Sabbatical for JPMorgan Risk Chief; Suggestions for Obama's SEC Nominee


Receiving Wide Coverage ...

Advice for Mary Jo White: "Making Them Pay (and Confess)" is what the Times' Gretchen Morgenson would like to see from White, President Obama's nominee to head the SEC. In other words, the columnist wants White to kick the SEC's habit of allowing companies to settle charges by paying fines without admitting fault. The Post notes that the agency lacks some of the awesome powers of White's former employer, the Department of Justice. The SEC can't brandish threats of jail time, wiretaps, search warrants, undercover operations or grand jury probes. But it has other strong enforcement tools at its disposal, such as issuing damning reports on individuals and barring them from serving as corporate directors and officers. "Even if White wanted to devote all her energies to enforcement, there will be other and perhaps more pressing regulatory matters before the agency, including putting in place the sweeping regulations heaped on the agency by the Dodd-Frank Act," the article says. It also notes that unlike at the U.S. attorney's office in Manhattan, White will be overseeing unionized attorneys and answering to a five-person commission.

JPM Risk Chief Takes a Break: John Hogan, JPMorgan Chase's chief risk officer, is taking a four-month leave of absence to spend more time with his family, the bank said Friday. The finite term of the sabbatical strongly suggests that "spending time with family" is sincere in this case, rather than the corporate euphemism for dismissal it often is. Hogan has wanted to take time off since his father died in November, the papers say, citing anonymous sources. He took the CRO job early last year, shortly before the "London Whale" trading losses came to light, and the bank's recently released internal reports on that incident largely spared him from criticism. Deputy risk chief Ashley Bacon will fill Hogan's duties during his leave of absence. Wall Street Journal, New York Times

FOMC Previews: The Federal Open Market Committee is expected to keep short-term rates near zero and maintain its bond-buying program during its two-day policy meeting Tuesday and Wednesday, given the soggy economy. (Wall Street Journal, New York Times) The Journal's "Heard on the Street" column warns that by keeping rates so low, the Fed and other central banks "may have created a ticking time-bomb for investors in the bond market." Once the economy is back on its feet, market yields should rise, prices of existing, lower-yielding bonds may plummet and investors that have loaded up on such paper (including banks) could suffer sizable losses.

Living Wills: You know what happens when you assume? The family-friendly version is that it creates embarrassment for multiple parties. Regulators in the U.S. have warned megabanks working on their living wills not to assume that countries would coordinate to resolve a failing institution and avoid another Lehman-scale disaster. "Instead they are being forced to spell out what sorts of legal filings, notices and applications they would need to submit in each jurisdiction to ensure co-operation among regulators, and describe countries' legislation that is already in place that would facilitate co-ordination. From the banks' point of view, they are being asked to predict how different surgeons will behave when they are lying ailing on the operating table." A British official calls this "an impossible essay question" and tells the FT that bankers have asked him, "But you really would co-operate, wouldn't you?" If you have to ask ... The British paper says the U.S. regulators' guidance has fed suspicions that "for all the planning, countries will act in their narrow interest when it comes to the next crisis." Yes, the Financial Stability Board will have a lot to talk about at its meeting today.

Wall Street Journal

"Treasury Gets a Citibanker" — an editorial on the Jack Lew nomination. "Citibanker" is not meant as a compliment.

Why write a follow-up story on that Euromoney foreign-exchange ranking all these banks care so much about, focusing on Citi's efforts to top the survey, and not elaborate on the "lurid t-shirts" mentioned in the last story?

This one's not about banking, but it's a fun read — an interview with the founder of Uber, whose taxi-summoning smartphone app is disrupting a highly regulated industry across the country.

Financial Times

"Bank of America has begun moving more than $50bn of derivatives business out of its Dublin-based operation and into its UK subsidiary," partly for tax reasons.

"Banks' adjustment to IT threat barely begun." The "IT threat" referred to is not hackers, but competition from "non-bank data aggregators," broadly defined to include everyone from Paypal and Square to Kickstarter to M-Pesa. And maybe even Visa.

New York Times

"A New Housing Boom? Don't Count on It," writes Robert Shiller, who everyone should have listened to eight years ago.



Big Winners and Losers for Banks on Election Night

Republicans won a sizable victory late Tuesday, retaking the Senate after losing it eight years ago. Banks, too, largely benefited, as an ally of the industry captured a Senate seat in West Virginia, two credit union allies fell and a key Democratic senator squeaked past. Here's how election night played out for banks.

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