Jeanine Skowronski

Breaking News This Morning ...$2.4B to Make It Go Away: Bank of America agreed to pay $2.43 billion to settle a class-action lawsuit brought by investors who claimed, among other things, that the bank misled them about the health of Merrill Lynch, which B of A was in the process of buying. B of A denies the allegations, but said it just wanted to put the dispute to rest. "Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders," said CEO Brian Moynihan. New York Times, Wall Street Journal

Receiving Wide Coverage ...Libor Shuffle: We suspected Libor was going to be big news this week. Following CFTC chairman Gary Gensler's call for radical reform of the Libor system, reports surfaced that the British Bankers' Association has voted to give control of the benchmark interest rate — which the BBA itself created back in 1986 — to someone else. The trade association's vote, which took place earlier this month, precedes the formal recommendations from U.K. Financial Services Authority managing director Martin Wheatley expected to be unveiled on Friday. The Times says the group's potential removal is "a blow to the organization," while the FT's Jonathan Guthrie calls the BBA's decision "the decent thing" to do. His op-ed, however, also points out that the trade association should have stepped down much sooner and equates the move to "an old-fashioned army suicide" preceding a dishonorable discharge at the hands of Wheatley. "The pre-emptive move amounts to banks telling customers: 'We can't be trusted,'" Guthrie writes, while adding that a switch in oversight may not preclude more scandals from popping up since "regulation and Whack a Mole have much in common."

Receiving Wide Coverage ...Global Threat on the Horizon: The central banks' efforts are all well and good, but the U.S. and European governments will need to do more to prevent global growth from screeching to a halt, says International Monetary Fund managing director Christine Lagarde. In an address at the Peterson Institute for International Economics, Lagarde warned the IMF may cut its estimates of global growth again this year during its meetings in Japan next month. She urged the U.S. to put aside political wrangling in order to address its deficit, calling the widening debt ceiling and uncertainty over the fiscal cliff "a threat for the global economy." , Washington PostNew York Times

Receiving Wide Coverage ...The Fed Dissected: It's been well over a week since the Federal Reserve announced another round of (this time unlimited) quantitative easing, but the U.S. central bank is still making headlines. The Journal has two stories this morning dissecting Federal Reserve Governor Daniel Tarullo's schedule. Their major takeaways include that Tarullo, considered the Fed's top banking regulator, spends a lot of time talking "with Obama administration figures, U.S. regulators and foreign officials" in an attempt to coordinate the massive regulatory overhaul taking place worldwide. He also made plenty of time for bankers, having "met in person or talked on the phone more than 60 times during one recent year with top U.S. bank executives" or, as the paper, alternately puts it, "five times more often" than Fed Chairman Ben Bernanke did. Tarullo spoke most often with Morgan Stanley Chief Financial Officer Ruth Porat, who has a role in organizing meetings between big-bank financial chiefs and the regulator. He also met periodically with Bank of America chief Brian Moynihan, Goldman Sachs head Lloyd Blankfein, JPMorgan Chase boss James Dimon and Citigroup leader Vikram Pandit, though the Fed is declining to comment on what any of these meetings were actually about.

Receiving Wide Coverage ...QE3,the Weekend After: The analysis of whether the Federal Reserve's latest round of quantitative easing is likely to accomplish anything continues. The Journal suggests big bank stocks will get a boost from Fed chairman Ben Bernanke's big move since it will increase lending and bank-revenue growth. It's also likely to underpin "the nascent housing recovery" and "extend the recent refinancing wave that has lifted mortgage revenue at a host of banks." But, according to the FT, the Fed's plan isn't likely to have an immediate effect on the larger economy since many banks are struggling to process back-logged mortgage applications, which could keep "rates on home loans elevated." And this Times article suggests banks may not be encouraged to push mortgage rates down as low as they could go since "by keeping the rates elevated, they are able to earn much larger profits when they sell the mortgages into the bond market." The collective assessment sounds an awful lot like the criticism of government stimulus efforts we've heard before: good for big banks on Wall Street, of little help to those on Main Street.

Receiving Wide Coverage ...QE3 Forever?: The Federal Reserve Thursday outlined its latest plan to spur job growth and bolster the economy. The basic steps include the purchase of $85 billion in long-term bonds a month through the rest of the year, the subsequent addition of $40 billion of mortgage-backed debt per month until the job market gets better and low interest rates through at least mid-2015. Stocks rallied following the announcement of this indefinite QE3, as traders apparently had been sufficiently encouraged to buy "growth-sensitive assets," reports the FT.

Receiving Wide Coverage ...Banished: The U.K.'s Financial Services Authority has banned former head of corporate lending at HBOS Peter Cummings from working in the country's financial services industry for his role in the bank's collapse during the 2008 financial crisis. Cummings was also fined £500,000 ($805,000), which the Journal notes is "the highest fine imposed by the FSA on a senior executive for management failings." The FSA imposed the penalties because it believes Cummings "pursued an aggressive expansion of HBOS's lending practices, which led to major losses," the Times reports. HBOS was ultimately purchased by Lloyds TBS as a part of a rescue takeover in 2008 and the merged banks received a big bailout from the British government shortly thereafter.

