Receiving Wide Coverage ...
Suisse Plea, Take Two: Credit Suisse chief executive Brady Dougan said in a Tuesday conference call that he never considered stepping down during the course of the U.S. government's investigation over whether the Swiss banking giant helped Americans evade taxes. But Dougan apparently came closer to losing his job than his comments suggest. The bank's board members considered asking Dougan to step down in exchange for an assist from the Swiss government, anonymice told the Wall Street Journal. The board was reportedly willing to give up Dougan if the Swiss government would issue an emergency law allowing the bank to offer prosecutors the names of their American clientsa move banned under the country's bank-secrecy laws. Strangely enough, New York Department of Financial Services head Benjamin Lawsky appears to have had more concern for the fate of Dougan and other top Credit Suisse executives. "You don't just say, 'Well you were upper management, off with your head,'" Lawsky told reporters. "I think it has to be a careful analysis when you're talking about individuals and their lives and their careers." Media coverage seems to have reached a consensus that Credit Suisse will be just fine despite the criminal plea, though the papers have different takeaways. The Journal says "prosecutors should feel emboldened" to get tough on banks since Credit Suisse investors weren't scared off by the settlement. An op-ed in the paper suggests that Credit Suisse's guilty plea is "mostly a political statement" with few consequences and that it was inappropriate to charge the entire organization for a crime committed by individuals. The New York Times says that the government's "concern with minimizing the collateral consequences almost gives the impression that this was a guilty plea without all the guilt." The Financial Times writes that the fate of Credit Suisse's senior management is still in question. The Guardian's Heidi Moore points out that "it's pretty easy to look tough on a bank that's based in Switzerland and spends little of its pocket change lobbying here in the U.S."
Fed Debates: As the Federal Reserve continues winding down its quantitative easing, central bank officials debate the best way to exit its post-financial crisis policies. New York Fed chief William Dudley and San Francisco Fed President John Williams said the talk about using reverse repos and interest paid on excess reserves to drive up short-term rates does not "necessarily augur a permanent policy-making overhaul," according to the Journal. In other words, the Fed's federal funds rate target may stick around. Dudley also said the central bank should continue reinvesting in its mortgage portfolio after it raises interest rates, according to the FT. Current policy requires the Fed to stop reinvesting money in mortgage-backed securities before it increases rates. "Delaying the end of reinvestment puts the emphasis where it needs to be getting off the zero lower bound for interest rates," Dudley said in a Tuesday speech to the New York Association for Business Economics.
Wall Street Journal
Regulators want Wall Street banks to cut back on financing risky corporate takeovers, but the banks aren't listening. In fact, banks have financed more private-equity deals with high levels of debt this year than in any year since 2007, according to the paper.
JPMorgan Chase shareholders approved Jamie Dimon's pay increase and the firm's compensation plan at the bank's annual meeting. But the consensus was decidedly down from last year. Nearly 78% of shareholders approved the plan, compared to 92% in 2013.
Wells Fargo's revenue from mortgage banking is on the wane, and Chief Financial Officer John Shrewsberry admits "investors were right to have asked two years ago what Wells Fargo would do when the refinancing boom fizzled." But Shrewsberry predicts that business will stabilize.
HSBC and UBS are prioritizing financial technology. HSBC will spend up to $200 million to improve its fintech, while UBS has launched a number of new internal groups dedicated to specific technology projects.
The Export-Import Bank's charter is set to expire at the end of September. Some Republicans want to seize the moment to close the agency for good, arguing that the government "shouldn't be in the business of picking winners and losers" among U.S. companies.
The mortgage refinancing slowdown may bring on a wave of bank consolidation, according to the paper. "Most of the folks who are here are sounding fairly optimistic but at the same time they are getting several phone calls a week from people wanting to sell [their business] to them," the Mortgage Bankers Association's chief economist Michael Fratantoni said at a conference this week. "There's the potential for a lot of M&A this year."
New York Times
JPMorgan Chase's former head of China investment banking has been arrested by Hong Kong's Independent Commission Against Corruption. Fang Fang is at the center of the U.S. investigation into whether JPMorgan's hiring practices in China violated the Foreign Corrupt Practices Act.
A number of economic thinkers use the release of Tim Geithner's new memoir Stress Test as an opportunity to reevaluate the government's response to the financial crisis. Most of the panelists find reasons to criticize the government's approach, arguing that Geithner should have done more to help struggling borrowers stay in their homes or implemented bailout conditions that would have forced financial institutions to scale down and "become a boring bank." But at least one writer opines that the government did a heckuva job: Lee Sachs, who was counselor to Secretary of the Treasury and led the financial crisis response team between 2009 and 2010.