Receiving Wide Coverage ...
The Fed Dissected: It's been well over a week since the Federal Reserve announced another round of (this time unlimited) quantitative easing, but the U.S. central bank is still making headlines. The Journal has two stories this morning dissecting Federal Reserve Governor Daniel Tarullo's schedule. Their major takeaways include that Tarullo, considered the Fed's top banking regulator, spends a lot of time talking "with Obama administration figures, U.S. regulators and foreign officials" in an attempt to coordinate the massive regulatory overhaul taking place worldwide. He also made plenty of time for bankers, having "met in person or talked on the phone more than 60 times during one recent year with top U.S. bank executives" or, as the paper, alternately puts it, "five times more often" than Fed Chairman Ben Bernanke did. Tarullo spoke most often with Morgan Stanley Chief Financial Officer Ruth Porat, who has a role in organizing meetings between big-bank financial chiefs and the regulator. He also met periodically with Bank of America chief Brian Moynihan, Goldman Sachs head Lloyd Blankfein, JPMorgan Chase boss James Dimon and Citigroup leader Vikram Pandit, though the Fed is declining to comment on what any of these meetings were actually about.
Meanwhile, the Washington Post has an article highlighting Bernanke's new "forceful" approach to managing the U.S. central bank in hopes of revamping its "reclusive" image and bolstering the nation's economy. Moving forward, the paper says Bernanke will maintain a stimulative stance and is even considering "the idea of declaring that the Fed will boost the economy until unemployment reaches a specific target or until inflation takes off." Some Fed officials have suggested these magic numbers are 7% unemployment or 3% inflation, while others believe the goal should be 5.5% unemployment or 2.5% inflation. Either route, expect QE3 to last awhile.
UBS's U.K. Bankers Were Risk Takers: That's the latest news to come out of the trial of UBS's alleged rogue trader Kweku M. Adoboli, who faces fraud and false accounting charges in connection with a $2.3 billion loss at the Swiss Bank. Both the Times and the FT have stories highlighting remarks made by Adoboli's former manager John DiBacco, who told the court late last week that UBS's London trading desk was "less risk adverse" than its U.S. counterpart. He also reiterated statements he made to KPMG auditors called in to investigate the huge losses back in 2011: "There was a lot of risk-taking happening in London of a proprietary nature not strictly for the facilitation of clients." DiBacco, the former global head of synthetic equity trading at UBS, was terminated in January 2012 for "failure to supervise." He said during his testimony he disagreed with the bank's assessment of his performance.
Wall Street Journal
The U.K. government is setting up a new state-backed business bank designed to support up to £10 billion of new lending for small and medium-size companies. The bank, which will be set up over the next 12 to 18 months, is meant to help tackle "the long-standing problem of a lack of credit for smaller companies."
How do you get the megabanks to behave? According to some of the stranger responses received by the U.K.'s Parliamentary Commission on Banking , which asked interested parties for suggestions, you could perform a personality test or "a behavioral monitoring audit" on employees, end "fractional reserve" banking or print your code of conduct on the menu at your annual banquet.
Here's another question: How can you determine just how big a bank is? The answer, it seems, will vary, depending "on your view of how derivatives should be accounted for on banks' books," which is one of the reasons it may not be so simple to just break up giant financial institutions.
No-longer-free checking is getting more expensive. According to a new survey from Bankrate, customers must now keep an average minimum balance of $723 in zero-interest checking accounts (a 23% increase over last year) in order to avoid a monthly fee, which is on average around $5.48 (a 25% increase over last year.) Customers, needless to say, aren't happy with the spikes, which banks blame largely on new regulations.
European banks are moving to sell €20 billion worth of property loans in order to reduce exposure to the volatile real estate sector ahead of tougher capital requirements. Lloyds, Santander and the Bundesbank are among those that have already sold expensive portfolios.
Russian lender Promsvyazbank is looking to raise as much as $500 million in a dual London-Moscow initial public offering.