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Customers of Mt. Gox, once the world’s largest Bitcoin exchange, are closer to getting back at least some of the money they lost this year when it shut down and announced that their funds had gone missing, New York Times DealBook reported today. The bankruptcy trustee for Mt. Gox, which is based in Tokyo, announced today that it would work with a California-based Bitcoin exchange, Kraken, to return the money left in the estate to the company’s 127,000 creditors. Jesse Powell, Kraken’s chief executive, said that his company would help with the claims process, including evaluating the assets owed to creditors, and that it would assist in the investigation of Mt. Gox’s collapse. He said that the trustee would have the final decision on payments in Bitcoin.

A client note from Moody’s Investors Service says that foreclosure timelines for private-label residential mortgage-backed securities loans backed by properties in California and Nevada, two non-judicial foreclosure states, will remain lengthy over the next year until gradually starting to decline in early 2016, HousingWire.com reported yesterday. Analysts with Moody’s cited procedural scrutiny on foreclosures as a result of Homeowner Bill of Rights laws are extending the amount of time that properties are in foreclosure and that repeat foreclosure filings are keeping servicers occupied with legacy foreclosure issues. Analysts say that the lengthy timelines are credit negative for private-label RMBS because more than 21 percent of all properties backing seriously delinquent loans are in the two states — 19 percent in California and 2 percent in Nevada.

U.S. regulators said that Wells Fargo & Co. has convinced them that the financial system would not likely be seriously damaged if the bank were to ever collapse, giving it a passing grade that ratchets up the pressure on other big banks slammed for producing unrealistic bankruptcy plans a few months ago, Dow Jones Newswires reported yesterday. The San Francisco-based lender graded better than its peers yesterday on its plan for a theoretical bankruptcy, but it still doesn't have the top score regulators would like to see. The Federal Reserve and Federal Deposit Insurance Corp. said that a hypothetical bankruptcy plan submitted by Wells Fargo "provides a basis for a resolution strategy that could facilitate an orderly resolution under bankruptcy" but said the blueprint still had some shortcomings that must be addressed when the bank files a revised plan in 2015.

The Federal Reserve Bank of New York’s legal advisers sought to devise ways to avoid accountability to shareholders in the 2008 bailout of American International Group Inc. (AIG), according to evidence introduced at the end of trial testimony over terms of the rescue, Bloomberg News reported today. “We succeeded in finding a structure that allows the trust to gain control of the company without shareholder votes,” John Brandow, an outside lawyer for the Federal Reserve Bank of New York, wrote in one of the documents summarized in the trial of Starr International Co. and ex-AIG chairman Maurice Greenberg’s lawsuit against the U.S. government. In another document, an unidentified federal official expressed concern that the New York Fed’s outside counsel, Davis Polk & Wardwell LLP, is “revising history and giving self-interested advice” regarding a shareholder suit against the bailout filed in Delaware in late 2008. The documents were among more than 30,000 previously off-limits records linked to communications between the New York Fed and outside lawyers that U.S. Court of Federal Claims Judge Thomas Wheeler ordered the government to turn over to Starr.

The Financial Industry Regulatory Authority (Finra) yesterday fined Citigroup $15 million for failing to adequately supervise its research analysts’ interactions with the bank’s clients, the New York Times reported today. In one example cited by Finra, Citigroup hosted “idea dinners” for institutional clients at which some of the bank’s equity research analysts discussed stock tips that differed from their published research. In another, an analyst helped the bank’s investment banking clients with their investor road show presentations before a public offering. Even when Citigroup discovered problems with its analysts’ communications with clients, its disciplinary actions “lacked the severity necessary to deter repeat violations,” Finra said.

The Consumer Financial Protection Bureau is proposing additional measures to ensure, it says, that homeowners are treated fairly by mortgage servicers, HousingWire.com reported on Friday. The proposed measures include:

1. Extending borrower protections
Right now, a mortgage servicer must give the borrower certain foreclosure protections, including the right to be evaluated under the CFPB’s requirements for options to avoid foreclosure, only once during the life of the loan. Under the proposed rule, servicers would have to give those protections again for borrowers who have brought their loans current at any time since the last loss mitigation application.

2. Expanding death protections
If a borrower dies, CFPB rules currently require that servicers promptly identify and communicate with family members, heirs, or other parties, known as “successors in interest,” who have a legal interest in the home. The proposal would expand the circumstances in which consumers would be considered successors under the rules, including when a property is transferred after a divorce, legal separation, through a family trust, between spouses, from a parent to a child or when a borrower who is a joint tenant dies.

