Receiving Wide Coverage ...
Baleful in Basel: Banks around the world still need to repair their balance sheets by writing down dodgy assets, the Bank for International Settlements said in its annual report. In a speech, Jaime Caruana, general manager of the association of central banks, warned that excessive monetary stimulus could make things worse, by creating complacency about fiscal problems, encouraging risk-taking by the financial sector and/or unleashing inflation. Wall Street Journal, New York Times
Win Some, Lose Some: "Words such as 'honesty,' 'integrity,' and 'fair dealing' apparently do not mean what they say; they do not set standards; they are mere shibboleths.” That memorable quote comes from a judge’s ruling rejecting Goldman Sachs’ motion to dismiss a shareholder suit alleging material misstatements about conflicts of interest in CDO deals. According to the Journal, Goldman had argued that “words in the disclosures at issue were nonactionable statements of opinion or puffery.” Calling that argument “Orwellian,” Judge Paul A. Crotty of the U.S. District Court in the Southern District of New York wrote, "If Goldman's claim of 'honesty' and 'integrity' are simply puffery, the world of finance may be in more trouble than we recognize." However, as the FT notes more prominently in its story about the ruling, Crotty did dismiss a key claim of the pension-fund plaintiffs: that Goldman was obliged to disclose to shareholders it had received a “Wells notice” from the Securities and Exchange Commission warning the agency intended to file civil fraud charges. “A Wells notice indicates not litigation,” the judge wrote, “but only the desire of the [SEC] enforcement staff to move forward, which it has no power to effectuate,” since the five-member commission has final say on whether to sue. This will be a comforting decision for the many public companies that do not disclose Wells notices, the article says. Wall Street Journal, Financial Times
Bank CEO Pay: The FT has a package of content on the subject today (not to be confused with the series the paper did a few weeks ago about banker pay in general). According to the paper’s research, CEO compensation rose last year by almost 12% on average at top U.S. and European banks; the average climbed for the second year in a row, despite the weak performance of the industry. There’s also the obligatory, but still pretty neat, interactive graphic, which shows JPMorgan’s Jamie Dimon had the fattest pay of 15 international finance CEOs.
