Morning Scan
Wednesday, March 3, 2010
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Receiving Wide Coverage ...
Euro Trashed: The Journal reports that the Justice Department is investigating whether several prominent hedge funds — including those run by George Soros, John Paulson, David Einhorn, and Stephen A. Cohen — colluded to short the European currency. A front-page feature in the paper, headlined "Europe's Original Sin," says that despite all the blame directed at Wall Street for Greece's current debt woes, neighboring governments turned a blind eye to the country's manipulation of budget figures.
Speaking of Greece, the papers report that its government is expected to announce today a new austerity plan designed to save $6.5 billion and "avert a debt crisis in the euro zone." Wall Street Journal, New York Times
The Journal also reports that credit default swap prices indicate fears of defaults by European countries have subsided …
… while the Times says concerns about Britain's debt levels are rising as the pound takes a beating.
Post columnist Harold Meyerson cites Goldman Sachs' role in the Greek debt crisis as a reason why Congress should bring the opaque over-the-counter derivatives market under regulation, without the exemptions allowed by a bill passed in the House last year.
… which brings us to:
U.S. Reg Reform: Key members of the Senate Banking committee are seeking support for a proposal that would house a new consumer-protection regulator within the Fed. The Post calls the proposal an "unlikely twist after all the beatings that Democrats and Republicans have laid on the Federal Reserve over the past year" — one that "was greeted with horror Tuesday by liberal lawmakers and a broad coalition of trade unions and consumer-protection and other advocacy groups." New York Times, Washington Post
The Times' Breakingviews column says lobbyists for the banking industry have watered down financial reform. "America's big banks aren't being broken up. Nor does it appear there will be strict new limits on their activities. And while lenders may have to cope with a new consumer regulator, its power and scope is shrinking daily."
The Journal's "Heard on the Street" is similarly disappointed in Congress' compromises but focuses on the moral hazard that the legislation would create by formalizing emergency support measures for banks.
Wall Street Journal
A story on the front page of the Money & Investing section declares that the long-running bank branch building boom is coming to an end. The total number of retail branches in this country is on track to decline this year for the first time in nearly a decade, in part because acquirers are shedding overlapping branches.
The FDIC plans to securitize $4 billion of assets inherited from failed banks the agency took over in three separate offerings, starting with a $1.8 billion deal this week. Don't bother looking for a prospectus on the SEC's Edgar system; these securities are being offered as private placements.
The paper explores the reasons why historically low mortgage rates have produced so few refinancings: falling home prices, tighter lending standards, declining incomes and last but not least special fees imposed by Fannie Mae and Freddie Mac.
New York Times
A front page article says New York City officials and economists believe that the federal government's bailouts of Wall Street firms helped soften the blow of the recession in the Big Apple. "The primary measure of the local impact of a recession has always been how many jobs it wiped out; on that score, this recession has been significantly milder in New York than in the rest of the United States. … [F]orecasters now expect the city to follow the nation out of recession in the next few months without having suffered as much as other large cities in big states like California, Florida and Illinois."
The paper also says GMAC's chief executive Michael Carpenter's pay rivals that of Goldman Sachs chief Lloyd Blankfein, despite the fact that the auto and home lender hasn't turned a profit since 2008. Carpenter earned about $1.2 million in salary and restricted stock in 2009 for just a month and a half of work. (He joined GMAC in November.) "That is equivalent to full-year pay of $9.5 million."
, with contributions from Kate Davidson and Sara Lepro.
