Receiving Wide Coverage ...
Earnings: JPMorgan Chase and Wells Fargo reported first-quarter results this morning. JPM handily beat analyst estimates, according to the early takes. Previewing JPMorgan's conference call, the Journal's "Ahead of the Tape" said the tone taken by CEO Jamie Dimon "will influence how investors view banks generally." Doesn't it always? The column also notes that "Dimon may have to explain how headline-grabbing trades like those by a unit in London will be affected by a ban on proprietary trading," and we suspect the impetus for him to address the matter will be especially strong now, after this Bloomberg headline: "JPMorgan Said to Transform Treasury to Prop Trading." Another earnings curtain-raiser story in the Journal takes a broad look at how expenses — for things like litigation, compliance and foreclosures — are burdening banks. The FT says the administration's revamped Home Affordable Refinancing Program should aid bank profits in the upcoming reports, though. Wells Fargo, for example, could generate an extra $2 billion to $4 billion of revenue this year from refinancing underwater borrowers through the government's "scheme," as the Brits at the FT call it. (The word's not pejorative on their side of the pond.)
Freaky Friday: The morning papers report that the supposedly all-powerful and imperious Consumer Financial Protection Bureau wants to nix a pricing restriction put in place by the supposedly laissez-faire and bank-friendly Federal Reserve. Remember that the CARD Act of 2009 capped at 25% any credit card fees during the first year of an account's existence. At least one bank tried to get around that by introducing fees that are charged upfront, before an account is opened, as a precondition for getting the card. In 2010 the Fed tried to close this loophole with a regulation that said the law's fee cap applied to those upfront charges. First Premier Bank of South Dakota (where else?) sued, and won a preliminary injunction last year blocking that Fed rule from taking effect. Yesterday the CFPB (you know, the "cop on the beat" conceived by Elizabeth Warren and so feared by Republican lawmakers because it was unconstrained by Congressional appropriations funding or a bipartisan commission) proposed undoing the Fed's rule. Why? The bureau ain't sayin', according to the Times, but "some consumer advocates said they believed that the consumer agency… may be backing down because it has decided to 'pick its battles,' while trying to show that it is not unfriendly to business." If so, Obama has taught Richard Cordray well. New York Times, Washington Post
LIBOR-Gate: The Economist takes a close look at the evidence that has been presented in court cases about big banks' alleged manipulation of LIBOR, the subject of regulatory investigations around the globe. The picture painted by the legal documents "is not pretty," the magazine says. In the FT, columnist Gillian Tett reports similar shenanigans may be going on in the oil market, where the indexes for derivatives also are based not on actual trades but on price quotes from financial players.
Wall Street Journal
"The world's top banks are still falling far short of new regulatory targets on the amount of capital and liquid assets they must hold, the Bank for International Settlements said."
The Group of 30, a body of finance and regulatory bigwigs and academics, issued a report calling for big U.S. financial institutions to split the chairman and CEO roles. Industry leaders like Lloyd Blankfein of Goldman Sachs and Dimon at JPMorgan hold both titles, even though for years it's been considered a best practice of corporate governance to give the positions to two different people.