3 Things That Could Move Financial Stocks Today (Update 1)
Story updated to include new information on a possible housing settlement in the first graph.
NEW YORK (
) -- Investors are awaiting more news on the foreclosure settlement.
As of late Monday, more than 40 states had agreed to sign on to the foreclosure settlement, according to Associated Press, citing the Iowa State AG Tom Miller who is leading the negotiations.
There is still no word on whether holdouts including California and New York will join the deal. ""Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement," said Iowa Attorney General Tom Miller, who is leading the 50-state talks.
California AG Kamala Harris said Monday that they were closer to a deal now than they have ever been before. "I am less concerned about the timeline than the details," she said.
Analysts contend that a deal without California, which has been among the worst affected by the housing bust, will do little to resolve the legacy problems ailing banks.
The settlement, expected at $25 billion, will require banks to reduce the principal owed on mortgages for borrowers as well as address their foreclosure procedures. Banks have been seeking a broad release from future mortgage claims from the states, but recent reports suggest that the immunity might be restricted to only matters concerning robosigning.
The New York Attorney General Eric Schneiderman on Friday sued
Bank of America
(BAC) - Get Report
,
JPMorgan Chase
(JPM) - Get Report
and
Wells Fargo
(WFC) - Get Report
over their use of Mortgage Electronic Registration System or MERS, an electronic mortgage database, saying it resulted in deceptive and illegal practices, including false documents used in foreclosure proceedings.
The three banks, along with
Citigroup
(C) - Get Report
and
Ally Financial
- are at the center of the year-long negotiations with the states over their allegedly deceptive foreclosure practices, including robo-signing.
While the New York AG has opposed the deal, some have speculated that Schneiderman might sign on to the deal if he is convinced he can go after banks legally through his recently formed mortgage fraud task force.
The talks over allegedly deceptive foreclosure practices including "robo-signing" have dragged on for more than a year, but expectations have mounted in recent weeks that the states will finally come to an agreement.
Federal Reserve
Chairman Ben Bernanke testifies at Capitol Hill on economic and monetary policy issues. Markets will be watching out for more commentary from Bernanke on the state of the housing market and his recommendations for policy responses
He may also face questions on whether the central bank is keeping interest rates too low for too long after St.Louis President James Bullard, who does not have a vote on the FOMC, said he disagreed with the Fed's decision to keep short-term rates near zero till 2014.
Later this week, Bernanke will also be speaking at the Homebuilder's convention in Florida.
In addition, a subcommittee of the House Financial Services Committee is scheduled to mark up a bill that could strengthen the FHA's ability to demand that banks repurchase mis-sold loans.
Analysts at KBW see the prospect of the bill becoming law as a "low probability event." Still, they say that the event merits following. "If there is any sort of compromise between congressional Republicans and the White House concerning the President's recent FHA refi proposal, then we think the Republican's FHA bill could conceivably be part of that deal," they wrote in a note.
President Obama recently proposed a new
that will allow borrowers with private mortgages who are current on their mortgage payments to refinance their loans at lower rates.
UBS
(UBS) - Get Report
reported net income of $427 million compared to $1.8 billion during the same period last year, the Swiss bank said in a statement Tuesday. The massive drop in profitability was attributed to a falloff in investment banking activity.
Executives damped any hopes of a recovery in 2012, saying that ongoing concerns surrounding eurozone sovereign debt and the European banking system will "likely to have a negative influence on client activity levels in the first quarter of 2012."
"In light of the above, traditional improvements in first quarter activity levels and trading volumes may fail to materialize fully, which would weigh on overall results for the coming quarter, most notably in the Investment Bank," UBS said.
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