Friday, December 23, 2011
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Editor's Note ...
Morning Scan is taking a break for the holidays next week. We'll publish next on Tuesday, Jan. 3.
Receiving Wide Coverage ...
Bah, Humbug! We're a few days late with this one, but it's still worth noting since it captures the zeitgeist quite well. On Tuesday, Bloomberg News ran a story by Max Abelson about bankers and billionaires defending the wealthiest 1% of the population against the criticisms of the Occupy Wall Street protestors. It led with a quote from JPMorgan Chase's CEO Jamie Dimon: "Acting like everyone who's been successful is bad and because you're rich you're bad, I don't understand it." The remark, made during an investor presentation earlier this month, had been reported previously, but in the context of Abelson's story it took on a new life. Soon an open letter to Dimon by Josh Brown, an investment advisor who blogs at ReformedBroker.com, was showing up on seemingly half the Twitter feeds we follow. "Not only do we not 'hate the rich' as you and other em-bubbled plutocrats have postulated, in point of fact, we love them," Brown wrote, citing the Yankees' Derek Jeter and the late Steve Jobs as examples of rich people adored by the public. "What we hate are the people who we view as having found their success as a consequence of the damage their activities have done to our country. What we hate are those who take and give nothing back in the form of innovation, convenience, entertainment or scientific progress." In other words, those working in the financial sector. A commenter on Brown's site sought to distinguish between Dimon and his megabank peers, on the one hand, and community bankers on the other: "My brother works for a small bank that covers a couple of counties. They did not take TARP, laughed at the foolishness and arrogance of Big Banking, and continued to make money during the worst of the financial crisis because they were not caught up in ridiculous things like derivatives, crappy loans, investment banking, etc. … No one in their community hates the owners or begrudges them financial success." Another commenter expressed the same sentiment about small banks but also offered some nuanced thoughts on Dimon: Though perhaps pugnacious, the JPMorgan CEO "managed a bank that really did have better underwriting standards, and that (in his view) could have avoided any bailout at all. … ALL of the major banks were ordered to take bailout money, on the premise that if only some took it, everyone would know what the weakest links were, and eat them alive. Did Citibank need it? Almost surely. Did JPMorgan and Wells Fargo? I'm not so sure." That Bloomberg story also had button-pushing quotes from former BB&T chief and known Ayn Rand devotee John Allison ("Instead of an attack on the 1 percent, let's call it an attack on the very productive") and Blackstone Group CEO Steven Schwarzman, who said of lower-income people who pay no income tax, "You have to have skin in the game." You'd think Schwarzman would have learned his lesson about optics after the flak he got for that Caliguloid birthday bash a few years ago.
Benmosche Sticking Around: "AIG chief Robert Benmosche has told the company's directors that he would like to remain in his job longer than previously planned, signaling he is in for the long haul after weak markets slowed the government's exit from the bailed-out insurer," the Journal says. A similar Bloomberg News story notes prominently that Benmosche has been treated for cancer.
Wall Street Journal
What's in your closet? Capital One, which has two big acquisitions pending, has come under scrutiny for trying to collect on credit card debts that were previously discharged in bankruptcy. Which is illegal. A court-appointed auditor found the company had attempted to do this more than 15,000 times (a figure the company disputes, though it hasn't said what the correct number would be). We've got to think this revelation cannot help the company's applications for regulatory approval to buy ING Direct and the U.S. credit card arm of HSBC. The deals have already drawn howls of protest from community activists.
"The Federal Reserve could signal it is likely to keep short-term interest rates near zero into 2014 or beyond, to bolster the fragile economic recovery."
New York Times
FINRA "fined Barclays Capital $3 million for misrepresenting information about subprime mortgage securities the bank had sold from 2007 to 2010." Commenting on this story, a Times reader, identified as "Joe," scoffs, "A fine for securities fraud is nothing more than a tiny little adjustment in the cost of doing business. When the SEC, or regulators or the Justice Department settles a case against a bank for fraud without a trial the main thing they are doing is covering up the crime, letting criminals go free, and telling other fraudsters not to worry." Sure your name's not Jed, pal?
And, Lastly …
Bitcoin: We remain fascinated by this digital underground currency and the endearing subculture of dollar-distrusting libertarians, cryptography geeks, and earnest entrepreneurs that's blossomed around it. There's been a lively debate in the blogosphere about whether Bitcoin poses a serious threat to the established monetary and banking order and what value it brings to those who use it. But here's one sign that the concept is capturing the public imagination: it's the subject of an upcoming episode of the CBS television drama "The Good Wife." In the episode, entitled "Bitcoin for Dummies," the series' heroine, attorney Alicia Florrick, "defends a lawyer … after the government arrests him for not revealing the name of an anonymous client: a mysterious computer programmer who illegally invented a new online currency." Alicia's client is played by guest star Jason Biggs, best known (to us at least) for playing the kid who ruined the eponymous dessert in the movie "American Pie." (No, we are not linking to that). We still haven't managed to acquire, much less spend any Bitcoins (incredibly, our IT department's firewall blocks the software, so we'll have to start this journey on our home computer, once we convince the missus that it's secure). Fortunately, we do know how to work the DVR, and our better half's a "Good Wife" fan, so at least we'll get to experience Bitcoin vicariously. Happy holidays!