Receiving Wide Coverage ...
Freddie vs. Banks Over Libor: Freddie Mac is suing more than a dozen banks and the British Bankers Association, alleging it incurred substantial losses as a result of Libor-rigging. The alleged losses are related to swaps transactions and mortgage securities the GSE had linked to Libor. The suit claims the BBA participated in the rigging "to protect revenue it generated from selling Libor licenses and to appease the banks that were on the Libor panel," the FT reports. Freddie's counterpart, Fannie Mae has yet to file suit, but told the Journal it was "weighing that possibility." Banks caught in Freddie's crosshairs include B of A, JPMorgan Chase, Citigroup, Credit Suisse, Deutsche Bank, RBS, Barclays and UBS.
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Good Press, Bad Press for JPM: The London Whale hearing continues to make headlines. ProPublica, via Dealbook, is out with a piece that argues the findings of Carl Levin's investigation into the multi-billion trading loss reveal banks have learned nothing from the financial crisis. And the Journal is elaborating on a story it put out last Friday addressing Levin's disclosure in the subcommittee report that the OCC downgraded its confidential rating of JPM's management back in July. This part of the Journal article appears new: "On a scale of 1 to 5, with 5 being worst," JPM went from a two to a three and the downgrade, anonymous sources say, wasn't solely related to the London Whale losses. But it's not all negative press for JPM. The Times reports the bank has decided to make changes to its policies that will make it more difficult for payday lenders to tap into consumers' bank accounts. Of course, this is a follow up to an earlier Times article from the same reporter that called attention to the fact that JPM (among other big banks) was allowing payday lenders access to consumer bank accounts in the first place, but, hey, at least, it's not another negative Whale hearing headline.
Cyprus, Day Three: Cyprus lawmakers rejected a controversial European bailout plan that would have included a levy on its depositors. "I understand why Cyprus is rejecting the terms of the European Union's bailout. What I don't understand is why the European Union is offering these terms," writes the Washington Post's Ezra Klein. He goes on to compare the bailout terms to a missile the EU asked Cyprus to launch directly at "the currency union's deposit insurance system." What's next for Cyprus? "Some more meetings," Slate's Matt Yglesias tweeted, though, based on reports, it remains unclear what negotiations with the Eurozone will look like. The Journal reports that Cypriot lawmakers are working on a Plan B that would involve support from Russia. The FT outlines three additional scenarios: Cyprus backtracks, the Eurozone relents and disaster. Cyprus's banks remain closed and the European Central Bank has agreed to provide liquidity to the country in order to prevent its immediate collapse. In the meantime, Twitter is a flutter with alternate suggestions for staving off the country's economic collapse. "Looking forward to hearing Cyprus Plan B: #mintthecoin," HuffPo's Mark Gongloff tweets, while New York mag's Kevin Roose asks, "Have we considered a Cyprus bailout Kickstarter?" More big picture coverage here: New York Times, Washington Post, Financial Times
Wall Street Journal
The Securities and Exchange Commission is looking into fees and expenses, particularly the "exotic" ones, that hedge funds and private-equity firms charge investors.
Visa may have to buy the Visa Europe payments system, thanks to "a plan being discussed by the European banks that own the business."
Financial Times
The world's biggest banks are making "big strides on Basel." According to a survey from the Basel Committee on Banking Supervision, cumulative shortfall among 101 "very large" banks on the minimum core tier one capital ratio of 7% dropped €175.9 billion, or 43%, between December 2011 and June 2012. These big banks "are now collectively short €208 billion of the capital they will need to meet tougher Basel III requirements."
New York Times
This op-ed refutes the notion that big banks should be made smaller, arguing, among other points, that "historically, small banks in the United States pose the highest risk of failure."
