Receiving Wide Coverage ...
JPM Lawsuits, Etc.: JPMorgan Chase sued the Federal Deposit Insurance Corp. on Tuesday for over $1 billion, alleging that the regulator did not honor its obligation to cover legal claims against Washington Mutual. JPM, of course, acquired WaMu in a hastily drawn-up deal at the height of the financial crisis. (We're saying "hastily drawn-up" here, since the agreement apparently lacks specifics over who exactly is liable for what.) JPM is not seeking restitution for the landmark $13 billion mortgage settlement it reached with the Justice Department in November, because, you know, as part of that settlement, it agreed not to. The bank is, however, looking for the FDIC receivership to cover damages from "24 suits brought by a variety of investors, for which it said it should not have to take responsibility," reports the FT. The bank includes settlements paid out to Fannie Mae and Freddie Mac over bad loans they purchased from WaMu. Spokespersons from both sides are declining to comment. The Journal notes that JPM's "confrontation with one regulator comes as the bank faces a host of other legal headaches and investigations into everything from its overseas hiring practices to its trading operations." In fact, just yesterday, the bank was sued by Mississippi's attorney general over its credit card debt collection practices. And, in case you haven't had your fill of JPM news this morning, a new report, per the Journal, has found JPM "is the least likely among 15 big U.S. commercial banks to return large amounts of excess capital to shareholders over the next three years."
Bloomberg Adds Chat Room Controls: Bloomberg is adding tools to its terminals that will allow firms to monitor and restrict access to trader chat rooms, which are popular for those involved in market manipulation schemes. Illicit trader chats have been cited in recent Libor and Forex settlements/probes and several banks, including JPM, are reportedly close to prohibiting their use. The tools will, among other things, allow clients to limit how employees can access multi-firms chats. Wall Street Journal, Financial Times
Wall Street Journal
So, despite what you may have heard, figures suggest the Securities and Exchange Commission is actually bringing fewer enforcement cases and slowing early-stage probes. Legal experts tell the paper "the more selective approach presents risks for SEC Chairman Mary Jo White if she fails to win some blockbuster cases to support her get-tough rhetoric."
The paper profiles Ben Bernanke as he winds down his Federal Reserve chairmanship. "It is widely accepted that the landmark policies Mr. Bernanke championed during and after the crisis—rock-bottom interest rates, loans to banks and controversial bond buying—averted an economic calamity," Jon Hilsenrath writes. "Their failure to spur a vigorous recovery, however, has created perhaps the biggest unanswered question about Mr. Bernanke's legacy."
As new rules and tough markets have made being an investment bank much harder, the paper takes a look at Goldman Sachs. Goldman anonymice tell the paper the firm "which clung to its trading roots even after a regulatory overhaul drove rivals to change course, is now reining in riskier activities, shrinking its balance sheet and steering clear of trades that don't produce the double-digit-percentage returns its shareholders crave."
Mortgages costs will go up next year since the Federal Housing Finance Agency has directed Fannie and Freddie to charge higher fees on loans to borrowers who don't make big downpayments or have stellar credit. The higher fees are meant to "level the playing field" between the GSEs and private lenders. One consumer advocate tells the paper "there will be significant opposition very quickly once people understand what is actually being implemented."
The European Union has agreed to finance up to 0.8% of the banking sector's insured deposits. "The weaknesses of the existing guarantees were brutally exposed after the 2008 financial crisis," the paper notes.
The New York Review of Books features a long item from U.S. District Court Judge Jed Rakoff on why no high-level executives have been prosecuted in relation to the financial crisis. "I do not claim that the financial crisis that is still causing so many of us so much pain and despondency was the product, in whole or in part, of fraudulent misconduct," he concludes. "But if it was—as various governmental authorities have asserted it was—then the failure of the government to bring to justice those responsible for such colossal fraud bespeaks weaknesses in our prosecutorial system that need to be addressed."