Receiving Wide Coverage ...
Seriously, AIG?: We had a feeling the Internet was going to let out a collective groan once the news that AIG was considering a lawsuit against the federal government over its $182 billion bailout was picked up by news outlets and made the rounds on Twitter. (To summarize, the firm is being asked to join a suit originally launched by former CEO Maurice Greenberg, who claims the terms of the bailout were too harsh and deprived shareholders of billions of dollars.) And, oh, what a collective groan it was. "AIG, bailed out by U.S., may now sue U.S., claiming bailout terms were too harsh. We should counter-sue for stupidity," Berkeley professor and former U.S. Secretary of Labor Robert Reich tweeted with a link to an article from ABC news explaining the potential suit. "AIG considers suing government for bailing it out, world implodes in on itself," one Washington Post headline reads. Blogger Andrew Borowitz penned a satirical letter from AIG to the taxpayers for the New Yorker. (Sample line: "by suing … we are standing up for one of the most precious American rights of all: the right to sue someone who has just saved your life.") And David Weidner from MarketWatch goes so far as to suggest the government retaliate by charging AIG with treason.
To be fair, AIG isn't entirely without defenders. CNBC Senior Editor John Carney came out with a blog post entitled "Why AIG Suing America Isn't as Crazy as You Think" yesterday afternoon (though this follow-up tweet seems to indicate Reuters' Felix Salmon and Business Insider's Joseph Weisenthal enticed him to write it.). The argument he presents is complex as it delves into the specifics of various claims Greenberg makes in the case AIG is being asked to join, but the central thesis that emerges is similar to this point Slate blogger Matthew Yglesias makes: "If Greenberg wins and AIG doesn't sue, then AIG's management will be exposed to further litigation on the grounds that they've failed in their fiduciary duty to shareholders." (As a counterpoint, perhaps, to the counterpoint, this follow-up Dealbook article outlines why the government bailout of AIG may not have been as "onerous" as Greenberg claims.) We suppose those who like to take a contrarian view simply for the sake of being contrarian could also argue that AIG suing the U.S. for the bailout falls into the same gray areas as, say, the U.S. suing JPMorgan Chase for Bear Sterns' mistakes. As one Bloomberg commenter noted, "This is a story of a dog biting another dog." But that still doesn't make the potential litigation any easier for taxpayers to swallow.
More Changes at JPMorgan: The Journal takes a look at JPMorgan's former investment bank chief Jes Stanley's decision to leave the bank for the hedge fund that discovered the London Whale, while also pointing out that Todd Maclin has stepped down from his job as the co-chief of consumer and community banking earlier than expected. The article notes these moves "are the latest steps in a drastic reshaping of JPMorgan's executive suite" over the last (Whale-filled) year. Staley, who gave up direct oversight of the bank's investment unit in July, told the paper that move was intended to make room for the "next generation" of leaders.
In other JPMorgan personnel news, Dealbook reports that the bank has hired T. Timothy Ryan Jr., president and chief executive at top Wall Street lobbying firm the Securities Industry and Financial Markets Association, as its new top regulatory officer. A separate article also says the bank's chief executive Jamie Dimon has given up his position on the board of the Federal Reserve Bank of New York where he represented big banks with over $1 billion in capital and surplus. It's unlikely the London Whale had anything to do with this development: Dimon's second three-year term on the board expired at the end of December and the article notes "it is common for New York Fed directors to serve no more than two terms."
Wall Street Journal
Goldman Sachs has decided to disclose the value of its money-market funds daily rather than monthly, in order "to satisfy investors' calls for greater transparency on fluctuations in the price of their investments." The move, which represents a break with the industry standard, could lead other firms to follow.
"Nearly every major central bank is buying nontraditional assets to resurrect domestic economies," following the global financial crisis, citing Switzerland, "for decades a paragon of safety in finance," as yet another nation with a central bank currently executing a high-risk strategy to stimulate its economy.
Andrea Orcel, chief executive of UBS's investment bank, when being questioned by the U.K.'s parliament following UBS' $1.5 billion Libor fine, says he thinks bankers are too arrogant and that the industry, in general, is in serious need of a change.
Should HSBC's sale of its shares in Asian insurer Ping An fail to take place (an outcome that is looking increasingly likely), "hindsight hawkeyes will disparage HSBC's due diligence," this column from Jonathan Guthrie argues.
The Federal Reserve is considering a plan that would allow foreign banks to circumvent regulatory changes meant to prevent derivatives trading from costing taxpayers.
New York Times
U.S. officials have, well, officially declared the recent cyberattacks against banks were perpetrated by Iran, likely in retaliation for economic sanctions and a series of cyberattacks the U.S. launched on its systems.
Blogger Neil Irwin uses regulators' decision to loosen Basel III's liquidity rule and the recent mortgage settlements to declare that banks are winning, then (similar to Andrew Ross Sorkin's defense of the Basel III decision) uses the still-fragile economy to assert this isn't such a bad thing. "Every dollar that a bank holds as part of its liquidity buffer is a dollar it is not lending out toward a longer-term, illiquid investment, such as a loan to build a factory," Irwin writes. "And as long as the Bank of Americas of the world are facing a large and uncertain legal liability tied to their past behavior in mortgage lending, they are going to hoard cash to guard against extreme negative outcomes."