Receiving Wide Coverage ...
JPM Hearing Previews — The Script: This morning Jamie Dimon will testify before the Senate Banking Committee on “what went wrong” that led to JPMorgan Chase’s recent $2 billion trading loss. The lawmakers should probably go straight to Q&A and skip his prepared remarks (which you can read unfiltered right here), because the testimony has already been parsed six ways from Sunday. Media outlets either play up the contrition (e.g. the Associated Press headline, “Dimon to Apologize…”), emphasize his insistence that the beaching of the London Whale was “an isolated event” (the Times: “JPMorgan Chief Is Expected to Play Down Trade Risks at Hearing”), or lead with the CEO throwing his subordinates under the bus (the FT begins by saying he’ll tell the senators that “the bank’s chief investment office was instructed to reduce its risk exposure last year but did the opposite”). Wall Street Journal, Financial Times, New York Times, Forbes, Bloomberg, Associated Press, American Banker
JPM Hearing Previews — The Issues: No one except JPMorgan’s shareholders would have any reason to care about the trading loss were it not for that whole too-big-to-fail thing. So says a Journal op-ed by Jeffrey Lacker and Gary Stern, president and former president, respectively, of the regional Fed banks in Richmond and Minneapolis. Hence, it’s important that the “living wills” (plans for orderly wind-down of large, interconnected firms) required by the Dodd-Frank Act be done right, the writers argue. “Regulators should set a high bar to ensure that an unassisted resolution would be the attractive choice for policy makers” if a big institution approached the precipice, Lacker and Stern write. There must be a “serious prior commitment to employ the plans when the time comes,” rather than “scrapping an approved plan in favor of using public funds and perpetuating too-big-to-fail.” Meanwhile, our colleagues in American Banker’s Washington bureau have prepared a handy cheat sheet on what to expect from the hearing, focusing on the really important part: lawmakers’ questions, which are likely to touch on the Volcker rule, capital requirements and whether big banks ought to be broken up.
Force-Placed Insurance: New York’s top financial regulator, Benjamin Lawsky, wants carriers to cut premiums for this widely discredited form of homeowners insurance, which servicers unilaterally purchase on behalf of delinquent mortgage borrowers. Wall Street Journal, New York Times
Record Fine for ING Bank: The Dutch bank will pay a $619 million penalty for illegally moving billions of dollars through the United States for clients in Iran and Cuba and thus violating economic sanctions. ING threatened to terminate employees who refused to conceal the origin of the money from the “filters” at U.S. banks, authorities said. The fine is the largest ever for these kinds of infractions. Court documents include this howler from someone in ING’s legal department, writing to a colleague in 2004: "We have been dealing with Cuba (and ways around clearing through Manhattan) for a lot of years now and I'm pretty sure that we know what we are doing in avoiding any fines." Wall Street Journal, Financial Times
Wall Street Journal
The paper profiles the Moody’s analyst heading the team that’s reviewing a number of big banks for possible downgrades.
“A former Wells Fargo loan officer has recast herself as a crusader for consumers, testifying that the bank targeted minority communities for shoddy loans” in the closely watched suit Baltimore is pursuing against the bank. In her new business, she audits consumers’ loan files for chain-of-title defects (“They had no legal standing to even sue you,” she tells a client) and testifies in court as an expert witness on their behalf.