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Jon Corzine lost his bid for dismissal of the U.S. Commodity Futures Trade Commission’s lawsuit over the 2011 collapse of MF Global Holdings Ltd., Bloomberg News reported yesterday. The requests of Corzine and former MF Global Assistant Treasurer Edith O’Brien to throw out the case are “without merit,” U.S. District Judge Victor Marrero said in a ruling filed Jan. 17 in Manhattan federal court. The agency alleged in its complaint that the executives violated the Commodity Exchange Act by illegally transferring funds from customer accounts. Judge Marrero said that it was too soon in the case to rule on whether the CFTC can prove its claims. “At this state of the proceedings, the court must accept the pleadings as true, and draw any reasonable inferences and resolve any ambiguities in favor of the opponent of a motion to dismiss,” Marrero wrote. MF Global, once touted by its senior officers and directors as having strong internal controls and liquidity levels, collapsed and filed for chapter 11 protection in October 2011 after making bad bets on European sovereign debt and getting margin calls.

Hedge Fund Research Inc. reported yesterday that hedge fund assets increased by 17 percent last year, reaching a record $2.63 trillion, Bloomberg News reported. Global assets rose by $376 billion, including $63.7 billion in net inflows from investors and $312 billion in investment gains, the Chicago-based data provider said in a report today. The fourth quarter was the sixth in a row that the industry saw a growth in assets, it said. Investors poured $29.6 billion into event-driven strategies, which include activist-oriented hedge funds such as Daniel Loeb’s Third Point LLC and Bill Ackman’s Pershing Square Capital Management LP.

S&P said that former U.S. Treasury Secretary Timothy Geithner told McGraw Hill Financial Inc. Chairman Harold W. McGraw III in 2011 that Standard & Poor’s downgrade of the U.S. debt would be met by a response, Bloomberg News reported today. S&P filed a declaration of McGraw yesterday in federal court in Santa Ana, Calif., as part of a request to force the U.S. to hand over potential evidence the company says will support its claim that the government filed a fraud lawsuit against it last year in retaliation for its downgrade of the U.S. debt two years earlier. In his court statement, McGraw said Geithner called him on Aug. 8, 2011, after S&P was the only credit ratings company to downgrade the U.S. debt. Geithner, McGraw said, told him that S&P would be held accountable for the downgrade. Government officials have said the downgrade was based on an error by S&P.

Governor Andrew Cuomo and Attorney General Eric Schneiderman agreed to split the first $163 million of New York’s $613 million share of a settlement with JPMorgan Chase & Co. over mortgage bond sales, Bloomberg News reported yesterday. The two Democrats had been dueling over the funds, a piece of a $13 billion federal-state settlement with the bank. The deal worked out between the two officials directs about $81.5 million to Cuomo’s control, where it’ll go toward housing programs, according to Rich Azzopardi, the Cuomo spokesman. The remaining $81.5 million will be distributed by Schneiderman’s office to anti-foreclosure programs, Matt Mittenthal, a spokesman for Schneiderman, said in a statement yesterday.

From JPMorgan Chase’s $13 billion settlement over mortgage securities to lawsuits brought by bondholders, a barrage of litigation has been raining down on Wall Street banks, but the banks are not disclosing a number that is crucial for assessing their ability to deal those legal costs, the New York Times DealBook blog reported today. Additionally, the regulator that has sway over companies’ disclosure practices has not called on the industry to reveal this important figure so that investors can weigh the institutions’ health. The banks are choosing to settle lawsuits for their roles in shoddy mortgage practices before the financial crisis of 2008, paying out multibillion-dollar sums to make amends. The size of JPMorgan’s settlement with the Justice Department, struck late last year, shocked many in the industry. Now, other large banks — in particular, Bank of America, with its enormous exposure to sour precrisis mortgages — are expected to announce painful deals with the government in the coming months.

