AIG ruling overturned; Staley faces the music

Receiving Wide Coverage ...

Jin Lee/Bloomberg

Vacated: A federal appeals court threw out a lower court's ruling that the 2008 federal bailout of American International Group was unlawful, taking a victory away from former CEO Maurice R. "Hank" Greenberg. Greenberg, who built AIG into a financial services and insurance giant, sued the government in 2011, arguing the Federal Reserve overstepped its authority when it took an 80% equity stake in the company in exchange for an $85 billion bailout during the financial crisis. In Tuesday's ruling, the appellate panel ruled in favor of the government. It also ruled the lower court had not erred in denying AIG's shareholders up to $40 billion in damages they had sought as a result of the government takeover. Wall Street Journal, Financial Times, New York Times

Wall Street Journal

Real estate red flags: S&P Global Ratings said banks could face trouble in the commercial real estate market as portfolios grow. Average CRE loans on banks' balance sheets reached a record $1.63 trillion at the end of last year, surpassing the previous peak of $1.52 trillion in 2008. "In an environment of interest-rate increases, such high asset values add risk for banks, given their heavy exposure to the sector," the paper said.

In the residential sector, higher costs for lumber, labor and financing may be putting pressure on the housing market, the paper warns. "And since housing helps drive spending of everything from cars to couches, the risk is the economy may end up on a shakier foundation."

On the other side of the border, troubled Canadian mortgage lender Home Capital Group, which has been battling a run on deposits the past few weeks, has agreed to sell as much as C$1.5 billion (U.S. $1.1 billion) of mortgages to an unidentified buyer to raise capital. The Toronto-based company said the deal allows the unidentified buyer to purchase additional loans in the future.

Bitcoin rallies: The price of bitcoin jumped 6% on Tuesday, pushing it to an intraday record high of $1,747. The price of the digital currency is up about 80% so far this year after closing 2016 at $968.

More for Motown: JPMorgan Chase said it is investing an additional $50 million in Detroit's revitalization efforts, on top of the $100 million it invested three years ago. The funds will be used to help small businesses and for training and neighborhood development.

Good times ahead: Financial crashes cause bad things like unemployment and political turmoil, John Michaelson, CEO of Michaelson Capital Partners, writes in an op-ed. But they also eventually bring on "massive economic reorganization, spectacular outbursts of innovation, the creation of new industries, increased productivity, and decades of high growth."

He thinks that's about to happen. "The combination of advances in platforms and intolerable pain is about to result in an explosion in entirely new applications that are inexpensive to operate, are far less likely to fail, are far more secure, and easily accommodate unimagined advances in ease of use and effective output," he writes. "This scenario will be seen in sector after sector."

Financial Times

Paying the piper: Barclays CEO Jes Staley, who is fighting to save his reputation after British and American bank regulators opened investigations into his attempts to uncover the identity of a whistleblower at the company, is likely to encounter angry shareholders at the bank's annual meeting in London on Wednesday.

Quotable ...

"We believe the risk related to commercial real estate lending has increased, which could have negative rating implications over time." – S&P credit analyst Rian Pressman