Jeanine Skowronski

Receiving Wide Coverage ...Confirmed: As expected, the Senate confirmed former federal prosecutor turned corporate defender Mary Jo White as chairman of the Securities and Exchange Commission on Monday. She's set to start at the SEC any day now, but already has her hands full. On the SEC's (and as such White's) to-do list, per Dealbook: "complete new rules for Wall Street," "take aim at financial fraud," "confront the growing world of high-frequency trading … and money market funds." The Post reports, before she was confirmed White told Senator Al Franken "she would consider reforming the credit rating agency industry." She'll also need to address growing hostility over the SEC's delays in "establishing the rules to implement new online crowdfunding portals" authorized as part of the Jumpstart Our Business Startups Act last April.

Receiving Wide Coverage ...Lobbying for Dimon's Dual Role: JPMorgan Chase board members certainly support Jamie Dimon as bank CEO and chairman. Now, they're working hard to ensure shareholders feel the same way ahead of a vote on a nonbinding proposal to take away Dimon's chairman title. The proposal, which has been voted on by shareholders before, is expected to get more support this year due to the continued fallout from the London Whale trading debacle and concerns over succession planning. Per a representative for one activist shareholder group quoted by the Journal, "I can't think of another company where independent board leadership would be a more useful correction for CEO hubris." But other shareholders believe splitting the roles could create more problems than it solves, reports Dealbook. Those interested in the general debate around having the same CEO and chairman should check out this American Banker video.

Receiving Wide Coverage ...SEC Unveils Social Media Rules: The Securities and Exchange Commission has decided that companies can use Facebook, Twitter and other social media outlets to disclose key information about operations. But there's one catch: investors must be told what handles, Facebook pages, etc. these updates will be posted to. According to the Post, this disclosure rule essentially mimics the guidance issued by the SEC regarding company websites in 2008. Regarding the new social media rule, one former SEC enforcement official tells Dealbook, the "they did a really good job of splitting the baby." But this Journal blog hints that the SEC's clarity on social media may not be a game-changer. "While companies may now feel freer to use Facebook or Twitter to disseminate key information, in practice many are likely to play it safe and won't rely solely on social media sites as a distribution channel for such news," the author writes.

Receiving Wide Coverage ...Reopened: Cypriot banks reopened this morning, after being closed for nearly two weeks due to the country's financial crisis, but there are limits to what customers can do at their branches. Per the Post, cash withdrawals will be limited to 300 euros ($383) per person a day, transactions with other countries will be capped at 5,000 euros and those travelling won't be able to take more than 1,000 euros (as well as the equivalent sum in foreign currency) along for the trip. Cypriot banks were "braced" for an outflow of money once doors reopened, but, according to this Journal article, things thus far have been fairly quiet. "For the moment … the only crush at the branch was from the swarms of foreign journalists that have descended on the island over the past few days," the paper reports, adding that some Cypriots are waiting until the weekend to make withdrawals in order not "to topple the banks" the government is trying to protect. Meanwhile, U.S. markets are slipping because "investors just can't get past Europe" and German politicians are worried about all the criticism Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble have received as a result of the controversial Cyprus bailout. Another Journal article outlines how Cyprus' big banks ended up in financial ruin. The short version: It involves a lot of bad bets on Greece. It also appears regulators did little to flag (or stop) the exposure. Per the article, "both Cypriot banks passed Europe-wide stress tests in 2010, relieving them of pressure to change course. They passed again in 2011."

Receiving Wide Coverage ...Bernanke on Fed Policy … and TBTF: The Federal Reserve issued its latest policy statement yesterday and, as expected, plans generally remain the same. The central bank will keep short-term interest rates low and continue buying $85 billion a month in Treasuries and mortgage-backed securities indefinitely. But both the Journal and the Times posit the Fed is eyeing a wind-down. Per the Journal: "Fed Chairman Ben Bernanke … said the central bank would vary the amount of its monthly bond purchases depending on how the economy is performing. This means it could slowly dial them down from the current pace as it becomes more convinced that the job market is improving." Per the Times: "Bernanke's remarks suggested that the Fed would reduce its asset purchases if job growth continued at the current pace." The Times article goes on to note, however, that the change is at the very least "a few months away." Meanwhile, Bernanke did spice up what many believed would be a "boring" press conference by saying he agreed with Sen. Elizabeth Warren's stance on "Too Big to Fail" banks. "It's a major issue," Bernanke said. "I never meant to imply that the problem was solved and gone. It's still here."

