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Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), suggested that authorities should retool or replace the London interbank offered rate (Libor), the New York Times DealBook blog reported yesterday. Libor, a measure of how much banks charge each other for loans, underpins the cost of trillions of dollars in mortgages and other loans. "It is time for a new or revised benchmark - a healthy benchmark anchored in actual, observable market transactions - to restore the confidence of people around the globe that the rates at which they borrow and lend money and hedge interest rates are set honestly and transparently," Gensler said. In June, Gensler's agency leveled a $200 million fine against Barclays, accusing the British bank of trying to manipulate Libor.

Mortgage firms including Bank of America Corp. that repeatedly ignored rules meant to improve service for struggling homeowners said they are on the verge of complying with standards ordered in a $25 billion settlement, Bloomberg News reported today. After failing to adhere to at least two separate sets of servicing guidelines since 2010, lenders are preparing for more than 300 rules that take effect next month on loan modifications, fees, foreclosures, and the treatment of military personnel. For the first time, banks face a watchdog dedicated to keeping them honest, Joseph A. Smith, North Carolina’s former commissioner of banks. Bank of America, JPMorgan Chase & Co, Wells Fargo & Co. and Ally Financial Inc. representatives have said they will conform to the new standards by Oct. 2.

The U.S. Securities and Exchange Commission approved regulations that will prevent banks from keeping secret the yields on certain state and local government bonds during the first trading day, Bloomberg News reported yesterday. The SEC on Sept. 21 approved rules that require underwriters to disclose yields on bonds that are not immediately offered for resale to investors, the Municipal Securities Rulemaking Board said yesterday. The board proposed the change in March, which will require more rapid dissemination of information that previously may not have been available to the public until the end of the trading day.

An Australian Judge ruled that Lehman Brothers Holdings Inc.'s Australian unit is liable for losses three towns incurred from buying failed securities, Bloomberg News reported on Friday. Grange Securities Ltd., which was bought by Lehman, invested the towns’ money in securities whose value collapsed along with the U.S. housing market. The synthetic collateralized debt obligations (SCDOs) in 2008 played a role in the worst financial crisis since the Great Depression, as world-wide credit froze and the $330 billion market for auction-rate securities collapsed. The three Australian towns that invested A$37.3 million ($39 million) in the securities sold by Grange sued in 2009 to recover their losses.

Standard Chartered, the British bank accused of illegally funneling money for Iranian banks and corporations, signed a settlement on Friday with New York State's top banking regulator, the New York Times DealBook blog reported on Friday. Bank executives agreed last month to pay $340 million to settle claims that Standard Chartered moved hundreds of billions of dollars in tainted money and lied to regulators. The final agreement allows the 150-year-old bank to move beyond its clash with Benjamin M. Lawsky and the agency he heads, the 11-month-old New York Department of Financial Services. The state regulator moved alone to accuse Standard Chartered in August of working for nearly a decade with Iran to hide from regulators 60,000 transactions worth $250 billion.

Knight Capital Group is not likely to shed any of its major business units after the August 1 trading glitch that cost the market maker $440 million, forcing it to take on additional investors to avoid bankruptcy, Chief Executive Thomas Joyce said on Friday, Reuters reported. Volume levels at Knight, one of the top executors of U.S. stock trades, have returned to normal and now management and the firm's reconfigured board are conducting a strategic review of Knight's business units, Joyce said last week. He said the thrust of the review is to look for efficiencies.

A U.S. Senate panel probing the multibillion-dollar trading loss by JPMorgan Chase & Co. plans to unveil its findings at a hearing this year to press regulators to tighten the Volcker rule, Bloomberg News reported today. Staff members of the Permanent Subcommittee on Investigations, headed by Sen. Carl Levin (R-Mich.), have interviewed JPMorgan officials as well as examiners and supervisors at the institution’s regulator, the Office of the Comptroller of the Currency. One focus of the queries is whether JPMorgan’s wrong-way bets on derivatives would have been permitted under regulators’ initial draft of the Volcker ban on proprietary trading, the people said. The lender lost $5.8 billion on the trades in the first six months of the year.

Bankruptcy Judge Carol Doyle yesterday approved the first payout to former customers of failed futures brokerage Peregrine Financial Group, according to the lawyer for the firm's bankruptcy trustee, Reuters reported yesterday. Judge Doyle approved the trustee's plan to return approximately $123 million to futures customers, which amounts to 30 percent to 40 percent of customers' claims. Peregrine Financial Group filed for bankruptcy on July 10, a day after then-Chief Executive Russell Wasendorf Sr. attempted suicide and confessed to stealing more than $100 million from customers over nearly 20 years. Peregrine's customers have had no access to their money since Wasendorf's failed attempt on his own life, outside of the company's headquarters near Cedar Falls, Iowa. The first wave of payouts will happen by Oct. 8 and a second wave will occur before Oct. 29, said trustee Robert Fishman.

A law firm that won an $8.5 billion settlement from Bank of America Corp. tied to faulty mortgage bonds said that Wells Fargo & Co. and Morgan Stanley failed to service $73 billion of similar securities, creating a default, Bloomberg News reported yesterday. Gibbs & Bruns LLP cited at least $15 billion of Wells Fargo's residential mortgage-backed securities and $5 billion from Morgan Stanley where holders have 25 percent or 50 percent or more of the voting rights, according to the Houston-based law firm. The dispute also covers $23 billion of Morgan Stanley-issued RMBS and $30 billion of Wells Fargo's RMBS where holders "have significant voting rights, but less than 25 percent or 50 percent," the firm said.

Bank of America Corp.'s Countrywide Financial unit is asking a judge to throw out claims for "billions of dollars" in damages by the Federal Housing Finance Agency for mortgage-backed securities bought by Freddie Mac and Fannie Mae, Bloomberg News reported yesterday. The agency's federal and state securities law claims are time-barred, lawyers for Countrywide said in a Sept. 7 filing in support of their request to have the claims dismissed. The Federal Housing Finance Agency sued Countrywide last year as conservator of Freddie Mac and Fannie Mae, the government-sponsored enterprises created to support the housing market by buying residential mortgages in the secondary market. It alleges negligent misrepresentations and fraud related to the offerings of Countrywide mortgage-backed securities.