Receiving Wide Coverage ...
What's Another $2 Billion at This Point? Paul Volcker and his eponymous rule have been hogging the financial headlines for far too long this week. Time for JPMorgan Chase to take back its usual place at the center of the spotlight, today with news that it's nearing yet another multi-billion-dollar payout to government authorities. This one involves jailed Ponzi schemer Bernie Madoff and a deferred-prosecution agreement for actual criminal charges against JPMorgan for turning a blind eye to Madoff's scam as it banked him, anonymice tell the papers.
As you might expect after the earlier, protracted negotiations for JPMorgan's mortgage-based settlement this fall, which ended up costing the bank $13 billion, the actual amounts of the Madoff deal are a little up in the air right now. Time for "The Price is Right," Madoff edition! The Wall Street Journal's sources predict it will be "more than $1 billion in penalties to the Justice Department" plus an unknown amount of additional "fines to U.S. regulators relating to inadequate warnings around Mr. Madoff as well as other control weaknesses." The New York Times' sources, meanwhile, say the total bill will be around $2 billion, including "more than $1 billion in penalties to resolve the criminal case," plus fines to regulators "investigating broader gaps in the bank's money-laundering safeguards." But yes, the bank and its executives will continue to avoid admissions of wrongdoing: "In the negotiations, the prosecutors discussed the idea of extracting a guilty plea from JPMorgan but ultimately chose the steep fine and deferred-prosecution agreement, which could come by the end of the year," according to the NYT's sources.
JPMorgan CEO Jamie Dimon, who's been unusually (if understandably) muted in some public speeches this year, sounded more energetic in a Wednesday presentation at the Goldman Sachs financial services conference, when he largely dismissed the bank's recent regulatory settlements as the cost of doing business. The FT notes that he even foreshadowed the likelihood of a Madoff-related payout: "You read about Madoff in the paper today. We have to get some of these things behind us so we can do our job," he said.
Surely it's a coincidence that on the same day that this latest proposed payout makes the papers, JPMorgan is also pledging to spend $250 million on a five-year jobs initiative. (That's roughly 1.67% of the possible $15 billion JPMorgan Chase will have agreed to pay in federal settlements this fall, including the proposed Madoff settlement and the earlier $13 billion deal over mortgage-related claims.) Dimon "dismissed a connection between the bank's recent troubles and its jobs initiative," according to Dealbook.
Volcker Round-up, Day Three: "The Volcker Rule may finally be out, but the process of understanding the intricacies of the complex regulation that bans the largest banks from making risky trades has only just begun." That's American Banker's Donna Borak, summarizing the long and conflict-prone road ahead for the bankers, lawyers, consultants and regulators involved in implementing and enforcing the rule. The Journal also reports that bankers and regulatory agencies are drawing battle lines over the long-gestated, finally-birthed provision, while the FT wonders if the "cash-strapped agencies have the resources to deal with another regulatory task."
Meanwhile, in an FT op-ed, the man himself (writing with former Citigroup co-CEO John Reed) turns his attention to banks' leverage ratios, praising U.S. regulators' efforts to apply stronger standards.
Fischer at the Fed: "Stanley Fischer, widely seen as a dean among the world's top central bankers, is President Barack Obama's choice to become second-in-command at the Federal Reserve," sources tell the Journal. The FT and NYT also hear he's in the running.
New York Times
Here's Bitcoin news that got the attention of American Banker Executive Editor Marc Hochstein, leader of our resident Bitcoin enthusiasts: Coinbase, a San Francisco company that promotes the use of the digital currency, has a new set of high-profile Silicon Valley backers.