Receiving Wide Coverage ...
On the Regulatory Horizon: An anonymouse tells the Journal that the forthcoming Volcker Rule won't allow banks to use "portfolio hedging," thanks to JPMorgan Chase's whole "London Whale" debacle. "Regulators, in response to [JPM's disclosure its trades were a hedge], pushed to write a rule that would ensure banks couldn't engage in such trades," the paper reports. "The move will come as a blow to banks, which lobbied regulators to keep language allowing portfolio hedging in the rule." But finishing Volcker does not necessarily mean finishing Dodd-Frank. Dealbook reports that U.S. Treasury Secretary Jacob Lew is set to give a speech Thursday that champions the financial reform act, but leaves open the possibility of adding more measures to end too big to fail in the future. "Lew is pushing for new measures to reduce the risks posed by money-market mutual funds," the article notes. "In addition, he argues that vulnerabilities still exist in the short-term debt markets that Wall Street firms tap heavily." Meanwhile, three Wall Street trade groups the Securities Industry and Financial Markets Association, the International Swaps and Derivatives Association and the Institute of International Bankers are suing the Commodity Futures Trading Commission for allegedly wrongfully issuing new directions for swaps as guidance rather than a formal rule. "At its heart, the challenge reflects a broad worry among industry activists and conservative lawmakers in Washington that the trading commission has gone too far," Dealbook notes, while the Journal reports: "SIFMA and ISDA sued the CFTC before, in December 2011, which resulted in the CFTC revising a rule aimed at curtailing bets in commodities markets."
Settled: Fifth Third Bank has agreed to pay $6.5 million to the Securities and Exchange Commission to settle charges of improper accounting of commercial real estate loans in 2008. The bank's former chief financial officer Daniel Poston has agreed to pay $100,000 and be suspended from working as an accountant at any publicly traded company for at least a year. No admissions (or denials) of wrongdoing were included in the settlement. Wall Street Journal, New York Times
EU Fines Revisited: An updated version of a Journal article included in Wednesday's Scan says that six, not eight, financial firms were fined $2.32 billion by the European Union over colluding in attempts to manipulate key global benchmark interest rates. These banks include Deutsche Bank, Société Générale SA, Royal Bank of Scotland Group, JPM, Citigroup and small U.K. cash broker R.P. Martin Holdings Ltd. Meanwhile, a few op-eds argue that firms should take note of Barclays' and UBS' exemption from the settlement. The banks, which were the first to settle over Libor manipulation allegations, escaped penalties by whistleblowing on other involved parties. Citi also received a lesser penalty for coming forward. "Barclays seemed to have made a tactical error when it was first to come clean on attempted Libor-rigging last year," notes a Reuters Breakings Views column (via Dealbook.) "That was a possible disincentive to firms to take the lead in coming clean with the authorities, and implicating rivals. But there are now clear financial benefits to stepping forward." This FT column echoes "those who do not settle may also be subject to lengthier published findings, which are the fodder for follow-on damages actions that could haunt the banks beyond 2020."
Wall Street Journal
Meet Vikram Pandit the disruptor. The paper profiles the former Citi CEO's financial backing of Orchard, a peer-to-peer lending startup. "The investment is a bet that borrowers will continue to flock to peer-to-peer and other 'shadow lenders,' which have expanded rapidly since conventional banks cut back on loans during the financial crisis," the article notes. Pandit first resurfaced back in May when news broke that he was investing in Indian financial services group JM Financial. He also invested in CommonBond, a Brooklyn, N.Y.-based start-up that lends to MBA students, back in September.
New York Times
Mobile payments are beginning to gain traction with the poor in India, after startup MoneyOnMobile moved to replicate the success of Kenya's mobile money transfer service M-Pesa. "Mobile payments could improve the lives of India's 354 million poor most of whom have cellphones but no bank accounts, credit cards or debit cards by lowering the cost of the domestic remittances on which so many families depend," the article notes. American Banker readers may recall, however, that there are reasons the successes of M-Pesa and its offshoots, wouldn't be so easily replicated in the U.S.