Receiving Wide Coverage ...
Embrace the Unknown: The Federal Reserve is "patient" no more, but it's not exactly raring for an interest-rate hike. In dropping the word from its statement Wednesday, the Federal Open Market Committee made room for the possibility that it will increase its benchmark rate as soon as June without committing itself to that timeline. "If the strengthening dollar and falling oil prices start to translate into still-lower expectations for future inflation, the Fed will hold off from rate rises," says the New York Times' Neil Irwin. A separate Times article says the Fed may want to keep interest rates steady in the hopes of achieving even lower unemployment rates and, according to Irwin, wage gains. The Financial Times suggests the Fed "still wants to prime the markets for higher rates, but it is very much taking a softly-softly approach." That's music to the ears of investors, according to the Times, although the Wall Street Journal merely says investors were "surprised" by the Fed's caution and loaded up on stocks and bonds as a result. Over at the Washington Post's Wonkblog, Matt O'Brien says the Fed has done a "pretty masterful" job of backing away from forward guidance on its rate plans "without freaking out markets." "The Fed is back to, well, normal monetary policy where we don't know what it will or won't do every meeting," he writes.
Wall Street Journal
Big banks may take "tens of millions of dollars" in losses on energy loans that investors don't want to buy, the paper reports. Falling oil prices have shaken the energy market and made loans in that sector less attractive. The paper highlights some parallels between the situation and the financial crisis, when banks were left with toxic mortgages and leveraged loans on their books, but says banks' energy loan troubles are on a smaller scale.
Regulatory capture: not really a thing, according to top banking lawyer H. Rodgin Cohen. He blamed "the canard of regulatory capture" for rancor between banks and regulators at a legal conference in Phoenix Wednesday, arguing examiners are developing hostile relationships with banks in order to counteract criticisms they are too soft on the firms they supervise. This negativity leads to "less effective examinations, not more," he said. A couple commenters point out that Cohen's profession likely informs his assessment of the situation.
Goldman Sachs has joined Credit Suisse and other banks in forming specialty lenders that make loans to small businesses without credit ratings, the paper reports. So-called "business development companies" can get around recent regulatory restrictions on riskier loans, and as long as banks hold less than a 25% stake in the firms they are not considered affiliates of the holding companies.
Citigroup chief executive Michael Corbat's job may be safe since the bank passed its stress test last week, but his pay for 2014 is still getting docked to $13 million. Citigroup explained the logic behind Corbat's 10% pay cut in a regulatory filing Wednesday, citing the bank's failure of last year's stress test and ongoing scandals in its Mexican and foreign-exchange units.
In the wake of the recent tax evasion scandal at HSBC's Swiss unit, former chairman Lord Green has come forward to admit the bank may not be exactly infallible. "Did we get everything right? Maybe not," he said Wednesday. "Did we work hard at trying to do the right thing? Yes we did."
Why would a former JPMorgan trader implicated in the London Whale scandal want U.K. authorities to keep investigating him? Michael Skapinker tackles the curious case of Julian Grout, who petitioned a British judge with a request that the Financial Conduct Authority resume its probe. Grout's lawyers say their client wants "the chance to clear his name," but the judge denied the request because he says Grout will have the opportunity to do so in the U.S., where he faces charges. The titular whale Bruce Iksil, on the other hand, has received immunity in return for testimony against Grout and Iksil's former supervisor Javier Martin-Artajo.