Receiving Wide Coverage ...
Stuck with Second Mortgages: The Supreme Court sided with banks Monday by ruling homeowners cannot void second mortgages in bankruptcy even if their homes are underwater. The unanimous decision in favor of Bank of America leaves struggling homeowners with even fewer options, according to New York Times columnist Stephen Lubben. But he suggests banks may eventually have to provide relief to underwater borrowers "if they ever want to move on. After all, there were two main players in the mortgage crisis, and only one received a bailout." Lenders have argued while second mortgages may be essentially worthless in areas where property values have tanked, prices could rise again, making debt repayment possible, according to the Wall Street Journal. A Times article notes the Supreme Court ruling specifically concerns Chapter 7 bankruptcy filings, and therefore homeowners could still attempt to cancel their second mortgages under Chapter 13. But the latter option involves a more expensive and drawn-out process, which underwater homeowners may not be able to afford. The Financial Times plays it straight.
Fischer, Fired Up: Guess which government heavyweight bemoaned in a Monday speech that bankers who break the law have yet to be "punished severely"? Sen. Elizabeth Warren would be a reasonable conjecture, but it was none other than Fed Vice Chairman Stanley Fischer. Fischer also warned of the fragility of the global economy and told policymakers there's still plenty of risk for a repeat of the 2008 crisis, according to the FT. This all sounds pretty fire-and-brimstone, but the vice chair appears remarkably mild-mannered in the Journal's account of the same speech. The Journal blog leads with the assertion that Fischer "said he doesn't currently see any pressing financial stability problems in the global economy." To get the best possible sense of Fischer's current mindset, perhaps it's best to read the speech for yourself.
Rate-Rigging as Popular Sport: A trader on trial for allegedly conspiring to manipulate interest rates admitted he was aware he was "operating in a grey area" but said he was hardly alone in his actions, according to audio recordings heard by the jury on Monday. "I was participating in an industry-wide practice," former UBS and Citigroup trader Tom Hayes told British authorities in the recordings. Wall Street Journal, Financial Times
Wall Street Journal
JPMorgan Chase has found a replacement for the Hong Kong executive who was pushed out as authorities questioned the bank's hiring practices in China. The new head of global investment banking in Hong Kong, David Lau, takes the seat left vacant by Catherine Leung's departure.
Fed chair Janet Yellen should avoid making comments about stock valuations since the markets inevitably interpret her remarks as investment advice, according to Wealthfront chief investment officer Burton Malkiel. While he acknowledges it makes sense for a Fed official to worry about price bubbles, he notes the Fed's focus should be on potential bubbles financed by debt, not whether bio-tech stocks are overvalued.
The Securities and Exchange Commission fined the Merrill Lynch unit of Bank of America $11 million in a short-selling case.
When disaster befalls corporate kingpins like former Lehman Brothers head Dick Fuld, they love to blame it on a "perfect storm" of factors outside their control. This tendency reveals the dangers of putting overconfident and self-deluded leaders at the helm of major companies, according to Andrew Hill.
Bank reports just keep getting longer, but Oliver Ralph says that may be necessary in order for investors to rebuild trust in banks that previously erred on the side of opacity.
Banks are loading up on "safe" assets, such as sovereign debt, at the instruction of regulators, but Peterson Institute senior fellow Avinash Persaud warns, "even if these assets were safe to start with, the enforced concentration is enough to make them risky."