JPM Board Lobbies for Dimon's Dual Role; Fed Policy Side Effects

Receiving Wide Coverage ...

Lobbying for Dimon's Dual Role: JPMorgan Chase board members certainly support Jamie Dimon as bank CEO and chairman. Now, they're working hard to ensure shareholders feel the same way ahead of a vote on a nonbinding proposal to take away Dimon's chairman title. The proposal, which has been voted on by shareholders before, is expected to get more support this year due to the continued fallout from the London Whale trading debacle and concerns over succession planning. Per a representative for one activist shareholder group quoted by the Journal, "I can't think of another company where independent board leadership would be a more useful correction for CEO hubris." But other shareholders believe splitting the roles could create more problems than it solves, reports Dealbook. Those interested in the general debate around having the same CEO and chairman should check out this American Banker video.

Monetary Policy Side Effects: The Federal Reserve's insistence on keeping interest rates low "could be giving the housing market a sugar high," reports the Wall Street Journal. The U.S. central bank's move to purchase mortgage-backed securities has increased purchasing power among prospective buyers, despite ongoing supply-and-demand issues. This doesn't necessarily mean we're headed for another bubble. Home prices still haven't risen high enough for that to happen. Additionally, "tighter credit standards are acting as a brake on the recovery," the article notes. "High unemployment, low savings, and high debt loads among those who would like to buy their first homes will also remain a drag." Meanwhile, the FT reports that global central bankers are "putting cash into riskier assets and exotic currencies to compensate for ultra-low returns on U.S. Treasuries" and the depreciation of the dollar and euro. This move will either stabilize or destabilize global financial markets, depending on which investor you ask.

Wall Street Journal

The paper wonders why the Justice Department is suing Standard & Poor's over its allegedly shoddy ratings of mortgage-backed securities prior to the financial crisis while Moody's has yet to be hit with similar charges. The answer, the article sort-of concludes, is not so "clear cut" after an analysis of the 33 CDOs cited as evidence in the case elicited two small discrepancies. The discrepancies apply to tranches of two deals and don't appear particularly insightful. Persons familiar with the probe at the Justice Department maintain Moody's is still under investigation.

"Litigation finance" — where investors use their millions to fund lawsuits in hopes of collecting a payout when the verdict is delivered — is apparently a new trend. Critics believe this move will lead to frivolous lawsuits. One "lawyer-financier" maintains that funding frivolous litigation would be "the fastest way for me to go out of business."

Financial Times

Crédit Agricole is moving to cut costs in its investment bank unit.