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The Federal Deposit Insurance Corp. is set to adopt a rule today responding to concerns that commercial depositors in the U.K. branches of U.S. banks could be disadvantaged in the event of a lender’s collapse, Bloomberg News reported today. U.K. regulators had expressed concern that domestic depositors to U.S. banks were favored over foreign-based account holders. In response, the FDIC proposed in February that overseas branches of the U.S. companies make deposits payable in either country, giving them greater protection if a bank fails. One of the FDIC’s chief concerns was writing a rule that walls off its deposit-insurance fund from non-U.S. deposits, so that the proposal maintained a clear barrier. The agency’s board will vote on the final version of the rule today.

A rise in interest rates is slamming homeowners' demand for mortgages, prompting large and midsize banks to cut jobs and warn investors of declining profitability in the home-loan business, the Wall Street Journal reported today. Wells Fargo & Co., the nation's largest mortgage company by loan value, on Monday told investors at a conference that it expects mortgage originations to drop nearly 30 percent in the third quarter to roughly $80 billion, down from $112 billion in the second quarter. JPMorgan Chase & Co., the largest U.S. bank as measured by assets, said during the conference sponsored by Barclays PLC that it expects to lose money on its mortgage-origination business in the second half of the year. On Aug. 29, Bank of America Corp., notified about 2,100 employees that they were being let go largely due to a decline in refinancing activity. Rates are rising on investor worries the Federal Reserve soon will take steps toward reducing an $85-billion-a-month bond-buying program designed to help stimulate the economy.

Federal regulators signaled yesterday that they may more strictly oversee the high-speed trading that’s come to dominate financial markets and impose risk controls in response to a series of market-disrupting technology glitches, the Washington Post reported today. The 137-page “concept release” from the Commodity Futures Trading Commission (CFTC) comes at a time when regulators are struggling to cope with a technological revolution that has transformed trading from a human-centric endeavor to one driven by computers that execute orders at blink-of-an-eye speeds — sometimes with disastrous results. One of the most harrowing was the May 2010 “flash crash,” when the stock market plunged nearly 1,000 points in minutes, then whipped back up. Other high-profile glitches ensued, including the runaway trades linked to faulty computers at Knight Capital last year. Technical problems halted trading in Nasdaq-listed stocks for more than three hours two weeks ago, an issue that the exchanges have been summoned by the Securities and Exchange Commission to discuss Thursday.

MF Global employees fired after the broker's epic collapse will appeal a court ruling dismissing their allegations that they were not given proper notice of their terminations, Reuters reported on Friday. The employees said in court papers on Friday that they would appeal Bankruptcy Judge Martin Glenn's Aug. 23 decision. More than 1,000 workers were fired when the commodities broker, run by former New Jersey Governor Jon Corzine, filed a $40 billion bankruptcy on Oct. 31, 2011. In a class action, the employees said that they should have been given notice under the Worker Adjustment and Retraining Notification (WARN) Act, which requires employers to give notice of mass layoffs. Judge Glenn twice rejected the lawsuit — once in October of 2012 and again last month — after giving the plaintiffs a chance to amend their case. In his latest ruling, Judge Glenn said that MF Global's broker-dealer unit, which employed the workers, was shut down not by the MF parent, but by the Securities Investor Protection Corp., which insures customers of failed brokers. The workers thus cannot hold MF Global liable for the decision, Judge Glenn said.

At least three Democrats on the Senate Banking Committee are expected to oppose Lawrence Summers if he is nominated to become Federal Reserve chairman, setting up a razor-thin vote to determine who will lead the central bank at a critical moment for its easy-money policies, The Wall Street Journal reported today. Democrats hold a two-vote majority on the 22-member panel, so the loss of three Democrats would make it impossible for Summers to advance to the full Senate for a confirmation vote without the backing of some of the 10 Republicans. No Republican has publicly expressed support so far for any potential White House nominee for Fed chief, giving President Obama little margin for error. The committee Democrats expected to oppose Summers are Jeff Merkley of Oregon, Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts. The banking committee is the panel that will hold confirmation hearings on the nominee and vote on whether to send him or her to face a final vote in the 100-member Senate. President Obama has said the candidates he is considering include Mr. Summers, Fed Vice Chairwoman Janet Yellen and former Fed Vice Chairman Donald Kohn. President Obama will announce his choice for the job sometime after Congress returns from recess on Sept. 9. Read more (subscription required).

