Receiving Wide Coverage ...
Geithner Parsed: The Monday release of Timothy Geithner's financial crisis memoir Stress Test occasioned a lengthy profile of the former Treasury secretary in the New York Times magazine. The article by Andrew Ross Sorkin includes a number of interesting-if-not-explosive reveals, including Geithner's discomfort with criticizing Wall Street's banker bonuses and the fact that he regrets failing to get more aid for troubled homeowners. Geithner also says that the failure of Lehman Brothers led to some discord amongst himself, former Fed chairman Ben Bernanke and then-Treasury Secretary Henry Paulson. The Wall Street Journal review of the book takes a skeptical view of Geithner's role in history. "One of the themes in Stress Test is Mr. Geithner's difficulty in understanding the health of large financial firms," reviewer James Freeman writes, noting that he failed to foresee the mortgage crisis or the necessity of requiring banks to hold more capital. "None of this is particularly surprising in a man who, at the time he became president of the New York Fed, had never worked in finance or in any type of business." The Times' Michiko Kakutani opens with a more literary critique of the book, calling it "gripping, if subjective." But Kakutani ultimately refuses to go easy on Geithner, writing that his memoir "tends to underplay the larger, unresolved problems in the American economy while overstating the importance or efficacy of regulatory changes the administration oversaw." Meanwhile, the Financial Times emphasizes the revelation that Geithner supported the idea of lending U.K. bank Barclays funds from the Federal Reserve in order to help it buy Lehman.
Tough Talk: The New York Times reports that the attempts of Credit Suisse and BNP Paribas to avoid facing criminal charges in the U.S. may be for naught. Anonymice told the paper that federal and state prosecutors "appeared to brush off the concerns" expressed by BNP officials that "a guilty plea could wreak havoc on BNP and the broader economy well beyond France's borders." (The French bank is charged with violating U.S. sanctions by doing business with countries including Sudan.) Prosecutors are similarly unsympathetic to Credit Suisse's efforts to persuade them to charge their newly formed U.S. subsidiary, rather than the parent company, for helping U.S. citizens avoid taxes, according to the report. The FT has more bad news for Credit Suisse, reporting that top Swiss politician Christian Levrat is urging three of the bank's senior executives to step down. Levrat's targets include Brady Dougan, Credit Suisse's chief executive; Urs Rohner, its chairman; and general counsel Romeo Cerutti. Each of the three is "a liability," according to Levrat.
Wall Street Journal
Banks with a large number of branches in Wal-Mart stores are raking in fee revenue, with much of their income stemming from overdraft charges. Some of Wal-Mart's low-income customers appear to be using the overdraft option as a cheaper alternative to payday loans, according to the report. Some readers criticized the overdraft practices of Woodforest National Bank and other Wal-Mart lenders, arguing that they unfairly "profit from the insufficient incomes of low-wage workers." Another Journal reader warned the banks to prepare for coming overdraft regulations: "If I were running any of these banks, I would make it mandatory to have each such customer undergo an explanation of the overdraft policy in their language and sign off on having been given a copy of the policy."
JPMorgan Chase is reviewing its relationships with domestic correspondent banks, including Citigroup's Banamex USA, Zions Bancorp and Regions Financial Corp. "The industrywide review started in January and comes as JPMorgan tries to shore up controls in a period of heightened regulatory scrutiny and record fines," the paper reports. JPMorgan may opt for a small reduction in its number of client banks after the review is complete, according to the article.
Reform for Fannie Mae and Freddie Mac may be a long time coming, John Carney writes in a "Heard on the Street" column. In the meantime, he proposes merging the two government-sponsored entities in order to reduce operational and regulatory costs as well as redundancies.
Royal Bank of Scotland has been ordered by a New York district judge to stop using loan software by information technology firm Complex Systems. RBS has perpetrated "six years of uninterrupted infringement" by using the software for trade finance, according to Judge Katherine Forrest.