BankThink

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

The economic pain inflicted on millions of citizens and businesses by the collapse and eventual bailouts of some of Wall Street’s largest financial firms reveals why community banks should continue to distinguish themselves from systemically risky financial firms.

Proponents of national servicing standards aren't gaining much traction in their efforts to eliminate conflicts of interest.

A new version of the Zeus financial malware uses peer-to-peer technology to improve its defenses.

"Face It, Bankers: You're Not Apple" by Andy Sobel [BankThink, Oct. 11, p. 21] contends banking shouldn't focus on innovation and instead should act like the utility sector. It conjures a Prius-driving straw man who only wants his bank to deliver cash from the ATM – "a human right," as utilities deliver water from the faucet.

With millions of American homeowners living under a Sword of Damocles otherwise known as foreclosure, expect to see more protestors turning out to block evictions and sheriff’s sales.

Breaking News This Morning ...Earnings: JPMorgan Chase reported a third-quarter profit of $4.3 billion, or $1.02 a share, on $24.4 billion of revenue. Ahead of the bank earnings season that kicks off today, the Journal's "Ahead of the Tape" identifies a few potential bright spots amid what is bound to be an overall bleak picture. Business lending, mortgage refis and unrealized securities gains are among the possible "rays of sunshine," along with the fact that expectations are so low that "some positive surprises are likely," the column says. Also in the Journal, the "DealJournal" blog lists four themes to watch for in JPMorgan's report today. Topping the list, naturally, is exposure to Europe.

Rap star Diddy's American Express card number was posted online, TMZ reported Wednesday.

Putting a commission in charge of the bureau would at best produce partisan gridlock, and risks handing the young agency over to financial institutions.

Sony's PlayStation Network has been struck by hackers – again. And the company insists that the intruders did not get access to any credit card details – again.