BANKTHINK

RBS, S&P Revisited; Geithner Book Titles; JPMorgan May Have Knowingly Made Bad Mortgage Deals

Print
Email
Reprints
Comment
Twitter
LinkedIn
Facebook
Google+
Partner Insights

Receiving Wide Coverage ...

RBS, Part II: Bankers behaving badly are all too happy to document said behavior in any type of internal correspondence they can. That seems to be a big takeaway this week as the Royal Bank of Scotland's $612 million Libor settlement has yielded incriminating emails and instant messages similar to those the Justice Department revealed in its civil case against Standard & Poor's. The most notable RBS correspondence making the rounds is an instant message a senior yen trader wrote in mid-2007: "The jpy libor is a cartel now. It's just amazing how libor fixing can make you that much money." Some other things we're learning from the RBS settlement the morning after: British taxpayers may wind up paying some portion of the fine, as "the government still owns an 82% stake in the bank." Emails aside, RBS could emerge from the scandal "about as well as shareholders can have dared hope." And, banks, in general, "are keen" to reach Libor settlements, (for which, Dealbook offers this handy tutorial.)

S&P Part III: The Justice Department's civil case against Standard & Poor's continues to make headlines. Per the Journal's homepage, thirteen states and the District of Columbia have also filed lawsuits against S&P. These states are looking to recoup funds related to various investments the credit agency rated and allege, similar to the DOJ, that "S&P presented its ratings as based on objective and independent analysis but actually were inflated to cater to the banks that helped arrange and sell the securities." But this op-ed from Bloomberg columnist Jonathan Weil points out why a case against S&P may be hard to win. Listed among the harmed investors in the Justice Department's case against the credit rating agency are Citigroup and Bank of America — banks who underwrote the CDOs S&P was asked to rate. "Under the government's version of the facts, S&P's fraud caused the banks' losses, and Citigroup and Bank of America were victims," Weil writes. "I would hate to be a government attorney who has to stand in front of a jury and try to make that argument." Meanwhile, the Post has effectively deemed credit rating agencies "Too Big to Fail." "The rating agencies, however flawed, have become so crucial to the workings of Wall Street that no one can live without them," the article notes. "The trouble in dealing with the … firms is that while there is broad consensus about the problems, there is little agreement on how to address them."

Geithner, Post-Treasury: Yesterday's Scan mentioned Timothy Geithner was joining the Council on Foreign Relations, a "sort of think tank", as a "distinguished fellow." Now it looks like the former Treasury Secretary is getting ready to write a book as well. An unnamed source tells the Post that Geithner, who is still looking for a publisher, "wants to write about how to fight global financial crises" and would "recount the story of the U.S. response to the crisis, which he saw first-hand." The move isn't entirely unsurprising: Several books about the financial crisis have been critical of Geithner's performance, including Neil Barofsky's "Bailout" and Sheila Bair's "Bull by the Horns" and a book would serve as a chance to set the record straight. This news prompted many people on Twitter to offer up title suggestions, including: "Crime and No Punishment," "Heart of TARPness," "The AIG of Innocence" and "Tuesdays With Moral Hazard."

Wall Street Journal

Credit Suisse is making some money again, thanks to costs savings and a more-focused investment bank, though revenue and net profit remain below analyst expectations.

Financial Times

Deutsche Bank suspended five traders implicated by an internal inquiry into rate-rigging at the bank.

New York Times

Internal emails are also coming back to haunt JPMorgan Chase. Documents filed as part of a lawsuit by Dexia Bank indicate JPM (as well as Washington Mutual and Bear Stearns) may have adjusted critical reviews to make mortgage-backed securities investments appear safer. Per the article: "In some instances, JPMorgan executives reduced the number of loans considered delinquent, the documents show. In others, the executives altered the assessments so that a smaller number of loans were considered 'defective.'" JPMorgan declined to comment in the article.

JOIN THE DISCUSSION

SEE MORE IN

The Seven Largest Sanctions-Related Fines Against Banks

The Justice Department announced a criminal plea and settlement with BNP Paribas on Monday, in which the French bank will pay nearly $8.9 billion to settle charges it willfully continued to do business with countries and entities on the U.S. sanctions list. It was the largest sanctions fine in the Justice Department's history more than four times larger than #2 on the list. The following are the largest penalties paid by banks for sanctions violations.

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.
TWITTER
FACEBOOK
LINKEDIN
Already a subscriber? Log in here
Please note you must now log in with your email address and password.