Morning Scan
Tuesday, January 12, 2010
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Receiving Wide Coverage ...
Bank Tax Eyed: The papers, citing unnamed officials, said the Obama administration is considering a tax on big banks designed to recoup the cost of the bailout and discourage excessive risk taking. The Journal said "the White House hopes the fee will soothe the public's anger at financial firms." The Times said, "the president also has a political purpose — to respond to the anger building across the country as big banks, having been rescued by the taxpayers, report record profits and begin paying out huge bonuses while millions of Americans remain out of work." The Post also said the idea could be "politically popular." Wall Street Journal, New York Times, Washington Post
Two other Journal articles considered prospects for the bank tax. A news analysis said populist ire at Wall Street continues to simmer, and the proposed fee could get a favorable reception in Congress as the 2010 campaign year unfolds. A nearly identical "Capital Journal" column by Gerald F. Seib asked, "Could all those populist pitchforks currently pointed at Washington be turned toward Wall Street instead? That's the question that ought to worry Wall Street executives as they prepare to pay themselves nice bonuses this month, hard on the heels of a government bailout of the financial system, and amid continuing job losses around the rest of the country."
Cuomo Seeks Info on Bonuses: Not to be outdone, New York Attorney General Andrew Cuomo said Monday that his office has requested information from the nation's largest banks and Wall Street firms on their compensation and bonus plans for fiscal-year 2009. Wall Street Journal, New York Times
B of A Update: The Post reported that the SEC expanded its charges against Bank of America on Monday, accusing the bank of "concealing from investors plans to pay billions of dollars in bonuses to employees at Merrill Lynch before shareholders were asked to approve a merger of the two firms." But the Times reported that a federal judge rejected the SEC's request to expand its charges. The paper also said B of A is discussing a settlement of a separate inquiry of the deal brought by the New York Attorney General. New York Times, Washington Post
The Journal, citing unnamed sources, reported that Gregory Curl, the B of A executive who was passed over in the competition for the top job, is expected to see his responsibilities diminished as part of a forthcoming management shuffle.
Wall Street Journal
House and Senate negotiators are considering applying for the first time the Medicare payroll tax to investment income as part of a compromise to pay for a health overhaul. The extra Medicare tax would apply only to the wealthy and could allow congressional Democrats to reduce the sting of a tax on high-cost insurance plans, said Democratic aides and others briefed on the negotiations.
The New York Fed raised capital requirements for its network of primary dealers to $150 million from $50 million. It said any firm applying to become a primary dealer must have had the "relevant operations" in place for at least a year.
Citigroup removed Terri Dial from her job leading the New York company's U.S. retail bank as part of a broader push by Chief Executive Vikram Pandit to strengthen his leadership team.
AIG has asked Thomas Russo, the former top in-house lawyer at Lehman Brothers, to be its next general counsel, according to people familiar with the matter.
"Heard on the Street" said support is growing for reducing the principal on mortgages that are worth more than a house's value.
An Op-Ed by Alan S. Blinder, a professor of economics and public affairs at Princeton University, vice chairman of the Promontory Interfinancial Network, and a former vice chairman of the Federal Reserve Board, said Wall Street has quickly rediscovered the virtues of mammoth paychecks and asks, why hasn't there been financial reform?
Another Op-Ed by David Backus, a professor of finance and economics at the New York University Stern School of Business, and Thomas Cooley, a former dean and an economics professor at the New York University Stern School of Economics, said don't blame international capital flows for the run-up and crash in home prices.
New York Times
Columnist Andrew Ross Sorkin said the hearings of the Financial Crisis Inquiry Commission that begin Wednesday, "may help direct the national conversation and steer the current reform efforts." In his Dealbook column, he outlines some of the questions that the commission should ask the Wall Street executives, including ones about the value of proprietary trading and bonuses.
Washington Post
In a front-page story, the Post said the Fed will turn a $45 billion profit for 2009, according to the newspaper's calculations. The money will be sent to the Treasury and is "good news for the federal budget and a sign that the Fed has been successful, at least so far, in protecting taxpayers as it intervenes in the economy."
Wells Fargo loan specialists met with troubled borrowers in the Baltimore area on Monday to help modify their loans. "About 600 borrowers from Baltimore and the Washington region have signed up for help so far, but the company hopes to attract up to 2,000."
, with contributions from Sara Lepro and Steven Sloan
