Receiving Wide Coverage ...
JPM, FERC Update: Very shortly after yesterday's Scan, JPMorgan Chase, as predicted, formally settled with the Federal Energy Regulatory Commission over energy market manipulation allegations. Kudos to the Journal for nailing the amount of the fine associated with the widely anticipated settlement in an earlier report on the matter: $410 million. Dealbreaker, however, gets the credit for best explanation of the settlement agreement. A choice quote from the blog post by Matt Levine: "FERC built a terrible box, and the box had some buttons that were labeled 'push here for money,' and JPMorgan pushed them and got money." JPM didn't admit or deny any violations as part of the settlement and individual traders, including commodities head Blythe Masters, were exempt from separate punishment. The bank's official statement on the matter, per the FT: "We're pleased that this matter is behind us. Due to reserves previously set aside, this settlement will have no material impact on earnings." Meanwhile, the Times' Dealbook predicts JPM will pay to settle further U.S. inquiries. "Its new and conciliatory approach a departure for the bank and its leader, Jamie Dimon, who generally has taken a hard line with the authorities is yielding mixed results," the article notes. "Government officials, stung by the bank's past displays of hubris, may drive up the price of settlements or resist the overtures altogether."
And Geithner Makes Three?: Bloomberg is reporting that Timothy Geithner is President Obama's "third option" to take over as Federal Reserve chairman when Ben Bernanke leaves, though it's unlikely that the former Treasury secretary would take the position. "Geithner really doesn't want the job right now, and it has rarely been Obama's style to pressure or cajole anyone to take a post in his Cabinet," the article notes. Scan readers will recall that Fed Vice Chairman Janet Yellen and former Treasury Secretary Lawrence Summers are considered front-runners for the position. In other Fed chair news, the Journal's Jon Hilsenrath takes a look at Summers' view on monetary policy. "Summers has been skeptical about the benefits of the Fed's huge bond-buying programs, known as 'quantitative easing,' but he also has said he sees few harmful side effects stemming from them," he notes.
Charged: Federal prosecutors have filed criminal insider trading charges against former tech stock research analyst Sandeep Aggarwal in connection with the government's indictment of hedge fund SAC Capital Advisors. The Securities and Exchange Commission has filed a related civil suit against Aggarwal. New York Times, Washington Post
Wall Street Journal
UBS has agreed to pay "less than $60 million" to settle SEC allegations that the bank misled investors in a mortgage bond deal that went bad during the financial crisis, anonymice tell the paper.
Well, here's another, albeit potentially risky, future banking model: Blackstone Group and Deutsche Bank are reportedly in negotiations to securitize rental payments on "about 1,500 to 1,700" homes Blackstone purchased out of foreclosure. "The creation of a new type of security shows that Wall Street's financial engineering, blamed for deepening the financial crisis, is revving back up," the article notes.
Liechtenstein bank has agreed to pay the U.S. $23.8 million to settle allegations of (and avoid criminal prosecution for) helping Americans dodge taxes on money held in offshore accounts.
New York Times
Jessica Silver-Greenberg's latest article looks at how mistakes "like a bounced check or small overdraft" have led "more than a million" Americans to be effectively black-listed by "little-known private databases" used by major banks and rejected for a bank account. "When the databases were created more than 20 years ago, they were intended to help banks guard against serial fraud artists, like those accused of writing bogus checks. Since then, though, the databases have ensnared millions of low-income Americans," sources tell Silver-Greenberg. The article notes that the Consumer Financial Protection Bureau has received complaints on the issue and is looking into whether the databases comply with the Fair Credit Reporting Act.