Receiving Wide Coverage ...
Holiday Reading: The long-simmering battle between five federal agencies over the Volcker Rule appears to be in its final stage. The current draft is around 1,000 pages, and it's expected to be finalized before the end of the year. The basic dynamics here with the Fed and the SEC pushing for looser restrictions, while the CFTC seeks tighter rules are old news. But the New York Times has a detailed look at some of the places where the agencies remain at odds, including the draft language defining market-making. The Times also reports: "Since the Volcker Rule was first proposed in 2011, regulators have had to contend with a fierce lobbying campaign by the banks. But that effort lost momentum last year, after JPMorgan's trading debacle revealed that its traders were placing enormous speculative bets under the guise of hedging." Meanwhile, the Financial Times reports that the Fed is considering giving banks until July 2015 to comply with Volcker's new restrictions.
Geithner Cashes In: Former Treasury Secretary Timothy Geithner spent a lot of time during his tenure battling the incorrect belief that he used to work in the financial sector. If only his critics had waited a few years, they'd have been right. Geithner announced over the weekend that he will join the private equity firm Warburg Pincus. Among the angles explored in the coverage: 1) Geithner wanted to get paid. Duh. 2) While at Treasury, Geithner urged Congress to raise the low tax rates paid by private equity managers. "The effort failed and Mr. Geithner will now be able to benefit from that failure," the Financial Times writes. 3) "The increased pay comes without the baggage of joining a big Wall Street bank " the FT notes. So in terms of public perception, big banks are apparently even lower than the private equity industry. 4) Geithner's forthcoming book, scheduled for publication in 2014, is expected to settle a score with Sheila Bair.
Yet Another Mortgage Settlement: It's hard to keep them all straight, but under this most recent settlement, announced late Friday, JPMorgan Chase would pay $4.5 billion to institutional investors who argued that the bank or predecessor institutions mis-sold mortgage securities. The deal would resolve claims related to Bear Stearns mortgages, but not those from Washington Mutual. Financial Times, New York Times, Washington Post
Wall Street Journal
An industry attack continues on a government report that warned of risks associated with asset-management firms. Two Democrats on the Senate Banking Committee, Mark Warner and Jon Tester, are amplifying the asset-management industry's complaints about the report, which was written by the Office of Financial Research.
Easy-money policies in Japan are running into a familiar barrier. It's one thing to incentivize banks to lend more, but even at low interest rates, it can be hard to convince businesses to take the cash. "Japanese companies and individuals still don't feel confident enough to borrow and invest," the article concludes. The problem is more acute away from the country's urban centers.
The former chairman of a nearly collapsed British bank was caught on video allegedly buying cocaine and crystal meth. This came just days after the banker, Paul Flowers, who is also a Methodist minister, testified to British lawmakers about the downfall of Co-operative Bank.
Just how much trust should we be putting in the methods the Financial Stability Board is using to determine which banks are global systemically important financial institutions?
The head of the nearly three-year-old European Banking Authority says that its governance structure which relies on a committee with representatives from each of the EU's 28 members is going to be a big problem during the next financial crisis. "Committees in a crisis don't work because you have conflicts," says chair Andrea Enria.
A pair of articles on the peer-to-peer lending industry note that the P2P label is becoming less useful as a descriptor since banks and institutional investors are making more and more of the loans. One of the articles warns that what led to overheating in subprime mortgages could eventually plague the hot P2P sector. "The danger becomes if demand begins to drive lending."
With European economic data looking dismal, columnist Wolfgang Munchau calls on the European Central Bank to take up quantitative easing. Europe's financial crisis seems to be running a couple of years behind our own, so might we look forward to an EU tapering debate in 2016?
New York Times
The paper's technology blog looks at the role Bitcoin is playing in facilitating illegal drug sales, gun purchases and other illicit transactions online. The conclusion: authorities are "playing Whac-a-Mole" with websites like Silk Road that are part of the "Dark Web." As soon as one site gets shut down, another pops up. Among those expressing concern is Delaware Sen. Thomas Carper, who chairs the Senate committee that's holding a hearing on Bitcoin Monday afternoon.
The long-running court hearing involving Bank of America and dissatisfied investors in Countywide mortgage securities is the subject of Gretchen Morgenson's weekend column. After closing arguments are held early this week, a New York judge will decide whether a proposed $8.5 billion settlement to be paid by B of A to investors should be approved. But that's not what the case is really about, Morgenson writes. " what's really on trial here is the role played in the settlement by Bank of New York Mellon, the trustee charged with protecting all investors in these securities," she writes. "This complex and circuitous case has drawn back the curtain on trustee practices. Investors relying on these entities to serve their best interests should be dismayed by the view."
Blogger Mike Konczal analyzes Sen. Rand Paul's "Audit the Fed" bill, noting that the measure may end up getting a vote in the Senate as the price for allowing Janet Yellen's Fed chairmanship nomination through the chamber. While the better-known parts of the bill will appeal to some Republicans, there's also a section that "will likely bring significant liberal support." This part of the legislation calls for an audit of the ill-fated foreclosure review process that turned into a bonanza for bank consultants.