Receiving Wide Coverage ...
All About JPM: Everyone's still talking about JPMorgan Chase's $920 million settlement with U.S. and U.K. regulators over last year's $6 billion "London Whale" trading loss. The main takeaways from JPM's Terrible Thursday? For starters, the bank's "Whale" problems may not be over. The Journal reports that the SEC is continuing a civil investigation of individual employees who are connected to the matter. Bank CEO Jamie "Tempest in a Teapot" Dimon is not expected to be one of them. (Once again, regulators punish the bank, but not its top executives, this Dealbook column notes.) However, both Dimon and the bank certainly remain out of favor with regulators. "The bank is now facing scrutiny from at least seven federal agencies, several state regulators and two foreign nations," the Times reports, with an investigation into the trading debacle by the Commodity Futures Trading Commission presenting "a particularly thorny problem." Dealbook columnist Peter Hennings explains: "The issue [in the CFTC's case] is whether the bank's extensive trading manipulated the derivatives markets in violation of the Commodity Futures Act. That law gives private investors a claim for damages against traders who sought to manipulate the value of futures contracts." So, if the bank were to admit wrongdoing to the CFTC, it would potentially open itself up to investor lawsuits over the trading fiasco. These lawsuits, conversely, are not likely to result from JPM's admission of guilt to the Securities and Exchange Commission that came as part of yesterday's broad settlement. "The candor, largely limited to questions of record-keeping, was contained. JPMorgan never said it misled or deceived anybody," explains the Journal's Jacob Gershman. "Any potential securities class-action would still have to show that JPMorgan made a reckless misstatements that had real financial consequences." Also, in case you missed it, the "London Whale" settlement wasn't the only enforcement action against JPM yesterday. The bank was also fined a total of $389 million by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency over deceptive credit card practices.
Keeping an Eye on the Fed: The Federal Reserve's decision to hold off on tapering has introduced new uncertainty into the market. "Some investors and analysts said the Fed's action was the latest in a series of communications missteps," reports the Journal. Now all eyes turn to four central bank officials who will deliver separate speeches today in the hope that they will offer some insights on the Fed's taper delay. Clarity regarding who will run the central bank may also be forthcoming, given that the White House has stepped up its vetting process, though hurdles remain for the subject of this vetting, Fed vice chairman Janet Yellen. "While Ms. Yellen enjoys strong support from Senate Democrats
Senate Republicans will be more difficult to persuade," for confirmation, reports the Times. Economist Simon Johnson, on the other hand, happily stumps for Yellen in his latest column: "Not only is Ms. Yellen perfectly well qualified to lead the Fed, she might be the best qualified potential Fed chief ever." And, just in case you were wondering, Warren Buffet has endorsed Ben Bernanke for Fed chair. "I think if you've got a .400 hitter in the lineup, you don't take him out," he told CNBC.
Oops: A computer glitch, followed by a clerical error at the Federal Reserve Bank of New York, caused Goldman Sachs to receive none of the three-month Treasury bills and more of the six-month Treasury bills it wanted from a government debt auction that took place earlier this month. This marks the second time in recent months that the investment bank got bit by a computer. A technical glitch in its own system caused erroneous orders to be placed for options on stocks with ticker symbols beginning with the letters I through K back in August. Wall Street Journal, Financial Times
Financial Times
Former U.S. Treasury Secretary Hank Paulson on criticism of his crisis response, such as not tracking every dollar invested in saving U.S. banks: "It's asinine."
New York Times
Money market funds have managed to circle the wagon on regulation, writes columnist Floyd Norris. New SEC rules "are pitifully weak and inadequate," he writes. "They could even make the system more vulnerable in a crisis, as the presidents of all 12 Federal Reserve banks pointed out in a letter to the SEC."
Washington Post
Columnist Jena McGregor wonders what the right CEO-to-worker pay ratio is, in light of the SEC's new disclosure rules regarding the subject. "No doubt what's deemed acceptable once these ratios start coming out will be just that: arbitrary," she writes. "I'm skeptical these new disclosures will bring about much change, and they may even have the unintended consequence of previous disclosure rules - higher pay. I hope to be proven wrong."
