Katherine Kane

Receiving Wide Coverage ...Occupy Somewhere Else (for a While): Police in New York cleared Zuccotti Park, the site of the Occupy Wall Street protests, in a surprise raid Tuesday morning. The demonstrators were told the move was temporary and they could return later, but if and when they do the structures they erected to keep warm (illegal fire hazards, according to authorities) will be gone. The Post quotes a sanitation worker as saying, “We’re gonna disinfect the hell out of this place.” (Oh, that’s the New York Post, if you were wondering.) The tabloid has an accompanying editorial entitled “Time’s Up, Children.” Hmm, maybe we’re reading too much into the nuanced writing, but we’re beginning to think maybe the Post doesn’t hold the protestors in high regard? We went to the Village Voice site for a different perspective and found some news we might use (“Occupy Wall Street Vows to Shut Down Subways” – aw jeez, please don’t) and a Tweet that demonstrates 140 characters can convey a lot (“Me: 'I'm press!' Lady cop: 'Not tonight.'”) OK, we’d better get back to banking now… Wall Street Journal, New York Times, New York Post, Daily News (New York), Financial Times

Receiving Wide Coverage ...Messy MF: Regulators looking for that missing $600 million have a big problem, the Journal reports this morning. It turns out that MF Global’s recordkeeping was “in shambles,” as an executive from Interactive, the brokerage that almost rescued Jon Corzine’s firm, puts it. People who’ve examined the books have found “incomplete transactions, numbers that didn't seem to add up and other inconsistencies,” the Journal says. Meanwhile, the CFTC has decided to audit every futures trading firm “to verify that customer money is protected,” the Times’ “DealBook” says. We certainly hope so, for the sake of all those goldbugs who thought they were flocking to safety by investing in gold futures. The FT has a neat video in which one of its journalists reminds us that the CFTC proposed a year ago to restrict the range of options for investing customer funds – including a pullback from, you guessed it, foreign sovereign debt. Now Bart Chilton, a CFTC commissioner, wants to revive this plan, and has cleverly branded it the “MF Global rule.” (The other fun part of the video is the interview footage of Corzine from last summer, in which he sounds like Rip van Winkle talking about how much the financial system had changed during his hiatus as a politician.) Incidentally, we made a judgment error in yesterday’s Scan and picked the wrong MF Global story to mention. It’s yesterday’s papers, as they say, but if you want a link to the story we should have told you about, and an explanation of our goof, click here.

The title of Javelin Strategy & Research's blog entry today nearly says it all: "Occupy Oakland deposits $20,000 with … Wells Fargo."

Receiving Wide Coverage ...Unlucky Seven: Investors dumped Italian government bonds, pushing their yields up past 7% -- a "psychologically important" level - after LCH Clearnet, a clearing house for European repo trades, raised margin requirements for the debt. As the FT explains, 7% yields had previously "led to both Ireland and Portugal requesting emergency bail-out loans," and while Rome could handle borrowing costs at this level for a year or so, the concern is that these costs could get stuck in a self-reinforcing spiral. (Is that a redundant phrase? We can't decide.) Moreover, Italy's a lot bigger than those other two countries, so a full-blown financing crisis there could be a "game-changer," the FT says. Italy is "too big to bail," and an attempt to rescue it "would stretch the European financial stability facility, the eurozone rescue fund, to breaking point." The fear in the fixed-income market spread to the global stock markets, which tanked. But here comes the cavalry: this morning the FT reports Italian yields have dropped back below 7% following reports that the European Central Bank had intervened. European stock markets are calmer after Italy pulled off a successful debt sale this morning. Financial Times, Wall Street Journal, New York Times, Washington Post

Receiving Wide Coverage ...The Blame Game: MF Global creditors have formed a committee to protect their interests in bankruptcy, the Post said. Meanwhile the "frantic search" continues for the $600 million missing from customer accounts. The Journal reports on allegations that JPMorgan delayed trade settlements by MF Global as it rushed to sell assets. Executives at MF believe that made it difficult to find a buyer, the paper says, and could have “caused” the $600 million gap. In his column, Francesco Guerrera offers three lessons to be learned from MF's failure. Still another Journal story looks at how MF investors are fairing, with their accounts frozen or moved to other firms.

Breaking News This Morning ...Corzine Out at MF Global: And he won't seek severance.

Breaking News ...European Central Bank Cuts Rates: Full press release and snark at ZeroHedge.

