Receiving Wide Coverage ...
Peregrine, Shook: This seems to be the week for disturbing, noir-ish financial stories. First there was that director of the failed Georgia bank believed to be on the lam after being charged with fraud and sending colleagues what read like a suicide note. Now Peregrine Financial, a Chicago futures brokerage, has filed for Chapter 7 liquidation, $215 million of customer funds are missing, and its founder, accused by authorities of fraud, has been hospitalized after an apparent suicide attempt. Wall Street Journal, Financial Times, New York Times, Washington Post
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Liborama: Faithful Morning Scan readers know the drill by now.
“Congress Joins Libor Probes; Focus Includes U.S. Regulators Who Knew About Problem as Early as 2007.” Wall Street Journal, Financial Times
“The Libor Scandal's Threat to Growth: The world cannot afford endless litigation against banks”: An interesting Journal op-ed by economist David Malpass.
And that risk of further private litigation is far from hypothetical. “Baltimore has been leading a battle in Manhattan federal court against the banks that determine” Libor, says the Times. Now other states and municipalities are weighing suits.
Cooler policymaking heads must prevail, says the FT’s “Lombard” column. “Politicians need better evidence on the impact of Libor manipulation before they split investment banks from commercial and retail parents, as many commentators are now proposing.” Although “Barclays is rightly seen as emblematic of the capture of a solid old bank by amoral risk-takers,” since “swap traders exploited their access to Treasury staff within the model of a universal bank to manipulate its Libor submissions,” the writer cautions that “politicians need to ponder further shake-ups of banking dispassionately, given that the supply of credit to businesses and consumers remains weak.”
“We should be alarmed that corporate wrongdoing has come to be seen as such a routine occurrence. Capitalism cannot function without trust.” These words could have been written pretty much any time in the last four or five years, but in this case the news peg is the Libor scandal. (The Times’ “Economic Scene” column.)
Another good one for the summer interns: “Q. and A.: Understanding Libor.” (New York Times)
“Assessing the Chances for Criminal Charges in the Libor Scandal”: It may depend on how much banks cooperate with authorities and whether the government finds their internal corporate investigations credible. (The Times’ “White Collar Watch” column.)
Wall Street Journal
Anonymice tell the paper JPMorgan plans to claw back “millions of dollars in stock” from former Chief Investment Officer Ina Drew, and that details could be disclosed as early as Friday, when the bank reports second-quarter results. Kremlinology isn’t our forte, but it seems someone is trying to counter this Bloomberg News story from last month, which quoted compensation experts who doubted Drew’s bonuses could be clawed back since she wasn’t terminated for cause.
