Receiving Wide Coverage ...
Suisse Justice: Credit Suisse is close to a $2.5 billion settlement deal with the Justice Department, according to anonymice who spoke with the Wall Street Journal. The Swiss bank would pay $1.7 billion to the Justice Department, $100 million to the Federal Reserve and $600 million to the New York State Department of Financial Services. The penalties for allegedly helping Americans dodge taxes strike some observers as a little low. "If Lawsky doesn't get more money, this will be a disappointment," wrote one Journal commenter, while another suggested that Credit Suisse "grab this bargain immediately." The Journal notes that the settlement amounts were intended to "punish the bank but not cripple or kill it." Indeed, the chances that either Credit Suisse or its fellow European lender BNP Paribas will bite the dust as a result of their expected criminal pleas with U.S. regulators appear quite slim, as Floyd Norris writes in the New York Times. "Perhaps the most interesting part of the prolonged and leak-filled dance leading up to the expected criminal charges has been the effort to assure that the banks will stay in business after they plead guilty," Norris observes. If banks know they'll ultimately weather criminal charges, how big a difference is there between civil and criminal settlements? Both kinds of deals should be more transparent about the waivers banks typically receive exempting them from tougher consequences that might impact their business, according to Norris. "Waivers may be practically necessary to settle cases, and they may justly avoid excessive punishments that would reduce competition in banking," he writes. "But at least they deserve more sunlight than they now receive."
Deutsche Tosses in Its Hand: Deutsche Bank is folding its hand and selling the Las Vegas casino it owns. The bank has agreed to sell its splashy Cosmopolitan resort to private-equity firm the Blackstone Group for about $1.7 billion, according to reports. Deutsche Bank invested $4 billion in the resort it acquired after foreclosing on its developer, but it's been angling to sell the Cosmopolitan from the start. The FT frames Deutsche's foray into the land of high rollers as a fiasco, noting that the Cosmopolitan lost $100 million each year after it opened and that it "entered the casino development business at exactly the wrong time," i.e., as Vegas's gambling business soured during the economic downturn. The Times also characterizes Deutsche's casino experience as "long and painful." Perhaps Blackstone will have more luck in Vegas. A JPMorgan analyst told the Journal that the deal "speaks to a historically smart real-estate buyer making a statement on the length of the Las Vegas Strip recovery."
Wall Street Journal
Credit ratings agencies are patting themselves on the back for disagreeing about the quality of a new kind of bond. Three firms say that bonds backed by rental payments on foreclosed homes deserve a triple-A rating; three others are wary of the bonds. The agencies say their different viewpoints prove that the industry has changed in response to criticisms that its unvaryingly inflated ratings of mortgage-backed securities helped bring about the financial crisis.
Investors' growing confidence in big banks including Citigroup, JPMorgan and Wells Fargo has led to a spike in demand for subordinated debt. Bondholders of subordinated debt have lower priority in the event of a default. Since the bonds are riskier for investors, they come with higher interest payments.
Deutsche Bank traders were warned to watch their tongues in an internal video made by the co-head of the German lender, Colin Fan. Fan warns traders against "boastful, indiscreet and vulgar" behavior and reminds them that all their communications are being watched.
The big four U.S. brokerages are planning to reduce financial advisers' wages in an effort to trim costs. "This is going to happen," an anonymous executive told the FT. "There are fewer places for people to go."