Receiving Wide Coverage ...A Golden Age for Whistleblowers?: The Internal Revenue Service has awarded Bradley Birkenfeld, a convicted former banker, $104 million for the role he played in exposing the aid Swiss bank UBS provided to wealthy clients in a decades-long effort to help them evade paying taxes. According to the Journal, details provided by Birkenfeld ultimately led UBS "to turn over the names of more than 4,000 account holders who were U.S. taxpayers and pay $780 million to resolve a criminal case involving secret offshore accounts." The agency has also collected more than $5 billion in taxes and penalties from over 33,000 U.S. taxpayers, who confessed to holding undeclared overseas accounts following news of the scandal. Birkenfeld himself was charged with conspiracy for failing to come clean about his role in the matter and is currently serving the remainder of a 40-month prison sentence in home confinement in New Hampshire.

Receiving Wide Coverage ...Wait a Minute … Do Bailouts Work?: That seems to be the question following the Treasury Department's now official sale of a massive chunk of AIG stock it purchased at the height of the financial crisis. According to the Journal, the Treasury sold shares to the public at $32.50 apiece, netting $18 billion, and bringing the federal government's return on its original $182.3 billion investment in the insurance firm to a combined total of $194.7 billion (or $12.4 billion in profit). So were the bailouts a necessary evil? Dealbook's Andrew Ross Sorkin, not surprisingly, seems to think so. In this column (which isn't so much a column as it is a transcript of the "told-you-so" conversation he had with former SIGTARP-turned-author Neil Barofsky), Sorkin essentially elaborates on the thesis posed at the end of his bailout book "Too Big to Fail": "As distasteful as the rescue effort was, it should be clear by now that without it, we faced an economic Armageddon. And the results thus far of bailing out the big banks, and AIG, indicate a profit."

Receiving Wide Coverage ...AIG Stock for Sale: The Treasury Department announced on Sunday that it is getting ready to sell $18 billion of the stock it purchased in American International Group during the controversial 2008 bailout of the insurance firm. The sale is expected to reduce the federal government — or, as the FT notes, "the U.S. taxpayer" — to a minority shareholder in the company for the first time since the financial crisis. According to the Times, the Treasury could reduce its holdings from 53% to as little as 15%, a move that marks "the realization of a long-held goal by both the Obama administration and the company." The Journal was quick to note this sale "could raise questions about timing, coming less than two months before a closely contested presidential election," though the Treasury was just as quick to tell the paper the unwinding of AIG has nothing to do with the political season.

Receiving Wide Coverage ...Another U.K. Banking Probe: Lloyd's Banking Group is at the center of the U.K. Financial Services Authority's crackdown on the mis-selling of financial products. According to the Journal, the FSA found Lloyd's to be "particularly aggressive in its sales strategies" of products, such as payment protection insurance, during its wider investigation of the practice and, as such, have launched an official probe into the commissions the bank offered branch employees on sales. Lloyd's, which has come under fire for mis-sold payment protection insurance before, says it has "made significant changes" to its "incentive schemes" since the start of the year.

Receiving Wide Coverage ...Spanish Bank Launches Big IPO: Spain's Banco Santander is launching an initial public offering of its Mexican unit in an effort to raise up to $4.2 billion as the Spanish economy continues to falter. The Madrid-based bank will sell as much as 24.9% of its aptly named Santander Mexico unit with shares costing between 29.00 and 33.50 pesos each. Santander is one of the few Spanish banks still able to issue debt, but that doesn't mean the bank is thriving. According to the Times, it reported a 93% drop in second-quarter profit "as it set aside more money to cover bad loans in the Spanish market." The FT says the IPO is in line with a strategy Santander has used throughout the financial crisis "to sell stakes in its overseas subsidiaries to raise capital and to establish clearer valuations" in troubled times. The paper also points out that the IPO is the "second-largest in the world this year after Facebook" and, as such, could provide a "welcome jolt" to the U.S. economy. Let's just hope the debut, expected on September 26, goes smoothly.

Receiving Wide Coverage ...Europe's Banking Woes Burgeon: Perhaps because of the long weekend in the U.S., this morning's banking news is dominated by headlines about Europe … and things aren't looking up. The Journal reports the French government rushed to bail out the "small, but key" Caisse Centrale du Crédit Immobilier de France (CCCIF) over the weekend after the mortgage lender requested aid to pay down bonds that were due on Monday. The $6.3 billion loan provided to CCCIF follows the French government's bailout of Franco-Belgian lender Dexia last year. French Prime Minister Jean-Marc Ayrault said in a radio interview while the county's financial sector is largely strong, both bailouts were necessary because of the areas they were focused on: housing and local governments.

Just in case you thought otherwise, the Treasury Department has released an infographic outlining how Wall Street reform helps to strengthen small banks.