The market for student loans suffered another blow on Thursday when J.P. Morgan Chase & Co. announced that it is getting out of the business, The Wall Street Journal reported today. J.P. Morgan's departure, effective Oct. 12, leaves Wells Fargo & Co. as the only major U.S. commercial bank still making student loans. Big banks have been fleeing the industry since 2009, when the Obama administration signaled that the federal government would become much more active in making loans directly to students. Since then, banks' share of the roughly $1 trillion student-loan market has shriveled. Private lenders made about $8.1 billion in student loans in the 2011-12 academic year, according to estimates from Moody's Investors Service. Banks and other private lenders now account for only about 15 percent of the outstanding student debt; the U.S. government accounts for the rest. J.P. Morgan derived less than $200 million in revenue from student lending in 2012, compared with more than $6 billion in 2008. Several big banks have exited the student loan business, including Bank of America Corp., Citigroup Inc. and U.S. Bancorp.

When a bank holding company files for bankruptcy, it usually occurs after the Federal Deposit Insurance Corp. has taken away its banking subsidiary, according to commentary in the The New York Times's DealBook from Prof. Stephen J. Lubben. In such a chapter 11 case, the only thing left for the company to do is marshal the assets and pay out the results to creditors before liquidating. Washington Mutual provides the most obvious example of this basic model. However, Anchor BanCorp Wisconsin plans to use chapter 11 to recapitalize rather than liquidate, which a judge approved late last week. It filed for chapter 11 on Aug. 12 before its bank, AnchorBank, was taken over by regulators. Indeed, it hopes that its chapter 11 case will avoid such a takeover. By filing for chapter 11, it could take three crucial steps. First, it would be able to pay off more than $180 million in debt owed to other banks for just $49 million. Second, it could convert the U.S. Treasury’s preferred stock into a small equity stake, worth about $6 million, in the holding company. Lastly, Anchor said that it would cancel its existing shares and sell the remaining new equity to investors, leading to the recapitalization of the holding company. Federal regulators still need to officially sign off on the plan, but Anchor said that it had been in contact with those regulators and that they “have not raised any objection.”

The bankruptcy reorganization plan for Anchor BanCorp Wisconsin of Madison is one step away from taking effect, the Wisconsin State Journal reported Friday. Bankruptcy Judge Robert Martin approved the proposal Friday morning after a hearing in U.S. District Court in Madison. All that’s left now is for the Federal Reserve System to approve the arrangement, and that “could happen any day,” said Van Durrer, a partner with the Skadden law firm in Los Angeles, who represented Anchor in court. Under the terms of the arrangement, Anchor BanCorp, parent of AnchorBank, will pay $49 million to settle $183 million in principal and interest owed to U.S. Bank, Bank of America and Associated Bank from a 2008 loan. It will also give the U.S. Treasury about $6 million in stock in the reorganized company to pay off $139 million owed from funds received in 2009 through TARP, the Troubled Asset Relief Program. The payments are coming from $175 million in new investment capital Anchor has amassed. Eight letters were filed with the court objecting to the bankruptcy, primarily from shareholders upset at losing their investment. The chapter 11 settlement cancels Anchor’s existing shares; new ones will be issued when the reorganization takes effect.

Swiss banks that seek to avoid prosecution for fostering tax evasion through secret accounts held by U.S. clients face penalties of as much as 50 percent of the value of those assets, the U.S. government said, Bloomberg News reported Friday. Hundreds of Swiss banks could be covered by a U.S./Switzerland accord over how to punish financial institutions that used secret accounts to help American clients hide assets from U.S. tax authorities. The U.S. said that it will continue criminal probes of 14 banks while allowing others to avoid prosecution by paying penalties and disclosing accounts. “This program will significantly enhance the Justice Department’s ongoing efforts to aggressively pursue those who attempt to evade the law,” Attorney General Eric Holder said in a statement. “The program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. Treasury.” Under the accord, banks that seek to avoid prosecution must pay penalties, disclose their cross-border activities, give detailed account information for U.S. clients, describe other banks that received secret accounts, and cooperate in requests for information under a U.S.-Swiss tax treaty.

U.S. prosecutors told a federal judge that a civil forfeiture lawsuit against SAC Capital Advisors LP should be put on hold while prosecutors continue their criminal case against the hedge fund over alleged insider trading, Bloomberg News reported yesterday. “Civil discovery would adversely affect the ability of the government to conduct the prosecution of a related criminal case,” prosecutors said in the filing yesterday. The hedge fund, which held as much as $14 billion in July, was founded by Steven A. Cohen, who is worth about $9 billion, according to the Bloomberg Billionaires Index. Prosecutors announced criminal charges against the fund on July 25 over what they described as unprecedented insider trading by employees as far back as 1999. That day, the government also filed the civil suit alleging SAC engaged in money laundering of illicit profits from the scheme by comingling them with the firm’s capital. In that case, the government is seeking the forfeiture of “all property, real and personal” derived from insider trading offenses.