Receiving Wide Coverage ...
Submissive on Pay: The Treasury Department failed to rein in outsize executive pay at some of the biggest bailed-out companies last year, according to a report published Monday by the special inspector general of the Troubled Asset Relief Program. Treasury officials awarded 63% of the 25 highest-paid employees at Ally Financial, AIG and General Motors total pay packages in 2012 that topped the median pay for executives at similar companies by more than $37 million. The Journal observes that Treasury previously rejected the watchdog's criticism and declined to institute policy changes on pay, "a sign the report might not crimp the future pay packages of GM and Ally Financial executives." The Treasury recently sold its remaining shares in AIG, so the company no longer has to submit its pay packages for approval. The Times echoes the point, noting that a report by the inspector general in 2012 "made similar criticisms." The Washington Post also picks up the thread, noting that Monday's report evaluates Treasury's actions since last year "with stinging allegations of lax oversight and supervision."
Wall Street Journal
RBS is nearing a settlement with U.S. and U.K. authorities over the bank's alleged manipulation of the London interbank offered rate, or Libor, the Journal reports. One holdup: The Department of Justice is said to want the British bank to plead guilty to a criminal count in addition to paying a penalty of roughly $790 million. The push for a criminal charge reflects "a newly tough stance" for the DOJ, which the paper notes has been slammed for going easy on the big banks. Prosecutors' fears that a criminal plea could destabilize RBS reportedly eased after the muted market reaction to a settlement in December of Libor-rigging charges by UBS that included a felony plea by the Swiss bank's Japanese arm.
UBS and Barclays agreed to pay a combined $2 billion last year to settle Libor-rigging probes.
For its part, RBS is said to worry that copping to a criminal charge would spur clients to cut off business and fuel private lawsuits. The Journal also echoes a report by Reuters that bankers discussed possibilities for an industry-wide settlement of Libor probes during a closed meeting on Thursday in Davos, although an official with one regulator tells the Journal that prospects for a pact represent "more wishful thinking than anything else." A banker called the suggestions of a multi-bank settlement "ill formed" at present.
The FT details some of the assumptions used by the Federal Reserve in its latest round of bank stress tests. JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley had to show they could weather, among other things, a doubling of German sovereign debt spreads, a 56% drop in the price of benchmark oil, a 42% fall in Brazil's main equity index, and a 160% widening of spreads on U.S. Treasuries. In all, the Fed gave the six banks roughly 30,000 risk factors against which to test their portfolios, according to the FT, which notes that how banks fare on the tests will determine how much capital they can return to shareholders in the form of dividends and stock buybacks. The banks submitted their data recently, with the results expected in March.
New York Times
Though former federal prosecutor Mary Jo White's work as partner at the law firm of Debevoise & Plimpton will force her to recuse herself from anything that ties to her previous clients, the Times says that President Obama's pick to run the SEC has a bigger problem: She has "zero experience" to help her to implement and enforce provisions of Dodd-Frank and to regulate electronic trading that even an experienced financier would find daunting. White's work as a lawyer for JPMorgan Chase, ex-Bank of America chief Ken Lewis, and former Morgan Stanley CEO John Mack, gives the Times pause, too. "Of course, if she is confirmed, we must all hope that she can put her previous client relationships behind her and work for her new client — us," Dealbook writes.