Receiving Wide Coverage ...
QE3 Forever?: The Federal Reserve Thursday outlined its latest plan to spur job growth and bolster the economy. The basic steps include the purchase of $85 billion in long-term bonds a month through the rest of the year, the subsequent addition of $40 billion of mortgage-backed debt per month until the job market gets better and low interest rates through at least mid-2015. Stocks rallied following the announcement of this indefinite QE3, as traders apparently had been sufficiently encouraged to buy "growth-sensitive assets," reports the FT.
Analysts, economists and politicians all seemed conflicted as to whether this plan was "forceful," "sweeping," "dull," "artificial" and "ineffective" or the inverse of all those things, but Reuters blogger Felix Salmon made some good points when he compared the Fed's plan to the recently-debuted iPhone 5: "It's basically the same thing that we're used to at this point, but it's got enough in the way of new bells and whistles to get people excited anyway — and boost economic growth. So, it's a good thing, even if it's not in any way revolutionary."
Of course, "excited" is a relative term. "This action may give Wall Street a boost, but overall it's a bad move," one American Banker reader commented regarding whether the Fed had made the right move. Another wrote, "Of course, the correct answer is, who knows for sure? The image that keeps fighting for my attention is of King Canute, the Danish/English King, who as story would have it commanded the tide not to come in. The question is, was that to prove to his followers that there are limits to what can be commanded, or was it with some belief that he might succeed?"
Delayed: Mobile platform venture Isis has pushed back trials of the product that were slated to take place in Austin, Texas, and Salt Lake City by the end of the summer. The digital payments service, a joint venture between Verizon Wireless, AT&T, and T-Mobile USA, will announce in October a new start date for the tests. The company is declining to say why specifically the trials have been pushed back, though its head of marketing Ryan Hughes did tell CNET "we're not experiencing any major issues." He also said the company is not making changes to its business model. The pushback follows Apple's announcement that its latest iPhone will not support the near field communications (NFC) short range wireless technology that the Isis service will be based on, Reuters notes.
Wall Street Journal
Royal Bank of Scotland is proceeding with the initial public offering of its Direct Line insurance business, even though a number of analysts doubt the move's profit potential.
Goldman Sachs has made some cuts to its pay programs, but it's the junior analysts who are feeling the effects. The investment firm is no longer offering two-year contracts for most analysts hired out of college. These analysts also won't get bonuses for completing its analyst program, which has long been seen as a "meal ticket to a lucrative Wall Street career" for young traders.
Lenders looking to turn a profit may want to focus on business loans. So long as the economy remains stable, "growing loan volume and the resulting payments that will flow into banks will buoy those weighed down by low interest rates."
Financial Times
Japanese investment bank Nomura is moving its international operations headquarters from London to Tokyo.
Former HBOS banker Peter Cummings became the only executive banned and fined by the U.K.'s Financial Services Authority for the role he played in the 2008 financial crisis because of his "hands on" approach.
Meanwhile, an ex-UBS trader Kweku Adoboli has found himself in trouble with U.K. prosecutors who allege he "fraudulently gambled" away $2.3 billion from the Swiss bank. Adoboli is currently on trial for fraud and false accounting and, if convicted, faces a possible 10-year jail sentence.
New York Times
The Commodity Futures Trading Commission is still debating how to crack down on foreign derivatives trading.
Here's another solid quote regarding the great Glass-Steagall debate: When asked about the complexity of big banks, former Bank of America and Citigroup executive Sallie L. Krawcheck said "it makes you weep blood out of your eyes." Krawcheck wasn't totally Sandy Weill-ing it, though. She went on to say the proposal to break up banks and the regulation known as the Volcker Rule were simply two possible "means to an end."
