Receiving Wide Coverage ...
Downgraded: Moody's downgraded four major U.S. banks JPMorgan Chase, Morgan Stanley, Goldman Sachs and Bank of New York Mellon Thursday, after the rating agency concluded that the government has become less likely to bail out big firms. "The lower credit ratings could raise the cost of capital for the banks, many of which were already downgraded by Moody's following another major review undertaken last year," the FT reports. Wall Street Journal, American Banker
Subsidized: The first of two anticipated studies from the Government Accountability Office has found that (surprise!) big financial firms benefited from U.S. aid during the crisis in the forms of lower rates and longer maturities. The GAO didn't attach a dollar amount to these subsidies. A second GAO study, due out next year, is expected to examine how big banks benefit from the market's assumption that the government will bail them out of a crisis. Wall Street Journal, Bloomberg, American Banker
Yellen Confirmation Hearing: Here are a few key takeaways from Federal Reserve chairman nominee Janet Yellen's Senate Banking committee hearing yesterday, per the dailies: Her confirmation is widely expected. Quantitative easing is likely to last (at least) a little bit longer under her watch. (Stocks climbed following her remarks.) And big banks may have a reason to be nervous. The last suggestion comes courtesy of Journal Heard on the Street columnist David Reilly who believes that Yellen came off as "hawkish" on "too big to fail" (and its related regulations) during the hearing. "The question is whether Ms. Yellen will stick to it should economic growth continue to prove elusive," he writes.
Wall Street Journal
JPM is shutting down its energy-trading team in Geneva.
Despite its assertions to the contrary, UBS is still working behind the scenes to revamp its investment bank. "The bank's position
reflects a broader trend in which second-tier investment banks face shareholder and regulatory pressure to shrink but have trouble relinquishing the riches of investment banking in good years like this one," the paper notes.
"It's been consistently inconvenient and occasionally frustrating
but never impossible" to live off of Bitcoin, says one half of a couple that documented their attempt to live solely off of Bitcoin. The single hardest thing to get regularly, the paper reports, is gasoline.
Financial Times
Barclays is cutting 1,700 jobs at its U.K. retail banking operation.
New York Times
U.S. Attorney General Eric Holder weighs in on the burgeoning international Forex probe: "The manipulation we've seen so far may just be the tip of the iceberg. We've recognized that this is potentially an extremely consequential investigation."
Current and former government officials tell the paper the CIA is secretly collecting bulk records of international money transfers handled by companies like Western Union under the same law the NSA used to collect phone records. A few anonymice say more bulk collection programs exist, but have yet to come to light. The disclosure "offers evidence that the extent of government data collection programs is not fully known and that the national debate over privacy and security may be incomplete," the paper notes.
Top New York regulator Benjamin Lawsky is suggesting firms that conduct virtual currency transactions be issued a "BitLicense." The announcement comes ahead of a public hearing Lawsky plans to hold on digital currencies (no date set yet). "If the plans go ahead, it would be an important step in bringing bitcoin and other virtual currencies closer to the financial mainstream," Dealbook notes.
Columnist Floyd Norris addresses market participants' propensity to blame the rating agencies when deals go bad, using a new suit by the trustee for two Bear Stearns funds as an example. "Even if the rating agencies are found to have acted wrongly, that in no way should absolve money managers from blame for investing billions of dollars in securities they knew little about," he concludes.
