Morning Scan
Tuesday, November 10, 2009
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Receiving Wide Coverage ...
Card Watch: A front-page article in the Times' "Card Game" series looked at the credit card industry's "squeeze on customers" ahead of the new card law's implementation deadline, in the midst of Congressional efforts to speed up that implementation. "The higher rates and fees reflect the grim new realities of the credit card industry — the percentage of uncollectible balances has hit a record even as a new law may further limit the cards' profitability." The Journal's "Credit Markets" column said the market for bonds backed by credit-card debt has been roiled by new accounting rules that throw into question bondholder rights to the assets when an issuer goes into receivership. As a result, no new credit-card securities have been issued since the beginning of October.
Unfreezing Salaries: The Journal, citing an internal memo from JPMorgan Chase's human resources department, said the firm lifted a salary freeze on all employees earning more than $60,000 and announced a one-time $500 award for lower-paid employees. In the paper's "In the Game," column Dennis Berman advised taxpayers in the Northeast to "Get downon a knee, clasp your hands and pray" more Wall Street firms follow suit. "New York's state government, and its dysfunctional neighbors in New Jersey and Connecticut, already are in deep financial crisis. Without the tax revenue from Wall Street pay and bonuses, they could find themselves closer to the brink."
Regulatory Watch: The financial services industry has moved out of the spotlight for the moment, but the Journal said Democrats are advancing proposals in Congress designed to limit the size and complexity of financial companies so that any collapse wouldn't damage the broader economy, "a sign that lawmakers are responding to anti-Wall Street sentiment by toughening the administration's rewrite of finance rules." Another story looked at the debate among EU ministers over when to withdraw support for the bloc's banking system. Ministers are due to discuss a plan this week that could end state guarantees for bank debt starting next year, but the paper interviewed several minister who think it is too soon. The Times said Hector Sants, the chief executive at Britain's financial industry regulatory body, said in a speech in London that many senior banking executives failed to accept responsibility for the financial crisis and neglected the need to change their behavior.
Wall Street Journal
Fewer banks tightened lending standards for businesses and consumers during the past three months, the Federal Reserve's latest survey of loan officers showed. The paper called it "a sign that the credit crunch's grip may soon ease."
John Grayken, the head of real-estate private-equity giant Lone Star Funds, wants to raise $20 billion to buy pools of troubled mortgages and other kinds of distressed debt. To get the money, Mr. Grayken is doing what once would have seemed outlandish for a brand-name deal maker like Lone Star: He is cutting some of his fees by more than 50%.
Robert McCann, the recently appointed chief of UBS' wealth-management business for the U.S., has assembled a team of former Merrill Lynch & Co. executives to help him return the struggling unit to profitability.
Randall Smith reviewed Josh Kosman's "The Buyout of America," a warning that heavy debt loads of companies acquired by private equity firms could lead to then ext credit crisis. Smith said the book "brings to the subject a relentlessly critical approach that is refreshing, simply because so many stories about the buyout firms are the sort of puff pieces that result from delicate negotiations for access." But he said Kosman "undercuts his wealth of material with a one-sided approach and strident tone."
In an op-ed, Anil Kashyap of the Booth School of Business at the University of Chicago, and Frederic Mishkin , a professor at the Graduate School of Business at Columbia University and a former governor of the Board of Governors of the Federal Reserve System, took issue with a bill that would subject the central bank's monetary policies to an audit, calling it "a veiled attempt to undermine the Fed's independence."
New York Times
In "Dealbook," Andrew Ross Sorkin considered Wall Street whispers that Barclays got the remnants of Lehman Brothers for "too good" a deal, and a lawsuit that lays out some of those rumors: "In simplest terms, the creditors to Lehman's estate — including large pension funds and hedge funds — claim that Barclays bought the American firm for $5 billion less than it was worth."
Washington Post
The paper said FHA's financial problems — it has burned through its cash reserves — could lead the agency to use an automatic funding resource from the Treasury, which would not need congressional approval. "If losses on FHA-backed loans continue, the agency could find itself overdrawn, yet payments from Treasury would not stop. They would automatically continue, rescuing the agency with taxpayer money."
, with contributions from Joe Adler and Maria Aspan.
