Breaking News This Morning ...
B of A Earnings, Etc.: Bank of America reported a $276 million loss compared with a $1.48 billion profit a year earlier, largely due to legal expenses. (In case you may have missed it, Bank of America has been on a bit of settlement tear of late. And, the Journal notes this morning that the bank has settled mortgage-backed securities claims with the monoline insurer Financial Guaranty Insurance Co., which is expected to cost B of A about $950 million.) According to Dealbook, "Excluding the legal expenses, the bank's results mirrored those of its Wall Street peers like Citigroup and JPMorgan Chase." It's been a bit of a bad news cycle for B of A. Late yesterday, American Banker's Kate Berry reported that Ginnie Mae has halted the bank's transfer of mortgage servicing rights to a nonbank servicer because B of A is missing important documents on the underlying home loans.
Receiving Wide Coverage ...
Passed: The European Union has finally passed regulation that will create its long-discussed banking union. The regulation provides guidelines, among other things, "to ensure shareholders and bondholders and not taxpayers are first in line to pay for bank rescues." It also establishes, over the next eight years, a common fund of $76 billion that can be used to cover the costs associated with a failing bank. Some critics, however, still believe the reforms do not go far enough to protect certain creditors and that the fund is insufficient to cover big crises. The package is subject to approval by the Council of Ministers. Financial Times, Wall Street Journal, New York Times
Yellen on Bank Regulation: Federal Reserve Chair Janet Yellen indicated on Tuesday that she is in favor of higher capital requirements for big banks in order to curb systemic risk in the banking system. Of particular concern, based off of a speech she gave in Atlanta, is the short-term debt market which has been mentioned before as an area of possible additional reform by Fed. Governor Daniel Tarullo. "The fact that [the Fed] has continued to press this issue could send a chill through Wall Street firms, like Goldman Sachs and JPMorgan Chase, that borrow billions of dollars a day in the short-term-debt market," notes the Times. Washington Post, American Banker
S&P Lawsuit Update: A federal judge denied Standard & Poor's request to split up the government's $5 billion lawsuit against it into multiple trails. The judge did give S&P permission, however, to access federal documents from the day it downgraded the U.S.'s credit rating, meaning, that former Treasury Secretary Timothy Geithner may find himself deposed. Scan readers will recall the Justice Department is suing the credit rating agency for allegedly ignoring their own standards and rating mortgage investments much higher than they should have been in years leading up to the financial crisis. S&P has alleged that the suit was launched in retaliation for the aforementioned downgrade.
Bad News Day for Credit Suisse: Credit Suisse reported a 34% fall in profit for the first quarter, largely due to its underperforming investment bank. Meanwhile, an anony-mouse tells the FT that Benjamin Lawsky's New York Department of Financial Services is escalating its investigation into whether the bank helped U.S. residents evade paying taxes.
Wall Street Journal
The Royal Bank of Canada is closing its proprietary trading desk on Wall Street, "another win for regulators that have pushed banks to cut back on making big bets with their own money."
Goldman Sachs, meanwhile, is trying to energize its stock trading business.
Nevermind: Beleaguered Bitcoin exchange Mt. Gox has given up on its plan to rebuild under bankruptcy protection and is, instead, moving toward liquidation.
A new government report shows the U.S.'s biggest commercial banks sharply increased borrowing last year from the Federal Home Loan Bank system "to help them meet new international bank-liquidity rules."
Barclays investors are still planning to protest the bank's pay policies despite a newly tapped chair of the board's remuneration committee.
New York Times
A new column on federal investigations by columnist Peter J. Henning drops this line on Citigroup's Mexican unit fraud problems: "The Justice Department's investigation into how Citigroup's Mexican subsidiary, Banamex, was defrauded of more than $400 million shows how the government may use not just a bank's actions but its inactions as well to pursue corporate criminal liability."