Receiving Wide Coverage ...Freddie vs. Banks Over Libor: Freddie Mac is suing more than a dozen banks and the British Bankers Association, alleging it incurred substantial losses as a result of Libor-rigging. The alleged losses are related to swaps transactions and mortgage securities the GSE had linked to Libor. The suit claims the BBA participated in the rigging "to protect revenue it generated from selling Libor licenses and to appease the banks that were on the Libor panel," the FT reports. Freddie's counterpart, Fannie Mae has yet to file suit, but told the Journal it was "weighing that possibility." Banks caught in Freddie's crosshairs include B of A, JPMorgan Chase, Citigroup, Credit Suisse, Deutsche Bank, RBS, Barclays and UBS.

Receiving Wide Coverage ...Citi Settles: In a story that will sound familiar, Citigroup has agreed to pay $730 million to settle claims that it misled its bond and preferred stock investors about possible exposure to losses on securities backed by subprime mortgages. The settlement is now the second-largest class action settlement related to the financial crisis. Bank of America's $2.4 billion payout to shareholders over the health of Merrill Lynch still takes the top spot. Citi, which maintains it did nothing wrong and merely settled "to eliminate the uncertainties, burden and expense of further protracted litigation," plans to cover the costs with "existing litigation reserves," the FT reports. One analyst told the Journal he thinks "we're starting to see the light at the end of the tunnel" in terms of the litigation, "which is one reason why these stocks have been trading better." New York Times, American Banker

Receiving Wide Coverage ...Stress Tests, Part II: Second round of results of the Federal Reserve's stress tests are in. The big items to note, per the headlines: Ally Financial and BB&T had their capital plans denied; JPMorgan Chase and Goldman Sachs received "conditional" approval for theirs since the Fed has concerns about their "ability to adequately estimate losses" when faced with a severe economic event (Both now have until September to resubmit capital proposals); and Citigroup and Bank of America — "two of the nation's most troubled banks during the crisis" — got the go ahead to reward their shareholders. The Journal has a nice round up of the banks' response to their results that outlines what their capital plans look like. Specifics about the Fed's decision regarding each bank are a bit harder to come by since, as the FT Alphaville blog puts it "the Fed wouldn't tell the banks how it arrived at its estimates, or say much that sounded like it might have come from a sentient being." General reaction to the results is mixed. The FT says the Fed's approval of about $30 billion of share buybacks represents "a vote of confidence in the strength of the U.S. financial system." The Journal cites analysts who believe the action "shows continuing unease with the risks posed by giant financial firms despite their capital raising in recent years." And Slate blogger Matthew Yglesias adopts an even more cynical stance. "This right here is the real bank bailout," he writes.

Political and public outcry against "too big fail" has certainly grown in the last few months. Do large financial institutions need to fear a breakup?

Receiving Wide Coverage ...Reaction Split on Stress Test Results: Seventeen of the 18 largest banks have enough capital on hand to weather a sharp economic downturn, according to the first set of results from the Federal Reserve's latest stress tests. Full explainer, plus graph, of the results are available in this American Banker article. You'll notice Ally Financial standing out as the only bank failing to meet the Fed's requirement of a minimum Tier 1 common capital ratio of 5% with two other firms — Goldman Sachs and Morgan Stanley — seeing their Tier 1 common ratio fall below 6%. (The Financial Times focuses on Goldman Sachs' performance in this round up of results, headlined "Goldman exposed to $20bn loss in a crisis.") Reaction to the overall results thus far appears mixed. "Banks Health on the Mend," declares this Journal headline, with one analyst noting "One way to address too big to fail is to keep capital levels too onerous in order to have the banks shrink. These results are pretty much in line with that." But others argue banks fared well because the Fed went too easy and that there are vulnerabilities the tests fail to account for. "The derivatives market is huge — $600 trillion — and a potential source of instability for the banks, though you are likely to see little indication of that in the Fed's stress tests," writes Fortune senior editor Stephen Gandel. Perhaps David Reilly sums it up best in his "Heard on the Street" column: "Overall, many aspects of the test should soothe investors still worried about bank strength. But they shouldn't engender complacency about the need to keep shoring up the financial system." Meanwhile, Citigroup has already publicized its request to buy back $1.2 billion of shares without seeking a dividend. The FT believes the Fed's stress test results may ultimately rein in U.S. bank payouts. The Federal Reserve is expected to respond to Citi and other requests next week.

Receiving Wide Coverage ...Stress Test Results Are Coming: Today is the day the Federal Reserve tells banks how they fared on their stress tests and whether they'll be able to return more capital to shareholders through dividends or buying back stock. Results won't be made public until March 14, but according to the Journal's Heard on the Street column, "analysts expect healthy capital returns overall." This doesn't mean investors should expect big payouts, as some banks, including Bank of America and Citigroup, which have previously seen return requests denied, and JPMorgan Chase have indicated their requests will be modest. "While chances are good that the 2013 capital-return announcements won't include nasty surprises, they also aren't likely to be game changers," the column concludes. "For that, investors still have to look to prospects for the economy, lending growth and interest rates." Meanwhile, this Dealbook article written by Jesse Eisinger of ProPublica takes issues with the fact that Bank of America is likely to get the Federal Reserve's green light on payouts, since the bank "has been underestimating its legal risks for years." The article cites a lawsuit over an $8.5 billion settlement with investors reached in 2011 concerning Countrywide's bad mortgages as the latest legal risk B of A may be downplaying on its legal reserves accounting books. "In keeping the reserves low, Bank of America has already won," Eisinger writes. "If it turns out that the bank loses its cases and has to pay much more money, it nevertheless has managed to make its books look that much better for years. That surely helped as it has tried to dig itself out of its financial crisis hole."

