Bank of America settled charges that it discriminated against disabled mortgage applicants without admitting guilt, according to Reuters. The lender was said to have forced loan applicants who relied on disability insurance to jump through extra hoops, including asking borrowers to submit doctors' notes to document income. The bank will make four-figure payments to eligible applicants, but said policy was contradictory and unclear: "We're being accused of wrongdoing by the government for following a policy that the government approved," it said in a statement.

JPMorgan's share price has recovered losses suffered after the disclosure of massive trading losses in the banks chief investment office. The bank's shares fell as much as 24 percent after the revealed multi-billion dollar losses that came to be associated with the trader known as the London Whale, according to Bloomberg. The stock climbed to $41.40, beating a pre-Whale price of $40.74.

The private equity business is booming at levels not seen since 2007, according to The Wall Street Journal. One thing: The firms are often selling to and buying from each other.

Russell Wasendorf Sr., the Peregrine Financial Group who attempted suicide in July as his scheme to hide missing funds unraveled, pleaded guilty yesterday, agreeing to a $3.25 million fine and up to 50 years in jail.

Laura Pendergest-Holt, the former chief investment officer at Stanford Financial Group, the firm run by convicted fraudster Allen Stanford, was sentenced to three years in prison.

The trial of a former UBS trader Kweku Adoboli—charged with "unauthorized speculative trading!" er, false accounting and fraud in connection with a $2.3 billion trading loss—opens in London today.

Greece has identified 40 uninhabited islands that can be leased as the nation aims to raise 19 billion euros from state assets sales by 2015.

In always seems like Spain is in need of financial help from its European neighbors, until said help arrives, at which point the Spanish government starts going on about how it can handle it's own affairs, gracias. Now European finance ministers are asking Spain to clarify whether it needs European Central Bank intervention in its debt markets, according to Reuters. Gracias.

Financial firms and financial regulations are so complex, "it makes you weep blood out of your eyes," said Sallie Krawcheck, former Bank of America wealth management boss, at the Bloomberg Markets 50 Summit yesterday.

Bradley Birkenfeld, the former UBS banker who provided the Internal Revenue Service with evidence that the Swiss bank was helping U.S. citizens evade taxes, will receive $104 million in a whistleblower award. Mr. Birkenfeld, who said he once concealed diamonds in a toothpaste tube on behalf of a client, was released from prison on Aug. 1 after serving part of a 40-month sentence after confessing that he had forgotten to blow the whistle on himself.

Deutsche Bank is lagging behind its European peers when it comes to meeting new regulatory capital requirements, according to Bloomberg. The bank may cut jobs and reduce pay ratios under a restructuring plan announced this week.

A German court paved the way for the European Central Bank to begin a new program to buy sovereign debt, dismissing a lawsuit that sought to delay the plan.

Two-thirds of economists polled by Bloomberg think that the Federal Reserve will announce a new round of bond purchases tomorrow.

More details in the plea agreement signed by Peregrine Financial Group founder Russell Wasendorf Sr., who faces up to 50 years in prison under a deal with prosecutors.

Zuck spoke; Facebook shares rose.

Plaintiffs say that private equity firms including KKR, Silver Lake Partners and Bain Capital colluded to tamp down prices on buyout deals, according to a complaint filed in Massachusetts Federal District Court. The New York Times went to court to get the documents, which Bain lawyers worried would get washed into the election news cycle.

No one in France believes Bernard Arnault, the Louis Vuitton chief and the country's richest man, when he says he'll keep paying taxes in France once he's received Belgian nationality, according to The Financial Times. French president François Hollande has promised to tax income above 1 million euros at 75 percent.

Picking up the pace: The Treasury and the Fed are speeding efforts to offload assets acquired during the 2008 bailout of the country's banking system. The government is expected to sell or be repaid on $29 billion in securities in the months to come.

Set free: Anil Kuman, the cooperating witness you helped the government secure insider-trading convictions against Raj Rajaratnam and Rajat Gupta, was rewarded yesterday, receiving two years probation and no jail time for his involvement in the insider-trading scheme run by Mr. Rajaratnam.

Stiffer penalties: Japanese lawmakers are seeking to rewrite securities law to provide for criminal prosecution of brokerages and bankers that leak inside information. No underwriters have been charged for giving investors early word on new stock offerings in Japan's ongoing insider trading probe.

