Receiving Wide Coverage ...
If You Love PayPal, Set It Free: The split between eBay and PayPal appears to be the celebrity breakup of the business world, prompting excited speculation and in-depth analysis. eBay says the payments landscape has changed significantly in recent months and that the companies' parting of ways will "free PayPal to more easily reach agreements with companies that compete with eBay's online marketplace," thereby eliminating potential conflicts of interest, the Wall Street Journal reports. Most news coverage highlights the role the debut of Apple Pay and the agitations of activist investor Carl Icahn may have played in eBay's decision to spin off its payments subsidiary, although eBay's chief executive John Donahoe sought to play down the influence of both factors in announcing the news. Icahn, who had been calling for a split between the two companies since January, applauded the decision and called the separation "a 'no brainer" on his corporate blog, according to the New York Times. A separate article in the Times focuses on the Icahn factor and eBay's board's about-face.
The Journal also suggests that both eBay and PayPal are now attractive takeover candidates" a point reinforced in a "Heard on the Street" column that says PayPal could alternatively become "a formidable acquirer." The Financial Times takes a dour view of the split, calling it a "further unraveling of one of the few remaining successes from the dotcom era of Internet companies" and "a setback for some of Silicon Valley's best-known figures" who had previously opposed a split, including venture capitalist and eBay board member Marc Andreessen. The Times acknowledges PayPal will now have more freedom to innovate but says competition from Apple Pay makes the stand-alone company a "risky bet." Yet another Times article suggests PayPal could actually benefit from the introduction of Apple Pay if it creates an equivalent feature for Android devices.
A Blow for GSE Shareholders: A federal judge on Tuesday dismissed the claims of Fannie Mae and Freddie Mac shareholders protesting the federal government's seizure of profits generated by the government-sponsored entities. The judge's decision "said Congress had in effect given the Federal Housing Finance Agency, Fannie Mae and Freddie Mac's regulator, and the Treasury Department the power to take the companies' profits as a provision of the Housing and Economic Recovery Act," according to the Journal. The judge did have some sympathy for shareholders, the Washington Post reports: he said it was "'understandable' for the sweep to 'raise eyebrows or even engender a feeling of discomfort.'" A number of similar lawsuits filed against the federal government are still in play.
Wall Street Journal
Citigroup has received waivers from the Securities and Exchange Commission that release the bank from restrictions on its hedge-fund activities. Citi had been operating under the constraints since the approval of its $285 million securities-fraud settlement with the SEC in August. Democrat commissioner Kara Stein objected to the waivers, according to an anonymouse, "arguing that large financial institutions have been treated too leniently."
Deutsche Bank "is withholding several million euros in bonuses
from its co-chief executives and other current and former top managers as it seeks to hold senior staff responsible for a host of costly legal and regulatory problems," the paper reports.
New York Times
Readers familiar with American Banker's "Most Powerful Women in Banking" feature are well aware of the dearth of female executives on Wall Street. Now a new report finds major gender disparity among entry-level investment bankers. "In this year's class of first-year bankersknown on Wall Street as analysts77.5 percent are men," the paper reports. The report by recruiting firm Vettery also looks at ethnic diversity, finding that "65% of this year's class of analysts are white, while 29% are Asian. Just 6% of the analysts are black or Hispanic."
Day two of the trial on the government bailout of American International Group featured more testimony from Federal Reserve general counsel Scott Alvarez. David Boies, the lawyer for plaintiff and major AIG shareholder Maurice R. Greenberg, sought "to paint dissension in the ranks" over the terms of the bailout. Under government questioning, Alvarez's "halting speech patterns and long pauses ... gave way to what appeared to be a much more relaxed demeanor," the paper reports.
"Lawrence Summers, the former chief economic adviser to President Obama, said on Tuesday that the Treasury Department had undermined the Federal Reserve's stimulus campaign and that doing so was a large and expensive mistake," the paper reports. Binyamin Appelbaum focuses on the question of whether Summers is experiencing any cognitive dissonance over the paper he co-authored, since he is a proponent of the very Treasury policy that the paper identifies as a problem. The issue comes down to the fact that "one arm of the government has been draining the bathtub while the other adds water," Appelbaum writes. "The Fed has been trying to reduce the supply of long-term Treasury securities. The Treasury, meanwhile, has been issuing relatively more long-term debt and less short-term debt."
Bloomberg: The Federal Reserve is examining leveraged loan deals on a case-by-case basis since banks are largely failing to heed its warnings, according to a Bloomberg report. "Until now, supervisors collected loan data in an annual survey, and last year told banks they needed better adherence to standards they put forth in guidelines in March 2013. Over the past several weeks, they have shifted tactics and are examining loans as they are made, showing a new urgency in avoiding the kind of overly risky lending that was blamed for igniting the financial crisis."