U.S. lawmakers suffered a minor setback Wednesday in their ongoing effort to close offshore tax havens. Mark Branson, an executive at the powerful Swiss bank UBS, apologized to a Senate subcommittee for helping Americans dodge taxes but he refused to disclose the names of the estimated remaining 33,000 U.S. clients accused of evading taxes with the help of UBS. Branson argued that he could not cooperate because full disclosure would violate Swiss criminal law, and told lawmakers, "the IRS is attempting to resolve this diplomatic dispute in a courtroom, which is neither productive, nor proper." (Associated Press)

The Treasury Department Inspector General reported on Wednesday that bank regulators knew in 2002 about financial instability at several banks owned by First National Banking Holding Co. but failed to act before it was too late. Those banks - in Arizona, California and Nevada - crashed last year because their management favored "growth and profits over appropriate risk management," according to the audit report. This follows the IG's criticism last month of the U.S. Office of Thrift Supervision for their insufficient oversight of IndyMac bank. In each of these cases, the IG's actions indicate the potential for increased government regulation of financial institutions. (Financial Week)

Franklin D. Raines, a prominent Democratic businessman, took advantage of a special program reserved for friends of a former Countrywide Financial CEO, claims Representative Darrell Issa (R-CA). Issa released documents Wednesday which indicate that Raines, the former CEO of Fannie Mae, received discounts including a 4.125 percent rate on his mortgage compared to the 5.1 percent prevailing rate for comparable loans. Raines also did not have to pay application or processing fees common for Countrywide's ordinary clients, according to Issa's documents. (Washington Post)

A group of fourteen specialist companies agreed to pay $70 million in penalties to resolve concerns of impropriety, the SEC announced on Wednesday. A report by the agency accused the firms - including E*Trade and an offshoot of Goldman Sachs - of favoring their own investments over those of their clients between 1999 and 2005, essentially abusing their position as financial specialists to make a profit at the expense of their investors. Despite settling with the SEC, the firms did not admit any wrongdoing. (CNN Money)

The Government Accountability Office found cases of immigration discrimination in an investigation into 29 government agencies. The GAO report, released Wednesday, accuses the Immigration and Customs Enforcement program of using ethnic profiling to catch undocumented workers living in the United States. The program, which the Wall Street Journal calls "a symbol of the Bush administration's crackdown on illegal immigration," arrested nearly 80,000 people since January 2006 for minor crimes, including speeding. The GAO found that the majority of government agencies participating in the study cited pervasive racial discrimination. (Wall Street Journal)

Joseph Nacchio, the former CEO of Qwest, was convicted of 19 counts of insider trading on Wednesday. The court found that in 2001, Nacchio sold $52 million worth of stock after company insiders warned him that Qwest shares would tank. (Reuters)