BankThink

Receiving Wide Coverage ...JPM … Again: News outlet continue to closely monitor JPMorgan Chase ahead of Tuesday's shareholder vote on a proposal that could see Jamie Dimon stripped of his dual title as chairman and CEO. Dealbook reports the Council of Institutional Investors has asked the Securities and Exchange Commission "to intervene" after Broadridge, the firm that provides tabulations on these types of votes, stopped giving updates to the investors sponsoring the proposal, though the article gives no indication of whether the SEC is likely to do so. Another Dealbook column classifies the forthcoming vote as a test of stockholder power. Per the article, "a victory against a bank that prides itself on its 'fortress balance sheet' would go a long way toward proving that shareholders can push for changes even at strong companies." Meanwhile, the Financial Times has its own ode to the bank's executive, entitled "Jamie Dimon, the Last King of Wall Street," — see here and here for prior versions — though this rendition does end on a semi-somber note. "Maybe these are grey days," U.S. banking editor Tom Braithwaite writes. "The best hope for Mr. Dimon's large coterie of supporters is that this backdrop gives him something to prove for the first time since the crisis and that, whether he retains his chairmanship or not, all the hurdles and criticism might provoke another lease of life."

A recap of the informed opinions (and the discussions they generated) on BankThink this week.

The Chairman/CEO split issue is a sideshow. No one has considered the troubling implications of a large, crazy, lucky bet the London Whale made the year before his infamous money-losing trades.

The return to profitability of Fannie Mae and Freddie Mac is not a reason to preserve them as part of a future housing finance system.

For two years, Democrats and Republicans have been at an impasse over the nomination of the Consumer Financial Protection Bureau's Director Richard Cordray, and next week Senate Majority Leader Harry Reid is once again calling up the long-awaited confirmation vote.

Receiving Wide Coverage ...Deriving Pleasure: Too many price quotes will increase trading costs and reduce liquidity. That is the curious (if not spurious) story megabanks successfully stuck to in lobbying financial regulators to water down a key provision of the Dodd-Frank Act aimed at governing derivatives trading. The result was a 4-to-1 vote by the Commodity Futures Trading Commission on Thursday in favor of reducing the number of price quotes buyers must seek before conducting swaps trades from the originally proposed five down to two. "A paradigm shift" is how CFTC Chairman Gary Gensler (formerly of Goldman Sachs) characterized the result. "The bare minimum," quipped CFTC Commissioner Bart Chilton, a Democrat. Republicans had pushed for even fewer restrictions. Bloomberg quoted Sandler O'Neill & Partners' analyst Richard Repetto splitting the difference: The rules represent "the start of a process that could eventually lead to a seismic change in trading of over-the-counter derivatives ... It is a switch from an opaque, bilateral market to something where there is some price transparency and a more open and automated market." Any way you size them up, the trading regulations are the bid by the CFTC and Securities and Exchange Commission to curb risk and increase transparency in the $633 trillion (notional value) swaps market, which has previously operated in an unregulated, over-the-counter fashion. Critics charge that market and its Wild West structure were major contributors to the 2008 financial crisis. The new rules require at least two quotes before trades are conducted and establish trading platforms that will require all prices to be made public after a deal is done. As too many quotes and too much liquidity have commoditized the trading of stocks and bonds, Wall Street has turned to murkier markets to fuel profits. The new rules may erode bank profits by reducing banks' ability to carry out bilateral trades directly with other banks and clients. The trading, clearing and other rules may cost JPMorgan Chase $1 billion to $2 billion in revenue, Bloomberg said, referencing a Feb. 26 bank presentation. Five banks dominate the U.S. swaps business. JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC) , Citigroup (NYSE:C) and Morgan Stanley (MS) controlled 95% of cash and derivatives trading for U.S. bank holding companies at the end of last year, Bloomberg reports, citing the Office of the Comptroller of the Currency. Wall Street Journal, New York Times, Bloomberg

Loan performance data show the entire case against GSE underwriting standards, and their role in the financial crisis, is based on social stereotyping, smoke and mirrors, and little else.

Analyze data to tailor offers and draft sales pitches that customers, particularly those visiting branches, will have a hard time refusing.

Receiving Wide Coverage ...Aw Mom, JPMorgan Again? Yes, kids, but today's meatloaf is spicy. Broadridge, the firm counting JPMorgan shareholder votes on the resolution to sever the CEO and chairman jobs, has stopped providing running tallies to the investors sponsoring the proposal, the Times reports. Broadridge says it did so at the behest of SIFMA, the Wall Street trade group, whose members are the firm's clients. SIFMA told the Times that "one of its working groups had concerns about 'the authority of a vendor to release confidential information.' … Executives at some banks were concerned, according to people briefed on the matter, that shareholder groups were leaking early vote tabulations." (Wonder where they got that idea.) The activist shareholders complain that without polling numbers, they are at an unfair disadvantage to management, which opposes the proposal to split the CEO and chairman roles. "It's like playing a game where only the home team gets to know the score," says an assistant to New York City comptroller John Liu, who oversees pension funds that own shares in JPMorgan. … In other JPMorgan news, the bank is considering legal action against Bloomberg and has demanded five years of employee records from the information giant following reports that journalists in its news division were spying on clients' terminals. You can read all about it in the Wall Street Journal or Financial Times, but the best headline is (naturally) in the New York Post.

The common-sense steps taken in the bill will help even the playing field between community banks and big financial firms.