Receiving Wide Coverage ...
Sold: JPMorgan Chase is selling half of its $4.5 billion in holdings in its One Equity Partners private-equity unit, in part because of the requirement that banks reduce investments made with their own money, and in part because of new capital requirements. The Journal story on the sale also throws in another reason for selling the business unit, by pulling a quote from Jamie Dimon from a recent earnings conference call: "It hasn't earned much money in the last few quarters." Another factor is that JPMorgan didn't want to compete directly with its clients, the Times said. But isn't that the way Wall Street works? Your competitors are your clients and all that.
Wall Street Journal
Bank profits reached their second-highest level in at least 23 years in the second quarter, the paper reported, citing SNL Financial data. The profit surged was helped by improving credit quality and loan growth, especially in commercial lending. Student lending, auto loans and credit cards all increased as well. Banks are easing lending standards as a result of the improvement in credit quality.
Payments from sweep agreements that require Fannie Mae and Freddie Mac to hand over all additional income (after establishing a minimum net worth) to the U.S. Treasury have become far smaller now that the GSEs' tax benefits and legal settlements have tapered off. That means there's much less at stake for the government and the fund managers who own shares of Fannie and Freddie, according to the "Heard on the Street" column.
The Fed should take into consideration the possibility of excesses in the market brought on by low interest rates; furthermore, the "macroprudential tools" currently available (and on which the Fed's Board of Governors said it will rely to reduce systemic risk) are not as broad and comprehensive as they should be. That's the premise of an op-ed co-authored by Martin Feldstein, chair of the Council of Economic Advisers under President Ronald Reagan, and former Treasury Secretary Robert Rubin.
The Fed has been much more involved than anyone expected in its regulation of nonbank institutions, including management and board decisions and whether certain employees should be fired, the FT says, citing anonymice. That's one observation from the Fed's scrutiny of AIG and GE Capital and how that may portend for other nonbanks deemed systemically important.
Halfway through his eight-week treatment for throat cancer, JPMorgan Chase CEO Jamie Dimon continues to say that he will be able to be actively involved in the business and run the company as normal, the paper reports.
New York Times
The Manhattan district attorney charged payday lenders with violations of usury laws. The DA, Cyrus Vance, is pursuing criminal charges against Carey Vaughn Brown, the Chattanooga, Tenn., owner of MyCashNow.com and other payday-loan businesses.
It's no surprise that that the living wills submitted by the SIFIs were rejected, bankruptcy law professor Stephen Lubben writes for DealBook. After all, in JPMorgan Chase's living will, under the subhead "material entities," the bank lists more than two-dozen legal entities, a host of branches, and enough potential conflicts of interest to scare off even the lightest-touch regulators. Consider this: JPMorgan Chase has an entity that's incorporated in Delaware, but operates primarily out of its London branch. Oh, this too: "securities sold under agreements to repurchase" remains the biggest source of funding for JPMorgan. Remember, repurchase agreements "were at the very heart of the financial crisis," Lubben writes.