Movers: Robert Wolf, the top UBS banker whose close ties to President Barack Obama seeming to some like less an asset and more a liability, leaving the bank to open his own shop, called 32 Advisors. Credit Suisse hired Morgan Stanley banker David Hammond to lead its metal and mining advisory. Don Mullen, one of the architects of Goldman Sachs' big subprime trade, is aiming to raise a $500 million fund to buy foreclosed homes as rental properties.

Splits: Whitney Tilson plans to keep a lower profile after separating from T2 partner Glenn Tongue. "I will dramatically reduce my television appearances, interviews with the media, blogging/writing, and public speaking, both in the investment and philanthropic realms," he said in a letter obtained by Dealbreaker.

Student protection: The Consumer Financial Protection Bureau recommended Congress rewrite a 2005 law to allow student debtors to seek bankruptcy protection on private loans.

IPO off: Guitar maker Fender is not going public after all, citing market conditions in cancelling its initial public offering.

“The Federal Reserve Bank of New York has entered into an agreement to acquire the building at 33 Maiden Lane in lower Manhattan,” a New York Fed spokesperson confirmed in a prepared statement issued yesterday afternoon to The Commercial Observer. “The Bank is now in a final due diligence phase prior to the expected closing in the first quarter.”

33 Maiden Lane.

The building, which is being sold by the real estate investment company Invesco, serves as a large ancillary office for the New York Fed, which bases its operations in the neighboring building 33 Liberty Street.

The large real estate investment trust Vornado had been in contract to purchase the building, which was placed on the market by Invesco last year. According to sources however, in a surprise move, the New York Fed exercised rights that are sewn into its leasing agreement at the property allowing it the option to match Vornado’s offer for the building.

Market sources familiar with 33 Maiden Lane estimate that the building will trade for around $300 per square foot, a price that would place the total sale at about $170 million.

The New York Fed spokeswoman said that the bank was buying the building to allow it to potentially profit on its appreciation and because it will give the bank greater control over its operations.

“The acquisition will provide a long-term economic benefit for the Bank as well as allow for greater control over the maintenance, operation and security of the building,” the spokeswoman’s statement said.

The New York Fed is one of 12 banks in the U.S. Federal Reserve system and is where Washington monetary policy is actually implemented. 33 Liberty Street, the New York Fed’s nearby headquarters, is famous for its underground vault, thought to be the world’s largest gold respository.

The Fed made waves today by offering a projection that it wouldn’t raise interest rates until 2014, a statement that suggested the country’s central bank doesn’t forecast an economic recovery for years to come.

"L8R."

Three hours before President Obama's "eff an S & P" presser, a tidbit of news broke about a staffing change at the Federal Reserve: Nathan Sheets, the Fed's chief international economic adviser—or: the director of the Division of International Finance—is getting out of dodge. Mr. Sheets, who started with the Federal Reserve Board in 1993 as an economist, had been there for 18 years. More importantly, he's the third in a trend of (take a guess)...

...top advisers of Fed chair Ben Bernanke's to step down in the last 13 months.

Notes Bloomberg:

The departure means all three of Bernanke’s top staff advisers have left their positions or announced their departures in the last 13 months. Brian Madigan, former director of the Division of Monetary Affairs, retired last year, while the Fed said in May that David Stockton, director of the Division of Research and Statistics, is retiring Sept. 30.

Mr. Sheets is stepping down after four years in his capacity as Chief International Economic Adviser, and as Bloomberg noted, a single day before the Federal Open Market Committee (the cleverly-named component of the Fed that oversees how our country's famously awesome open market works) convenes to meet. Also as Bloomberg noted, a reason for Mr. Sheets' depature was not given. We rang up his office and were told he was in a meeting, and left a message. We'll update if we receive quote.

fkamer@observer.com | @weareyourfek

"The Federal Reserve has been looking for ways to increase its transparency for years, and we've made a lot of progress," Mr. Bernanke responded to a question about the difference between facing the press and facing Congress. For the record, he was speaking to the revolutionary innovation that is holding a press conference. He later attributed the push for transparency to Fed Vice Chair Janet Yellen, who's clearly poked around on the issue before. While CNBC expressed concerned about the chair's chair, noted feminist John Carney pointed out the gender disparity in reporting, and Sarah Palin expressed concern over your focus, there would be only one true indicator of exactly just how well this thing went, and Zero Hedge was glad to provide it:

That's a score of 0.62% gold thumbs up, for those counting at home. Other reviews?

