Receiving Wide Coverage ...
Barclays Branded a Big Disgrace: Newly-minted Barclays Chairman David Walker has got a pretty tough job on his hands when it comes to revamping his bank's image. A new report from British lawmakers calls Barclays' steps towards rigging the London Interbank offered rate "disgraceful," says CNN. It also suggests the Libor scandal stemmed from a "deeply flawed culture" at the bank and was not simply the actions of a "small group of rogue traders."
The report also calls out ousted Barclays chief Robert Diamond. According to the Times, lawmakers believe Diamond was not forthcoming during recent hearings into the Libor scandal. The report disputes Diamond's recollection that regulators were happy with Barclays' leadership prior to news of widespread rate-rigging. In a separate statement, Andrew Tyrie, the British politician who led the recent Libor hearings, called Diamond's testimony "highly selective" and "well short of the standard that Parliament expects."
Diamond issued a statement over the weekend disputing the report's allegations and maintaining that "Barclays was both aggressive in its investigation of this matter and engaged in its cooperation with the appropriate authorities."
The bank wasn't the only involved party receiving criticism. According to the Journal, the report also takes issue with British regulators, calling the scandal "a failing by the authorities." It suggests the Bank of England's belief that banks wouldn't rig rates, even though they clearly could, was naïve. Lawmakers also placed a bulk of the blame on the U.K.'s Financial Services Authority as it was charged with policing the banks at the time. The FSA will hand over a majority of its duties to new regulatory bodies in early 2013. Some of its powers will be returned to the Bank of England.
Wall Street Journal
The board at JPMorgan Chase has named Lee Raymond, the former chairman and chief executive of Exxon Mobil Corp., as head of the committee tasked with investigating the bank's multibillion-dollar "London Whale" trading blunder. Real estate developer Laban Jackson and former Johnson & Johnson Chief Executive William Weldon were also appointed to the committee as directors. The paper says the move is risky for both Raymond and JPMorgan CEO Jamie Dimon. Depending on the committee's discoveries, Dimon could face a number of penalties, including a pay cut. Meanwhile, Raymond will open himself up to public scrutiny if his actions are perceived as too weak.
Financial Times
Possible money-launderers and/or victim of rogue regulator Standard Chartered is getting ready to shake up its board after a number of investors have questioned the bank's oversight following the accusations it conducted $250 billion of illegal transactions with Iran. Chief executive Peter Sands and finance director Richard Meddings, though the subject of investor criticism, are not expected to be ousted as part of the shake-up.
Speaking of possible rogue regulators, former New York attorney-general Eliot Spitzer is defending his Wall Street legacy as several banks, including Goldman Sachs, UBS and Bank of America Merrill Lynch, choose to shut down the independent research offerings formerly funded by the 2003 "global settlement" Spitzer brokered. Spitzer says there are still a lot of independent research firms in existence, "some doing well and others not" and that "Goldman has other business models and other priorities."
New York Times
An editorial says credit card collection cases are seeing their own version of the robo-signing scandals that erupted in 2010 surrounding foreclosure proceedings. One New York judge claims that "in roughly 90 percent of credit card lawsuits the plaintiffs cannot even prove that a person owes the debt. Which is another way of saying that the courts are often being used as de facto debt-collection mills, allowing banks and others to seize money in violation of basic protections." (The situation might sound familiar to frequent readers of American Banker, which reported on it back in January.)"
Headline pretty much sums this one up: Cautious Moves on Foreclosures Haunting Obama
The Economist
For those who can't get enough of the great Glass-Steagall debate, this Economist article points out separating commercial and investment banks is not as simple as it sounds since its "hard to unscramble the eggs that have gone into making them." It suggests, in lieu of carving up big banks, regulators look for "more subtle" alternatives, including the "ring fence" approach which requires banks to raise enough capital to support each business without having to choose between them. It also says regulators should specify how big investment banks can be compared with commercial banks since, as one banker told the publication, "If you can keep the parasite in the right proportion to the host you can have a symbiotic relationship."
