Receiving Wide Coverage ...
Who Speaks for the Savers? The Times and the Journal offer critiques of the Fed's zero-interest rate policy. In her Times column, Gretchen Morgenson frames the argument in moral terms and implicates the financial sector: "The Fed drove down interest rates to almost zero to shore up big banks and an economy that those banks helped drive off a cliff. Now savers, who did nothing to create the financial crisis, are being punished." In a Journal op-ed, Andy Laperriere of the investment research firm ISI Group makes an economic case against ZIRP, arguing that encouraging consumption at the expense of savings will hurt growth: "Prosperity does not come from spending; it comes from work, saving and investment." Wall Street Journal, New York Times
Living Wills: The FT has a pair of stories on the plans for winding themselves down that systemically important institutions must prepare under Dodd-Frank in the U.S. and a G20 agreement internationally. One article emphasizes global banks' lack of progress in preparing their living wills. The other focuses on a major obstacle — inconsistent and sometimes conflicting instructions from regulators in different countries.
Hanging Out a Shingle: JPMorgan’s head proprietary trader, Mike Stewart, is leaving the bank to start his own hedge fund. Although the Volcker rule is forcing U.S. banks out of prop trading, JPMorgan had picked Stewart for a newly created job in its asset-management unit. He’s taking about half a dozen people with him to the new venture. Financial Times, New York Times.
Wall Street Journal
The results of the January stress tests are coming soon, perhaps as early as next week, and “some very large banks are clashing with the Federal Reserve over how much detail the central bank will reveal.” The Fed intends to publish more data than it did for the 2009 stress tests. This time, it will reveal its projections for banks’ revenues and bottom lines in the stressed scenarios, not just loan losses and capital needs. The banks’ concern is competitive, according to the Journal. “Fed officials are assuring banks they won't release data that rivals could mine for clues to future acquisitions or other moves. In one concession, the Fed told banks it doesn't intend to break out projected losses on a quarterly basis.”
Remember when Wells Fargo drew the line at the Mississippi river? Now it wants to expand internationally, according to the FT. The San Francisco bank “wants to expand into 20 markets around the world, providing full corporate banking services to its US customers as they expand globally.”
Last year was the first since at least 1984 without a single start-up bank chartered in the U.S. This is a somewhat lagging indicator of investor sentiment, since it takes time to get a charter application approved. “The lack of de novos now is probably a reflection of public attitudes in 2008,” one analyst tells the FT. Another analyst points out that last year’s three de novos were set up to take over failed banks.
Before directing your attention to this next one, we’d like to reiterate that anyone accused of a crime should be presumed innocent until proven guilty. “A senior banker at Morgan Stanley has been placed on leave and charged with a hate crime, after allegedly attacking a New York City cab driver with a pen knife” and making racial slurs, the FT reports. This yuppie-versus-workingman story is likely to become fodder for the populist crowd, so it’s perhaps ironic that the accused banker’s name is William Bryan Jennings.
New York Times
The hacker group Anonymous may have inadvertently done businesses a favor, a Times dispatch from the RSA data-security conference suggests. “What Anonymous has done, experts said … is raise the alarm about the unguarded state of corporate computer systems. … [A] company that is a target of Anonymous may also be the target of a far more potent adversary. … Anonymous draws public attention — and by extension, that of executives and shareholders.”
Ever wonder where Paul Volcker and George Soros go to exercise? Neither did we, but the Times’ Sunday Business section featured a profile of their personal trainer, who also helps other financial titans work off the old gut.