The two largest U.S. home lenders are feeling the bite of competition from smaller firms as mortgage originations tumble at the fastest rate since 2011, Bloomberg News reported yesterday. New loans at Wells Fargo & Co. fell 38 percent to $50 billion in the fourth quarter from the third quarter, the bank said on Tuesday. At JPMorgan Chase & Co. originations decreased 42 percent to $23.3 billion, outpacing the 27 percent fourth-quarter drop forecast by the Mortgage Bankers Association for the industry. Big banks are facing dual challenges of increased competition and a plunge in home loan refinancing after the Federal Reserve said that it planned to reduce monthly bond purchases, which sent mortgage rates soaring. Smaller lenders are helped because the market is shifting to one led by mortgages for home purchases, favoring firms that can capture the buyers’ attention, said Clifford Rossi, a former Citigroup Inc. risk manager who now teaches at the University of Maryland’s Robert H. Smith School of Business.

Big banks such as JPMorgan Chase & Co. may face quicker reprimands for risk-management failures under a new Office of the Comptroller of the Currency effort set to be announced today, Bloomberg News reported. The national-bank regulator’s policy shift will remove hurdles to targeting lenders with certain enforcement actions, according to OCC Chief Counsel Amy Friend. The change follows Comptroller Thomas Curry’s push to clean up management at banks hit with billions of dollars in penalties over misdeeds in the wake of the 2008 credit crisis. Under the leadership of Curry, who took the helm in 2012, the OCC has extracted the largest penalties in its 150-year history. The agency fined London-based HSBC Holdings Plc a record $500 million in 2012 for money-laundering faults and has penalized JPMorgan twice — reaching a $300 million settlement over the London Whale trading losses and a $350 million agreement resolving allegations that the bank failed to report suspicions about Bernard Madoff’s Ponzi scheme.

Bank-industry groups and Republican lawmakers called for broader Volcker Rule revisions a day after regulators permitted exemptions for some collateralized debt obligations faulted for obscuring lenders’ capitalization, Bloomberg News reported today. Representatives of the Securities Industry and Financial Markets Association and other groups joined House Financial Services Committee members in highlighting the “unintended consequences” of the proprietary-trading rule at a hearing yesterday. Lawmakers and lobbyists alike said that the Jan. 14 move to shield some CDOs backed by trust-preferred securities wasn’t enough to protect banks and the public from harm. “While we welcome the relief provided to certain holders of TruPS CDOs, we believe that regulators must address the larger problem of the inclusion of senior debt securities issued by collateralized loan obligations,” Sifma Chief Executive Officer Kenneth Bentsen said at the hearing. “If this situation is not remediated, corporate borrowers could face higher credit costs and banks will likely suffer unnecessary losses.”

Lawmakers pressed the Federal Reserve yesterday to act more forcefully, and quickly, to limit banks’ involvement in the commodities business, which has been blamed for inflating prices on everyday items like electricity and canned beverages, the New York Times reported today. For months, Congress has been evaluating complaints that the huge commodities holdings of investment banks like Goldman Sachs and Morgan Stanley pose a risk to the financial system. Businesses and consumer groups have also expressed concern that the banks’ financial heft gives them an unfair advantage over other competitors as well as the ability to manipulate prices for essentials like energy, cotton and food. On Tuesday, the Fed said it was considering some new rules and issued a request for public comment. In part, the Fed wants to determine whether the financial system could be hurt if banks incurred large losses in the volatile commodities markets.

The Federal Reserve is asking for public input on whether to put restrictions on banks’ trading and warehousing of physical commodities amid lawmaker scrutiny of potential conflicts of interest and market manipulation, Bloomberg News reported yesterday. The Fed’s request released yesterday seeks comment on 24 questions, including some on the risks posed by bank ownership and trading of commodities such as oil, gas and aluminum by deposit-taking banks and the possible benefits of imposing additional capital standards. “The Board is considering whether additional restrictions would help ensure that physical commodities activities authorized for financial holding companies are conducted in a safe and sound manner and do not pose a threat to financial stability,” the Fed said. The central bank said that it will consider whether further rules are needed after the public comment period ends on March 15.