Breaking News This Morning ...
Earnings Season Kicks Off: JPMorgan and Wells Fargo reported third-quarter results this morning. A big theme this earnings season, according to the Journal's "Ahead of the Tape" column, will be the upward trajectory of long-term interest rates. That trend's bad for post-crisis profit boosters like mortgage refinancing and fixed-income trading, but generally positive in the long term for, you know, core banking.
Receiving Wide Coverage ...
Looming U.S. Default: Big banks are taking the possibility seriously enough to be making contingency plans, according to the FT. "One senior banker said that three large repo lenders had asked his company, a big US investment bank, to start thinking about how it would amend the agreements for its repo deals to explicitly exclude shorter-term Treasury securities that are viewed as most vulnerable to the gridlock in Washington," the British paper reports. This morning on BankThink, "Risk Doctor" columnist Clifford Rossi warns Congress that a U.S. default is the ultimate systemic risk and offers a refresher on liquidity risk and market contagion. Meanwhile, the administration and House Republicans are talking, even though they haven't reached a deal, so maybe all this contingency planning and handwringing will turn out to be another Y2K (remember that?). Wall Street Journal, Financial Times, New York Times, Washington Post
She's No Muppet: A former bank examiner at the New York Fed sued the regulator, claiming she was fired for sticking to her guns and criticizing Goldman Sachs' conflict-of-interest policy or lack thereof. "They wanted me to falsify my findings," the former examiner, Carmen Segarra, told the Post, "and when I wouldn't, they fired me." Wall Street Journal, Financial Times, New York Times, Washington Post
JPMorgan Previews: Ahead of today's earnings report, Post columnist Allan Sloan advises readers to look past JPMorgan's current litigation woes and consider the long-term challenges of a megabank that's "in a zillion businesses" and subject to higher capital requirements. But the litigation woes persist: Anonymice tell the Journal that JPMorgan and the Department of Justice "remain far apart on a potential multibillion-dollar pact that would resolve several probes into the bank's sales of mortgage bonds and settle potential criminal and civil charges."
Wall Street Journal
Speaking of mortgage settlements: SunTrust "is paying more than $1 billion to settle federal allegations of mortgage violations, in the latest move by a bank to put behind it costly legal issues stemming from the financial crisis."
"Investors, law firms and [investment] banks are facing off against homebuilders and real estate agents in a battle over the US government's role in guaranteeing home loans." The former camp is lobbying to lower the conforming loan limit to $400,000 from $417,000, which the housing interests naturally oppose.
New York Times
"The Big-Bank Subsidy" A Simon Johnson blog post, but you already knew that from the headline.