Receiving Wide Coverage ...All About the Dow: Despite "tepid economic growth" and "political gridlock" (most recently personified by the ongoing sequester), the Dow Jones Industrial Average hit a record high on Tuesday, climbing 125.95 points, or 0.89%, to 14253.77 and exceeding the previous record set in October 2007. But will the rally last? Maybe, posits the Journal. Or, alternately, should more investors pile in? Possibly, says the Times, due largely to the ongoing efforts of the Federal Reserve. More big picture coverage of the Dow rally: New York Times, Bloomberg, Reuters

Receiving Wide Coverage ...Fannie-Freddie Merger: One big step for housing reform? Federal Housing Finance Agency acting director Edward DeMarco unveiled plans on Monday to merge certain parts of government-controlled mortgage giants Fannie Mae and Freddie Mac in order to "create a common platform for issuing mortgage-backed securities." Details on this plan were scarce, but the merger of certain "back-office functions" would involve forming a new company with its own CEO, management and headquarters. This firm will be jointly funded by Fannie and Freddie. The aim is to "create a single standard for issuing securities that could survive independently if the two companies no longer exist," Bloomberg reports. No timeline was given for when the new company would start issuing securities, but it is "unlikely" to take place this year. Congress and the White House will ultimately have to "decide how the securitization platform is operated, and whether it should be privatized." Reaction to the plan, thus far, has been minimal, largely because news of its existence broke late yesterday. BankThink's resident Risk Doctor Cliff Rossi, who has championed combining Fannie and Freddie before, told the Journal, the merger would "signal to the market that the status quo since 2008 for the [companies] is changing." But not everyone was feeling kind toward Fannie and Freddie, which have collectively received $190 billion in taxpayer aid since 2008. "Put all your rotten eggs in one basket," one Post reader commented. "That's sometimes the only way," another reader responded.

Receiving Wide Coverage ...Executive Pay: The global crackdown on executive pay continues. Swiss voters backed a plan over the weekend that places severe limits on how companies pay their executives and directors. These limits give shareholders (including pension funds holding shares) a binding say on executive compensation, prohibit bonuses from being awarded to executives joining or leaving the firm and require "annual re-elections for directors." Firms that violate these rules could face heavy fines equal to six years in salary or face a prison sentence of up to three years, the New York Times reports. The plan, which could be implemented in 2014 or 2015 (or maybe even later) depending on whether you talk to its supporters or opponents, will apply to all companies listed in Switzerland. This includes UBS, which is among the companies the Journal says will be affected "most dramatically" by the initiative due to "their relatively large payrolls and because they need to recruit employees from around the world." The approval of the Swiss proposal follows a move late last week by the European Union to cap bankers' bonuses at twice their salary. An op-ed posted on Dealbook is critical of the EU's move, expressing that bankers will find a way to skirt the rule, and suggests paying bankers like waiters, capping their salaries and requiring them to rely on tips. "Banks boast so often about serving customers that it would mean they really have to practice what they preach — or expect a welter of forlorn-looking bankers following clients out of offices asking what they did wrong," the author notes. "The chance of seeing that alone surely makes paying bankers in tips worthy of consideration."

Receiving Wide Coverage ...Citi's Executive Pay Plan: Citigroup is revamping its executive pay plan by now linking a portion of an executive's total compensation to the "company's performance relative to other big banks." These so-called "performance share units," payable three years after the firm meets performance goals, are being introduced after investors revolted against a proposed $15 million compensation package for former (and ultimately ousted) CEO Vikram Pandit in April. The new structure "will pay 40% of awards in cash, 30% in deferred stock and 30% in performance share units," the FT says. To get the maximum pay in the new category, CEO Michael Corbat "will have to achieve a return on assets of 0.85% and deliver a total shareholder return above four peers," the FT reports. Executive pay, generally, has remained a point of contention following the financial crisis, but any kudos Citi was set to reap for its revamped bonus plan were dwarfed by the announcement that CEO Corbat, who took over for Pandit in October, was being awarded $11.5 million for 2012. This compensation package puts him on par with B of A CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon, despite the fact that, as Shanny Basar tweeted, Corbat's "only been CEO for 2 minutes." As this New York magazine blog post notes, "if Corbat made $11.5 million under the new rules, think about what he could have raked in under the old." Wall Street Journal, Bloomberg

