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Embattled brokerage firm RCS Capital Corp. plans to file for chapter 11 bankruptcy protection under a prearranged filing intended to allow RCS to focus on its retail advice unit Cetera Financial Group, the Wall Street Journal reported today. RCS said that its lenders have agreed in principle to invest $150 million in new working capital into Cetera. The company said that it expects debt reduction and the elimination of preferred stock will total more than $500 million. Just over a month ago, RCS said that it would wind down its wholesale distribution business as part of a $3 million settlement with Massachusetts securities regulators over its use of fake proxy votes. The company has been working to raise capital and sell assets in the wake of a collapsed deal for Apollo Global Management LLC to buy a controlling stake in a group of trusts and other funds with $19 billion in real-estate holdings from RCS founder Nicholas Schorsch.

Federal Reserve Vice Chairman Stanley Fischer sounds concerned that the central bank may lack some key tools needed both to prevent another financial crisis and to contain the fallout should one occur, Bloomberg News reported yesterday. He said in a speech on Sunday that the Fed is not as well-equipped with regulatory powers to rein in housing and other asset bubbles as some other central banks. And he questioned whether Congress had gone too far in limiting the Fed’s ability to intervene if a crisis erupted and threatened the financial system. "We won’t know until it’s very late" whether the Fed has been constrained too much, Fischer said. That’s something "we have to worry about a great deal." In arguing that the Fed has less leeway to restrain speculative excesses than other central banks, Fischer pointed in particular to the property market, the epicenter of the last financial crisis. Faced with run-away real estate prices, many other countries have tightened loan-to-value or debt-to-income ratios to curb borrowing.

Bank of America Corp., the second-biggest U.S. lender, will post a $600 million pretax writedown in the fourth quarter as it redeems $2 billion of trust preferred securities tied to its 2009 acquisition of Merrill Lynch, Bloomberg News reported yesterday. The securities, which pay holders 7 percent to 7.28 percent, will no longer count toward the bank’s regulatory capital starting next year, the bank said.  Banks may start redeeming these securities early because the Dodd-Frank Act phased out their treatment as regulatory capital. The fourth-quarter charge represents a lump-sum writedown on the securities as the bank accelerates their redemption.

Distressed-company investor Lynn Tilton lashed out at the Cayman Islands corporate directors who moved to block her attempt to force one of her debt-investing vehicles into bankruptcy, Dow Jones Newswires reported yesterday. She says the directors have ignored their duties to Zohar — a collateralized loan obligation, or CLO, fund — in favor of protecting the interests of the Cayman Islands, which is receptive to creators of sophisticated financial vehicles like Zohar-I. It is a conduit stuffed with loans to troubled companies, and the conduit itself is in trouble. It missed a payoff date in November and was bailed out by bond insurer MBIA Inc. Tilton, who was accused of fraud by the Securities and Exchange Commission in connection with her CLO operation, has denied wrongdoing and vowed to fight the charges. Now she is battling directors in the Cayman Islands, who have said her attempt to invoke bankruptcy protection for Zohar-I runs afoul of the agreements that created the specialized investment vehicle.

Both billionaire hedge fund managers, and many of their peers, will be under pressure to explain to their investors how they lost so much money this year, the New York Times reported today. Few bank analysts expect stocks to perform much better next year than they did this year, when the Standard & Poor’s 500-stock index was set to end the year largely unchanged from where it began trading. The prospect that the Federal Reserve will continue raising interest rates — a step it took in December for the first time in nearly a decade — may also weigh on the markets and complicate the odds of a strong bounce-back in the new year. Steep losses this year come at a difficult time for the nearly $3 trillion industry; some pension funds have openly questioned what value hedge funds add to a portfolio in light of their hefty fee structure. Hedge funds typically charge 2 percent of assets under management and 20 percent of performance, which means that managers can still haul home multimillion-dollar paydays even when they lose money for their investors.

A U.S. court-appointed mediator said that Argentina's new government and holdout bondholders are to meet in the second week of January to start "substantive" talks toward settling a more than decade-old sovereign debt dispute, Reuters reported yesterday. The talks would mark a major breakthrough in the dispute, which has caused Argentina to be shut out of the international capital markets and encouraged the prior governments of both Cristina Fernandez and Nestor Kirchner to adopt unorthodox economic policies. Mauricio Macri, the first non-Peronist president in more than a decade, was sworn into office on Dec. 10. He has moved to start reversing some of the populist policies of the prior governments and said it was a priority to settle the debt issue. Daniel Pollack, a New York lawyer who is the mediator, said that he met for about one hour on Monday in his office with Argentina's newly installed finance secretary, Luis Caputo, and the vice chief of the cabinet, Mario Quintana. "The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the bondholders," Pollack said in a statement released through his law firm, McCarter & English.