Receiving Wide Coverage ...
Sanders vs. the Big Banks: Presidential candidate Sen. Bernie Sanders is already stirring up trouble for big banks with legislation that aims to break up "too big to fail" institutions. As American Banker reported Wednesday, the bill's chances of passing are slim, but it's nonetheless helping to keep Wall Street reform a hot topic this election season. The New York Times points out Democratic candidate Hillary Clinton has been criticized for cozying up to the financial industry; the TBTF bill offers Sanders a chance to distinguish himself in the public view as a more progressive alternative. Bloomberg suggests the legislation may even push Clinton "to back up her populist rhetoric on Wall Street with specific proposals." The Wall Street Journal agrees that the bill may pressure Clinton to go on the attack.
B of A Notches a Win: Bank of America shareholders haven't been the happiest of campers of late, but they did show support for the bank's leadership by reelecting all board directors at an annual meeting Wednesday. B of A chief executive and chairman Brian Moynihan at the meeting argued investors benefit from his bank's size and scale. This point was disputed by consumer advocate Bart Naylor, who pointed out that General Electric's recent move to shed the bulk of its financing arm was greeted enthusiastically by shareholders. Wall Street Journal, Financial Times
Wall Street Journal
Look out for a wave of foreign-exchange settlements as early as next week. Citigroup, Barclays, JPMorgan Chase and Royal Bank of Scotland Group are all expected to plead guilty to criminal charges in separate deals for allegedly conspiring to manipulate rates. The penalties for each bank will range from hundreds of millions of dollars at the low end to more than $1 billion at the high end, according to anonymice. Banks and prosecutors appear to like the idea of announcing the settlements collectively: U.S. authorities get to "showcase the wide-ranging investigation" and banks get to reduce the damage to their reputations by sharing the spotlight with one another. UBS is also expected to reach a settlement with U.S. prosecutors around the same time, but the bank will receive immunity from prosecution for cooperating with investigators, the paper reports.
The paper compares the results of Securities and Exchange Commission cases tried before the agency's in-house judges and cases tried in federal courts. The upshot: "SEC won against 90% of defendants before its own judges in contested cases from October 2010 through March of this year" compared to just a 60% success rate in federal courts. The analysis raises questions about bias among the SEC's in-house judges, although the agency says the discrepancy in success rates is owed to the types of cases tried in each court.
The London trader accused of triggering the May 2010 flash crash made his first public comments since his arrest Wednesday, telling a British court "I have not done anything wrong apart from being good at my job." The paper reports that Navinder Singh Sarao's claim highlights the blurry nature of the case against him, as the legal system attempts to sort out whether his trading moves veered into illegal territory.
Big-bank leaders tend to defend the size of their institutions by pointing to "revenue synergies," or opportunities for cross-selling. But these claims don't hold up for HSBC and Société Générale, according to Paul J. Davies of "Heard on the Street," who points out modern technology "can link customers and products across countries and companies as easily as sprawling banking businesses." This logic would appear to apply to banks beyond HSBC and Société Générale, although Davies doesn't take it that far.
Advisory firm ISS is going after Jamie Dimon's cash bonus. The firm is urging JPMorgan Chase shareholders to vote against the bank chief's pay package because the board offered him a $7.4 million cash bonus for 2014 "without a compelling rationale."
HSBC would be wise to make a break for Asia and Standard Chartered should follow suit, according to the FT's John Gapper. He suggests moving the banks' headquarters abroad would teach British lawmakers a lesson about how much they can tax their financial institutions before they cut and run. Gapper acknowledges big banks need to be subject to stricter regulation in the aftermath of the crisis, but warns of the dangers of treating them "largely as taxable pariahs."
The New Yorker: Stanford finance and economics professor and bane of the big banks Anat Admati chats with The New Yorker about the all-female lineup at this week's Washington, D.C., conference "Finance & Society." Sen. Elizabeth Warren, Fed chair Janet Yellen and the International Monetary Fund's Christine Lagarde discussed "how finance can best serve society and how to improve the system," Admati explains.
Bloomberg: Sen. Warren warns that giving President Barack Obama and his successor the authority to fast-track trade deals could weaken the Dodd-Frank Act. Wall Street lobbyists are currently pushing for trade agreements with Europe and Asia to involve international derivatives rules and other subjects covered under Dodd-Frank.