Receiving Wide Coverage
Support for Moynihan: Warren Buffett is standing up for Brian Moynihan. Bank of America's chairman and chief executive is facing a shareholder vote later this month that could strip him of his chairmanship. Some shareholders are angry that B of A's board reversed a corporate bylaw (which shareholders had approved), to give Moynihan the additional title. Not Buffett. In a CNBC interview on Tuesday, Buffett said the disagreement with shareholders is “no big deal” and that Moynihan has “done a first-class job” as CEO. Moynihan “took a company that was just a terrible mess … the public hated it, the government hated it, they had all kinds of lawsuits coming in and employee morale was terrible, and he’s resuscitated it. If he is the chairman as well as the CEO, God bless him.” Buffett's Berkshire Hathaway owns about $5 billion worth of B of A stock and warrants.
Dick Spangler, whose family controlled about 32 million shares of Bank of America stock in 2009, said he will vote to allow Bank of America CEO Brian Moynihan to keep the chairman title. Spangler and his family own National Gypsum in Charlotte, N.C. Spangler's wife, Meredith, is a former B of A director.
Wall Street Journal
Regulators are looking into why so many of the assets of Highbridge Capital Management, an investment firm owned by JPMorgan Chase, come from JPMorgan's private bank assets. The question is whether JPMorgan inappropriately steered its private banking clients into its own hedge fund products. The Commodity Futures Trading Commission is leading the investigation. Other federal and state regulatory agencies are also examining the matter.
An additional question is whether JPMorgan adopted the steering policy, in order to provide assets to Highbridge to prop it up during the financial crisis. Regulators are concerned the steering took advantage of customers by not clearly disclosing to them where their funds were being directed, and if the decision to move their investments into bank-owned hedge funds was in the customers' best interests.
The U.S. Treasury Department's Financial Crimes Enforcement Network fined Caesars Entertainment $8 million for lax anti-money laundering controls at its Caesars Palace casino in Las Vegas. Caesars also agreed to pay $1.5 million in civil money penalties to Nevada state regulators. Caesars admitted to openly allowing wealthy patrons to gamble in private VIP rooms, mainly Chinese high-rollers.
European banks don't compare favorably to U.S. banks in the area of returns, the “Heard on the Street” team said. Europe's banks have more work to do when it comes to unloading assets that are weak revenue producers.
Financial Times
Maybe you thought U.S. Treasury auctions were a sleepy backwater. Those thoughts were misguided. After a Wall Street Journal article on Tuesday about the obscure New York hedge fund Element Capital Management, which has been spending tens of billions of dollars snapping up Treasuries, here comes the next chapter. The New York Department of Financial Services is investigating whether banks have manipulated Treasury auctions, according to unnamed sources. Banks, a total of 22 in all, serve as the primary dealers for auctions of U.S. government debt. New York's top bank cop sent letters to some of them, seeking more information about their operations. The letters were sent to Barclays, Deutsche Bank, Goldman Sachs, Société Générale and others that went unnamed by the FT. The Financial Services Department is also investigating potential manipulation of the Isdafix benchmark for interest rate swaps.
The FT takes a long look at how an interest-rate rise would help banks, but how a rate hike wouldn't be a cure-all for the banking sector. Bridget Gandy of Fitch Ratings makes an important point about the role deposits will play, if and when rates rise. "One uncertainty is what happens to retail deposits,” Gandy said. “There is an assumption that people don’t change their bank accounts. But because of the new internet generation we don’t know if such loyalty will still be there.”
And here's this quote for those of you getting your hopes up that a rate hike is around the corner. The Federal Reserve risks triggering “panic and turmoil” in emerging markets if it raises rates now, said Kaushik Basu, the World Bank's chief economist.
Elsewhere ...
San Francisco Business Times: HSBC has hired Martin Richards as U.S. head of middle-market banking. Richards, who's based in San Francisco, was previously an enterprise client coverage executive for Bank of America. He was also previously B of A's San Francisco market president.
Cleveland Plain Dealer: Citizens Financial Group's Citizens Bank has introduced a free checking account for small business customers in Cleveland. Citizens' product matches a similar product offered by Dollar Bank, a Pittsburgh mutual that has offices in Cleveland.
