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Prudential Financial Inc., the insurer contesting a decision deeming it systemically important, won the support of the Federal Housing Finance Agency (FHFA) during a vote of U.S. regulators last month, Bloomberg News reported yesterday. The Financial Stability Oversight Council (FSOC) voted 7-2 to designate an unidentified company as systemically important, meaning the firm could endanger the financial system if it were to fail, according to minutes of the June 3 meeting released yesterday by the Treasury Department. The company was Prudential, according to sources, who asked not to be identified because the information wasn’t officially released. The FHFA’s acting director, Edward DeMarco, voted “no,” as did Roy Woodall, a former Kentucky state insurance commissioner who is the council’s independent member with insurance expertise, the panel said. Prudential is the only one of three companies appealing the FSOC’s ruling subjecting them to heightened Federal Reserve oversight. The Newark, New Jersey-based insurer said on July 2 that it requested a hearing to explain why it shouldn’t be designated.

The U.S. Trustee Program (USTP) on Monday announced the unsealing of a settlement with Citigroup Inc. to protect the personal information of nearly 150,000 consumers in 85 jurisdictions around the country. Citi agreed to redact proofs of claim filed in bankruptcy cases nationwide in which the personal information of consumer debtors and third parties, including Social Security numbers and birthdates, had not been properly redacted as required by the bankruptcy rules. Citi also agreed to notify all affected consumers and offer them one year of free credit monitoring. An independent auditor appointed under the settlement is reviewing the accuracy of the correction process. The settlement, approved by the U.S. Bankruptcy Court for the Southern District of New York on March 13, 2012, had been sealed to prevent potential wrongdoers from learning of the breach and victimizing the affected consumers. On July 11, 2013, the bankruptcy court granted the parties’ motion to unseal the proceedings. Click here to read the USTP release.

Citigroup Inc., the third-biggest U.S. bank by assets, said first-half costs at a unit holding some of the lender’s most toxic loans and securities multiplied by almost 10 times from a year ago on higher legal expenses, Bloomberg News reported yesterday. The Special Asset Pool’s operating expenses climbed to $1.25 billion for the first six months of the year from $129 million in the same period last year, according to figures on the New York-based bank’s website. That’s more than double the unit’s $619 million in total costs for 2012 and 2011 combined. Swelling expenses in the unit, one of three that house distressed and unwanted assets in the Citi Holdings division, point to the continuing legal costs facing Chief Executive Officer Michael Corbat.

Bank of America Corp. said former workers who alleged that the firm awarded bonuses for sending homeowners into foreclosure misrepresented their roles and made “impossible” claims about the lender’s assistance program, Bloomberg News reported on Friday. The former employees, whose sworn statements were filed last month in a lawsuit against the bank, had limited roles that didn’t allow them to understand the full scope of efforts to assist distressed borrowers, the Charlotte, N.C.-based company said on Friday in court documents. The former employees’ “wild misrepresentations about their roles lead to impossible claims about what they did and saw,” Bank of America said. They “could not have witnessed what they claim to have witnessed because they were not in a position to do so and would not have witnessed such things in any event because Bank of America’s actual practices were diametrically opposite.”

U.S. and European Union financial regulators took a step toward bringing derivatives trading under an integrated framework of global regulation designed to reduce risks in the $633 trillion swaps market, Bloomberg News reported yesterday. The accord, announced jointly by the EU and the U.S. Commodity Futures Trading Commission, broke a deadlock over whether the U.S. could impose its rules on trades booked in Europe. Banks and other swaps traders said that the deal reduces the chance they will be forced to comply with conflicting regulatory regimes. Under the deal, the CFTC agreed to accept some EU rulemaking as “essentially identical” to U.S. standards, allowing companies to apply only the rules of the jurisdiction where they are based. The concessions include rules on risk mitigation and how traders should settle disputes over the valuation of derivatives contracts.

