BANKTHINK

The Bad News: JPM Is Laying People Off; The Good News: JPM Is Laying People Off

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More on JPMorgan Layoffs: According to a story in the Post, the more than 10,000 job cuts the bank announced this week speak volumes about JPMorgan's views on the housing market, good and bad. On the bright side, "foreclosures at the bank have tumbled … which is why most of the employees receiving pink slips are those that were hired to handle mortgage defaults." But JPMorgan is also cutting jobs in mortgage production, reflecting its view that "heightened competition" will nibble at the outsized margins it's been enjoying, the article says. (Where's that competition going to come from in such a concentrated origination market, you ask? Some argue there'll be room for upstarts after the refis fade.) The FT's "Lex" column notes that no cuts were announced in investment banking, and suggests that the downsizing of JPMorgan is a case of "cyclical staffing adjustments," not "structural change." Also, Rolling Stone's Matt Taibbi has a more-NSFW-than-usual interpretation of JPMorgan CEO Jamie Dimon's testy exchange with analyst Mike Mayo at the recent investor day. Reader discretion strongly advised before clicking. We're including it because Taibbi has influenced public perception of financial companies (see: Goldman Sachs), not for the yuks — but don't say we didn't warn you.

Senate Confirms Lew for Treasury Secretary: Compared to Chuck Hagel, he sailed through. Wall Street Journal, New York Times, Washington Post

Finance: Can't Live With It …: A McKinsey Global Institute study showed global finance — measured by things like cross-border capital flows and the growth of financial assets relative to the economy — has cratered since the 2008 crisis. While there's general consensus that finance was too big before, the report raises concern that the correction could go too far, leading to a safer, but "balkanized," world where capital for investment will be harder to obtain. "This is an age of ambivalence about finance—and for good reason," writes the Journal's David Wessel. "It nearly destroyed us. But we can't prosper without it." Wall Street Journal, Washington Post

Wall Street Journal

Speaking of balkanization: Both the FASB and its international counterpart, the IASB, want banks to book losses on soured loans sooner, but the FASB's plan is more punitive. U.S. banks would have to record upfront all the losses they foresee over the life of a loan, while their overseas counterparts would have to book only the losses they expect over the next 12 months. So the U.S. banks fear they'll be put at a disadvantage, since the same results would look worse under the FASB's rules than under IASB's.

"Volcker Rule Could Be Delayed—Again." Now regulators are talking the second half of the year. But it's still scheduled to take effect next year, so bankers will have to be quick studies unless they can persuade regulators to push back the effective date.

Financial Times

"US regulators have raised the prospect of taking severe action against banks that submit deficient 'living wills.'" The last round of resolution plans disappointed regulators. Now the FDIC and the Fed are debating how much time to give the big banks to write credible wills before forcing them to hold more capital or breaking them up, the paper reports, citing anonymous sources.

New York Times

We missed this one yesterday: An op-ed by former FDIC chairman Sheila Bair. It's not about banking; she advises fellow Republicans to make an issue out of the country's "extreme" income inequality, which she argues is the result of "government actions, not merit."

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Big Winners and Losers for Banks on Election Night

Republicans won a sizable victory late Tuesday, retaking the Senate after losing it eight years ago. Banks, too, largely benefited, as an ally of the industry captured a Senate seat in West Virginia, two credit union allies fell and a key Democratic senator squeaked past. Here's how election night played out for banks.

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