Receiving Wide Coverage ...
Debating the Export-Import Bank: Supporters of the Export-Import Bank are fighting back against the House Republicans who want to scrap it. Each member of Congress will receive in the coming weeks, "a personalized index card laying out exactly which companies in their districts benefit from the financing agency and how many people they employ" according to the Wall Street Journal. Companies including General Electric and Boeing, along with industry groups such as the U.S. Chamber of Commerce, are behind the effort to save the Export-Import Bank. Meanwhile, Lawrence Summers defends the agency on foreign policy grounds in the Financial Times' op-ed section, pointing out that other countries have a similar service. "Only by maintaining a capacity to counter foreign subsidies can we hope to maintain a level global trading system and to avoid ceding ground to mercantilists," Summers writes. "Eliminating the Export-Import Bank without extracting any concessions from foreign governments would be the economic equivalent of unilateral disarmament."
Wall Street Journal
Ground beef and fresh fruit are getting more expensive, but for now rising meat and produce prices appear to be more of a passing trend than a sign of broader inflation to come. The Federal Reserve is keeping a close eye on prices as officials weigh the best time to raise short-term interest rates.
The Basel Committee on Banking Supervision may adopt a new measure that aims to prevent banks from treating all government bonds as risk-free. The committee is discussing several possible policy changes, including one that would require banks to "evaluate their sovereign risks in the same manner as other assets." Another potential change would introduce "risk-weighting 'floors,' which would set minimum risk weights for certain classes of assets." The Journal says some opponents of the prospective measures argue the changes would increase capital requirements; one commenter notes, "Uh, that's the point."
Former Federal Deposit Insurance Corp. chairman William Isaac has penned an op-ed arguing the government is failing in its obligations to Fannie Mae and Freddie Mac investors. "By defying and rewriting the terms of the conservatorship, and by keeping investors in the dark about FHFA's activities as conservator, the government is a destabilizing force, as evidenced by the dearth of private capital flowing into the mortgage market since the conservatorship began," Isaac writes.
Western banks are retreating from Iraq as political turbulence in the country escalates. Citigroup, which opened an office in Baghdad last year, "recently moved some operations to Amman in neighbouring Jordan." The U.K.'s Standard Chartered moved the head of its Iraqi division and another colleague to Dubai. "We want to be prepared for any breakdown of the country's banking system," an anonymous banker told the FT.
Leslie Caldwell, the recently confirmed head of the Department of Justice's criminal division, vowed to be "appropriately aggressive" in investigating and prosecuting financial institutions in an interview with the paper. Commenters say it's "disconcerting" that Caldwell spent the last 10 years "helping defend corporations against civil and criminal investigations," an angle that goes largely unexplored in the article.
"Big U.S. banks are expected to report dismal second-quarter earnings, with weakness in fixed-income trading and mortgage banking overshadowing an increase in lending to companies and consumers," the FT reports. The Lex team recommends big banks focus on building profits by making "more and better loans" to both consumers and businesses.
Julian Grout, a former JPMorgan Chase trader tied to the London whale scandal, is challenging findings from the U.K. Financial Conduct Authority's investigation into JPMorgan. Grout "is alleging that he is readily identifiable in findings that are meant to be anonymous," according to the usual anonymice. If Grout's case is successful, the FCA would be forced to give him the evidence it used in its settlement with JPMorgan. Grout, who currently lives in France, faces U.S. criminal charges concerning his alleged role in the trading fiasco.
The U.S. government is fighting to keep certain internal documents confidential in a lawsuit filed by Fairholme Funds over charges that the government is unfairly reaping profits from Fannie Mae and Freddie Mac. If the documents were to be leaked, they "could cause mortgage rate spikes and significant moves in share prices," according to the government.
New York Times
U.S. immigrants are having a harder time sending money to their families in foreign countries as banks abandon international money transfer services. The situation is an inadvertent result of the regulatory crackdown on potential violations of anti-money laundering rules, as American Banker readers familiar with past coverage are well aware. "JPMorgan Chase and Bank of America have scrapped low-cost services that allowed Mexican immigrants to send money to their families across the border," the Times reports, while Citigroup has cut off most remittances to Mexico. Analysts predict that immigrants will face higher remittance costs from companies like Western Union as competition dwindles. An anti-regulatory sentiment predominates in the Times comments section. "All this does is squeeze out legitimate payment methods that can actually be monitored," writes one reader. "With the banks withdrawing from this business, it will increasingly drive transfers 'underground'effectively the way most terrorist activities would be financed anyway."