Receiving Wide Coverage ...
Naming Names: British authorities have identified almost two dozen individuals at banks as possible co-conspirators in a probe into the manipulation of the London Interbank Offered Rate. The Serious Fraud Office notified the individuals last week that they had been included in court papers related to a case against Tom Hayes, a former trader at UBS and Citigroup. High Court justice Jeremy Cooke also lifted an order from last week that barred the Wall Street Journal from reporting the names of the individuals. Cooke found that there was "no basis" for the restriction, according to the Journal. Under British law, judges can restrict what the media reports if it might prejudice a defendant or potential jurors, according the New York Times. None of individuals have been "formally accused of wrongdoing," the Financial Times reported. Hayes and two others were supposed to plead not guilty to charges on Monday but that has been delayed until December.
More on JPMorgan Settlement Talks: The Justice Department is likely to use its tentative $13 billion deal with JPMorgan as a "blueprint for reaching similar deals with other banks in probes related to bad mortgages and the 2008 financial crisis," the Washington Post reports. This could mean a period of large settlements from other banks. Additionally, the Justice Department has scaled back its punitive penalties tied to actions by Bear Stearns and Washington Mutual, which JPMorgan acquired in 2008, according to the Journal. The only fine JPMorgan would pay between $2 billion and $3 billion depending on the publication you read relates to its actions before the financial crisis. The rest of the settlement would be paid to institutional investors and the Federal Housing Finance Agency for faulty mortgage securities sold by JPMorgan, Washington Mutual and Bear Stearns and used to aid homeowners.
Declining Profitability on Wall Street: Rising interest rates, litigation costs tied to settlements with the federal government and recent turmoil in Washington could mean lower profits for Wall Street for the second half of the year, according to a report from New York state Comptroller Thomas DiNapoli. Income could total roughly $5 billion for the last six months of the year compared with $10 billion during the first half of the year. The report was released after the 10 largest U.S. commercial banks and securities firms reported an almost 7% dip, to $17 billion, in combined adjusted net income for the third quarter, according to the Journal.
Farewell: J. Michael Evans, vice chairman of Goldman Sachs, will retire from the Wall Street firm at the end of the year. Evans, who joined Goldman in 1993, was once considered a possible candidate to succeed CEO Lloyd Blankfein. Evans, 56, has held several high-level positions, including chairman of Goldman Sachs Asia Pacific and global head of growth markets. He will take the advisory role of senior director, an honor bestowed by the firm to some retiring partners. Gary Cohn, president and chief operating officer, is now considered a contender to takeover for Blankfein. However, Blankfein, 59, hasn't indicated he will step down anytime soon. New York Times, Financial Times, Wall Street Journal
Wall Street Journal
The Commodity Futures Trading Commission has asked banks heavily involved in currency trading to review their records as part of a worldwide investigation into possible currency-market manipulation. Several international regulators, including officials in Hong Kong, Switzerland and the United Kingdom, are involved in the probe. A key issue is foreign-exchange "fixes" "snapshots of traded rates on an electronic marketplace captured" at a certain time every day, according to the Journal. The investigation in London is partly focused on whether traders in electronic chats went beyond simple information sharing and crossed the line into collusion to manipulate prices.
Banks need to focus on their strengths and "ditch their hobbies," according to this Journal item. Lackluster third-quarter results underline the need for banks to distinguish themselves from competitors. This may mean divesting underperforming units and revamping other business lines. Citigroup and UBS have both tried to slim down and refocus since the financial crisis, though results have been disappointing.
Achilles Macris, a former employee of JPMorgan Chase, filed a suit against the Financial Conduct Authority in the United Kingdom, claiming that he was wrongly identified in the settlement regarding the bank's "London Whale" trading scandal. Macris ran the bank's London Chief Investment Office. He oversaw the portfolio in which trades in credit derivatives eventually led to JPMorgan losing $6 billion in 2012 and settling charges with authorities for more than $1 billion. The Financial Conduct Authority had previously said that it was "deliberately misled" by JPMorgan through the conduct of its CIO London management. Although Macris was not specifically named, his lawyers claim he is clearly identifiable from the comments and that the criticism violates a law that requires administrative agencies to give parties a chance to respond to comments before they are made public.
Despite signs of economic growth, banks have showed concern about regulation. Bankers "complain of a lynch-mob mentality among regulators keen to punish the mistakes of the past, but in doing so undermining efforts to reinvent a cleaned-up, more robust banking sector," the FT reports.
Additional alternative sources of credit, such as peer-to-peer lenders and invoice financing, have caused nonbank lending to small business to hit a five-year high in the U.K., according to the FT.
A drive in the U.K. to encourage customers to move their business to a new bank has proven tricky. Despite two years of planning and a very expensive advertising campaign, 89,000 customers moved their accounts in the first month of the campaign only 9,000 more than during the same period last year.
New York Times
Sales of previously owned homes fell almost 2% in September to a seasonally adjusted annual rate of roughly 5.3 million. That is compared with almost 5.4 million in August, which was revised down, according to the Times.