Senator Elizabeth Warren (D-Mass.) said a bipartisan group of U.S. lawmakers are introducing legislation aimed at separating commercial and investment banking, recreating a Depression-era firewall established by the Glass-Steagall Act but repealed in 1999, Bloomberg News reported yesterday. The legislation is also sponsored by Sens. John McCain (R-Ariz.), Maria Cantwell (D-Wash.) and Angus King (I-Maine). The bill aims to separate traditional banks that offer checking and savings accounts insured by the Federal Deposit Insurance Corp. from “riskier financial institutions” that work in investment banking, insurance, swaps dealing, hedge funds and private equity.

Liquidators for two Bear Stearns Cos. hedge funds sued the three major credit-rating firms in New York State Supreme Court for allegedly misrepresenting their independence and the accuracy of their ratings, seeking $1.12 billion in damages, the Wall Street Journal reported today. The filing related to the ratings appears to be timed to beat the statute of limitations for fraud cases in New York state, which is six years, say lawyers uninvolved in the case. The rating firms—Standard & Poor's Ratings Services, Moody's Investors Service and Fitch Ratings—began their en masse downgrades of hundreds of securities backed by mortgages in July 2007. The liquidators allege that the rating firms "intentionally and knowingly misrepresented information concerning their independence, the accuracy of their ratings, the quality of their models, and the extent of their surveillance" on securities known as collateralized-debt obligations and residential-mortgage-backed securities. The lawsuit comes more than five years after Bear Stearns, a storied Wall Street investment bank, buckled under a load of mortgage-related debt. JPMorgan Chase & Co. purchased the securities firm in March 2008.

The biggest U.S. banks, after years of building equity, may continue hoarding profits instead of boosting dividends as they face stricter capital rules than foreign competitors, Bloomberg News reported yesterday. The eight largest firms, including JPMorgan Chase & Co. and Morgan Stanley, would need to retain capital equal to at least 5 percent of assets, while their banking units would have to hold a minimum of 6 percent, U.S. regulators proposed yesterday. The international equivalent, ignoring the riskiness of assets, is 3 percent. The banks have until 2018 to fully comply. The U.S. plan goes beyond rules approved by the Basel Committee on Banking Supervision to prevent a repeat of the 2008 crisis, which almost destroyed the financial system. The changes would make lenders fund more assets with capital that can absorb losses instead of using borrowed money. Bankers say that this could trigger asset sales and hurt their ability to lend, hamstringing the nation’s economic recovery.

The Justice Department said that U.S. Federal Reserve Chairman Ben Bernanke should not be compelled to testify in Maurice “Hank” Greenberg’s lawsuit over the government’s bailout of American International Group Inc. (AIG), Bloomberg News reported yesterday. Starr International Co., Greenberg’s closely held investment firm and an AIG shareholder, has not shown the “extraordinary circumstances” needed to warrant the testimony because information on Bernanke’s role in the 2008 bailout can be obtained from other sources, the U.S. argued in a filing in the U.S. Court of Federal Claims in Washington, D.C. Starr sued the government for $25 billion in 2011. Greenberg called the assumption of 80 percent of the AIG’s stock by the Federal Reserve Bank of New York in September 2008 a taking of property in violation of shareholders’ constitutional rights to due process and equal protection of the law.

As a top regulator prepares to slap JPMorgan Chase & Co. for mistakes that were made while collecting old debts, an internal review shows that errors occurred as the bank sued its credit card users for the delinquent amounts, the Wall Street Journal reported today. The bank studied roughly 1,000 lawsuits and found mistakes in 9 percent of the cases, said people familiar with the review. The errors ranged from inaccurate interest and fees applied by outside law firms to a "small number of instances" in which lawsuits listed higher balances than the amounts owed by borrowers, according to an internal document. In certain cases sworn documents were signed without knowledge of their accuracy, according to the document. The bank concluded the mistakes it found were "mostly small" and "had a minimal" impact on customers.