Receiving Wide Coverage ...
On Mt. Gox: The apparent collapse of big Bitcoin exchange Mt. Gox has reignited concerns about the digital currency. Japan's government, for instance, is now looking into regulating Bitcoin, though officials are not offering any specifics as to how. Some pundits are arguing, amid crashing Bitcoin prices, that Gox has sounded the cryptocurrency's death knell given that the reported theft of 744,000 bitcoins is likely to preclude prospective and even current users from investing further in the cryptocurrency. "Bitcoin is useful as a store of value and a medium of exchange only if lots of other people believe that it is useful as a store of value and a medium of exchange," writes Bloomberg's Megan McArdle. But others say the Gox debacle won't kill the currency; it may even make it stronger as reputable (and, yes, even regulated) exchanges enter the Bitcoin space. "The failure of individual Bitcoin companies is evidence that these companies were poorly run, but it's not evidence that the Bitcoin's underlying infrastructure is defective," writes the Washington Post's Timothy Lee. "The failure of Mt. Gox doesn't doom Bitcoin any more than the failure of Pets.com doomed the Internet." And some Bitcoin stalwarts afraid regulators will step in and completely outlaw the currency may find this Dealbook comment from New York's top regulator Benjamin Lawsky encouraging: "I think it's a significant event, but I think there's a decent chance that it is part of what we would call this sort of shaking out of the industry as it matures and slowly becomes a little more regulated." And, on that note, here's why Bitcoin matters to bankers.
JPM Investor Day: JPMorgan Chase held its annual investor day yesterday, prompting a slew of fresh (and slightly different) headlines among news outlets. Most of the headlines address jobs cuts, particularly in its mortgage business. News outlets also highlight that the bank plans to be more cautious in general throughout 2014, by, among other things, increasing compliance staff and reducing branch expansion. (Of course, the bank will need to tap a new person to lead said compliance staff since a memo obtained by Bloomberg shows Chief Compliance Officer Cindy Armine is leaving the bank to join First Data Corp. after a year on the job.) "The reduced ambitions show how J.P. Morgan's size and power across various markets hasn't made it immune to the struggles weighing down results at financial companies of all stripes," the Journal deduces. The FT also notes that JPM is building a war chest, or, to put it a bit less bluntly, aiming to set aside "$30 billion of excess capital by next year that could be distributed to shareholders." And American Banker's Maria Aspan outlines three things to watch in JPM's "transition year."
Credit Suisse Critique: A new report from Carl Levin's Senate committee alleges Credit Suisse went to great lengths to help U.S. clients evade taxes from around 2001 to 2008. "Great lengths" includes setting up a branch in a Zurich airport, referring to a bank office by code name and, in a favorite citation among news outlets, handing account statements to a one client by hiding them in a Sport Illustrated magazine. (To put things in perspective, Dealbook notes, at times, the Senate report "reads more like a John Grisham novel than a white paper.") Some of this news may sound familiar, because the Wall Street Journal reported back in January that Credit Suisse could wind up paying more than $800 million to the U.S. Justice Department in the first half of the year to settle similar allegations. The new Senate report also alleges the bank "artificially bolstered the performance of its Swiss private-banking business in financial reporting," the Journal says. The bank is officially declining to comment on the report, but its "top brass" are expected to answer questions at a Senate subcommittee meeting later Wednesday. CEO Brady Dougan's prepared remarks, obtained early by the FT, offer this defense: "Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management."
Wall Street Journal
Two regulatory filings indicate banks haven't put the financial crisis behind them just yet. Morgan Stanley has reached a preliminary agreement with the Securities and Exchange Commission to pay $275 million to settle allegations it misled investors about mortgage bonds in 2007. Meanwhile, Bank of America disclosed new probes into its foreign-exchange and mortgage practices.
New York Times
Seventeen brokerage firms, including Citigroup, JPMorgan Chase and Goldman Sachs, have agreed to stop participating in money management surveys as a means to get research analysis previews.
Standard & Poor's is seeking any documents detailing a meeting between President Barack Obama and then-Treasury Secretary Timothy Geithner just days after the ratings agency downgraded the U.S. government. The firm believes these documents will help bolster its defense that the government's fraud lawsuit against it is "retaliation" for the downgrade.
Speaking of Geithner, the title of his forthcoming book is "Stress Test."