Receiving Wide Coverage ...So Much for That: Bank of America dropped its plan to charge a monthly debit card fee, the last major bank to do so following widespread outrage. The public mood was clear when Jay Leno joked that on Halloween, "One kid wanted to charge me five bucks to give him candy.… I said: 'Who are you supposed to be?' He said: 'Bank of America!'" However, the impetus for the much-maligned fees — the loss of revenues as a result of new regulations, particularly the Durbin cap on interchange fees — remains. A comment posted by a Journal reader makes a salient point by channeling Milton Friedman: "There's no such thing as a free lunch, so expect to pay your bank for the honor and privilege of having an account." Wall Street Journal, New York Times, Washington Post

Receiving Wide Coverage ...Bailout Redux: While the European bailout plan "set off celebrations" in markets throughout the world, many analysts warned that the plan "remains a work in progress," the Post reported. "Key details are uncertain, they say, and a slowing European economy could throw the program off course." The Journal, like a lot of other media, went full tilt on the European bailout agreement even though - or maybe because - a lot of folks are skeptical it will hold up. Yes, Americans are happy everywhere that their 401(k)s shot up with the market Thursday, but it could take "weeks" for negotiators in Europe to tell us the details of (and to figure out themselves) what they have wrought, the Journal said. Not promising was the warning by a European Central Bank official that the deal's "leverage instruments are similar to those which were among the origins of the crisis, because they temporarily masked the risks." The deal relies on "Byzantine financial engineering," another Journal story said. (A note to Scan's Greek friends: that's not a compliment.) A big push is expected. European officials are going to have to sell sovereign markets on the plan, as sovereign bond markets and others reacted cautiously. Some say the European banks got off too easy, yet others speculated the plan might work despite initial shortcomings if it boosts confidence. The Times said German Chancellor Angela Merkel called bankers' bluff, telling them to take the offer on the table of a 50% write-down in the face value of their Greek bond holdings, or bear the consequences of a default. She was willing to risk a credit event that would have thrown world markets into turmoil, and if that happened, she would blame the banks. Critics say the plan may not deliver as much relief to Greece as promised, and that it may not be sufficient to help troubled banks. "It's another patchwork effort," said Richard Cookson, global chief investment officer of Citi Private Bank. The FT looked at China's role in the rescue, and its demands that other countries be involved and its investment be guaranteed. The article quotes French President Nicolas Sarkozy: "Why would we not accept that the Chinese had confidence in the eurozone and place a part of their surpluses in our funds or our banks. Would you rather they placed it with the US?" Ouch!

Receiving Wide Coverage ...Big Blue's New Boss: IBM will promote Virginia Rometty to be the first woman chief executive of the 100 year old company on Jan. 1. Currently its top sales executive, Rometty is a 30-year company veteran who's "help[ed] to lead IBM's transformation into a massive services business," according to Wired magazine. As such, the company has become an important vendor in the banking industry. The FT notes Rometty will be "the first head of IBM not to have run part of its traditional hardware business," not to mention "one of only a handful of women to head a large US corporation." New York Times, Wall Street Journal, Financial Times, Wired.

Breaking News This Morning ...Earnings: Regions Financial, Deutsche Bank

Breaking News This Morning ...Earnings: Bank of America, State Street

Receiving Wide Coverage ...JPMorgan Sets the Tone for 3Q: …and it ain't reassuring. The company posted its first year-over-year decline in quarterly earnings since the nadir of the financial crisis, in large part due to a drop in investment banking fees. Also unsettling: the company is tempering its aggressive growth plans for retail bank branches. Financial stocks slid on the news, given that JPMorgan Chase is considered one of the better-run large banks; if it's doing fair-to-middling, that can't bode well for the company's peers, which are scheduled to report their third-quarter results next week. Revenues from JPMorgan's investment bank declined because the August downgrade of the U.S. debt rating and the European crisis have discouraged clients from issuing securities or making acquisitions. And the results would have looked even weaker were it not for an accounting quirk. On top of everything else, chief executive Jamie Dimon said JPMorgan is slowing the release of loan-loss reserves. "We are just trying to be conservative here," he told investors. According to the Journal's "Heard on the Street," this was regarded as "a canary-in-the-coal-mine moment for all banks. It is especially troubling since reserve releases have driven earnings gains at many banks in recent quarters." It was uninspiring enough when banks relied on the realization that "credit problems aren't as bad as we thought" to fuel the bottom line; now it may turn out that the problems aren't as not-so-bad as they thought, Dimon's assurance that "the recovery is still here" notwithstanding. Also in the Journal, the "DealJournal" blog notes that JPMorgan has exhausted its regulatory allowance of share buybacks for this year, and quotes Dimon as complaining that when it comes to managing capital, "It's hard to tell what we're supposed to do. … The regulators need to give not just J.P. Morgan Chase, but the banking industry, more guidance." The "Overheard" column in the Journal reports that the usually pugnacious Dimon sounded uncharacteristically apologetic on the company's earnings call — though he did take a dig at a New York Times reporter who asked about compensation expenses. Speaking of the Times, the "Reuters BreakingViews" column lauds Dimon's efforts to put his best foot forward, noting his sly segues from talking about the business to proselytizing about policy (e.g., he pivoted from an explanation of Chase's debit card revenue to a swipe at the Durbin amendment). Looking ahead to next week's reports from the other big banks, the FT's "Lex" column advises investors to "beware good news," by which they mean "don't lose sight of bona fide signs of improvement." (Or that's what we think they mean, based on the last two paragraphs of the piece. British irony goes over our heads sometimes.) And one more Journal story says the regional banks are expected to show continued improvement, in part because of commercial loan growth, not to mention the fact that these institutions don't rely much on investment banking for revenues. Wall Street Journal, New York Times, Financial Times

