Receiving Wide Coverage ...
Stress Tests, Part II: Citigroup bore the brunt of bad press associated with the Federal Reserve's second round of stress test results, given that the bank had its capital plan rejected by the central bank for the second time in three years. The Journal calls the Fed's decision which appears to be based on "qualitative" measures "a surprising blow to Chief Executive Michael Corbat's effort to bolster the bank's reputation following a 2008 government rescue." The FT's Lex column gets a bit more ominous: "The previous stress test stumble was a part of Vikram Pandit's downfall, which no doubt Corbat is well aware of." Anonymice tell Dealbook "news of the stress test results set off a panic within Citi" and that "hours after the stress test results were released, Citigroup convened a board meeting at the bank's Park Avenue headquarters." Citi can resubmit a capital plan for Fed approval, but it's unclear when it will do so. Four other banks HSBC North America, RBS Citizens Financial, Santander and Zions Bank, which all failed the first round of stress tests also had their plans rejected. But major Citi competitors, including JPMorgan Chase and Bank of America, were given the go ahead to boost quarterly dividends and buybacks.
Settled: Bank of America has agreed to a $9.5 billion settlement on claims it sold bad mortgage-backed securities to Fannie Mae and Freddie Mac. It also agreed to pay $15 million to settle a New York state lawsuit alleging the bank duped shareholders about losses related to its acquisition of Merrill Lynch. Separately, former B of A CEO Ken Lewis agreed to a fine of $10 million and a three-year ban from work at any public company related to the Merrill Lynch case. "Wednesday's deal is a step towards putting the bank's legacy issues behind it, but its litigation woes are far from over," the FT notes. New York Times, Wall Street Journal
Suspended: UBS has suspended six more traders in relation to the global probes into banks' foreign exchange trading practices. Per the FT: "The latest move brings the total tally of staff suspended, placed on leave or fired to more than 30 across 11 banks and the Bank of England." But, thus far, none of these traders or any of the banks under investigation have been accused of wrongdoing, Dealbook notes.
Wall Street Journal
The U.S. Education Department is considering a proposal that would prevent "colleges and universities from steering students who receive federal financial aid into bank accounts offered by firms that have business relationships with schools."
Bitcoin enthusiasts burned by the whole Mt. Gox bankruptcy are banding together in an effort to get back their lost assets. "The moves show that in the nebulous world of digital currencies, which aren't backed by governments or regulated nationally, investors can end up with little protection if problems arise, and might have no choice but to try to take matters in their own hands," notes the Journal.
Senior U.K. politicians are accusing the U.S. of "'bullying' U.K. banks into refusing to support legal exports to Iran."
New York Times
Mark Branson, former UBS executive, has been named chief executive of the Swiss Financial Market Supervisory Authority.
The latest Jessica Silver-Greenberg vehicle takes on big, bad reverse mortgages. "There is no data on how many heirs are facing foreclosure because of reverse mortgages," she writes. "But interviews with elder care advocates, the housing counselors and heirs, suggest that it is a growing problem already affecting an estimated tens of thousands of people. And it is one that threatens to ensnare future generations, as older Americans increasingly turn to their homes for cash."