Breaking News This Morning ...
Earnings: JPMorgan, Wells Fargo
Receiving Wide Coverage ...
See You in Court: Is MetLife brave or foolish for going to battle over its designation as a systemically important financial institution? Opinions are split on the matter. In the pro camp, an unsigned op-ed in the Wall Street Journal calls MetLife's decision to sue the U.S. government "the best news taxpayers have had since the financial crisis." The article argues the Financial Stability Oversight Council needs to be more transparent about how it decides which firms are SIFIs. But two other opinion pieces cast doubt on the wisdom of MetLife's decision to go up against regulators. A short "Heard on the Street" column notes the federal judge who handles the case will face little risk in siding with the FSOC. If the court lifted the too big to fail label and MetLife later went down in flames, however, everyone would blame the short-sighted judge. Meanwhile, Reuters Breakingviews' Rob Cox compares MetLife's protests to the grumblings of JPMorgan Chase in the wake of the Dodd-Frank Act. The bank's accusations of regulatory overreach rang hollow after it lost $6 billion in the London whale scandal, Cox writes. "As [MetLife chief Steven] Kandarian acts like MetLife's mascot Snoopy taking on the regulatory Red Baron, he had best hope he has a better handle on what his 65,000 employees are doing than Jamie Dimon did."
Ocwen Under the Gun: Ocwen Financial's regulatory problems have gone bicoastal. "Already reeling from a lengthy fight with New York's top financial regulator, Ocwen on Tuesday pushed back against charges in California that it had failed to produce required documents in an examination of its mortgage-servicing practices," the Wall Street Journal reports. California's Department of Business Oversight says it is trying to suspend Ocwen's license to operate in the state after the company neglected to hand over mortgage servicing records on "more than a dozen occasions." Ocwen tells the paper that it's already given up the documents and everything's cool, which the California regulator says is flat-out wrong. The New York Times' coverage plays it pretty straight.
When Hackers Attack: The White House is looking to step up the government's cybersecurity game and encourage companies to do the same. President Obama on Tuesday proposed a multipronged plan that includes "new, voluntary information-sharing directives between the government and companies that aim to arm firms with timely details about the most pressing cyberthreats," the Journal reports. Republicans say they are willing to work on bipartisan legislation to strengthen U.S. defenses against hackers, according to the Journal. But a Times editorial expresses skepticism about whether the GOP will go for another element of the White House plan: a "privacy bill of rights" for consumers. "[N]obody realistically expects the current Republican-led Congress to adopt a strong law that truly empowers consumers," the paper claims.
Wall Street Journal
Two top executives at failed Portuguese bank Banco Espírito Santo were implicated in testimony by former employee Isabel Almeida on Tuesday, the paper reports. Almeida, who "has been linked to dealings between the lender and offshore vehicles that ultimately led to [the bank's] collapse in August," said the bank's chief financial officer and chief executive were well aware of her actions. Sometimes her orders came directly from them, she said.
"The U.S. Supreme Court on Tuesday adopted a borrower-friendly interpretation of a federal law that gives consumers the right in some circumstances to unwind certain mortgage loans," the paper reports. The court ruled borrowers who fail to receive full disclosures after taking out mortgage refinancing and home equity loans can rescind the loans as long as they notify the lender of their decision within three years of the transaction.
Commercial mortgage-backed securities are on a hot streak, buoyed by yield-hungry investors. If that news gives you a sense of déjà vu, you're not alone: "the market's growth is so robust that it is causing some to fear investors are getting ahead of themselves, making loans that could sour in a recession."
Rumor has it that Deutsche Bank is thinking about getting rid of its Postbank retail business. "Heard on the Street" gives the idea a thumbs-up, noting that Postbank's profits disappoint.
Recent drops in long-term interest rates are causing problems for big banks as they head into 2015. "Renewed falls in longer-term yields again put pressure on net-interest margins," the paper reports.
Financial Times
The revolving door between banks and regulators sees a lot of action, but that's not necessarily a bad thing, according to a new paper published by the Federal Reserve Bank of New York. The study finds banks tend to hire more ex-regulators in the wake of new rules or an upswing in enforcement actions. The authors say this disproves the theory that regulators treat Wall Street firms with kid gloves because they hope to jump to the private sector later on. (Does it, though?)
The Federal Reserve has given Royal Bank of Scotland a pass on new rules for foreign banks with more than $50 billion in U.S. assets, the paper reports. RBS plans to slim down enough to fall below that threshold by next year. Canada's Toronto-Dominion Bank also applied for a waiver, but the Fed said no dice.
New York Times
The Dodd-Frank Act is under slow but steady siege, the paper reports. "In the span of a month, the nation's biggest banks and investment firms have twice won passage of measures to weaken regulations intended to help lessen the risk of another financial crisis, setting their sights on narrow, arcane provisions and greasing their efforts with a surge of lobbying and campaign contributions."
Alternative investment firm MGG Investment Group has raised $200 million to launch into the small business lending. Sports fans will be interested to know that the capital funding comes from former Los Angeles Dodgers owner Frank H. McCourt Jr.
The Bitcoin industry "is bracing for the effects of a prolonged decline in prices," the paper reports. Bitcoin mining companies are particularly vulnerable to the downturn, according to the paper, since they depend on higher currency prices to pay for hefty operating expenses.
