Receiving Wide Coverage ...
Here Come the Regulators: A few Times articles echo a sentiment the FT's Tom Braithwaite alluded to earlier this week: A healthy earnings season may serve as the go-ahead for more big bank regulation in the U.S. "In recent weeks, the Treasury Department, senior regulators and members of Congress have stepped up efforts intended to make the largest banks safer," a Dealbook article notes. "The banks have warned that more regulation could undermine their ability to compete and curtail the amount of money they have to lend, but the strong earnings that came out over the last week could undercut their argument." Economist Simon Johnson believes that high profits signal danger for the megabanks. "In Europe, regulation remains weak, and the banks are floundering," he writes in a Times column. "In the United States, the rules are tightening, and the big banks are doing great. Once American politicians and regulators reflect further on exactly why the banks have become so profitable, this will only reinforce the latest push for more reform." Elsewhere, the Journal profiles the Federal Energy Regulatory Commission, which slapped Barclays with a big fine for alleged energy market manipulation earlier this week and is currently negotiating a settlement in a similar case against JPMorgan Chase. "Some people familiar with its enforcement operations think the commission is just getting started as it scrutinizes the once obscure world of electricity trading," the paper reports. Dealbook, meanwhile, notes that the industry-financed Financial Industry Regulatory Authority is moving to determine whether high-frequency trading firms pose a threat to the stability of financial markets. Finra "sent letters to 10 high-speed trading firms this week, asking them for more information about their trading programs and the steps they have in place to avert 'market disruptions,'" the paper reports.
Clues Bernanke to Go: Another sign Federal Reserve chairman Ben Bernanke won't be sticking around once his term ends in January, per the Washington Post: "Lawmakers bid farewell to Bernanke during his appearances on Capitol Hill over the past two days for what could be his final regular report to Congress." Meanwhile, a Journal survey of economists names Janet Yellen, the Fed's vice chairwoman, as the clear front-runner to succeed Bernanke. (Former Treasury Secretary Lawrence Summers was ranked a "distant second.") And Times columnist Floyd Norris has some advice for whoever gets the position. "If Bernanke's successor, whoever he or she is, will take to heart the lesson that Mr. Bernanke missed during the good times — that stability itself eventually becomes destabilizing — the chances of a Great Recession II will be greatly reduced," he writes.
AIG, MetLife and Prudential Financial are among the nine insurance companies designated as global systemically important institutions by the Financial Stability Board.
FTAlphaville has uploaded a map of shadow banking credit flows, obtained from a New York Fed paper. "We think we've got this piece of artwork … the right way up," the blog notes. "But we can't be sure."
New York Times
It looks like JPM Commodities Chief Blythe Masters will "escape" separate enforcement from FERC, as it negotiates its settlement with the bank over alleged energy market manipulation. "Still, the regulator's claims against JPMorgan … have turned a harsh spotlight on Ms. Masters," Dealbook notes.
A jury has found that Westport National Bank and parent company Connecticut Community Bank were not liable for investor losses related to Bernie Madoff's Ponzi scheme. The bank separately agreed to a $7.5 million settlement in a related case.