Receiving Wide Coverage ...
The Day After: "Thousands" of customers visited their local community banks and credit unions on Saturday, presumably to consummate Bank Transfer Day, the Journal reports. However, the paper raises the possibility that the megabanks losing these accounts may be whispering "good riddance" to at least some of them. "People who gravitate to credit unions tend to be unprofitable for giant banks because of the small balances they keep on deposit, low number of products they buy and the relatively high account-maintenance expenses at big financial firms," the Journal says. (Hmm, that idea sounds familiar; where did we read that before?) Lower down in the article is a refreshing acknowledgment that despite being lumped together with credit unions as "the good guys" in the Bank Transfer Day narrative, many community bankers resent their tax-exempt rivals at the CUs almost as much as they resent the too-big-to-fail banks (if not more so). Another Journal story warns consumers that while the $5 debit card fees that galvanized the Bank Transfer Day crowd are kaput, other fees are likely to take their place as banks try to somehow recoup revenues lost to the Durbin interchange regulation. (Hey, that analysis sounds familiar, too.) The Netbanker blog points out that several of the credit unions actively wooing consumers to make the big switch were using SwitchAgent, a technology developed by Deluxe Corp. that makes it easier to change banks. We must say this was a prescient and timely offering, particularly from a company whose traditional business is the very twentieth-century activity of printing checks. Another credit union featured in the NetBanker post, Verity, employed what the blog called a "gloves off" promo: "Join the Credit Union Revolution … Make a Stand." At least the ad doesn't call CUs a "movement"…
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MF Global: After the Fall: CFTC chief Gary Gensler has recused himself from his agency's investigation of the fallen commodities broker because of his ties to its former CEO Jon Corzine, the Journal reports. According to the FT, the big futures exchanges have relaxed collateral rules to contain the fallout from MF Global's collapse. In an op-ed in the paper, Mark Williams, a one-time Federal Reserve risk examiner, criticizes the New York Fed for conferring "primary dealer" status on MF Global nine months before the firm's spectacular fall. Even as early as February 2010, MF Global's "capital position was 30 times weaker than that of most primary dealers," Williams writes.
Wall Street Journal
"Ahead of the Tape" previews the Fed's senior loan officer survey, due out today. There's fear the survey will show a tightening of lending standards as a result of the crisis in Europe. "Because plenty of Europe's banks do business in the U.S., the Fed's survey is likely to show some tightening among lending by foreign banks. And because domestic banks have plenty of European exposure, they may pull in their horns as well."
The weekend edition featured an excerpt from longtime bank analyst Michael Mayo's new book, Exile on Wall Street. His description of the way sell-side analysts are bullied to suppress critical thoughts about the companies they cover is sadly familiar, and as infuriating as the tales we heard 10 years ago. We were a little surprised to learn from Mayo that this pressure came not only from the banks he covered and the investment bankers who coveted those banks' business (both to be expected), but also sometimes from portfolio managers, who as clients we'd think would generally appreciate skeptical analysis rather than cheerleading fluff.
"Heard on the Street" looks at the debate over U.S. banks' disclosure of their European exposures - particularly investor frustration with the dearth of information about the counterparties used to hedge positions. "Without more information, the protection [from these hedges] is suspect," the column says, proposing the SEC should demand "disclosures on counterparty concentrations and standardized information about country risks." The volatility in Jefferies Group's stock last week, following a series of not-wholly-reassuring disclosures, is Exhibit A for the need for fuller disclosure.
If it's not bad enough that European banks have exposure to nearly $500 billion of debt from Greece, Ireland, Italy, Portugal and Spain, now comes word that 16 top European banks are holding even more risky debt - about $532 billion of collateralized debt obligations and U.S. commercial real-estate loans and subprime mortgages. This debt pre-dates the financial crisis. The paper said this debt, which pre-dates the financial crisis, heightens "fears that the banks lack enough capital to absorb potential losses."
Washington Post
A lengthy feature story takes a step back and observes that despite the apparent animosity between the Obama administration and "Wall Street" (here, as so often, used as a catch-all for securities firms and banks' trading arms), the latter has prospered under the former.
The local business coverage Sunday included an as-told-to interview/profile of Brian Argrett, the new president and chief executive of City First Bank of D.C., who explains how he became interested in community development.
"The financialization of the economy is creating a bubble in commodities just as it did in real estate," writes columnist Steven Pearlstein. "Because of a sudden desire to earn higher returns and diversify investment portfolios, there are more people wanting to invest in corn and copper and oil than there is corn and copper and natural gas produced and consumed," spawning all kinds of derivatives that are driving up prices for the underlying assets. Sound familiar?
The Post's "Innovations" blog looks at tech start-ups and payment alternatives that respond to the same "unmet needs" the Occupy Wall Street crowd's been protesting. For example, there's WePay, which "over the past 45 days … has become the de facto official way to send money to the 'Occupy' protesters while simultaneously bypassing the largest financial institutions. At a time when many payment alternatives already exist, it's more than a coincidence that an unknown technology player, free of any associations with the banking establishment, has emerged as the financial intermediary of choice. Just a few months ago, the obvious choice for sending money to an organization like Occupy Wall Street would have been PayPal, but that was before the company decided to cooperate with the financial embargo against WikiLeaks." Other potential disruptors mentioned in the post include BankSimple and, of course, BitCoin.
