Receiving Wide Coverage ...
Bernanke on Fed Policy … and TBTF: The Federal Reserve issued its latest policy statement yesterday and, as expected, plans generally remain the same. The central bank will keep short-term interest rates low and continue buying $85 billion a month in Treasuries and mortgage-backed securities indefinitely. But both the Journal and the Times posit the Fed is eyeing a wind-down. Per the Journal: "Fed Chairman Ben Bernanke … said the central bank would vary the amount of its monthly bond purchases depending on how the economy is performing. This means it could slowly dial them down from the current pace as it becomes more convinced that the job market is improving." Per the Times: "Bernanke's remarks suggested that the Fed would reduce its asset purchases if job growth continued at the current pace." The Times article goes on to note, however, that the change is at the very least "a few months away." Meanwhile, Bernanke did spice up what many believed would be a "boring" press conference by saying he agreed with Sen. Elizabeth Warren's stance on "Too Big to Fail" banks. "It's a major issue," Bernanke said. "I never meant to imply that the problem was solved and gone. It's still here."
Executive Pay Potpourri: Dealbook is reporting on a study that illustrates Citigroup isn't the only financial firm providing extra monetary incentives to employees who leave for a position in government (a la Treasury Secretary Jacob Lew.) Per an analysis from the Project on Government Oversight, "banks, including JPMorgan Chase, Goldman Sachs and Morgan Stanley, also have provisions that allow acceleration of payments owed to senior executives if they take government jobs." Critics argue these provisions help the firms curry favor with federal officials; firms say the provisions are intended to promote public service. Meanwhile, the Journal delivers preliminary results from a survey it conducted with consulting firm Hay Group, which shows, CEO pay generally becoming increasingly tied to their firms' financial or stock-market performance. The shift, the paper says, "highlights the growing role of investors in shaping executive compensation." And Barclays was back in the new cycles yesterday, upon the disclosure that its top bankers, including investment banking head Rich Ricci, CEO Antony Jenkins and finance director Chris Lucas collected big cash in past bonuses. (Ricci netted the biggest payout, after cashing in $26 million of deferred shares, Dealbook reports.) The FT points out the bonuses "are likely to attract scrutiny after a torrid year for Barclays."
Cyprus Gets a Deadline: The European Central Bank is giving Cyprus until Monday to cut a bailout deal with the European Union and the International Monetary Fund. If the country fails to meet this deadline, the central bank will pull the emergency funding it has been providing to prop up the nation's struggling banks, the Journal reports. Officials "anxiously hunted" for alternatives on Wednesday, but coming up with a solution has proved difficult, since, as this Dealbook article argues, all of the country's Plan Bs are "dreadful." "There are broadly three," the author notes, echoing an FT assessment from yesterday. "Sell its soul to Russia, default and possibly quit the euro or patch together a new deal with the euro zone. They are all bad, but the last one is the least bad, for both Cyprus and the rest of Europe." Meanwhile, another Dealbook op-ed highlights this takeaway: "Cyprus does show that, for all the faults with the financial crisis rescues in the United States, the European Union still finds ways to show us how poorly a bailout can be handled."
Payday News Day: Bank payday lending is once again making headlines, following the release of a report from the Center for Responsible Lending. (Both the Times and Washington Post outline the report and some banks' response to it.) Those interested for more angles on the bank/payday debate should check out some responses (here, here and here) to our earlier BankThink discussion on the topic.
JPMorgan Chase's board is likely to throw its support behind Jamie Dimon's dual role as bank CEO and chairman.
StanChart chairman Sir John Peace is retracting statements he made two weeks ago that downplay the bank's involvement in U.S. sanctions violations. This retraction may or may not be due to discussions the bank recently had with "with the U.S. Department of Justice and the District Attorney of New York."
New York Times
Morgan Stanley is launching a new portfolio that "seeks to invest" in companies that include women on their corporate boards.