Breaking News This Morning ...
Citi Earnings: Citigroup's third-quarter earnings are out and the quick take is that results are disappointing, thanks to a slump in bond trading and a decline in mortgage revenue. "Third-quarter net income, adjusted for certain items, slipped to $3.26 billion, or $1.02 per share, from $3.27 billion, or $1.06 per share a year earlier," Reuters summarizes. "We performed relatively well in this challenging, uneven macro environment," CEO Michael Corbat said in a prepared statement. Wall Street Journal, Bloomberg, New York Times
Receiving Wide Coverage ...
Dimon, Post-Earnings: JPMorgan Chase's "blah" earnings have reignited debate over whether Jamie Dimon should and/or will stay in his dual role as chairman and CEO. (See "Now Are We Allowed to Talk About Firing Jamie Dimon" from the Huffington Post or "Tell Me Again Why Jamie Dimon Is Still Chairman of JPMorgan" from the Los Angeles Times.) The New York Times' Andrew Ross Sorkin addresses the HuffPo article and others calling for Dimon's head by pointing out that "the largest problem from the perspective of fines" the reported-to-be $11 billion settlement in the works with the Department of Justice over a mortgage-backed securities probe stems from "bad behavior" at Washington Mutual and Bear Stearns, two firms the government asked JPM to buy during the financial crisis. "Henry M. Paulson Jr., then the Treasury secretary, told me recently that he had indeed strongly encouraged Mr. Dimon to buy the companies to help the country and that Mr. Dimon had little time to conduct diligence," Sorkin notes. A column from the Washington Post's editorial board adopts a similar "no-good-deed-goes unpunished" stance (and also name-drops Paulson) in discussing JPM's "political persecution", while the FT's Lex column simply thinks we need to stay tuned regarding Dimon's fate. "If JPMorgan's business performs well, Mr. Dimon may live down his first loss quickly," the column concludes. "If not, he will find himself one more major scandal away from losing his job."
Business with China: U.K. Chancellor George Osborne is expected to break down regulatory barriers and offer special terms to China's state-owned banks on Tuesday "as part of his 'personal mission' to make London a significant Chinese offshore banking center," reports the FT. Meanwhile, the Washington Post reports that the World Bank's financing of Chinese wind and solar power projects may have cost the U.S. jobs.
Wall Street Journal
A former RBS trader, Richard Usher, is under investigation as part of the U.K.'s probe into potential manipulation of currency markets, anonymice tell the paper. Usher, who now works at JPM, became a person of interest after an internal review at RBS uncovered that he participated in electronic chat room sessions with colleagues at other banks. The chat records were handed over to the U.K.'s Financial Conduct Authority, which opened an inquiry into possible manipulation of foreign-exchange markets this summer. "The precise content of the traders' chat sessions isn't known," the paper notes, though it did discover that "the group of traders in the chat rooms was known by various monikers including 'The Bandits' Club,' and 'The Cartel.'"
U.S. efforts to sell "ultra-safe" covered bonds have stalled.
Hector Sants, former head of the U.K.'s Financial Services Authority who currently works for Barclays, is taking a three-month leave of absence due to "exhaustion and stress." Scan readers may recall that Lloyds Banking Group CEO Ant-nio Horta-Os-rio took a similar leave of absence two years ago.
New York Times
Three American economists Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller have been awarded the Nobel Prize in Economic Science.
Columnist Peter J. Henning on the attempt by Irving Picard, the trustee overseeing claims in the Bernie Madoff Ponzi scheme, to overturn a lower court decision barring him from pursuing banks for their role in perpetuating the fraud: "If Mr. Picard is successful in being able to sue the banks, the potential liability of financial firms could be enormous because to succeed, every Ponzi scheme needs a bank account and other accouterments of financial legitimacy."
Columnist Peter Eavis concludes it's hard to predict how the nation's biggest banks will perform over the next five years. "Much of what they did over the past three decades looked innovative and appeared profitable at the time," he writes. "How constraints, either new or under discussion, will change banking practices or inhibit the kinds of profitable-but-risky innovations that marked the industry's recent history is not clear."