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Fed Won't Be Ceasing the Easing Until the Job Data's Pleasing

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Receiving Wide Coverage ...

Ease on Down the Road: Chairman Ben Bernanke defended the Fed's asset purchases and signaled they will continue until the job market firms up. He addressed concerns that by driving down interest rates for a long period of time, the Fed's easing encourages inappropriate risk-taking: While the central bank is cognizant of that danger, he said, low rates "also serve in some ways to reduce risk in the system, most importantly by encouraging firms to rely more on longer-term funding, and by reducing debt service costs for households and businesses." Wall Street Journal, Financial Times, New York Times, Washington Post

JPMorgan: At its annual investor day, the bank disclosed plans to cut 17,000 jobs by the end of next year. CEO Jamie Dimon also disputed the notion that JPMorgan enjoys a lower cost of funds due to the perception that it is too big to be allowed to fail. "We pay market prices when we borrow money," he declared, according to the FT. And if you followed American Banker National Editor Maria Aspan on Twitter yesterday, you already know what Dimon had to say about the activist shareholders calling to split the chairman and CEO roles (they're "the union investors," not "real money"), analyst Mike Mayo ("I'm richer than you") and JPM's own chief risk officer (unprintable in a family publication). Wall Street Journal, Financial Times

Wall Street Journal

"Builders Fuel Home Sale Rise" — "Developers Overlook Buyers' Credit, Cash Problems, Luring Them to Pricier Houses." No, this isn't a flashback to 2006. New home sales are surging, and while one reason is that investors have scooped up the inventory of existing homes, another factor is that "the nation's home builders have mastered the art of selling. … [M]ore home builders have offered to pay closing costs and arrange home loans through in-house mortgage operations. They have hosted free credit-counseling sessions for buyers with bad credit scores, and made heavy use of government-backed mortgage programs that allow buyers to get a home with little or no down payment," i.e. FHA. "In some cases, that means buyers are ending up paying more than they expected for a house, raising worries that some buyers are biting off more than they can chew." We repeat: The year is 2013. You have not traveled back in time.

"Regulators investigating alleged interest-rate manipulation are hoping to reach settlements with at least three major financial institutions" — Rabobank, Lloyd's and ICAP - "by the end of summer." Cue the inevitable outraged reader comment, complete with Biblical overtones: "What is this talk of 'settlements'? How about some slammer time for these money changers?"

Financial Times

"US banks enjoy best profits since 2006" — Fourth-quarter industry report card from the FDIC, which warns that the strong earnings are probably not sustainable for long.

New York Times

"S.E.C. Nominee Tries to Allay Skepticism" — Mary Jo White wages a "Congressional charm campaign" ahead of her Senate confirmation hearings. Also, new documents reveal she did some legal work for former HSBC CEO Michael Geoghegan, in addition to her previously disclosed financial services clientele.

"Wall Street Pay Rises, for Those Who Still Have a Job," according to bonus data from the New York state comptroller.

Remember the debate in late 2011 over a proposed "Tobin tax" on financial transactions? Such a tax could have unintended consequences, Steven M. Davidoff warns in his latest "Deal Professor" column, citing the experience of New York State and other jurisdictions. (The New York tax, created in 1905, was phased out beginning in the 1970s but technically is still on the books. Weirdly, the money is collected but immediately returned to the payer now.)

Dodd-Frank's mandatory "say on pay" votes may turn out to harm shareholders, according to this contrarian op-ed by a Jones Day lawyer.

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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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