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British and U.S. banking regulators proposed on Monday a joint strategy to ensure that the bankruptcy of big banks won't spark a chain reaction of contagion throughout markets, Agence France-Presse reported yesterday. The two bodies, acting on behalf of the two largest financial centers in the world, stressed that under the proposals, shareholders and not taxpayers would bear the full costs, and top managers would be let go. At the Bank of England, deputy governor for financial stability Paul Tucker said, "The 'too big to fail' problem simply must be cured. We believe it can be and that this joint paper provides evidence of the serious progress that is being made." The British and U.S. authorities said in a joint statement that the financial crisis had "driven home the importance of an orderly resolution process for globally active, systemically important, financial institutions" that have foundered. They said that their solutions, which would target the parent of any finance house in trouble, "have been designed to enable large and complex cross-border firms to be resolved without threatening financial stability and without putting public funds at risk." The statement said that the British part of the strategy is intended to fit with the powers provided by the UK Banking Act of 2009 "and in anticipation of the further powers that will be provided by the European Union Recovery and Resolution Directive." In the U.S., the measures would work in the context of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

A daylong auction of property owned by Peregrine Financial Group Inc. and its disgraced chief executive, Russell Wasendorf Sr., this week raised about $1 million for creditors to the defunct brokerage, according to the court-appointed receiver, the Wall Street Journal blog reported Saturday. Michael Eidelman, the receiver appointed to liquidate Wasendorf's possessions, said that the results "exceeded our expectations" with few, if any, items left unsold at the end of the auction. Peregrine collapsed in July after Wasendorf attempted suicide, leaving a confession detailing a nearly 20-year fraud against his clients. He was arrested shortly thereafter and in September pleaded guilty to charges of mail fraud and embezzlement. Clients and creditors of the firm face an estimated $190 million shortfall, according to Ira Bodenstein, the trustee. Eidelman said he next intends to focus his efforts on selling off Wasendorf's property as well as tracking down other assets that may be returned to creditors.

The U.S. Bankruptcy Court for the Central District of California in Santa Ana has approved the American Suzuki Motor Corporation (ASMC) for debtor-in-possession financing of up to $100 million, Torque News reported Sunday. The money will be split in two, allowing up to $50M for operations and up to $50M for inventory purchases from the Suzuki Motor Corporation (SMC). Suzuki's American arm filed for chapter 11 bankruptcy about a month ago. Despite the bankruptcy, the company plans to use some of the $50M in inventory funds to bring 2,500 additional cars from Japan to the U.S.—cars built for the market before and during ASMC's bankruptcy planning—enough to continue current sales through December and January. Suzuki's long-term plans are to close the ASMC operations and buy the debt it holds (roughly $346 million), self-financing the loss with Suzuki's other operations - namely the Suzuki Motor Corporation. The company plans to continue its motorcycle, ATV and similar small-engine operations as-is and will lump much of its existing automotive parts and warranty network into those operations under the SMC umbrella.

Capitol Bancorp Ltd. won more time to control its chapter 11 case, which is dragging on as the company waits for the regulatory approval it needs to firm up an equity infusion, Dow Jones DBR Small Cap reported Friday. Judge Marci B. McIvor of the U.S. Bankruptcy Court in Detroit approved on Thursday the bank-holding company's request to extend its exclusivity period, during which creditors are barred from introducing rival bankruptcy-exit plans. The Michigan-based company now has until March 7 to keep the reins in its chapter 11 case. Capitol Bancorp in October secured the $50 million investment it needs from ValStone Partners LLC. But as part of its agreement with ValStone, Capitol Bancorp agreed to reimburse the investor for its due-diligence costs, in a payment that required the approval of the U.S. Federal Deposit Insurance Corp. Capitol Bancorp filed for chapter 11 protection in August with a plan already in hand to restructure by swapping $158.1 million in debt for equity in the reorganized company.

Thursday marked the one-year anniversary of a significant milestone in Lehman Brothers' bankruptcy case: court approval of its $65 billion creditor-payment plan. But the judge's signature didn't close the book on its chapter 11 case: Lehman still winding down its holdings, settling claims and mailing checks to creditors. And Lehman will forever be tied to the recession, making it an essential case study for future business and economic students, according to an analysis in Friday's Wall Street Journal blog. The first place those students will turn will be the 2,200-page report issued in early 2010 by Anton Valukas, the court-appointed examiner given the gargantuan task of untangling the confusing web of Lehman and its many affiliates and transactions that spanned the globe. Valukas's report told the world what went wrong with Lehman and why, performing a public-service role that's not legally required but that has come to be at the heart of what bankruptcy examiners do. "It really explained how and why this happened and gave you a sense of where it was that our financial system was failing in terms of protecting investors and protecting the community," Valukas said Friday. "Once you know that, it might be of assistance in figuring out how you prevent it from happening again." To that end, Valukas's report identified what his team saw as the oversight failures of the federal government, which prompted new securities and accounting rules and regulations. He also cited the report's influence on the Dodd-Frank legislation, which he said "simply added evidence" to support financial reform.

Bank of America Corp. Chief Executive Officer Brian T. Moynihan said the firm has plenty of capital and he’s confident it will pass the next U.S. stress tests, Bloomberg News reported yesterday. Moynihan is renewing efforts to win approval for raising the dividend or repurchasing shares after the Federal Reserve blocked an earlier request. He is trimming staff and operations to reduce costs at the Charlotte, N.C.-based company and has sold more than $60 billion in assets since he took over in 2010 to streamline the firm and build capital. Moynihan defended his firm's business model of catering to retail customers, corporations and institutional investors, saying that the "universal banking model is the model that wins."

U.S. Senator-elect Elizabeth Warren is poised to join the Senate Banking Committee after she is sworn into office in January, Bloomberg News reported. Two Democratic aides briefed on the matter said Senate leaders intend to assign Warren to the Banking Committee, although a final decision on committee assignments will not be made until the new session of Congress convenes. Warren had been floated as a likely candidate for the committee seat, which would give her a role in writing banking legislation including revisions to the Dodd-Frank Act. Senator Joe Manchin (D-W.V.) is also expected to receive a seat on the Banking Committee, according to one of the Democratic aides. Manchin acknowledged he was pushing to get a seat on the committee.

The trustee overseeing the liquidation of MF Global's failed futures brokerage said he expects the more than 28,000 customer claims that have been filed to be fully resolved within the next few months, Reuters reported yesterday. However, further distributions to those customers will hinge largely on the outcome of pending claims against the failed brokerage by its parent company, MF Global Holdings Ltd , and its British affiliate, according to the progress report from trustee James Giddens. According to the report, more than 27,000 claims were filed by commodities customers. Of those, 26,610 were allowed - meaning that they have been deemed valid by the trustee -representing a value of approximately $6.7 billion.