Receiving Wide Coverage ...
Libor Mess: It turns out manipulating a key global interest rate for years on end can get you in some serious trouble. Stating that “the buck stops with me,” Barclays Chairman Marcus Agius has stepped down and the bank is launching an audit of its business practices, the Times says. The move is being read as an attempt to take pressure off of embattled chief executive officer Bob Diamond, the New York Times reports. The jury’s out as to whether that will be enough: the FT declares in a headline that “Decisive Week will Determine Diamond’s fate.”
Beyond Barclays, banks’ apparent fudging of their borrowing costs has now resulted in investigations on both sides of the Atlantic, as the UK is launching its own probe, reports the Journal.
But government officials believe a full out investigation “would be a waste of time and money,” the FT says.
Perhaps that’s because what happened is so unbelievably obvious?
Finally, in a regulatory version of “the grass is greener,” the FT heaps praise on the Commodities Futures Trading Commission, the U.S. regulator which pursued Libor manipulation when its European counterparts stood down. Whistleblower complaints and blatant admissions that the rate was being manipulated (“I would sort of express us maybe as not clean clean, but clean in principle,” a Barclays manager told the UK’s FSA in 2008) went ignored. The FT suggests that a reason for the inaction is that the FSA is a prudential regulator concerned about bank health — whereas the CFTC exists primarily to protect markets.
Wall Street Journal
Banks are stocking up on high-profile accountants, which the Journal reports is not an oxymoron. JPMorgan recently announced that former KPMG head Timothy Flynn is joining its board, and Morgan Stanley drafted Robert Herz the former head of the Financial Accounting Standards Board. The moves suggest the banks are “hungry for accounting credibility,” the Journal says.
New York Times
The Times reports on a possible sea change for New York City’s financial industry: major banks are moving jobs off of Wall Street, or at least the midtown high rises that have already supplanted the Financial District. This is very bad news for the world’s financial capital, the Times says, “threatening the vast middle tier of positions that form the backbone of employment on Wall Street.” Traders and high level employees seem to be staying in Manhattan. However, “low-level jobs have already migrated to call centers and back offices overseas,” the Times claims. “Services like accounting, trading and legal support, and human resources and compliance are being shifted to places like Salt Lake City, North Carolina and Jacksonville, Fla.”
Remember how the European debt crisis was solved again last week by the announcement of joint guarantees of bank debt? Expect the obligatory pullback this week, started out nicely in a Times article titled “Doubts Greet Plan for a New Euro Zone Bank Regulator.” While everyone now supports the idea in some fashion, there appears to be some disagreement as to what the idea actually is.
Corrections: The FT reported Friday that the loss to date on the London Whale's trades in its second-quarter report will be $5 billion, which is compatible with reports earlier in the week by an independent journalist, who was followed by the Times, that the bank expects the damage to eventually total $9 billion. Our usual Scan writer, who is taking a much-needed break today, mistakenly described these reports as contradicting each other in the email version of Friday’s Scan.
The Scan also misspelled Warren Buffett’s last name in Wednesday’s email and gave the wrong month for the latest new home sales report on Tuesday (the two-year high was reached in May, not April). The writer is repenting on his day off.