Receiving Wide Coverage ...
Fed on the Hot Seat: The Federal Reserve's public image took a few hits last week as the Senate held hearings questioning whether the regulator is too lenient on the banks it oversees. The New York Times' Gretchen Morgenson writes these inquiries are "absolutely justified" and suggests policymakers seize the moment to push for more transparency around bank examinations. A Yale professor tells Morgenson that if the Fed made public the mathematical models it uses in stress tests, it would be easier for investors to compare different banks' performances and encourage banks to release more information about the models they use. Meanwhile, the Fed's plan to launch an investigation into its supervisory process is bad news for banks, according to John Carney of "Heard on the Street," and so is a bill that would put the president in charge of selecting the head of the New York Fed. "At the least, big-bank investors should prepare to see the cost of regulatory compliance remain at elevated levels," he writes. And in case you missed it, American Banker's Washington bureau chief Rob Blackwell has a sharp analysis of New York Fed president William Dudley's suggestion during the Senate hearings that federal regulators are more like fire wardens than cops.
Wall Street Journal
"A faith-based shareholder group is asking Bank of America to separate the jobs of chairman and CEO, laying the groundwork for a potential showdown between the bank and some investors this spring," the paper reports. The proposal by Sisters of Charity of St. Elizabeth argues that an independent chairman is necessary to maintain an ethically rigorous bank culture.
There's a bright side to the foreign-exchange market scandal, writes Michael J. Casey: it may prompt governments to fix an antiquated system. "In the global, round-the-clock, increasingly computerized foreign-exchange market, it is possible to create a more transparent, competitive marketplace in which price fixing would be virtually impossible," he writes.
As the trial over the government bailout of American International Group is expected to a close Monday, the paper offers a timely refresher on the major events of the case. The central question is "whether the government correctly interpreted a 1930s-era section of the Federal Reserve Act to allow it to acquire a sizable equity stake in AIG to help compensate taxpayers," the paper reports.
Goldman Sachs is pouring cash into a startup that allows users to tap into big data to find answers to complicated financial inquiries. The analytics platform, Kensho, "has been likened to a Siri-style service for investors, analysts and traders," the paper reports.
Private banks are derisking in the wake of regulatory crackdowns on institutions that facilitate tax evasion and fail to comply with anti-money laundering and sanctions rules, the paper reports.
Deutsche Bank made the right call by merging its underachieving asset and wealth management divisions, says Bernd Amlung, a Deutsche executive who helped implement the restructuring. While Amlung may be a bit biased in his assessment, the article backs up the assertion with some hard numbers.
Dissent within the Fed has quieted considerably with the end of quantitative easing, according to the paper's interview with Dallas Fed president Richard Fisher. "Even I wouldn't advocate moving [on raising interest rates] today," admits Fisher, known as one of the more hawkish Fed leaders. He also says he's not worried about inflation in the short run. The article also reminds us that Fisher owns a 2,200-pound bull named Too Big to Fail and once used the animal as a metaphor to explain the dangers of economic uncertainty.