streets-top-cop-just-blacklisted-a-washington-consulting-firm-2015-8

Three questions to ask about reverse mortgages

OKLAHOMA CITY – One retirement planning resource that has gained interest in recent years is the reverse mortgage, which allows you to convert part of a home’s equity into cash without paying additional monthly bills. If you’re 62 or older and want money to pay off your mortgage or to help pay for other expenses, you might consider a reverse mortgage. The Oklahoma Society of CPAs offers three questions to answer in order to decide if a reverse mortgage is right for you.
1. What is a reverse mortgage? A reverse mortgage is a type of home loan that allows you to convert a portion of your home’s equity into cash. Reverse mortgages take part of the home’s equity and converts it into payments — a type of advanced payment on home equity where money received is usually tax-free. Generally, the money doesn’t have to be repaid, as long as you live in the home. However, you or your estate must repay the loan when you move to a new home or pass away.
2. What kind of reverse mortgage can I get?
•Single-purpose reverse mortgages: This is the least expensive option and most homeowners with low or moderate income can qualify. The loan can only be used for one purpose, which is specified by the lender (i.e., home repairs). Single-purpose reverse mortgages are offered by some state and local government agencies, as well as non-profit organizations, but they’re not available everywhere. Check with your financial advisor to see what options are available in your state.
•Proprietary reverse mortgages: Also known as private company reverse mortgages, proprietary reverse mortgages are backed by companies that develop them, not federally insured and typically designed for borrowers with higher home values. If you own a higher-valued home, you may receive a higher loan advance and qualify for more funds with this type of loan.
•Home Equity Conversion Mortgages (HECMs): These are federally-insured and can be used for any purpose — from supplementing retirement income to covering daily living expenses, to preventing foreclosure on your home. These loans tend to be the most popular and are backed by the U. S. Department of Housing and Urban Development (HUD).
3. Is a reverse mortgage right for me? There are pros and cons of a reverse mortgage, and only you can determine the right decision. Because there isn’t a specific income requirement on reverse mortgages, you are likely to pay higher fees and interest rates with these loans. Reverse mortgages can make leaving a home to an heir difficult because the loan must be repaid once you die. This usually means selling the home or using inheritance to pay off the loan. In many cases, a reverse mortgage isn’t worthwhile because of the drawbacks, but there are exceptions.
However, you might want to explore a reverse mortgage if you need cash for retirement expenses. These loans can help ease financial strains, especially if a large portion of money is locked into a home.

read more: http://www.claremoreprogress.com/news/three-questions-to-ask-about-reverse-mortgages/article_accbeac2-4201-11e5-ae46-a334f4305b36.html

Why Risky Borrowers Still Aren’t Getting Mortgages

Fannie Mae, Freddie Mac, the Federal Housing Finance Agency and the Obama administration over the past year have tried mightily to expand mortgage access for riskier borrowers.

But despite those efforts, there’s little evidence so far of borrowers with weaker credit making a strong return.

On Tuesday and Thursday, Freddie and Fannie released their quarterly earnings reports. Both companies said that the credit scores of loans that they back are actually higher year-to-date than they were last year. Freddie, for example, says that this year through June the weighted average credit score of loans it purchased from lenders was 751–on a scale of 300 to 850–up from 744 in 2014.

To be sure, mortgage rates dropped early this year, causing a boom in refinance activity. Borrowers who are refinancing tend to have higher credit scores and more home equity than people buying homes, which obscures the picture.

The percentage of mortgage borrowers backed by Fannie and Freddie with low credit scores or a low down payment has also risen since mid-2013, even though it has dropped recently with a change in the companies’ business mix.

Still, with such an abundance of anecdotes from lenders who say they’re making it easier to get a mortgage, you would expect there to be a more significant change.

So what’s going on?

Some lenders are still afraid of getting sued or of taking another hit to their reputations.

On Thursday, Fannie Mae CEO Timothy J. Mayopoulos said that Fannie and the FHFA have made great strides toward working with lenders to ease their concerns about being hit with penalties by Fannie years after they’ve made a loan.

Problem is, Fannie isn’t the only entity that lenders have to answer to. In the past few years, lenders have been under scrutiny from the Justice Department, Consumer Financial Protection Bureau and dozens of state attorneys general and lawmakers for alleged mistakes and abuses before, during and after the financial crisis. Some lenders think the scrutiny is overzealous and have pulled back from making certain loans as a result.

“When I meet with lenders, it’s very clear that there’s great concern about the legal and regulatory enforcement from any number of players at the federal and state level. It’s not something that we at Fannie Mae control,” Mr. Mayopoulos said. He said that the actions have had a “substantial effect on the mindsets of lenders, at least as they express it to me.”

Many borrowers with mortgage-eligible but poor credit don’t know they could qualify.