Receiving Wide Coverage ...Volcker Rule Unveiled: …but it's hardly final. Regulators' official proposal requested public comments on hundreds of questions, sowing concern in some corners that financial industry lobbying could eventually result in a watered-down final rule. Indeed, the Journal's coverage includes a sidebar describing the behind-the-scenes wrangling between industry representatives and regulators thus far. "When it comes to face time, no one can top Wall Street," the story says. Critics also say the proposal "gives banks too much leeway to interpret the rule as they see fit and could permit exactly the type of activities the rule is supposed to prevent," according to a separate Journal article. However, the Times' "DealBook" says the proposal "contained a few unfriendly surprises for the banks," including a ban on paying bonuses to bank employees to "encourage or reward proprietary risk-taking." One of the authors of the Volcker section of Dodd-Frank, now an industry lawyer, is quoted as calling the proposed compensation rule a "huge" change. Pardon us for being dim, but if the Volcker rule is supposed to get banks out of proprietary trading, should anyone be surprised that it would forbid banks to give employees incentives to do such trading? Wall Street Journal, New York Times, Washington Post.

Receiving Wide Coverage ...Steve Jobs Dies: The visionary founder of Apple, who famously said “It's not the consumers' job to know what they want," was 56. As American Banker noted when Jobs stepped down as CEO in August, Apple has had a substantial influence on the financial world. Wired, Fast Company, Financial Times, Wall Street Jornal, New York Times.

Receiving Wide Coverage ..."Close to Faltering": That was Federal Reserve chairman Ben Bernanke's description of the economy in Congressional testimony yesterday. Such blunt talk from a Fed chairman is a calculated risk, according to the Journal. "Bernanke wants to spur action in Washington, but he doesn't want to undermine fragile household and business confidence with gloomy talk." Specifically, he called for fiscal moves that would reduce the deficit in the long term, without resorting to growth-squelching austerity measures in the short term. Wall Street Journal, Financial Times, New York Times, Washington Post

Receiving Wide Coverage ...Eurozone Crisis, Chapter 42: German Chancellor Angela Merkel mustered a political victory by winning approval of the expansion of the European bailout mechanism in a parliamentary vote that would have passed on the stregth of her coalition's support alone. The Times said Slovakia "is the only remaining wild card" in a process that requires the assent of all 17 European Union countries. But even though the paper predicted that opponents in Slovakia would cave under pressure from the rest of the bloc, a fraught road lies ahead to secure the further amplification of the European Financial Stablitity Facility that many analysts believe is necessary to resolve the crisis. The Journal said, "As deputies emerged from the assembly in the Reichstag in central Berlin, a number of lawmakers predicted Ms. Merkel would have to ask parliament for more money soon." Wall Street Journal, New York Times, Washington Post

Receiving Wide Coverage ...No European Vacation: As The Scan was being prepared, German lawmakers approved a bill to expand the euro zone's bailout fund, the Times reported. Finland's parliament did so a day earlier. But talk has already begun on "a more radical increase in the scope of bailouts" and possible debt restructuring for Greece, the Journal said. Debate on that subject is expected to gain more momentum in October, and it could get dicier. German Chancellor Angela Merkel is taking heavy political flak in pushing the current bailout, and a revolt among lawmakers "underscores a broader shift among Germans about their nation's role in Europe since the crisis erupted nearly two years ago." Meanwhile, the European Union detailed its plan for a tax on financial transactions. It would cover all transactions among financial institutions when at least one party is located in the EU, the Journal reported. Financial and business groups are already mounting an attack, the FT reported.

Receiving Wide Coverage ...The Tobin Tax: Momentum appears to be building in the European Union for a tax on financial transactions. The idea is referred to as the “Tobin tax,” after the late James Tobin, an economist who suggested a tax on currency transactions after the Bretton Woods system broke down in the early 1970s. The aim, in Tobin’s words, is to “throw some sand in the wheels” of the markets as a check on volatility. The tax European leaders are now discussing would cover much more than currency trades, though, and while supporters do still cite the potential stabilizing effects for markets, replenishing public coffers in the midst of the sovereign debt crisis is also a goal. In an address to the European Parliament Wednesday, José Manuel Barroso, the European Commission president, framed the issue as “a question of fairness”: “It is time for the financial sector to make a contribution back to society.” Critics of the proposal have said it could drive business elsewhere. As one of the writers for the FT’s “Lex” puts it in this video, “you might want to buy shares in property for Bermuda.” (Warning: aside from losing some of the mystique around “Lex” by seeing the people who produce it identified on camera, you’ll have to sit through a treacly ad for Goldman Sachs before the actual clip starts. Nevertheless, we felt smarter, on balance, after watching.)

Receiving Wide Coverage ...Down Jones: Following news that the Chinese economy might be cooling off, the "Dow Jones Industrial Average fell 3.5 percent, capping its biggest two-day drop since the height of the financial crisis in 2008," the Post reported. But it wasn't just stocks markets that were showing the stress: commodities "plummeted after months of holding steady." The Journal concurred, noting a sell-off in "everything" in a flight to the safety of U.S. Treasuries, spooked by "fears of another recession and a Greek debt default." G-20 officials were busy trying to assure investors that European banks are healthy enough to endure another crisis.