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One of the most influential policymakers at the Federal Reserve, Daniel Tarullo, publicly debated options yesterday for ending bailouts of big banks considered too big to fail, the Washington Post reported today. The proposals attempt to limit the risks the nation’s largest banks can pose to the financial system, and ultimately taxpayers, if they collapse. Tarullo, the head of bank supervision at the Fed, yesterday stopped short of calling for permanently abolishing government backstops for banks, but he laid out policies to contain the problem, some of which would require fresh legislation. "The policy aim has got to be to confine the problem substantially more than it was in the years running up to the crisis," he said. "That seems to inexorably call for a set of complementary policy measures" to Dodd-Frank.

UBS AG is nearing a settlement with U.S. and British regulators over allegations that it tried to manipulate the London interbank offered rate, or Libor, the Wall Street Journal reported today. A settlement could come as early as next week but might be pushed back to as late as January, as the Swiss bank tries to hammer out a deal simultaneously with at least three regulatory agencies. UBS would be the second bank to settle Libor-rigging charges, following Barclays PLC this summer. Barclays paid a total of roughly $450 million. UBS is expected to pay considerably more. Barclays' fine was reduced because the bank used tens of millions of dollars to conduct its own investigation.

Deutsche Bank AG, Germany’s largest lender, was sued by a trustee over claims that some securities sold by a unit of the bank were backed by home-mortgage loans taken out by fraudulent borrowers, Bloomberg News reported today. DB Structured Products Inc.'s pool of more than 1,500 mortgages included more than 320 that were defective, HSBC Bank USA, acting as trustee, said in a lawsuit filed yesterday in federal court in Manhattan. HSBC seeks unspecified damages and said Frankfurt-based Deutsche Bank must buy back the breaching loans under its agreements with the trustee. The case is Deutsche Alt-A Securities Mortgage Loan Trust v. DB Structured Products Inc., 12-cv-8594, U.S. District Court, Southern District of New York (Manhattan).

JPMorgan Chase & Co. was sued by CIFG Assurance North America Inc., which says that it lost more than $100 million on collateralized debt obligations (CDOs) created by Bear Stearns, the investment bank JPMorgan acquired in 2008, Bloomberg News reported yesterday. Bear Stearns stocked the CDOs with toxic mortgage securities and profited by betting against the portfolios, the insurer said in a complaint filed yesterday in New York State Supreme Court. Bear Stearns told CIFG that independent firms had selected the collateral, New York-based CIFG said. "As a result of its fraud, Bear Stearns was able to pass off huge losses onto CIFG," according to the complaint.

Archstone Inc., the biggest property holding of Lehman Brothers Holdings Inc., will be sold to Sam Zell's Equity Residential and AvalonBay Communities Inc. in a deal valued at $6.5 billion, Bloomberg News reported yesterday. Lehman will receive $2.69 billion in cash as well stock in Equity Residential and AvalonBay valued at $3.8 billion, based on closing prices from Nov. 23, New York-based Lehman said yesterday. The deal comes instead of an initial public offering for Englewood, Colorado-based Archstone, which Lehman announced in August. Lehman, which filed the biggest bankruptcy in U.S. history in 2008, left court protection in March.

Citigroup Inc. has agreed to pay $360 million to the brokerage estate of Lehman Brothers to resolve a dispute over $1 billion in collateral that the investment bank was forced to post in the days leading up to its bankruptcy in 2008, Reuters reported yesterday. According to a settlement reached on Friday with the trustee liquidating Lehman Brothers's U.S. brokerage unit, Citigroup will also relinquish its claim to $75 million that was contingently paid to the estate at the beginning of the liquidation, court documents showed. The trustee, James Giddens, filed the claim against Citigroup and its subsidiaries early last year, arguing that the $1 billion was obtained under coercion and that the amount should be part of a general asset pool to be divided among creditors in accordance with bankruptcy law.

JPMorgan Chase & Co. and Credit Suisse Group AG agreed to pay almost $417 million to settle U.S. regulatory claims they misled investors while selling billions of dollars of investments linked to home loans, Bloomberg News reported on Saturday. JPMorgan resolved claims that it made misstatements about delinquency data for loans packaged into securities and that Bear Stearns Cos., which the bank acquired in 2008, did not tell mortgage investors it kept reimbursements on soured loans, the Securities and Exchange Commission said. Credit Suisse was also faulted for disclosures on reimbursements.

The Federal Reserve told the 30 largest banks to test whether they could withstand a severe recession in the U.S. and other major economies with weakening housing markets, Bloomberg News reported yesterday. The most severe scenario outlined by the Fed includes a nearly 6.1 percent decline in U.S. gross domestic product in the first quarter of 2013 and an average unemployment rate of as much as 12.1 percent in the second quarter of 2014. Real disposable income contracts for five consecutive quarters, and house prices fall 21 percent from the third quarter of 2012 to the first quarter of 2015. The Fed will conduct its own tests on the 19 largest institutions, including Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. The remaining 11 firms will test themselves and submit results to the Fed.

The U.S. Commodity Futures Trading Commission (CFTC) will appeal a judge's ruling that rejected efforts to curb speculative derivatives trading after the 2008 financial crisis, Bloomberg News reported yesterday. The CFTC filed a notice of appeal yesterday seeking to ask a three-judge panel to reverse a ruling by U.S. District Judge Robert Wilkins that said that the CFTC failed to assess whether limiting the number of contracts a trader can have in oil, natural gas or other commodities was necessary and appropriate. "The rule addresses Congress’s concern that that no single trader be permitted to obtain too large a share of the market, and that derivatives markets remain fair and competitive," CFTC Chairman Gary Gensler said. The decision, which blocked rules scheduled to take effect Oct. 12, was a victory for two Wall Street groups that challenged the constraints imposed under the 2010 Dodd-Frank Act.

Regulators are expected to serve JPMorgan Chase & Co. with a formal action alleging weaknesses in the bank's antimoney-laundering systems, the Wall Street Journal reported today. The cease-and-desist order from the Office of the Comptroller of the Currency is part of a broader crackdown on the nation's largest banks. The OCC is expected to require JPMorgan to beef up its procedures and examine past transactions.