Receiving Wide Coverage ...

Pandit on the Pulpit: In a speech at an investor conference yesterday Citigroup CEO Vikram Pandit played the goody two shoes, defending much of the Dodd-Frank regulatory reform law that his peers have complained about. For some time, “Pandit has struck a more humble tone than his competitors, perhaps because his bank relied so heavily on taxpayers to stay afloat at the height of the financial crisis,” the Times notes. In a separate Times article, columnist Peter Eavis politely calls Pandit’s bluff on transparency. The CEO reiterated his call for regulators to require new disclosures from banks that would help investors make apples-to-apples comparisons. “That’s an admirable aim, but Citigroup could start by catching up with other big banks and releasing how much capital it has supporting its investment banking unit” as JPMorgan does, Eavis writes. To be fair, he notes that the figure at JPM “has been at $40 billion exactly for several quarters, raising questions about the number’s usefulness.” Meanwhile, FT columnist Robert Shrimsley makes light of Citi’s deal to use IBM’s Watson supercomputer. Among the questions raised by this arrangement, he writes, “will be whether Watson is executing unauthorised trades and covering them up thanks to its personal relationship with the database server at the Federal Reserve — the two were Intel chips together when young.”

Wall Street Journal

The Fed is considering a “sterilized” version of quantitative easing. As in regular previous QE maneuvers, the Fed would print money to buy mortgage and Treasury debt, so as to drive down long-term interest rates for borrowers. But to avoid the risk of inflation, the central bank would take that new money right out of the system by taking out short-term loans from investors (including money market funds) and from banks. It’s similar to last year’s Operation Twist, in which the Fed sold its short-term paper and used the proceeds to buy longer-term assets, leaving the money supply unchanged. But the Twist was limited by the amount of short-term holdings the central bank had to trade in for longer-dated ones, while the sterilized approach, like regular QE, lacks this constraint.

A week from today is the deadline for all ATMs in this country to be equipped with technology that makes them accessible to the blind or visually impaired. But many ATMs, perhaps half of them or more, are unlikely to be in compliance with the Americans with Disabilities Act requirements in time. Whether penalties are imposed on banks or ATM deployers depends on customers complaining.

“American Express's cardholders will be able to sign up for merchant deals through Twitter, in the lender's latest move to tap social media to spur spending.”

Financial Times

In a letter to the editor, Neil Barofsky, the former special inspector for TARP, and finance professor Anat Admati rebut the recent op-ed by Bill Isaac and Dick Kovacevich arguing capital is overrated as a risk deterrent. Isaac and Kovacevich, the former heads of the FDIC and Wells Fargo, respectively, had proposed requiring banks to issue debt regularly to provide a form of “market discipline” that equity could not. Barofsky and Admati sound incredulous. “Certainly no such ‘discipline’ was evident in the run-up to the crisis, when banks relied on enormous amounts of debt and little equity. Most non-bank companies are funded with 70 per cent or more equity, without resorting to high leverage as a form of governance. Perhaps bankers can learn from them how to be more disciplined.”

Editor’s Note: Yesterday’s Scan gave the wrong link to the Journal story about H&R Block. The correct one is here.

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