Receiving Wide Coverage ...
Chairman and CEO?: Goldman Sachs' Lloyd Blankfein has successfully skirted a vote that could have split up his role as CEO and chairman after striking a deal with the investment group putting forth the proposal. The deal beefs up the role of lead director James Schiro, who will, moving forward, "set the agenda for the board, instead of merely approving it" and "write his own letter to shareholders in the proxy statement," Dealbook reports. Now the world waits to see what happens to JPMorgan Chase CEO Jamie Dimon, who faces a nonbinding vote on a similar issue at his bank's annual shareholder meeting next month. Dimon, the FT reports, "will not get off so easily" largely due to a little thing called the London Whale. This may be why, as the Journal reports, Dimon's annual letter to shareholders "lacked the feisty tone of years past." In the 30-page letter, Dimon "renewed his apologies" for the trading debacle, calling it "the stupidest and most embarrassing situation I have ever been a part of" and pledged to focus on compliance control. One analyst told Bloomberg earlier this week that Dimon may leave JPM "maybe not immediately but within the year" if the vote doesn't go his way. After all, he has all that new office space.
Bailout on the Way?: The Federal Housing Administration may be headed to its first ever taxpayer bailout, at least according to White House budget forecasts, which predict the agency needs around $943 million from the Treasury Department to cover loan losses. American Banker readers know the news isn't entirely surprising. (Back in November, an independent audit revealed the agency's capital reserve ratio had fallen into negative territory.) But it was certainly enough to drum up a fresh wave of criticism. "The FHA is merrily on its way to becoming the recipient of the next great taxpayer bailout," Rep. Jeb Hensarling said in a statement, quoted by MarketWatch. Still, a bailout is "no sure thing," reports Politico, since FHA has until the end of September to cover it funding gap (which was actually much lower than expected) "either through new settlements with big banks or higher revenues from new loans than expected in the budget." FHA has previously been trying to avoid a bailout by hiking insurance premiums, accelerating short sales and aggressively selling off defaulted loans.
Risk Shift: Both the Journal and Times have articles detailing banks' (particularly those in Europe) growing inclination to shift risks to investment funds in an attempt to bolster capital cushions. Per the Journal, these "deals are called synthetic because the banks keep the assets on their books." A choice quote in the Dealbook article from Anat Admati, a professor of finance at Stanford University and co-author of the increasingly popular book "The Bankers' New Clothes": "These trades allow the banks to go to regulators and say the risk is gone. But it's not gone at all; it's just been pushed into a murky corner of the market."
KPMG Update, Part III: The man allegedly on the receiving end of stock tips from KPMG's rogue auditor has been identified, first by the Wall Street Journal, as Brian Shaw, a partner in Shaw Diamond Co. of Encino, Calif. According to Dealbook, Shaw is a "longtime friend and frequent golf partner" of Scott London, the rogue auditor in question. Federal agents secretly photographed London accepting a cash payment from Shaw for confidential information at their local Starbucks. Expect more updates on this situation: anonymous sources told the website securities regulators are expected to file charges against the pair "by the end of the week."
Ryusuke Otani, RBS' Japanese investment bank chief is "set to step down ahead of an expected penalty against the lender in connection with the manipulation of benchmark interest rates."
New York Times
Regulators would have an easier time reining in the consulting industry, if so many former regulators weren't working as consultants.
In case you haven't heard (and we're pretty sure you have), banks, like JPMorgan Chase, Wells Fargo and PNC, are pushing into the prepaid debit card market as a way to tap into the unbanked and/or underbanked market. They're also moving to offer other business "once shunned," including payday loans and check cashing services. Some regulators think this a good opportunity for the underserved demographic, but consumer advocates fear these customers "will be trapped outside the banking system without the protections [inherent] in traditional checking and savings accounts."