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The finger-pointing over who was responsible for the collapse of Lehman Brothers continues nearly six years after the firm filed for bankruptcy at the height of the financial crisis, the New York Times DealBook blog reported yesterday. Now, an arbitration panel has dealt with the liability of one of those parties, finding no basis for a malpractice claim against Ernst & Young, the big accounting firm that audited Lehman’s books. The panel of three former judges ruled in April that it was Lehman’s management, not Ernst & Young, that was most responsible for setting in motion and maintaining a controversial accounting maneuver that allowed the firm to temporarily move tens of billions of dollars in debt off its balance sheet at the end of every quarter. The previously unreported ruling could complicate a pending lawsuit the New York attorney general’s office filed against Ernst & Young in 2010 over the collapse of Lehman. The lawsuit accused the company of helping Lehman engineer an accounting fraud that made it look less leveraged than it truly was in the months before its collapse in September 2008.

A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending, the New York Times DealBook Blog reported today. That investigation culminated yesterday with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers. In the indictment, prosecutors outline how Brown assembled “a payday syndicate” that controlled every facet of the loan process — from extending the loans to processing payments to collecting from borrowers behind on their bills. The authorities argue that Brown, along with Ronald Beaver, who was the chief operating officer for several companies within the syndicate, and Joanna Temple, who provided legal advice, “carefully crafted their corporate entities to obscure ownership and secure increasing profits.”

MF Global Holdings Ltd. is urging a judge not to toss its $1 billion lawsuit against PricewaterhouseCoopers LLP (PwC) for the alleged bad accounting advice that MF Global says led to its 2011 collapse, Dow Jones Daily Bankruptcy Review reported today. In a filing last week with the U.S. District Court in Manhattan, lawyers for the administrator in charge of MF Global fought PwC's argument that MF doesn't have the standing to sue PWC. PWC argued in a May court filing that only MF Global 's litigation trustee, who is in charge of pursuing certain lawsuits on behalf of creditors, has standing to file the suit. MF Global says its administrator also has the right.

Argentina may be held in contempt of court if the country’s officials don’t stop issuing false and misleading statements about a dispute between two groups of bondholders, said the U.S. judge overseeing the case, Bloomberg News reported on Saturday. The nation’s lawyers were called into Manhattan federal court on Friday for an emergency hearing after Argentina published full-page ads in the New York Times and the Wall Street Journal the previous day challenging the court’s jurisdiction. The ads, which said that Argentina wants to keep paying its debt but has been prevented by U.S. District Judge Thomas Griesa, misled the public, the judge said. Argentina’s obligations are the same to holders of restructured debt from a 2001 default and investors who rejected the new terms, Judge Griesa said. The judge said he had warned against such false statements just a week ago.

Three of the leading private equity firms on Wall Street have agreed to pay a combined $325 million to settle accusations that they colluded with one another to drive down the prices of corporate takeover targets, according to a court filing yesterday, the New York Times reported. The three firms — Kohlberg Kravis Roberts, the Blackstone Group and TPG — have agreed to settle all claims without admitting wrongdoing, and they will decide among themselves how to split up the payment, the filing said. Of the seven defendants in the case, all but one have now settled. The latest agreement, if approved by the Federal District Court in Massachusetts, would resolve the role of the private equity firms in a seven-year-old lawsuit filed by former shareholders of companies that the firms acquired during the boom times before the financial crisis. The plaintiffs, which include pension funds and individual investors, had sought billions of dollars in compensation.