• "You can't give Ben Bernanke a grade lower than an A-. It's not like we're watching Mr. Excitement."
• "The market says 'whatever.'" 
• "No news presser. Congradulations."
• "Next time Bernanke could come on to dry ice and thumping soft rock to placate those who think Fed explaining itself isn't entertaining enough."
• "If he does another one, he needs to get a better podium."
• "Bernanke wimps out."
• "Oh well fuck you Paul Krugman. You are just bitter grape nuts."

Tough crowd.

[fkamer@observer.com | @weareyourfek]

The Fed determined that labor demand was increasing but not enough to stave off high levels of unemployment. Industrial production increased, as did consumer spending, but the housing market remained a tremendous threat to prosperity. Stock prices rose, an outcome the Fed would deem as desirable, as the wealth effect of low interest rates is a key justification for monetary stimulus. The inflation that the Fed seeks remains elusive:

The underlying rate of consumer price inflation in recent months was lower than the staff expected at the time of the November meeting, and the staff forecast anticipated that core PCE prices would rise a bit more slowly in 2011 and 2012 than previously projected. As in earlier forecasts, the persistent wide margin of economic slack in the projection was expected to sustain downward pressure on inflation, but the ongoing stability in inflation expectations was anticipated to stem further disinflation. The staff anticipated that relatively rapid increases in energy prices would raise total consumer price inflation above the core rate in the near term, but that this upward pressure would dissipate by 2012.

[...]

Regarding their overall outlook for economic activity, participants generally agreed that, even with the positive news received over the intermeeting period, the most likely outcome was a gradual pickup in growth with slow progress toward maximum employment. [...] Regarding the outlook for inflation, participants generally anticipated that inflation would remain for some time below levels judged to be most consistent, over the longer run, with maximum employment and price stability.

It doesn't appear for the moment that the Fed's controversial policy of buying long-term Treasury and other securities is on pace to moderate, let alone reverse. Somewhere, David Einhorn is  expressing moderate frustration at this.

mtaylor [at] observer.com | @mbrookstyalor

Reuters reports on the Fed's assessment, citing a person familiar with the Fed's position. The news comes as the Financial Stability Oversight Council, the All-Star team of financial regulators put together under the Dodd-Frank Act, begins poking around the world of finance for companies that A) could bring us all to the brink of economic Armageddon; and B) are not banks (because, obviously, banks are already known to bring us to the brink on a regular basis). Says Reuters:

The indication that hedge funds might escape this designation is sure to send a huge sigh of relief through the $1.7 trillion industry, which has long avoided the tighter controls imposed on mutual funds, for example.

[...]

The source said the Fed does not think any one hedge fund can be "systemically important" but believes that information about the funds' positions could give the council insight into potential risks. The source requested anonymity while discussing talks held with the Fed.

Meanwhile, mutual funds and insurance companies are trying to persuade the government that they, too, are not systemically important and therefore do not merit additional oversight. It'll be interesting to see how successful the insurance industry is at persuading the government to look the other way.

mtaylor [at] observer.com | @mbrookstaylor

• Moody's downgraded Ireland's credit rating five notches and said more downgrades could come if the country didn't figure out how to deal with all its debt. [WSJ]
• If Ron Paul proceeds to hector the pants off Ben Bernanke in his new role as congressional Federal Reserve overseer, he'll be following a long-established tradition of berating central bankers. [NYT]
• It sounds ridiculous, but someone's asking the question: Could the Dow Jones Industrial Average hit an all-time high next year? It's theoretically possible! [AP]
• Congress has passed the tax cut extensions. [Reuters]
• New York required foreclosure mills to certifiy the validity of their paperwork following revelations that some foreclosure paperwork was not valid. They are not really doing this. [Naked Capitalism]

mtaylor [at] observer.com | @mbrookstaylor

Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have continued to trend downward.

As such, the creation of additional money to buy Treasuries will continue at a rate of about $75 billion a month. The target interest rate will remain between 0 and 0.25 percent. All the Federal Open Market Committee members voted in favor of the policy, with the exception of super inflation hawk and perennial dissenter Thomas M. Hoenig.

mtaylor [at] observer.com | @mbrookstaylor