Morning Scan
Thursday, September 2, 2010
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Receiving Wide Coverage ...
Defending Dick Fuld: Lehman Brothers stole the show at the Financial Crisis Inquiry Commission's hearing Wednesday. The Times said Lehman's former head, Dick Fuld, "got a fairly sympathetic hearing" from the commission, saying "comments by several commission members suggested that the panel's final report, due in December, would home in on the controversial way the bailouts of 2008 were conducted." The Post said Fuld got a better hearing from the FCIC than he did from lawmakers. "Although Fuld has previously made similar but less pointed remarks on Capitol Hill, they have been largely ignored. This time, however, members of the commission put U.S. regulatory officials on the defensive, to explain why they did not take aggressive action to save the bank." The Journal said a rift between Democratic and Republican members of the commission sets the stage "for a difficult debate within the Financial Crisis Inquiry Commission as it begins to craft its report on the 2008 meltdown's causes." Wall Street Journal, New York Times, Washington Post
In the Times, "Breakingviews" also came to Fuld's defense, saying he "makes at least one fair point: regulators were damagingly inconsistent."
Trading Probes: A story on the front-page of the Journal said the SEC is examining a practice known as "quote stuffing," trading in which unusually large numbers of orders to buy or sell stocks are placed in a fraction of a second, only to be canceled almost immediately, to see if such practices played a role in the May 6 "flash crash" and whether it puts some investors at a disadvantage. A separate story at the back of the A section said Finra is taking steps to prevent erroneous trades made in dark pools from accidentally triggering safeguards introduced in the wake of the "flash crash." A third story said the parent of the Chicago Board Options Exchange is hooking up some of the biggest Wall Street banks and trading firms — including Goldman Sachs, B of A's Merrill Lynch and Interactive Brokers Group — to an electronic exchange, set to launch in October.
Mixed Message from IMF: The International Monetary Fund is warning that many wealthy countries are amassing risky debt burdens but playing down the likelihood of a Greek default. A Post column questioned whether the U.S. government could default on its roughly $9 trillion in government bonds and notes after the IMF gave it a yellow caution flag. Wall Street Journal, New York Times, Washington Post
Run on Kabul Bank: A day after replacing top executives at Kabul Bank, Abdul Qadir Fitrat, the governor of Afghanistan's central bank, sought to allay fears about the institution's health, saying it is solvent and backed by the government. The Journal noted that his comments "contrasted sharply with what other central bank executives and U.S. officials have said in recent days" that Kabul is "deeply in the red after making hundreds of millions of dollars in clandestine loans to its own managers and owners along with some of Afghanistan's most politically connected people." The Times noted that "scores of Afghans lined up to empty their accounts at Kabul and found the bank unwilling to comply." Wall Street Journal, New York Times
Wall Street Journal
Connecticut Attorney General Richard Blumenthal is probing First Niagara Financial's $1.5 billion proposed acquisition of NewAlliance Bancshares, seeking information on jobs that may be lost and branches that may close as a result of the merger.
A federal judge rejected the FDIC's claim that it is owed more than $900 million from the former parent of Colonial Bank, which was seized by banking regulators last year. The paper said decision "is likely to be closely watched by bank-holding companies and could have a big impact on creditor recoveries in other similar bankruptcy cases."
A story on the front-page of the Money & Investing section said Value Line's attempts to recover from a scandal that led to the resignation of former CEO Jean Buttner in 2009 are being complicated by Buttner's continued influence over the company.
JPMorgan Chase promoted Tushar Morzaria to chief financial officer of its investment bank, to succeed Paul Compton, according to a memo reviewed by Dow Jones Newswires. Compton, 46 years old, will become chief administrative officer of JPMorgan's investment-banking business.
New York Times
Foreclosures may once again be an election-year "bugaboo" by making it difficult for potential voters to prove they live in the county in which they are registered to vote.
Christina Romer, the outgoing chairwoman of President Obama's Council of Economic Advisers, said in a final speech Wednesday that the government's stimulus efforts helped the country avoid a second Great Depression. She also offered an explanation of why her original forecast for unemployment — that it would peak at 8% — was off, saying firms cut production and labor much more than they normally would, something that economists are still struggling to understand.
An Op-Ed by Karl E. Case, a professor emeritus of economics at Wellesley and co-creator of S&P's Case-Shiller housing index, wrote that, while the economy may take years to recover from the housing market collapse, the dream of home ownership is still alive.
Washington Post
An article listed five reasons for why "a slow-and-steady recovery is likely to continue" despite speculation of a double dip. Those reasons included a rising savings rate, healing credit availability and a pick-up in new home construction.
, with contributions from Sara Lepro and Rachel Witkowski.
