Breaking News This Morning ...

Bank of America Swings to Profit: And beats analysts' second-quarter estimates. Wall Street Journal, New York Times, Press Release

Also Reporting: U.S. Bancorp, PNC, BNY Mellon, Northern Trust

Receiving Wide Coverage ...

A Very Public Resignation: HSBC's compliance chief quit his job during a U.S. Senate hearing, after the release of the investigations subcommittee's scathing report on the British bank's lax anti-money laundering controls. He's staying at the bank for at least a temporary period; the papers give different impressions of whether this is simply to smooth the transition or if he's taking a different position. (Teller? Janitor? Libor submitter?) Wall Street Journal, Financial Times

'Structurally Flawed': That's how Fed chairman Ben Bernanke described the process for computing Libor as U.S. and U.K. lawmakers grilled their respective regulators on the trans-Atlantic rate-rigging scandal. He even hinted to lawmakers that the index could lose its influence: "I would like to see additional reforms to the Libor process, assuming that Libor will continue to be a benchmark for financial contracts" (emphasis Morning Scan's). Also, the FT's "Alphaville" blog considers possible legal defenses that banks might mount as the Libor litigation and investigations pile up. Wall Street Journal, Financial Times, FT Alphaville, New York Times

Wall Street Journal

Goldman Sachs agreed to sell its hedge-fund back-office administration business to State Street.

Los Angeles is suing U.S. Bancorp, in its role as trustee for mortgage securitizations, for allegedly failing to look after foreclosed properties and illegally evicting renters. The Minneapolis bank argues it's not really the owner, the securitization trust is, and anyway the loan servicer is the party contractually responsible for maintaining the homes. If you're feeling déjàà vu, it may be because last year the city sued another trustee, Deutsche Bank, over the same issues, using the same rhetoric (then, as now, Los Angeles called the defendant bank a slumlord), with pretty much the same response.

Jonathan Macey, a Yale law professor, pans the CFPB's proposed mortgage disclosure forms in an op-ed. He faults the agency for obscuring the annual percentage rate, which boils down the interest rate and assorted fees into a single measure of the cost of a loan. "The new rules do not attempt to generate a single number that can be used for comparison purposes and instead focus on various components of the loan," Macey writes. "This makes it harder, not easier, for borrowers to compare mortgage options."

Financial Times

Shareholders would support a forced break-up of the largest banks, despite regulators' assumption that such dismantling would be regarded as an unwelcome government intrusion, Sebastian Mallaby argues in an op-ed.

New York Times

"Deal Professor" columnist Steven M. Davidoff previews the upcoming civil trial of a former Citigroup banker in a case based on allegations of misleading investors that Citi itself settled (in the deal that Judge Jed Rakoff rejected).

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