Receiving Wide Coverage ...Whispers at the Federal Reserve: Is the Fed getting ready to end its stimulus efforts? That's what some folks are wondering after minutes from the January Federal Open Market Committee meeting indicated "widening divisions among [Fed] officials" about the central bank's current monetary policy (which, recall, involves monthly purchases of about $85 billion in long-term bonds and mortgage-backed securities for an indefinite period). The stock market posted its biggest loss of the year upon learning "many" officials had expressed concerns that the ongoing QE3 could encourage excessive risk-taking and promote inflation. These concerns could lead the Fed to "taper or end" its asset purchases before unemployment improves substantially, an FT article notes. But investors' worry over QE3's imminent end may be premature since Fed chairman Ben Bernanke remains committed to the program. "We view Mr. Bernanke as being firmly in charge of the committee, and very dovish indeed," one analyst quoted in the Times wrote in a note to clients. He went on to predict the asset purchases will continue at the current pace for the rest of the year. "The prevailing sentiment at the Fed, as conveyed by the minutes as well as recent remarks, is that the central bank's efforts to pump tens of billions of dollars into the economy every month should not end anytime soon," a Washington Post story echoes.

Receiving Wide Coverage ...Moynihan's Big Payday: Brian Moynihan got a big raise in 2012. According to a regulatory filing (and one person "familiar with the matter" who was kind enough to fill in some gaps), the Bank of America CEO's overall pay package totaled $12 million. This includes a $950,000 salary and $11.1 million in restricted shares, which, together represent a 70% increase over his pay in 2011 and the "largest since he took over the Charlotte, N.C., company in 2010." The raise is related to "an improved performance" last year as B of A's shares advanced 109% and net profit jumped by 189%. If you're wondering where Moynihan, "the lowest-paid chief executive among the six giant U.S. banks and securities firms" in 2011, now falls on the executive pay scale, the raise puts him ahead of JPMorgan Chase's Jamie Dimon — who, recall, got Whaled in 2012 — and Morgan Stanley's James Gorman, who also took a pay cut this year. He will still make less, however, than Goldman Sachs' Lloyd Blankfein and Wells Fargo's John Stumpf. Financial Times, Wall Street Journal

Wall Street JournalFourth time's a charm? The paper reports "deficit hawks" Alan Simpson and Erskine Bowles plan to offer up a deficit fix to Washington sometime later today. According to the duo, this new plan "would reduce the federal budget deficit by $2.4 trillion over 10 years" primarily through reductions to Medicare and Medicaid, curbing or axing certain tax breaks, lowering caps on discretionary spending and adjusting how cost-of-living increases are calculated for Social Security checks. Of course, Simpson and Bowles' prior attempts to solve the nation's fiscal woes, including as co-chairs of a White House panel in 2010 "fell flat." The article attributes this to their pitches being "more popular with rank-and-file members looking to support a bipartisan plan than with congressional leaders ... locked in negotiations."

Receiving Wide Coverage ...RBS, Part II: Bankers behaving badly are all too happy to document said behavior in any type of internal correspondence they can. That seems to be a big takeaway this week as the Royal Bank of Scotland's $612 million Libor settlement has yielded incriminating emails and instant messages similar to those the Justice Department revealed in its civil case against Standard & Poor's. The most notable RBS correspondence making the rounds is an instant message a senior yen trader wrote in mid-2007: "The jpy libor is a cartel now. It's just amazing how libor fixing can make you that much money." Some other things we're learning from the RBS settlement the morning after: British taxpayers may wind up paying some portion of the fine, as "the government still owns an 82% stake in the bank." Emails aside, RBS could emerge from the scandal "about as well as shareholders can have dared hope." And, banks, in general, "are keen" to reach Libor settlements, (for which, Dealbook offers this handy tutorial.)

Receiving Wide Coverage ...And RBS Makes Three: Royal Bank of Scotland has reached a settlement with U.S. and U.K. regulators over its involvement in the Libor rate-rigging scandal. The settlement includes a combined $612 million fine. As previously speculated, RBS' Japanese unit pled guilty to criminal wrongdoing. Per Dealbook, this involves "a single count of felony wire fraud to settle the case." John Hourican, the head of RBS's investment bank, resigned as part of the settlement and his and other investment bankers' bonuses will be clawed back. Tangentially, an FT article, written prior to the formal settlement announcement, reports that U.K. Business secretary Vince Cable plans to "revive a radical plan to return Royal Bank of Scotland to the private sector by distributing free shares to the public," though it's unclear how likely this plan is to be implemented. The settlement makes RBS the third "giant global bank" to settle with regulators over the rate-rigging scandal.