Receiving Wide Coverage ...
Global Threat on the Horizon: The central banks' efforts are all well and good, but the U.S. and European governments will need to do more to prevent global growth from screeching to a halt, says International Monetary Fund managing director Christine Lagarde. In an address at the Peterson Institute for International Economics, Lagarde warned the IMF may cut its estimates of global growth again this year during its meetings in Japan next month. She urged the U.S. to put aside political wrangling in order to address its deficit, calling the widening debt ceiling and uncertainty over the fiscal cliff "a threat for the global economy." , Washington PostNew York Times
The Great Libor Debate: Commodity Futures Trading Commission chairman Gary Gensler brought the London interbank offered rate back into the news cycle when he told European parliament members on Monday Libor needs to be replaced as soon as possible. Gensler's call for abolition/extreme reform was driven by data compiled by the CFTC showing Libor may still be subject to manipulation. The FT reports the data shows Société Générale reported a daily change in three-month borrowing costs just 10 times during one 182-day stretch this year. Bank of America reported a daily change just 14 times. He pointed out other instances in which there were no changes in banks' reported rates despite "volatility in other dollar-denominated short-term interest rates and general uncertainty in the economy" and suggested Libor be replaced with a new reference rate that was based on observable transactions.
The Journal calls Gensler's remarks "the latest indication of an intensifying regulatory response to alleged bank misconduct in the area of industry-set rates." You can expect to hear more about the Libor this week. U.K. Financial Services Authority managing director Martin Wheatley is slated to reveal his recommendations for repairing the benchmark interest rate on Friday. According to the paper, Wheatley may suggest stripping the British Bankers' Association of its oversight responsibilities and handing those powers to a government agency or the Bank of England.
Wall Street Journal
German lenders may be overly affected by Spain's economic woes since "they remain heavily invested in Spanish financial institutions, commercial real estate and in other businesses hit by the crisis."
You can't have your payday loan and put it on your prepaid card, too. At least that's the message the Office of the Comptroller of the Currency sent yesterday when it came down on Urban Trust Bank, a community bank in Orlando, Fla., for allegedly maintaining "a strong relationship" with a payday-lending and check-cashing firm that sells its prepaid products. The practice of putting a payday loan on a prepaid card is considered problematic since the fees associated with the card make the already high loan even more expensive for the consumer. Urban Trust Bank maintains it doesn't sell payday loan products. The bank is now required to submit a risk analysis of its prepaid business to the OCC and strengthen its oversight of vendors selling its prepaid cards.
The paper has put together a nice farewell for soon-to-be-retired Goldman Sachs chief financial officer David Viniar, which includes the not-so-subtle, albeit slightly buried suggestion he take over as board chairman in order to ensure a smooth transition when chief executive and current chairman Lloyd Blankfein ultimately steps down.
UBS has "poached" Nomura's global co-head of natural resources Shaun Treacy. The Japanese lender's senior banker is now slated to take over as co-head of the Swiss bank's "All Industries Group" in January.
In this op-ed, banking editor Patrick Jenkins defends ex-Barclays chief Bob Diamond and current Standard Chartered head Peter Sands, arguing the two men were painted in a perhaps too-harsh light by a highly politicized and fickle regulatory system.
New York Times
Dealbook's Andrew Ross Sorkin argues Tim Pawlenty's recent appointment as banking lobbyist "is the clearest sign yet of the flexible ethic that makes the revolving door in Washington spin faster."