3. Providing proper notifications
Servicers will now have to notify borrowers promptly that the loss mitigation application is complete, so that borrowers know the status of the application and their foreclosure protections.

4. Holding servicers to timeframe
The proposal clarifies that generally a transferee servicer must comply with the loss mitigation requirements within the same timeframes that applied to the transferor servicer. Under the current system, when mortgages are transferred from one servicer to another, borrowers who had applied to the prior servicer for loss mitigation may not know where they stand with the new servicer.

5. Clarifying servicers' obligations
The bureau proposes clarifying what steps servicers and their foreclosure counsel must take to protect borrowers from a wrongful foreclosure sale. Servicers who do not take reasonable steps to prevent the sale must dismiss a pending foreclosure action. This aids servicers in complying with, and assist courts in applying, the dual-tracking prohibitions in foreclosure proceedings to prevent wrongful foreclosures.

6. Defining delinquent advance date change
It would clarify that delinquency, for purposes of the servicing rules, begins on the day a borrower fails to make a periodic payment. Under the proposal, when a borrower misses a payment but later makes it up, if the servicer applies that payment to the oldest outstanding periodic payment, the date of delinquency advances.

7. Providing borrowers with regular updates
The proposal would generally require servicers to provide periodic statements to those borrowers, with specific information tailored for bankruptcy, along with requiring servicers to provide written early intervention notices to let those borrowers know about loss mitigation options.

For more on the proposed changes, please click here: http://www.consumerfinance.gov/blog/proposed-changes-to-our-mortgage-se…

New York City rent stabilized tenants won a major victory when a federal appeals court ruled that their leases can’t be seized in bankruptcy and sold to pay off creditors, the New York Post reported today. The U.S. Court of Appeals for the Second Circuit on Thursday reversed a lower court decision that a rent-stabilized lease could be sold like any other household asset to satisfy debts. State law doesn’t specifically shield rent-stabilized leases from a forced sale in the event of bankruptcy, but the issue hasn’t really been tested in the courts until this case. “We hold that section 282 (2) of the Debtor and Creditor Law (DCL) exempts a debtor-tenant’s interest in a rent-stabilized lease,” the appeals court said in a statement.

Pension fund managers from the Netherlands to Canada, searching for new ways to invest, lambasted private-equity executives at a conference in Paris this week for charging excessive fees, the Wall Street Journal reported today. Ruulke Bagijn, chief investment officer for private markets at Dutch pension manager PGGM, said a Dutch pension fund for nurses and social workers that she invests for, paid more than 400 million euros ($501.6 million) to private-equity firms in 2013. The amount accounted for half the fees paid by the PFZW pension fund, even though private-equity firms managed just 6 percent of its assets last year, she said. The world’s largest investors, including pension funds and sovereign-wealth funds, are seeking new ways to invest in private equity to avoid the supersize fees. Some investors are buying companies and assets directly. Others are making more of their own decisions about which funds to invest in, rather than giving money to fund-of-fund managers. Big investors are also demanding to invest alongside private-equity funds to avoid paying fees.

Under pressure to show that it is up to the task of regulating giant Wall Street firms, the Federal Reserve issued a surprise announcement yesterday that it would review crucial aspects of its bank supervision, the New York Times reported today. The Fed asked its inspector general to look into whether top supervisors were getting the information they needed to make their decisions. The Fed also said that it wanted the inspector general to determine if top officials were hearing all the opinions of Fed bank examiners. The Senate is holding a hearing today to discuss whether bank regulators are too close to the firms they regulate. Right now, such concerns focus on the Federal Reserve Bank of New York, Wall Street’s main regulator. The Senate Banking Committee’s financial institutions subcommittee will question William C. Dudley, the president of the New York Fed.

The U.S. Securities and Exchange Commission resolved an impasse over punishing Bank of America Corp. in a mortgage-bond case, clearing the way for the lender to complete a $16.7 billion global settlement, Bloomberg News reported yesterday. In a private meeting earlier this week, SEC commissioners voted to waive most of a set of additional sanctions that could have seriously curtailed the bank’s asset management business and ability to raise money for private companies. Some of the relief is conditioned on the bank’s good behavior and comes with an outside monitor. The bank also got hit with a penalty that takes away its ability to issue more shares or bonds without getting SEC approval for each deal. The SEC’s decision came as Bank of America and the agency neared a deadline for a federal judge in North Carolina to sign off on the settlement. The two sides had twice sought more time from the court as negotiations dragged on.