Breaking News This Morning ...

Well, That Was Abrupt. The day after a generally positive earnings report (more on that below) CEO Vikram Pandit says he's "concluded that now is the right time for someone else to take the helm at Citigroup." That someone else is long-time company veteran Michael Corbat, who most recently oversaw the Europe, Middle East and Africa business and before that Citi Holdings, the company's garage sale of noncore assets. President and COO John Havens also resigned. Press release here.

Earnings: PNC, State Street, Goldman Sachs

Receiving Wide Coverage ...

Charge Citi: One-time charges "swamped" lots of positive indicators in Citigroup's third-quarter results, according to the Journal. Not only did the securities and mortgage businesses do well, but the bank's net interest margin expanded, bucking the trend among megabanks. Despite such core strength, items like a multibillion-dollar loss on Citi's ongoing sale of its stake in the Smith Barney joint venture to partner Morgan Stanley, not to mention the usual dreaded debt valuation adjustment, meant headlines like this one in the Times: "Citigroup Earnings Plummeted in Third Quarter on Write-Down." And in contrast to the bullish remarks on housing made by JPMorgan and Wells Fargo last week, Citi is still nervous about the sector, and so "has yet to undertake significant release of reserves related to mortgages," according to the Journal's "Heard on the Street" column. Interestingly, while the Times characterized the results as a vindication of CEO (or rather then-CEO) Vikram Pandit's global strategy, pointing to lending gains in Latin America, the Journal played up "signs of weakness from Citigroup's international business" in Asia, where the bank has been hit with regulatory issues and slowing growth.

(State) Street Fight: The FT has a pair of stories about shareholder discontent at State Street. One focuses on the sources of investors' frustration (a stagnant stock price, costs that have grown faster than revenues), the other on what they're doing about it: Agitating for the board to replace CEO Joseph Hooley or CFO Edward Resch.

Fed Watch, New York Edition: The New York Fed turned over to a House investigations subcommittee thousands of pages of documents detailing its response to alleged Libor-rigging by banks. You can read about it in the Journal and the Times. More interestingly to us, the FT reports that New York Fed President William Dudley says he's concerned that consolidation in the mortgage business is undermining monetary policy. The Fed's worked hard to indirectly lower mortgage rates by buying up mortgage-backed securities, but the drop in yields on those instruments has not fully been passed on to the consumer. As we've put it before, if X+Y=Z, and you lower X, it doesn't guarantee an equal reduction of Z. Dudley blames Y's misbehavior on the lack of competition in a highly concentrated origination market. He's hardly the first to draw that conclusion, but it's noteworthy that he said it.

Wall Street Journal

Trial balloon alert: The CFPB is considering what appears to be a compromise in the debate over the legal protections lenders should get if their product meets the "Qualified Mortgage" definition. Most QMs would get the full-fledged "safe harbor" from consumer challenges to foreclosures under this plan. But those carrying rates 1.5 points above the national average would have only the reputedly weaker defense of a "rebuttable presumption" that the lender vetted the borrower's ability to repay, with the onus on plaintiffs to prove otherwise.

Columnist Francesco Guerrera looks at the difficulty banks face achieving adequate returns on equity — "adequate" defined as 12% or above, on the assumption that their capital costs 8% to 12%.

New York Times

Fed Gov. Daniel Tarullo's idea to cap the size of large banks might find fans among Republicans who have been critical of Dodd-Frank's complexity, along with the usual break-'em-up advocates.

Columnist Andrew Ross Sorkin argues for the "no good deed goes unpunished" interpretation of regulatory actions against big banks for the alleged misdeeds of firms they rescued during the crisis: "Nowadays, Wall Street Saviors May Wish They Weren't."

The Blackberry "has become a magnet for mockery and derision from those with iPhones and the latest Android phones." Oh c'mon, don't rub it in.

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