Receiving Wide Coverage ...
Basel Leverage Rule Softened: Banks around the globe scored a victory Sunday when the Basel committee agreed to soften its proposed leverage ratio. Specific changes to the international proposal affect the treatment of certain derivatives exposures, some off-balance sheet activities, and the netting of repos. Reuters reports that there is still no agreement on the final level of leverage that will be allowed. The Journal notes that Sunday's change follows last year's relaxation of Basel's minimum liquidity standards, a move that also came at the industry's behest. Meanwhile, the FT points out Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., is still pushing for U.S. leverage standards that are tougher than the international version.
End of an Era: Interns and recent college grads on Wall Street have long worked insane hours, assuming that they'll eventually receive a promotion, and their lifestyle will improve. But that system now appears to be unraveling. On Friday, Bank of America issued an internal memo starting that analysts and associates in its Merrill Lynch unit should try to take off four weekend days each month. Changes also appear to be in the works at Goldman Sachs, Morgan Stanley and JPMorgan Chase. The Journal recounts some lore involving grueling work schedules, including a routine by some Barclays interns that was dubbed the "toilet nap." (It's exactly what it sounds like.) One former investment banker quoted by the Times says the moves to cut down on young employees' hours reflect more negative perceptions of the banking industry: "It used to be the case that financial services were such attractive jobs that that they were magnets for young talent. They didn't have to worry as much about what the actual work experience was like."
Wall Street Journal
Ever since the Great Swipe Fee Wars of 2010 and 2011, Congress has mostly shied away from fights between banks and retailers. But the Journal reports that last month's massive security breach at Target Corp. has brought to lawmakers' attention the question of who should pay to reissue compromised cards. The Senate Banking Committee is expected to hold a hearing on the issue in the coming weeks, and the banking industry looks to be going on the offense. "When you have a high-profile breach," Cam Fine of the Independent Community Bankers of America is quoted saying, "I think that helps gain sympathy from Congress to get something done on this."
Will soft consumer spending in December, combined with Friday's weak jobs report, prompt the Fed to take a more cautious approach to easing monetary stimulus?
"The Wolf of Wall Street" has sparked a public spat between federal prosecutors and the convicted fraudster upon whose sordid story the film is based. Jordan Belfort recently claimed on Facebook that he is giving 100% of film royalties to the victims of his pump-and-dump schemes. But officials at the U.S. attorney's office for the Eastern District of New York believe that he's turned over only a small fraction of the more than $1 million he's earned from book sales and movie royalties in recent years.
On the eve of earnings season, the FT makes the argument against return on risk-weighted assets as a measure of bank profitability. The paper also forecasts that investment banking profits in the fourth quarter will rely heavily on equity trading and underwriting, as fixed income trading continues to slide.
It's become easier for banks in countries on Europe's periphery to fund themselves, but those improvements are not being shared equally. At the moment, investors are looking at Italian banks more warily than their Spanish counterparts.
Boutique U.S. investment bank Moelis & Company is working on a potential initial public offering.
New York Times
You may have already read about the problems that the legal marijuana industry, particularly in Colorado and Washington state, is having with the banking system. But did you know that the cash-only businesses have been a boon to private security firms? Or that High Times magazine is starting a private equity fund to invest in pot businesses that can't get bank loans?
Richmond, Calif.'s long-running, long-shot effort to use eminent domain to buy up underwater mortgages draws favorable coverage in the Times. The article provides some new details about the steps the financial industry has taken to halt the plan.
Columnist Gretchen Morgenson highlights a paper published by the Financial Stability Board last week, which recommends that investment funds with more than $100 billion in assets, including hedge funds, mutual funds, and other asset management firms, should be designated as systemically important and subjected to more regulation. The mutual fund industry is already pushing back.
The "Room for Debate" feature asks: "Are Big Banks Out of Control?" Not many surprises here. Simon Johnson answers the question "Yes," while bank analyst Richard Bove says "No." The sun also rises in the east and sets in the west.
Visa has a new ad slogan, just in time for the Sochi Olympics: "Everywhere you want to be." That's a slightly shorter version, as you'll probably recall, of the card network's old slogan: "It's everywhere you want to be." The new version is meant to convey ubiquity in terms of mobile and electronic acceptance, in contrast to the old notion that you could use your Visa card in exotic locales overseas.
Wonkblog reporter Lydia DePillis has a long, exhaustively researched piece on the Consumer Financial Protection Bureau's inner workings over the last three-plus years a must-read for anyone who follows the Bureau closely. Unlike most coverage of the CFPB, this piece focuses on the formation of the agency's internal culture. (Among the revelations: CFPB had a softball team called the Overdrafts!) The story ends with a quote from an anonymous staffer, who says the initial excitement and idealism of the place is largely gone at this point: "You're left with the people who like the salary of a federal regulator and who are willing to put up with the bulls--- of a federal agency."