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Cracks in QE3; Swap Regs Deferred; Lovable Checking Fees

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Bloomberg: Chalk up a big win for the mortgage industrial complex and an equally large loss to Uncle Sam's coffers. That's the gist of a report indicating that, as legislators rushed to avert a fiscal crisis in the past week, they left in place mortgage tax breaks that will cost the U.S. government $600 billion over the next five years.

"This is a meaningful win for the housing lobby generally and more specifically the mortgage insurance industry," said Isaac Boltansky, an analyst for Compass Point Research & Trading LLC, which came up with the estimated the value of the programs.

Among the specific breaks left unscathed by the government's admittedly dull tax-break scythe: A 2007 credit for homeowners whose debt is forgiven by lenders, an exemption for profits on home sales and the much-loved mortgage-interest deduction.

Homeowners will save about $100 billion this year from the mortgage interest deduction alone, according to Compass Point.

The Atlantic: It's been one step forward and two steps back over the past four years in protecting the world from its banks. That's the conclusion of a long look at reform efforts by The Atlantic.

"For the past four years, the nation's political leaders and bankers have made enormous — in some cases unprecedented — efforts to save the financial industry, clean up the banks, and reform regulation in order to restore trust and confidence in the American financial system," write Frank Partnoy and Jesse Eisinger. "This hasn't worked. Banks today are bigger and more opaque than ever, and they continue to behave in many of the same ways they did before the crash."

Exhibit One in the essay: JPMorgan Chase and the way in which "a little-known corner of the bank called the Chief Investment Office" left Jamie Dimon, supposedly the savviest CEO on Wall Street, gagging on his tempest in a teapot.

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Q1 Earnings Outlook to Put Focus on Lawsuits, Stress Tests, Lending
With JPMorgan Chase (JPM) and Wells Fargo (WFC) set to issue the initial round of first-quarter earnings reports Friday, big bank CEOs are bracing to answer questions about executive departures, capital shortfalls, seemingly unending legal risks and oh, yeah how they are going to make money.

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