Even though some lenders have said that they’re expanding mortgage access, some borrowers have had it beaten into their heads over the last few years that it’s hard to get a mortgage. Those perceptions are hard to change, even if the reality has.

read more: http://blogs.wsj.com/economics/2015/08/10/why-risky-borrowers-still-arent-getting-mortgages/

N.Y. State Suspends Promontory From Some Consulting Work

New York’s banking regulator blocked consulting firm Promontory Financial Group from taking some assignments with banks the state oversees, setting up a potential showdown in court between the two sides. The New York Department of Financial Services said Promontory, one of the financial industry’s most prominent consultants, was too close to its client, Standard Chartered PLC. The state regulators alleged the firm watered down its compliance reports on the U.K. bank. As a result, the department said it would indefinitely cut off Promontory’s access to confidential department information it needs for some assignments, thus suspending the firm from some future consulting work. Promontory vowed to fight the department’s move and could file a request in court within days to put a hold on the action, people familiar with the matter said. “We will litigate the matter and defend our firm against this regulatory overreach,” Promontory said. That would be a rare legal challenge to the authority of the state regulator, which has waged a high-profile battle against what it sees as conflicts of interest at consulting firms such as Promontory in their work for banks. Promontory, based in Washington, was founded in 2001 by Eugene Ludwig, a former U.S. comptroller of the currency. The company positions itself as a “bank doctor” to help lenders with their compliance before they get in trouble with the government. The firm has hired a number of former regulators, including Mary Schapiro, the former Securities and Exchange Commission chairman, who worked at Promontory in 2013-14 and is still vice chairman of the firm’s advisory board. Standard Chartered has agreed to pay nearly $1 billion in multiple settlements in recent years with New York’s bank supervisor and other regulators over its handling of transactions that originated in countries such as Iran, Libya and Sudan that were subject to U.S. economic sanctions. Promontory was hired before those settlements to prepare reports to regulators about some of the bank’s conduct, and the New York regulator said the firm earned $54.5 million in revenue as a result. According to the regulator, Promontory improperly altered and toned down its findings. Both at the bank’s request and on its own, Promontory softened language and removed red flags that would have highlighted the bank’s misconduct, the state regulator said. In one case, the department said, the bank’s counsel asked for language in a Promontory report to be made “more bland.” In another, the bank’s counsel allegedly told Promontory to replace “potential violations” with a more ambiguous and innocuous phrase. “[N]o question the bank is going to have a big problem in trying to present some of these figures…and our report can go a long way toward softening the blow…,” a Promontory senior analyst wrote in January 2011, according to the New York regulator. see more: http://www.wsj.com/articles/n-y-state-to-suspend-promontory-from-some-consulting-work-1438611686

Italian consulting market grows marginally to 1.1 billion

The Italian consulting market has grown last year, yet with a mere 0.4%, bringing the market value of Italy’s management advisory landscape to just under €1.1 billion. The outlook for 2015 and beyond remains challenging. Over the past years the consulting markets of Southern Europe countries, including Spain, Portugal, Italy and Greece, have been impacted severely by of the financial crisis. In Italy’s case, at the height of the crisis years (2008 – 2010) its consultancy industry contracted by an estimated 5% to 10% per year. By 2012, the Italian consulting industry was according to data from Source Information Services (Source) worth €1.11 billion, comparable to the size of the Spanish consultancy market. On the back of a recovering economy Italy’s advisory business returned to growth in 2013, growing 0.6%, and new data from Source reveals that in 2014 the market has been able maintain the positive momentum, although growth continued to flat-line. Last year the industry grew by 0.4% to €1.06 billion, which equates to roughly one-fourth the size of the French consulting market and one-sixth the size of the UK consulting market. Growth is constrained primarily by the lacklustre state of the Italian economy, which has created “unhealthy buying conditions for clients” say the analysts, and spend on consulting is therefore suffering. Industry and functional areas Financial services is keeping the market afloat – the sector grew by 2.7% to €335 million, in a large part following the need for regulatory compliance due to both domestic legislation as well as European regulatory burden (e.g. ECB stress tests). The largest beneficiaries of the increase in financial services work have been the Big Four firms, which according to Source have a combined revenue of €412 million, making them the runaway leaders in terms of market share. Looking ahead, banking is forecasted to remain a growth driver, explains Danilo Viviani, President of Gruppo Coreconsulting, an Italian consulting firm with six offices across the country. “Banks had a lot of requirements to meet around regulation, which impacted demand for anything else. Italian banks have improved their stability now, so we think that demand will improve.” From a functional perspective the financial management and risk service line experienced the best levels of growth in 2014, expanding 2% to €290 million. The analysts state that this was largely due to regulatory compliance work, and a growing interest in cyber-security as Italian clients recognise that they are not immune to threats from hackers. However, operational improvement, which is the biggest service line in Italy, suffered a poor year, shrinking by 2.4% to €301 million. This was due to the fact that cost reduction and process improvement opportunities have been largely exhausted, and large-scale transformation programmes are few and far between. read more: http://www.consultancy.uk/news/2390/italian-consulting-market-grows-marginally-to-11-billion