Receiving Wide Coverage ...
Goldman CFO to Retire: David Viniar, who has served as Goldman Sachs' chief financial officer since its 1999 IPO, plans to retire in January and take a "non-independent" seat on the board. The 57-year-old will be succeeded by Harvey Schwartz, nine years his junior, in what the Journal describes as Goldman's "first nod to a group of younger leaders." In another Journal story, analyst Meredith Whitney is quoted interpreting Viniar's retirement as a "signal that relative calm has arrived" for Goldman. "Viniar has wanted to retire for years," Whitney says, "but because he was seen as such a source of stability for the firm and so trusted by the analyst and investor community, coupled with the increased scrutiny for the industry and particularly Goldman," the company loyalist couldn't bring himself to leave until now. (The wags at DealBreaker like to refer to Viniar by his nickname "Bones," which, at least in this context, appears to be a reference to Star Trek's trusty Dr. McCoy.) The FT notes that Schwartz will inherit an "unusually broad portfolio": In addition to the usual duties of a CFO, Viniar also oversees risk management, regulation and technology. And as the overseer of risk, Viniar signed off on Goldman's highly profitable bet against mortgage credit during the throes of the crisis, another FT story points out. Schwartz's background — he was the co-head of the securities division, and earlier the head of sales for that division — is "more salesy than treasury-y," writes DealBreaker's Matt Levine. Additional coverage in the New York Times
'If X+Y=Z, and We Cut X, Why Won't Z Fall?' The papers question QE3's power to minimize consumer mortgage costs, noting that previous rounds of stimuli lowered bond yields but not the spread between those rates and mortgages. "Banks say they are keeping rates high right now because lowering them any further would overwhelm them with customers," says the Post, though Times columnist Peter Eavis challenges the usual "backlog" explanation. Noting that Wells Fargo recently announced a big expansion of its mortgage staff, Eavis writes: "Perhaps a new equilibrium has descended on the market that favors the banks' bottom lines. The drop in rates draws in many more borrowers. The banks add more origination capacity, but not quite enough to bring the spread between bonds and loans back to its recent average." The current average 30-year fixed rate of 3.55% is inarguably cheap by historical standards, but Eavis writes that if spreads behaved as they used to, it would be 2.8%. New York Times, Washington Post
Wall Street Journal
The Journal's editorial page is happy that the Transaction Account Guarantee program appears unlikely to receive an extension, dismissing the crisis-era measure as a "bank subsidy" and "deposit insurance for the wealthiest." We know some community bankers would beg to differ.
Here's a disturbing trend: mortgage frauds allegedly perpetrated by lawyers.
U.S. regulators are having a hard time getting their counterparts in other countries to adopt new rules for derivatives by year-end. "London would like an extra six months, while Japan would like at least a year, and regulators from Hong Kong, Australia and Singapore want to defer indefinitely until 'international consensus' can be reached on the details." Washington's approach "has angered foreign regulators who have said that the U.S. is trying to reach beyond its boundaries" (wouldn't be the first time). Though to be fair, if regulators write rules that apply only here, the old specter of capital flight to more accommodating jurisdictions comes into play.
Speaking of international resistance to American standards: The head of the International Accounting Standards Board criticized a new approach to loan-loss provisioning the U.S. Financial Accounting Standards Board is developing. If banks had to provision upfront for all expected losses over the life of a loan, rather than just for the first year, they'd be less likely to lend, IASB chairman Hans Hoogervorst said in a speech.