Receiving Wide Coverage ...
Geithner's Turn: Most papers weighed in with coverage of Timothy Geithner's testimony on Tuesday, from Maurice "Hank" Greenberg's lawsuit challenging the federal bailout of AIG. Geithner spent six hours in a federal court witness box, so there was plenty of material to choose from. In one exchange, Greenberg's lawyer, David Boies, asked Geithner why he hung up before the end of a conference call on Sept. 16, 2008, during the Fed board meeting when the AIG bailout was authorized. "Perhaps I had something else to do, but I can't remember," replied Geithner, who was then president of the Federal Reserve Bank of New York. More to the point of the bailout, Geithner at one point opined that an AIG failure could have been worse than Lehman Brothers' failure. Geithner also acknowledged that the AIG bailout "wiped out" its shareholders, basically an admission that the terms of the bailout were very harsh. (Greenberg and the other plaintiffs are trying to argue that the government was overly punitive in the bailout.) Then there was the discussion of the meaning of the word "insolvent." In his book "Stress Test" (which was submitted as evidence in the case), Geithner said that Citigroup and Bank of America were "insolvent." Boies and Geithner then engaged in a lengthy back-and-forth over what he meant by that word. Geithner gets to spend more time in the witness box today.
Wall Street Journal
JPMorgan Chase, Bank of America, Morgan Stanley and other banks agreed to not sell the debt they will acquire from Puerto Rico's upcoming $1.2 billion sale of short-term notes. The banks will hold the debt until it matures in June to help out the "financially strapped" Puerto Rico, where many banks are struggling, including Doral Financial.
Richmond Fed President Jeffrey Lacker, in an op-ed column, elaborates on the reasons why he declined to support the Federal Open Market Committee's recent policy statement. Mainly, Lacker believes normalization should include a plan to sell Fannie Mae and Freddie Mac mortgage-backed securities at a "predictable pace," a plan the FOMC statement did not include.
A group of 18 banks has agreed to give up their right to cancel derivatives contracts with financially ailing institutions. U.S. regulators had insisted that banks devise a plan to stop counter-parties from terminating derivatives contracts in the event of a crisis. The new rules, which are essentially designed to prevent another Lehman Brothers-type failure, take effect Jan. 1. The FT names two of the banks in on the agreement: Goldman Sachs and Credit Suisse.
In an attempt to quiet the employee revolt over its $400 million cost-cutting plan, the World Bank's chief financial officer has agreed to give up his $94,500 annual bonus.
New York Times
A Times consumer column looks at what banks are offering or will soon offer chip-based debit and credit cards in the global fight against identity theft and cyberattacks. Bank of America will offer chip-loaded debit cards this month. JPMorgan Chase expects most of its debit cards to have chips by the end of next year, while many of its credit cards already have chips. Wells Fargo will issue debit cards with chips in the coming year. And Citibank plans to roll out chip-based debit cards next year, and all new consumer credit cards have chips.
Business Insider: Bank of America isn't made up of just a bunch of pencil pushers, bean counters and loan officers. B of A, along with other industry peers, at least according to Business Insider, employs geologists, archivists and gerontologists. Do these employees generate a revenue stream for B of A? It doesn't appear to be the case. B of A's gerontologist studies societal and psychological issues to help the bank determine the financial needs of its older customers. Its archivists' duties, in part, is to manage B of A's art collection. And the Department of Geology at B of A is working with a group at Harvard University to develop a carbon capture plan.