Argentina has asked the International Court of Justice to hear a lawsuit it wants to bring against the U.S. in a high-stakes legal battle between the South American nation and some of its creditors over unpaid debts, the Wall Street Journal reported today. Argentina's petition says that decisions by U.S. courts in the dispute have violated its sovereignty, The Hague-based tribunal said yesterday. However, the U.S. would have to accept the International Court of Justice's jurisdiction for a lawsuit to move forward, something that has happened in only 22 cases since the tribunal began working in 1946. The Obama administration is unlikely to grant the request in the absence of a bi-lateral treaty that would require the U.S. to accept the court as a venue to hear disputes with Argentina, said Paz Zarate, an international law expert at Oxford Analytica. "From the point of view of the U.S. government, the New York court system has dealt with a contractual dispute in which the executive [branch] cannot intervene. It's a dispute governed by a contract, not by a treaty or international law," Zarate said.
http://online.wsj.com/articles/argentina-sues-u-s-in-international-cour…

In related news, international banks are looking to put together a group of investors to buy disputed Argentine debt and resolve a U.S. lawsuit that is blocking the country from servicing any of its foreign bonds, Bloomberg News reported yesterday. The banks are seeking investors willing to purchase bonds left over from the nation’s 2001 default held by firms led by Elliott Management Corp., said Eduardo Eurnekian, an Argentine billionaire who has been approached by bankers. While Elliott has a court order for full repayment, a banker familiar with the talks speculated the New York-based hedge fund would accept a settlement worth about 80 cents to 85 cents on the dollar.
http://www.bloomberg.com/news/print/2014-08-07/banks-said-to-be-arrangi…

A change in how the most widely used credit score in the U.S. is tallied will likely make it easier for tens of millions of Americans to get loans, the Wall Street Journal reported today. Fair Isaac Corp. said Thursday that it will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency. The moves follow months of discussions with lenders and the Consumer Financial Protection Bureau aimed at boosting lending without creating more credit risk. Since the recession, many lenders have approved only the best borrowers, usually those with few or no blemishes on their credit report.

Consumer borrowing rose in June as American households took out auto and student loans, Bloomberg News reported yesterday. The $17.3 billion increase in consumer credit followed a $19.6 billion May advance, the Federal Reserve reported yesterday. Non-revolving loans, including borrowing for cars and college tuition, climbed $16.3 billion. Federal government lending to consumers, comprising mainly educational loans, increased $5.4 billion in June from the prior month before adjusting for seasonal variations. Revolving credit, which includes credit card balances, rose $941.5 million, the smallest advance since February, after a $1.74 billion gain in May, today’s figures showed. The report doesn’t track mortgages, home-equity lines of credit and other debt secured by real estate.

After months of negotiations, Bank of America agreed to pay more than $16 billion to settle investigations into its sale of toxic mortgage securities, the largest federal settlement in U.S. corporate history, the New York Times DealBook blog reported yesterday. The settlement started to take shape last week after the Justice Department rejected yet another settlement offer from the bank. Bank of America’s negotiating leverage took a hit this week when U.S. District Judge Jed S. Rakoff ordered the bank to pay nearly $1.3 billion for selling 17,600 loans, many of which were defective. Bank of America had previously lost that case, which involved its Countrywide Financial unit, at a jury trial.

The U.S. Circuit Court of Appeals for the Second Circuit ruled yesterday that Barclays Plc is entitled to about $6 billion of disputed assets as part of its hurried purchase of much of Lehman Brothers Holdings Inc.’s brokerage unit at the height of the 2008 financial crisis, Reuters reported yesterday. The decision is a setback for the brokerage's creditors, including Lehman affiliates and hedge funds, for whom the trustee James Giddens has been seeking to recoup money. Lehman had been Wall Street's fourth-largest investment bank. It had $639 billion of assets when it filed for chapter 11 protection on Sept. 15, 2008, making its bankruptcy by far the biggest in U.S. history. Barclays won court approval to buy much of Lehman's brokerage business at a Sept. 19, 2008 hearing overseen by U.S. Bankruptcy Judge James Peck in Manhattan. A dispute remained, however, over how to dispose of various "cash" assets of the brokerage. These included about $4 billion of margin assets held by third parties to support a Lehman exchange-traded derivatives business, and $1.9 billion of "clearance box" assets used to process securities trades.