BankThink

Bank of America's biggest conundrum is what to do about the Countrywide Financial situation. This 2008 acquisition called by some the worst corporate acquisition ever, has become the primary albatross hanging around B of A's neck — one that CEO Moynihan confesses is on his mind nearly every day.

On September 12 the U.K.'s Independent Commission on Banking released its much-anticipated final report, also known as the "Vickers report" after chairman Sir John Vickers.

Two men are accused of stealing the identity of a dead friend – and bringing his corpse along for the ride.

Many successful banks prefer to sell primarily through branches. This includes some large ones, such as Wells Fargo, plus a great many community banks.

Receiving Wide Coverage ...The UBS Delta Blues: Kweku Adoboli, arrested in London Thursday on suspicion of fraud after allegedly blowing $2 billion of his employer UBS' money on unauthorized trades, worked at the Swiss bank's Delta One trading desk — the same line of business as Jerome Kerviel, who was convicted last year for losing Societe Generale a bundle back in 2008. What the heck is this Delta One, you ask? The FT has a very helpful explainer which we could not possibly hope to improve upon. The Times' "Dealbook" says Delta One desks are big moneymakers, and "Heard on the Street" in the Journal finds it "baffling" that this line of business should be the source of two high-profile debacles, since, according to the column, it's a low-risk activity. "For UBS to have lost so much suggests it had an unusually large position in an underlying asset or currency. That, in turn, could suggest a massive failure of oversight at the bank." An analytical story in the Journal says the Adoboli affair raises questions about risk management in the broader financial sector. "Unauthorized trading is hard to fully protect against given that traders typically hide their losses using fraudulent methods," the story says, and "management oversight hasn't always kept pace with the complexity of trades." You may now be wondering, where were the regulators in all this? The more apt question may be "who": Another Journal article reports that UBS' London investment bank operations were supervised by both U.K. and Swiss regulators, and it isn't clear which one had jurisdiction over the trades gone bad. "Dealbook" used the UBS mess as an excuse to dust off a list of famous rogue traders, originally published around the time Kerviel was convicted. Other journalists are taking issue with the use of the term "rogue trader." "They're not 'rogue' for the simple reason that making insanely irresponsible decisions with other peoples' money is exactly the job description of a lot of people on Wall Street," writes Rolling Stone's Matt Taibbi. "Hell, they don't call these guys 'rogue traders' when they make a billion dollars gambling." The Journal's David Weidner makes the same point succinctly in a Borscht-belt headline: "What Do You Call A 'Rogue' Trader Who Makes $2 Billion? A Managing Director." Another analytical story in the Journal points out that this was only the latest in a series of crises for UBS in recent years. (Another "Heard on the Street" piece also focuses on the bank's long-running reputational issues, and in case anyone misses those two stories, this "Deal Journal" entry describes UBS' trust problems as well. The Times also chronicled UBS' rocky recent history in the form of a timeline.) Finally, one more "Dealbook" entry gives us Adoboli's backstory, which is full of sentences like this: "In his spare time, Mr. Adoboli liked photography, cycling and wine." Sometimes, the human interest angle just isn't that interesting.

Global accounting firms have not been drawing lines between audit services and everything else all that strictly.

The residential mortgage market has been plagued by uncertainty as the industry waits for guidance on risk retention, new disclosure requirements, and some kind of resolution of Fannie Mae and Freddie Mac.

Children are targets of identity thieves not only because they tend to have clean credit histories, but also because it can take years for kids or their parents to discover the identity theft occurred.

Receiving Wide Coverage ...Legacy Liabilities: Statutes of limitations are looming for investors with potential legal claims against firms that sold them dodgy mortgage-backed securities during the boom years, helping to explain a recent uptick in bondholder suits, the Journal reports. The Federal Housing Finance Agency's suits against various securitizers, filed just before the three-year anniversary of the agency's takeover of Fannie Mae and Freddie Mac, was only the most prominent example of such litigants racing to beat the clock. Meanwhile, another Journal story reports that the SEC is widening its probe into collateralized debt obligations, those mutant cousins of mortgage-backed securities. Among other actions, the agency is pushing Citigroup to settle a civil case for $200 million, the story says. The charges concern a $1 billion CDO that Citi created in 2007, right around the time cracks were beginning to show in the housing market façade; citing anonymous sources, the Journal says investigators are looking at whether Citi had short positions. In the Times, "Dealbook" takes a TARP tally and finds that nearly three years after the emergency program was created, 500 banks still owe the government a combined $19 billion of bailout money. (For perspective: that outstanding balance is just 8% of the total that the government invested through TARP.) The largest bank that still owes TARP: Regions Financial. Finally, Countrywide is the acquisition that just keeps on giving for Bank of America. The Department of Labor ordered the bank to rehire and pay $930,000 to a whistleblower it improperly fired. The employee, whose name has not been disclosed, had reported "pervasive wire, mail and bank fraud" at Countrywide, and illustrating the adage "no good deed goes unpunished," B of A "used illegal retaliatory tactics against this employee," a government official said. B of A insists the termination was solely related to the worker's "management style" and it plans to appeal. For now we'll just have to speculate on whether there's a "welcome back" card being passed around for everyone in the office to sign.

The recent Dreamforce conference in San Francisco focused on the rise of the 'social enterprise.'