Receiving Wide Coverage ...
JPM's Woes Grow Again: The hits just keep on coming over at JPMorgan Chase. The nation's biggest bank disclosed in a regulatory filing that the Securities and Exchange Commission is investigating its hiring practices in China. "Authorities suspect that JPMorgan routinely hired young associates who hailed from well-connected Chinese families that ultimately offered the bank business," explains the Times, which first reported on the filing. The bank told several news outlets it is fully cooperating with regulators regarding the investigation. The SEC is declining to comment. The FT notes that the investigation could "cause consternation" for more than just JPM. "In their rush to capitalize on China's economic growth, virtually all the big Wall Street and European financial institutions with operations in the country have habitually hired the children of senior Chinese officials," the paper notes. Meanwhile, the Journal estimates that JPM's growing regulatory problems could cause the bank to "absorb $6.8 billion in future legal losses above its existing reserves" then drops this factoid: "The numbers put JPMorgan on pace to supplant Bank of America as the big lender with the most legal problems."
B of A to Dissolve Merrill: In case you missed it, various news outlets reported on Friday that Bank of America is looking to dissolve subsidiary Merrill Lynch into its parent company as early as the fourth quarter. The investment firm, however, will continue to operate "as normal" under the Merrill Lynch name. The formal merger would allow B of A to take on all of Merrill Lynch's debt and obligations. It would also cut down on the legal and regulatory paperwork. New York Times, Wall Street Journal, Bloomberg
More Fed Chair Whispers: A Journal article postulates that Ben Bernanke's replacement as Federal Reserve chairman will have to work hard to quell dissent within the central bank. "Two leading contenders to succeed Mr. Bernanke, Lawrence Summers and Janet Yellen, tend to have strong views," the paper notes. "Either might push harder to advance his or her own positions, and face more pushback from other officials in return, making the Fed a feistier place." Meanwhile, the Washington Post profiles Yellen. "If Obama appoints her to the top job, the open question is not what her approach will be to guiding the nation's monetary policies," write Neil Irwin and Ylan Q. Mui, citing that the Fed vice chair has already indicated what her plans would be in speeches. "Rather, it is how she would adapt to a role in which she is the person in charge."
A Lex column looks at whether return on equity is the root of evil in banking: "Like all measurements based on the bottom line of the profit and loss statement, there are ways in which it can be either willfully massaged or persistently distorted by one-offs."
New York Times
Large pension and sovereign wealth funds are looking for ways to reduce their reliance on Wall Street firms in order to avoid fees and lackluster performances. The moves, however, "are not yet threatening to eat into the overall profits of the big hedge funds and private equity firms that cater to large international investors."
Reporter Ylan Q. Mui suggests the Fed could minimize the effects its anticipated stimulus program wind-down has on the market by initiating a "tiny taper" in September. "The Fed could reduce purchases to $75 billion a month instead of the $60 billion or so Fed watchers have been expecting," Mui argues. "A tiny taper would likely appease officials who worry that the economy is still not ready to stand on its own. But it could also satisfy those who believe the program has already gone on too long."