Receiving Wide Coverage ...
Executive Pay: The global crackdown on executive pay continues. Swiss voters backed a plan over the weekend that places severe limits on how companies pay their executives and directors. These limits give shareholders (including pension funds holding shares) a binding say on executive compensation, prohibit bonuses from being awarded to executives joining or leaving the firm and require "annual re-elections for directors." Firms that violate these rules could face heavy fines equal to six years in salary or face a prison sentence of up to three years, the New York Times reports. The plan, which could be implemented in 2014 or 2015 (or maybe even later) depending on whether you talk to its supporters or opponents, will apply to all companies listed in Switzerland. This includes UBS, which is among the companies the Journal says will be affected "most dramatically" by the initiative due to "their relatively large payrolls and because they need to recruit employees from around the world." The approval of the Swiss proposal follows a move late last week by the European Union to cap bankers' bonuses at twice their salary. An op-ed posted on Dealbook is critical of the EU's move, expressing that bankers will find a way to skirt the rule, and suggests paying bankers like waiters, capping their salaries and requiring them to rely on tips. "Banks boast so often about serving customers that it would mean they really have to practice what they preach — or expect a welter of forlorn-looking bankers following clients out of offices asking what they did wrong," the author notes. "The chance of seeing that alone surely makes paying bankers in tips worthy of consideration."
Good News, Bad News from HSBC: The British bank reported net profit fell 17% in 2012, due to, among other things, that record-setting $1.92 billion penalty imposed by federal regulators to settle money-laundering charges in December, a higher tax bill and its withdrawal from some global operations. However, HSBC also "lifted its dividend by 50% in the fourth quarter" of 2012 after its asset sales "bolstered its capital position" so things may be looking up. More on the banks' earning can be found here: Financial Times, New York Times, Wall Street Journal
Reviews of the Foreclosure Reviews Continue: Democrats on Capitol Hill want the OCC to explain how it reached its $9.3 billion foreclosure settlement with the nation's big banks after a Journal report revealed the banks "made more foreclosure mistakes than regulators disclosed," the paper reported. Meanwhile, Dealbook reported its own anonymously sourced breakdown of banks' foreclosure findings, saying the nation's biggest banks — which, in this instance, includes Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — "wrongfully foreclosed on more than 700 military members … and seized homes from roughly two dozen other borrowers who were current on their mortgage payments." These findings, like the ones cited last week by the Journal, "eclipse earlier estimates of the improper evictions."
Wall Street Journal
In a "reach for yield" in a low interest rate environment, investors are piling into securities backed by private student loans. This "hunger for return", however, comes at a time when "borrowers are falling behind on their payments at a faster clip."
New research shows, perhaps unsurprisingly, compliance salaries at banks are soaring.
New York Times
Remember last week's American Banker video on JPMorgan Chase's push into wealth management? According to this Dealbook article, current and former brokers aren't fans of this particular expansion, claiming JPM "pressures brokers to sell the bank's own products" and "prioritized profit to the detriment of its clients." Says one financial adviser who quit Chase in April 2012: "You are not a money manager; you are an asset gatherer." The article goes on to link to recordings Johnny Burris, a financial adviser who was fired from JPM, made in which managers reiterate the need to sell in-house products. JPM "disputes the characterization" and took issue with the recordings. "We believe it is unethical and unfair for Mr. Burris to use these piecemeal conversations to make his case," a spokeswoman told the website.
This editorial urges federal and state regulators to crackdown on payday lending.
Court filings obtained by Gretchen Morgenson reveal the Federal Reserve agreed to testify on behalf of Bank of America in its legal battle against AIG over fraud claims as part of a secret agreement struck in July 2012.