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Two More Years of This? Try Three: Janet Yellen, the Fed’s vice chairwoman, emphatically supported the central bank’s plan to keep rates super-low through late 2014 and suggested easy money may need to continue “until late 2015.” Wall Street Journal, Financial Times, New York Times, Calculated Risk.

Can Saving Be Saved? In today’s Journal, the “A-hed” — that’s the lighthearted story at the bottom of the front page — reports that grandparents nationwide are lamenting the end of the paper U.S. savings bond. Starting this year, the bonds are available online only; the paper stuff was eliminated as a cost-saving measure. What is Bubbe supposed to hand little Seth at his bar mitzvah reception now? Seriously, it’s a problem for bankers, too, since they have to deliver the unwelcome news to customers who walk into branches expecting to buy savings bonds. However, in his “Capital” column, the Journal’s David Wessel reports that the government has made an exception to the paperless policy for taxpayers who choose to receive part or all of their refunds as savings bonds. It’s part of a series of experiments by the IRS to encourage people to use their annual refunds to build savings. Wessel notes that although over-withholding is illogical in the abstract — it “amounts to an interest-free loan to the government” — behavioral economists have found that “many people, particularly lower-income Americans, use the tax system to force themselves to save.” Plus, it’s not like their wages are going to earn a whole lot of interest sitting in the bank all year anyway. (See the Janet Yellen item above.)

Cracks in the Street: The FT reports there’s been a “steady exodus of partners” from Goldman Sachs in recent months, underscoring how tightening regulation and diminished revenue potential are making Wall Street work less attractive. And the article doesn’t even mention Greg Smith! Meanwhile, John Mack, the former CEO of Morgan Stanley, is now casting his lot with the disruptors; the FT reports he’s joined the board of Lending Club, an arranger of peer-to-peer loans. And BlackRock has developed a platform for its clients to trade bonds with one another without going through Wall Street dealers. The fees for using the Aladdin Trading Network would be considerably lower than Street commissions. However, a BlackRock executive tells the Journal that “it’s not going to cannibalize Wall Street,” and we believe that comment reflects more than diplomacy. The article says dealers may have a role providing price quotes and standing by to fill orders that Aladdin can’t. Also, as one Journal reader points out in the comment thread, there’s no indication that financing will be available through Aladdin, and “given where yields are, that's pretty important these days” to boost returns through leverage. (See the Janet Yellen item above.)

Wall Street Journal

In a letter to the editor responding to Dallas Fed officials’ call to break up big banks, the ABA’s Frank Keating defends the utility of such institutions in today’s global economy. Other readers weigh in for and against the proposal.

New York Times

“Amalgamated Bank, long the nation’s only union-owned bank, announced that two financiers who offered it a lifeline … had closed a deal giving them 41 percent ownership in the bank.”

John A. Paulson apparently would prefer to remain in the shadow banking system. Under Dodd-Frank, his hedge funds now have to disclose certain information to the public via the SEC. But in one of the required forms “rather than use the names of each fund (Paulson Plus, Paulson Enhanced, or Paulson Partners), Mr. Paulson has opted to mask the portfolios by simply numbering them.” One thing is clear from the disclosures, though: Paulson’s funds rely heavily on JPMorgan for prime brokerage services, which the Times calls “odd” given the lesson about diversification hedge funds learned from their exposure to Lehman Brothers.

 

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