Receiving Wide Coverage ...
Davos Dispatches: Lots of interesting news is coming out of that World Economic Forum junket in Switzerland. Jamie Dimon says JPMorgan Chase considered pulling out of Europe’s troubled peripheral countries, the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain), though he diplomatically referred to them as “the euro five.” The decision to stay was “largely social and partially economic,” the CEO said, according to the FT. … Too-big-to-fail behemoths of the world, unite! The Global Financial Markets Association, an umbrella group for trade associations in the U.S., Europe and Asia that’s kept a low profile to date, is reinventing itself as a lobbyist on international regulatory issues for the world’s biggest banks. The group is chaired by Blythe Masters, the head of commodities at JPMorgan and a pioneer of the credit default swap. … The European Union plans to raise objections to the Volcker rule with U.S. Treasury Secretary Tim Geithner, the Journal reports. European officials worry the regulation will restrict U.S. banks’ ability to trade European sovereign debt on behalf of clients, hurting liquidity for these countries at a time when they really need it. Of course, the rule is supposed to ban only proprietary trading by banks, not old-school market-making, but banks have protested that there are gray areas between the two. … The Times profiles Treasury undersecretary for international affairs Lael Brainard, who’s in Davos “trying to coax European leaders to contribute to a financial firewall.” … BreakingViews reports that the plight of the 99% has cast a pall over the annual convocation. … But Reuters’ blogger Felix Salmon says that the Davos attendees really don’t care what the Occupy Wall Street crowd has to say. ... And if you care, wine tastings are once again being held at Davos, the Times reports. Fine, but please don't tell us what kind of shoes the female attendees we wearing. It can't be important.
Zero Benefit? The Fed’s expectation to keep short-term rates near zero until the end of 2014 augurs poorly for profitability at banks, which have been waiting for years for rates to rise, the Journal’s “Heard on the Street” says. “This could lead to further cost cutting and shedding of some business lines,” the column says, noting that the benefit to banks from lower funding costs is over time not as great as the pain from depressed asset returns. Conversely, a jump in rates would produce a nice pop in earnings for banks such as JPMorgan and Bank of America. Meanwhile, the Journal’s editorial page paints the Fed’s announcement as an act of desperation by a central bank that doesn’t really know what it’s doing.
Wall Street Journal
Two former midlevel managers at IndyMac, whom the FDIC is suing for negligence, accused the agency of a "stunning display of incompetence" for failing to preserve documents and emails when it took over the failed thrift. (Insert your own pot-calls-kettle-black joke here.) Without such evidence, the defendants say, they’re having a hard time building a defense against the suit, which blames them for approving loans to homebuilders that had a slim chance of getting repaid.
Discover “is facing a joint enforcement action by the [FDIC] and Consumer Financial Protection Bureau over its marketing of payment-protection plans.” And it can’t guess how big the cost will be because the "CFPB is a new agency for which no precedent has been established for enforcement matters."
We don’t even want to read this one, but if you’re interested: “Wall Street's Cutbacks Nip at Hamptons.”
An editorial excoriates HUD for rushing to issue a rule that would allow lawsuits against banks for lending practices that have a “disparate impact” on protected classes, even when there’s no evidence of discriminatory intent. The Supreme Court is expected to weigh in on the legality of bringing such claims in the case of Magner v. Gallagher, and the Journal’s editorial writers say HUD is overreaching by trying to sway the justices by putting out its interpretation first.
The Special Inspector General for Tarp says the Obama administration needs to be tougher on mortgage servicers that haven’t complied with the rules of the Making Home Affordable program. The watchdog singled out JPMorgan Chase and Bank of America in its report.
Speaking of JPMorgan and B of A, the FT reports that those two banks, along with Wells Fargo, offered a combined $15 billion of mortgage aid to California borrowers to get that state’s attorney general to come back to the table in the multistate settlement talks. It didn’t work.
New York Times
Senator Kirsten Gillibrand of New York is also worried about the Volcker rule. She told regulators she’s concerned about “inconsistent enforcement across regulatory agencies.”