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The riskiest U.S. companies are stepping up their borrowing in the market for leveraged loans, with the amount of financings completed this year already exceeding what they raised in all of 2012, Bloomberg News reported yesterday. Borrowers from HJ Heinz Co. to Valeant Pharmaceuticals International Inc. (VRX) have tapped non-bank lenders for $298.4 billion in 2013, more than the $295.3 billion obtained last year, according to Standard & Poor’s Capital IQ Leveraged Commentary and Data. At the current pace, the record of $386.6 billion in 2007 will be eclipsed before year-end. Rather than leveraging up, more than half of the loans made this year have been used to reduce interest costs or extend maturities as companies take advantage of investor demand to strengthen their balance sheets. Investors added a record $2.1 billion last week into funds that buy loans, bringing the total for the year to more than $40 billion, according to Bank of America Corp.

Patriot Coal Corp., the bankrupt mining company, said sharp declines in demand for coal could cause it to default on loans this year if it can’t change its current loan agreement, Bloomberg News reported yesterday. Over the past year, falling prices for metallurgical coal have cut into the company’s earnings forecasts, Patriot said in court papers filed on July 30. The St. Louis-based company filed for bankruptcy in July 2012, citing a drop in demand and $1.6 billion in lifetime health care obligations for its retirees. Patriot is seeking court approval of a proposed amendment to a $375 million loan, which lenders have already consented to. Under the previous loan agreement, Patriot was required to have a minimum of consolidated earnings of $205 million by Dec. 31. The proposed amendment would drop the threshold to $101.3 million.

The money-laundering complaint U.S. Attorney Preet Bharara filed against Steven Cohen’s SAC Capital Advisors LP raised the prospect that the hedge fund’s $14 billion in assets may be subject to forfeiture, Bloomberg News reported yesterday. Bharara seeks forfeiture of “all right, title and interest” in all of SAC’s assets should he prove his money-laundering case. Rulings interpreting the statute, however, suggest a less drastic outcome is possible for the Stamford, Connecticut-based hedge fund and Cohen, its founder. Bharara wouldn’t say exactly how much he wanted to recover when he announced the lawsuit and SAC’s parallel indictment for insider trading last week. The law underlying the civil case states that any property involved in money-laundering activities, or traceable to them, can be forfeited. Judges have approved forfeiture of illegal profits from a crime plus money derived from those profits, including appropriate interest, according to lawyers who have dealt with the money-laundering law. Bharara said that criminal conduct at the fund had resulted in “hundreds of millions of dollars of illegal profits.”

Retailers battling banks over debit-card transaction costs were handed a victory by a U.S. judge, who said that merchants were overcharged billions of dollars under an unlawful swipe fee set by the Federal Reserve, Bloomberg News reported yesterday. U.S. District Judge Richard Leon ruled yesterday that the Fed considered data it wasn’t allowed to use under the Dodd-Frank law in setting the cap on debit-card transaction fees, known as swipe fees, at 21 cents, and neglected to bolster competition in card networks. The decision, unless overturned on appeal, will force regulators to revisit rules that bankers said would cost them 45 percent of their swipe-fee revenue. Lenders collected about $16 billion annually from those fees before the Fed’s regulation and responded by cutting back on perks such as rewards programs and free checking to soften the blow to their profits.

The White House announced yesterday that it will nominate Federal Reserve Governor Sarah Bloom Raskin to fill the No. 2 post at the Treasury Department, the Washington Post reported yesterday. In making the announcement, Treasury Secretary Jack Lew cited Raskin’s deep experience in financial regulation and oversight of the Fed’s sprawling organizational structure as driving the pick. Raskin joined the Fed in 2010 after spending three years as Maryland’s commissioner of financial regulation. She was particularly focused on consumer issues, including overseeing the Fed’s review of foreclosure practices.

MF Global Capital LLC sued Bank of America Corp., Citigroup Inc. and nine other financial companies, claiming that they were part of a plot to unlawfully restrict the market for trading credit-default swaps, Bloomberg News reported yesterday. The complaint, filed by a unit of bankrupt MF Global Holdings Ltd. yesterday in federal court, is at least the fourth such suit accusing swaps dealers of conspiring to control the market for information about the instruments and their trading, in violation of federal antitrust laws. “The effect of these activities has been to decrease competition in the CDS market among defendants,” according to the complaint. “As a result, defendants’ customers were forced to pay inflated bid/ask spreads, which cushion the profits of the defendants while harming their CDS customers.” Damages sustained by the MF Global unit and other members of a proposed class of individuals and entities that bought or sold swaps from the defendants since October 2008 are estimated to be in the tens of billions of dollars, according to the filing.

Mistakes like a bounced check or a small overdraft have effectively blacklisted more than a million low-income Americans from the mainstream financial system for as long as seven years as a result of little-known private databases that are used by the nation’s major banks, the New York Times DealBook blog reported yesterday. The problem is contributing to the growth of the roughly 10 million households in the United States that lack a banking account, a basic requirement of modern economic life. Unlike traditional credit reporting databases, which provide portraits of outstanding debt and payment histories, these are records of transgressions in banking products. Institutions like Bank of America, Citibank and Wells Fargo say that tapping into the vast repositories of information helps them weed out risky customers and combat fraud—a mounting threat for banks. But consumer advocates and state authorities say that the use of the databases disproportionately affects lower-income Americans, who tend to live paycheck to paycheck, making them more likely to incur negative marks after relatively minor banking missteps like overdrawing accounts, amassing fees or bouncing checks.

UBS AG has agreed to pay less than $60 million to settle Securities and Exchange Commission allegations that it misled investors in a mortgage-bond deal that soured during the financial crisis, the Wall Street Journal reported today. None of the Swiss bank’s current or former employees will be charged as part of the civil action. The amount would be one of the smallest paid by a Wall Street firm to the SEC to settle allegations involving toxic securities sold leading up the 2008 financial meltdown. The pact will resolve an SEC investigation into a collateralized debt obligation (CDO) that UBS created in 2007. The SEC probe centered on allegations that UBS improperly retained upfront cash it received when it was constructing the CDO.

JPMorgan Chase has agreed to pay $410 million to the nation’s energy regulator, a move that will allow the bank to settle accusations that traders in its Houston offices manipulated electricity markets in California and Michigan, the New York Times DealBook Blog reported yesterday. The agreement is a record settlement for the regulator, the Federal Energy Regulatory Commission, which has ramped up its policing of Wall Street trading in recent months. While the commission fined the bank, it stopped short of penalizing individual JPMorgan executives. That decision is a reversal from earlier this year, when the agency warned JPMorgan that it might seek to sanction Blythe Masters, the influential leader of the bank’s commodities business. Initially, investigators also planned to recommend that the agency hold three of her employees “individually liable.”

Two major Wall Street firms are in detailed discussions to create and sell the world’s first bond backed by home-rental payments, the Wall Street Journal reported today. Blackstone Group LP is in negotiations to bundle monthly rental payments on about 1,500 to 1,700 of its homes. The private-equity giant is among the firms that have spent billions buying homes out of foreclosure, an investment strategy that has helped to bolster demand and strengthen the U.S. housing market. The bond comprised of the Blackstone homes would be structured and marketed to investors by Deutsche Bank AG. Some investors and analysts have said that they are wary of a bond backed by rental payments, citing the dearth of long-term data on how often tenants living in previously foreclosed homes pay their rent on time. Also, some investors and analysts have raised concerns about how quickly firms have purchased thousands of homes, and whether they have the management track record and expertise to oversee the maintenance of properties scattered across the country.