Receiving Wide Coverage ...Barclays Is Very Busy: The British bank named Antony Jenkins, its head of retail and business banking, as chief executive. The Journal says the move may represent "a shift in focus" away from investment banking as Barclays tries to revamp its image following its involvement in the London interbank offered rate scandal. Soon-to-be-board chairman David Walker told the FT "it was clear that Antony was the outstanding choice" and called his track record "highly compelling." It had to help that the British-born Jenkins is apparently nothing like his predecessor Bob Diamond, "an outspoken American investment banker" who the Times notes had been "booed and heckled by shareholders" in a meeting before the Libor scandal broke. Perhaps to drive home just how different the new and old CEOs are, Jenkins will be paid a base salary of £1.1 million. He will also be eligible for an annual bonus of £2.75 million and will receive shares in a long-term incentive program worth up to £4.4 million. Last year, the Journal reports, Diamond "received a pay award" close to £16 million.

Receiving Wide Coverage ...Et tu, UniCredit?: You can add UniCredit to the growing list of banks under scrutiny for possible sanctions violations. The Journal reports the Italian bank is being investigated by the New York County District Attorney's Office, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and the U.S. Department of Justice concerning dealings its German unit HypoVereinsbank had with heavily sanctioned Iran. Few details regarding the probe have yet to become available, but the probe is apparently not the result of the high-profile money-laundering activities have received following the investigation of Standard Chartered by New York regulator Benjamin Lawsky, which ended in a $340 million settlement. According to the FT, UniCredit disclosed it was being investigating by U.S. authorities at least seven months ago, though "it appears never to have been reported in the media." Over the weekend, the bank said its German unit was in the process of conducting an internal review regarding the possible violations and that "it would be inappropriate to comment further at this time."

Receiving Wide Coverage ...SEC Problems: More information is emerging on why Democratic commissioner Luis A. Aguilar decided to vote against Securities and Exchange Commission Chairman Mary Schapiro's plan to regulate money market mutual funds. Apparently, Aguilar "didn't appreciate" Schapiro's move to show Congress a report on the risks of money funds he viewed as misleading. The Journal reports Aguilar was already on the fence about the new proposal when news of the report's circulation was mentioned by several media outlets. Aguilar believed the proposal, which would require money funds to either float share prices like other mutual funds or to post capital against losses on their asset holdings, could have unintended consequences and possibly spread systemic risk to unregulated corners of markets. Many of Aguilar's colleagues are more than a little displeased with his decision. Schapiro called the failed vote "tragic," while former SEC chairman Arthur Levitt said Aguilar's decision represented a "sad day for the commission and the country."

Receiving Wide Coverage ...Citi Blasts Nasdaq About (Not Via) Facebook: Citi is so displeased with Nasdaq's plans for making up for losses caused by the fumbling of Facebook's initial public offering, it sent the Securities and Exchange Commission a 17-page letter about it. According to the Journal, Citi told the SEC Nadsaq's proposed $62 million compensation plan would cover "only a very small fraction" of its total losses. The bank is estimated to have lost about $20 million during the botched IPO due to glitches that Citi deems weren't technical, but instead caused by "grossly negligent, self-serving business decisions." Other companies, including UBS and the nearly-killed-by-computer firm Knight Capital, suffered higher monetary damages and overall $500 million worth of losses is being attributed to the event. Citi is asking the SEC to reject Nasdaq's proposal. The Times reports the exchange disagrees with the bank's position, largely due to the fact that its customers are required to sign a contract agreeing to the exchange's rules. A Nasdaq spokesperson formally declined to comment.

Receiving Wide Coverage ...Here a Probe, There a Probe: Two more banks have joined the ranks of financial institutions under investigation this summer for questionable behavior. According to the Journal, a federal grand jury is looking into the very close ties Regions Financial may have had with executive recruiting firm Fiderion Group LLC and its CEO James Norton III. Prosecutors have asked the bank to turn over information on "any gifts, trips or vacations" Fiderion may have funded. They have also asked for information regarding any loans Regions may have made to the firm or to Norton. The paper, which reviewed documents and spoke to people close to the inquiry, says the grand jury's investigation doesn't necessarily indicate wrongdoing, and the target of the probe isn't clear. It had been previously reported that Fiderion paid the tab for Regions executives at annual golfing getaways from 2002 to 2008, but Norton said he believed these outings complied with the bank's rules on vendor relationships.

Receiving Wide Coverage ...Auditors Disappoint: Initial audits of the auditors who inspect the financial statements of brokerage firms didn't go so well. In a report issued on Monday, the Public Company Accounting Oversight Board said it found deficiencies in all 23 of the broker-dealer audits from the 10 firms it reviewed as part of new duties allocated by Dodd-Frank. The Journal says two firms didn't adhere to Securities and Exchange Commission rules requiring independence among auditors, meaning they actually prepared or assisted in preparing the financial statements they were set to review. Regulators didn't name names in their report, but did say the results were "disappointing" and "disturbing" during a conference call.