Receiving Wide Coverage ...
Jobs Slow, Rates Low, Get Used to It: Chairman Ben Bernanke indicated the Fed must continue its easy-money policies, notwithstanding the strong employment gains of recent months. “Further significant improvements in the unemployment rate will probably require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies,” he said, dashing speculation that the Fed might start tightening monetary policy as soon as next year. Wall Street Journal, Financial Times, New York Times, Washington Post
The Comeback Kid: The FT has a pair of stories about Jefferies. One story chronicles the investment bank’s recovery since last year, when speculation about its exposure to the debt of weak European sovereigns cut the stock price in half. Quick action by management led to a rebound in the shares, and now its chairman says the firm is playing “guarded offense.” (He memorably describes the hedgies who played up Jefferies’ Euro exposure as “vandals.”) The other story details that offense: the creation of a corporate lending business in Europe to snatch market share from retrenching players there.
One MF’d Up Situation: Another Congressional hearing is scheduled tomorrow on the collapse of MF Global and the mysterious disappearance of $1.6 billion of customer funds that are yet to be found. The Journal notes that for the first time someone from JPMorgan Chase is scheduled to testify in the matter. JPM was a big lender, clearing bank and custodian for Jon Corzine’s brokerage, and an overdraft at a JPM account in London was covered with the now-infamous transfer of $200 million from an MF Global segregated customer account. A story in the Times’ “DealBook” focuses on the prepared testimony of MF Global’s chief financial officer, Henri Steenkamp, who, like Corzine in his previous Congressional testimony, will claim he had “no clue about the intricacies of customer accounts.” Also in “DealBook,” law professor and “White Collar Watch” columnist Peter J. Henning considers the dueling emails that have surfaced in the press — the one in which assistant treasurer Edith O’Brien says the aforementioned funds must be moved to the JPM account “per JC’s direct instructions,” which looks bad for Corzine, and the one in which Corzine is informed that the funds are from a noncustomer account, which would help clear him, as it were. “A crucial question,” Henning writes, “is what ‘instructions’ were provided to Ms. O’Brien. They do not appear to have been communicated by e-mail, so most likely they were transmitted verbally. This may well set up a classic ‘he said, she said’ situation.” Still another "DealBook" piece previews the testimony of MF Global's general counsel, who will speak publicly for the first time since the firm collapsed in late October.
Big Data: The Federal Trade Commission issued (voluntary) online privacy guidelines for companies and called for Congress to consider comprehensive legislation on privacy, data security and data brokers. A lot of the stories we’re seeing seem to contradict one another (is the FTC getting tough or just talking tough?), so here’s a link to the agency’s actual report for those who want to see what it says unfiltered. Wired, TechCrunch, Wall Street Journal, New York Times, Washington Post.
Wall Street Journal
Even banks that passed the recent stress tests are questioning the Fed’s math, which produced weaker capital ratios under economic shock scenarios than their internal models.
Government officials shouldn’t crow so much about how the Treasury is “turning profits” from certain crisis-era rescue programs, writes columnist Francesco Guerrera. The “bailout braggadocio,” he warns, “makes the crisis sound a lot more ordinary than it was, weakening the important lessons to be learned by regulators and bankers” and “dilute[s] the deterrent effect of such a crisis.” Or as former Tarp Special Inspector General Neil Barofsky puts it, "It's a form of moral hazard. It makes the financial crisis sound less dramatic. And it keeps the wolves that want to regulate banks at bay."
“Heard on the Street” considers the possibility of Morgan Stanley taking full control of Smith Barney from joint venture partner Citigroup earlier than scheduled. One reason why Citi might want to sell the rest of its shares to Morgan Stanley sooner than 2014 is that Citi needs capital after the Fed stress tests found it wasn't ready to return capital to shareholders.
JPMorgan Chase’s consumer banking website was intermittently down for a few hours yesterday, until the bank resolved what it said was a glitch related to a weekend upgrade.
New York Times
Columnist Joe Nocera spends a day at the Consumer Financial Protection Bureau and finds the idealistic young staff members “inspiring.”