BANKTHINK

Fannie, Freddie to Form New Firm; Corbat's Executive Review Plan; JPM's Whale Resurfaces

Print
Email
Reprints
Comment
Twitter
LinkedIn
Facebook
Google+

Receiving Wide Coverage ...

Fannie-Freddie Merger: One big step for housing reform? Federal Housing Finance Agency acting director Edward DeMarco unveiled plans on Monday to merge certain parts of government-controlled mortgage giants Fannie Mae and Freddie Mac in order to "create a common platform for issuing mortgage-backed securities." Details on this plan were scarce, but the merger of certain "back-office functions" would involve forming a new company with its own CEO, management and headquarters. This firm will be jointly funded by Fannie and Freddie. The aim is to "create a single standard for issuing securities that could survive independently if the two companies no longer exist," Bloomberg reports. No timeline was given for when the new company would start issuing securities, but it is "unlikely" to take place this year. Congress and the White House will ultimately have to "decide how the securitization platform is operated, and whether it should be privatized." Reaction to the plan, thus far, has been minimal, largely because news of its existence broke late yesterday. BankThink's resident Risk Doctor Cliff Rossi, who has championed combining Fannie and Freddie before, told the Journal, the merger would "signal to the market that the status quo since 2008 for the [companies] is changing." But not everyone was feeling kind toward Fannie and Freddie, which have collectively received $190 billion in taxpayer aid since 2008. "Put all your rotten eggs in one basket," one Post reader commented. "That's sometimes the only way," another reader responded.

Wall Street Journal

"You are what you measure." That appears to be Citigroup CEO Michael Corbat's motto. Anonymous sources tell the paper Corbat, who touted the aforementioned phrase at a recent executive gathering, is set to "unveil quantifiable targets that will allow analysts and investors to more-easily gauge the company's performance." Corbat plans to track the performance of 50 or so executives on scorecards focused on five categories: capital, clients, costs, culture and controls. The news is in line with other recent developments at the bank. Last month, Citi unveiled a revamped executive pay plan that links a portion of an executive's total compensation to the "company's performance relative to other big banks." Stay tuned for more insight into what Michael Corbat is thinking: He's set to speak today at a Citigroup investor conference.

Financial Times

An internal review admits the Financial Services Authority "was slow to react" to reports that banks were rigging Libor rates, but only because it was so focused on the fallout of the 2008 financial crisis. It also states that the FSA wasn't formally responsible for the Libor submissions.

Standard Chartered is not a fan of the EU's plan to cap bankers' bonuses, because how else will it draft and retain top talent?

A judge rejected Bank of America's claim that former New York State Insurance Department superintendent Eric Dinallo improperly allowed bond insurer MBIA "to transfer billions of dollars of cash between subsidiaries, depriving banks of hundreds of millions of dollars in payouts."

Here's a look at the scorecard HSBC used to rank CEO Stuart Gulliver's 2012 performance. He got a few zeros — one appears to be in "a general risk and compliance category" — and, overall, received a 52%. This score netted Gulliver a £1.95 million bonus for the year.

New York Times

JPMorgan Chase may face more stress over its Whale. A new Senate subcommittee report, set to be released on March 15, has found flaws in the bank's public disclosures and points fingers at several higher-ups, including then chief financial officer Douglas Braunstein, for allowing the bank to build the bets, which ultimately led to the now infamous $6 billion trading loss, without informing regulators and investors. As a result of the report, Braunstein may be called to testify in front of the Senate. CEO Jamie Dimon is not expected to be spared from an appearance. Dealbook notes, however, that Braunstein is "not the focus of a separate law enforcement investigation into the trading loss." JPMorgan, perhaps still reinforcing the idea that the Whale has been "harpooned," declined to comment on the Senate's findings.

Standard Chartered "posted a slight increase in annual net profit in 2012," despite a $667 million fine imposed by the U.S. for illegal money transfers.

 

JOIN THE DISCUSSION

SEE MORE IN

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.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.
Already a subscriber? Log in here
Please note you must now log in with your email address and password.