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Goldman admits it misled mortgage bond investors; Court of Appeals sets former SVP free

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Banking Essentials Newsletter - February Edition, Part 2

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Goldman admits it misled mortgage bond investors; Court of Appeals sets former SVP free

Yesterday's news was 's admission thatit sold RMBS knowing several of the loans that backed them did not conform to howthey were presented to investors. Fortunecalls the accord a "definite improvement"on previous "neither admit or deny" settlements, while Dealbreaker pointsout it is "almost victorious,"if one takes into account the $10 billion the firm received under TARP. Meanwhile,The New York Times notes Goldman willbe able to shave as much as $1billion from the payout, thanks to government incentives and tax credits.

Also on Goldman Sachs — a piece from The Wall Street Journal on how much the firm standsto lose from Brexit. "Goldman spent several years unwinding its Europeanoperations and concentrating them in London," the paper writes. Now the company,according to a source, "is mapping out which jobs might be hit by a loss ofthis passport, or the right to sell services across the EU, while scoping out Europeancountries where it has existing banking licenses and infrastructure that could quicklybe scaled up."

Meanwhile, cost cuts at may involvereplacing trading systems' phone lines with a cloud computing service, the Journalreports, citing head of private investments Rick Smith. The bank is already in talkswith Cloud9 Technologies, but implementation could take years.

In other banking news, madeKeefe Bruyette & Woods' 2015 BankHonor Roll. Eight were dropped: FirstMid-Illinois Bancshares Inc., Ohio-based Middlefield Banc Corp., Indiana's 1st Source Corp., St. Louis-based Cass Information Systems Inc., Hingham Institution for Savings in Massachusetts, California-basedOak Valley Bancorp, Houston'sProsperity Bancshares Inc.and WesBanco Inc. of WestVirginia.

In June 2015, a former AnchorBankfsb senior vice president was sentenced to 18 months in prison for wire fraud. Yesterday, a Court ofAppeals ruling saw David Weimert go free. Bluffing in business negotiations, JudgeDavid Hamilton had told the prosecutor, counted as "capitalistacts among consenting adults," the Journalreports.

SAC Capital's new life as Point72 Asset Management LP will include some old employees.Reuters reports Eugene Lipovetsky, Ladd Fritz, Ray Shu, Arjun Menon, Israa Al Bayaaand Stanislas de Caumont are back with Steven Cohen.

At the LendIt investment conference — and amid the issue of lower funding— Prosper Marketplace Inc.President Ron Suber told attendees onlinelenders "need to re-create[themselves] as an industry to bring on more permanent capital," the Journal quotes.

And in the broker/dealer scene,Bats Global Markets Inc.'sIPO could be oversubscribed— by up to 5x, according to Bloomberg News.

On the regulatory front, anaccidental data breachat the FDIC will affect 44,000 customers. The agency said no sensitive informationwas compromised, but includes names, addresses and Social Security numbers.

Marshall Sprungis leaving the SEC, where he is co-chief of the enforcement division's asset managementunit.

Andrew Levin used to be a special adviser to Ben Bernanke and Janet Yellen,and is now pushing for the Fed to be lessprivately owned, the Journal reports.

Lastly, the Government Accountability Office yesterday released a paperon how nonbanks serviced 24.2% of home mortgages last year, up from6.8% in 2012. And yet the CFPB has no way to comprehensively list these servicersit should be regulating, while the FHFA has no statutory authority to examine thenonbank servicers that do business with GSEs.

In other parts of the world

The StateBank of Pakistan said it decided to keep the policy rate unchanged at 6% as inflation in the country climbs. The centralbank said the inflation trend was anticipated, adding that it still expects inflationto be benign for the rest of 2016.

plans to cut jobsin the Americas and Europe under an extensive plan to reduce costs, sources toldthe Journal.

The day ahead

Early morningfutures indicators pointed to a lower opening for the U.S. market.

In Asia, the HangSeng was up 0.30% to 20,501.27, and the Nikkei 225 rose 1.13% to 15,928.79.

In Europe as ofmidday, the FTSE 100 dropped 0.06% to 6,196.60, and the Euronext 100 was up 0.16%to 852.52.

On the macro front

The NFIBsmall business optimism index, the import and export prices report, Redbook andthe treasury budget report are due out today.

The Daily Dose is updated as of 7:30 a.m. ET. Some external links mayrequire a subscription.