Stanford sentenced 110 years in jail

A federal court in Houston has sentenced R. Allen Stanford, Former jet-setting Texas tycoon, to 110 years in prison for his involvement in a $7 billion Ponzi scheme, according to reports on Thursday.

Federal prosecutors had asked the court to sentence Stanford to 230 years. Stanford, the former principal of Standford Financial Group, was convicted of fraud in March.

Moody's lowered ratings of 16 Spanish banks

Moody's Investors Service on Thursday lowered ratings of 16 Spanish banks and Banco Santander's U.K.-based subsidiary by one to three notches.

Moody's cited unfavorable operating conditions on renewed recession, reduced creditworthiness of the Spanish sovereign, and rapid deterioration in asset quality for the downgrades.

The outlooks on ten of the banks are negative while ratings of seven other banks remain on review for further downgrade. Some of the affected banks include Banco Santander SA, Banco Espanol de Credito, Banco Bilbao Vizcaya Argentaria SA, Caixabank, and Ceca.

Criminal probe into $2B trading loss at JPMorgan

The Justice Department has initiated a criminal probe into the JPMorgan Chase’ $2 billion trading loss revealed last Thursday, according to a law enforcement source familiar with the situation.

The news came as Jamie Dimon, the embattled chief executive of JPMorgan Chase, faced questions from shareholders Tuesday.

Standard & Poor's and Fitch Ratings last Friday downgraded J.P. Morgan Chase rating because of the $2 billion loss on derivatives

Stanford guilty of masterminding Ponzi scheme

A federal jury on Tuesday found Allen Stanford guilty of masterminding a $7.1 billion Ponzi scheme, according to smartinmoney.com.

Mr. Stanford has been jailed since June 2009 because he was judged to be a flight risk. He complained of memory loss from the head trauma caused by inmates’ beatings, and a court found that he was so addicted to his prescribed painkillers that he wasn't competent to stand trial. In December 2011, a judge found him competent and the trial commenced in January.

The jury convicted Mr. Stanford on 13 of the 14 charges brought by prosecutors, including conspiracy to commit money laundering, fraud and obstructing investigators. He faces a maximum of 230 years in prison. Mr. Stanford's attorneys told reporters they would appeal but didn't specify on what grounds. Prosecutors declined to comment.

At the peak of his career, he owned banks and residences around the world, had high-placed contacts with the leaders of Libya and other nations, and was a particularly outsize presence in the Caribbean isle of Antigua, where he was knighted in 2006. Mr. Stanford valued other kinds of possessions, too, including a 120-foot yacht and a fleet of aircraft valued at more than $100 million.

In 2008, Mr. Stanford was the 205th richest American with a net worth of $2.2 billion, according to Forbes magazine. His holdings in Antigua, where he held a dual citizenship, included banks, airlines and the country's biggest newspaper. A cricket enthusiast, he rose to international prominence as a benefactor of the sport.

In 2009, the U.S. government accused Mr. Stanford of swindling nearly 30,000 of investors in 113 countries for more than two decades by selling them certificates of deposit issued by the Stanford International Bank he controlled in the Caribbean island of Antigua, representing to clients that the money would be invested conservatively in stocks and bonds. Instead, he funneled the proceeds into risky real-estate assets and his own businesses, a luxurious lifestyle, a secret Swiss bank account and business deals that consistently lost money.

For the prosecution, the Stanford case was a Ponzi scheme in which he and five conspirators had given investors false financial statements indicating that the certificates of deposit were invested in conservative assets when $2 billion was actually lent to Mr. Stanford. (Read full article “Stanford Convicted in $7.1 Billion Ponzi Scheme” on smartinmoney.com)

Government and banks reached record housing settlement of more than $26 billion

State and federal government officials on Thursday announced a record housing settlement of more than $26 billion with five of the country's biggest banks over foreclosure abuses after more than a year of negotiations. The deal is expected to help more than one million U.S. homeowners.

For more than a year state attorneys-general and federal officials have been in discussions with banks over the robo-signing crisis - the practice of assigning bank employees to rapidly approve numerous foreclosures with only cursory glances at the glut of paperwork to determine if all the documents are in order. In the end, 49 states participated in the settlement, including California and New York which had previously held out for a better deal.

The settlement is with five big banks: Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., and Ally Financial Inc., the company formerly known as GMAC.

Of the $26 billion in the deal with the five banks, $17 billion must be spent by the banks to assist struggling homeowners. Of that amount, 60% must be employed to reduce the amount owed by troubled borrowers, known as principal reduction. The amount must be spent within three years, or banks will need to make cash payments to regulators.

Fed is likely to keep low key interest rate until late 2014

The Federal Reserve says it is unlikely to raise interest rates before late 2014. It means a period of record-low rates would be extended by more than a year. The Fed has kept its key interest rate at a record low near zero for three years.The Fed's decision to keep rates low is to help lift a weak but modestly growing economy.

The new timeframe hints at details in the Fed's quarterly economic forecast, which will be released later. That will show in what year policy members expect the first increase in the Fed's benchmark interest rate.