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Yellen Ties Labor Market, Rate Hikes: Federal Reserve Board Chair Janet Yellen told the Senate Banking Committee the improving employment picture could lead to interest rate hikes. The Washington Post led with her views on the labor market, although it also mentioned the Fed's plans to continue to cut back on its bond purchases and how that affects interest rates and the housing market. The Wall Street Journal turned it around slightly saying Yellen hedged on the timing of possible interest rates hikes. Those might come earlier if the labor market continues to improve. Wages are the missing piece, one economist opines. The Financial Times concentrates on Yellen's point that economic uncertainty could cause rates to rise earlier or later than expected. Housing, however, has shown little progress. But the New York Times is reassuring everyone that the Fed will continue to prop up the economy if needed, although right now it is reasonably healthy. But also check out American Banker's coverage of another piece of Yellen's testimony regarding a dedicated seat on the Fed for community bankers. Washington Post, Wall Street Journal, Financial Times, New York Times, American Banker
B of A Hiring Junior Staffers: Bank of America is increasing the number of junior analysts and summer interns on its payroll in order to improve working conditions and enhance their work/life balance. The death of an intern in London last year due to a seizure possibly brought on by overwork was the catalyst for the decision. Another reason is that banks are competing for talent with private-equity firms, hedge funds and technology companies. B of A is hiring 40% more people in each group. In addition to hiring more people, B of A is telling them to take time off on the weekend; so are Goldman Sachs and JPMorgan Chase. Financial Times, New York Times
Wall Street Journal
Goldman Sachs decided to reduce its balance sheet as a result of the Fed's stress test. That has benefitted not only the bank and its investors but the banking sector as a whole. Goldman made its sharpest quarter-over-quarter percentage reduction in assets since late 2008. It is a sign that banks as a group are being proactive and have concerns about the long-term profitability of the industry.
Christopher Dodd, the former U.S. senator whose name is immortalized on the most important piece of consumer finance legislation ever, has renewed his call for a single banking regulator. He supported the creation of a single regulator in the wake of the financial crisis but at the time had no support in Congress. As a result, the Dodd-Frank Act only took one of the existing regulators the Office of Thrift Supervision out of the mix. To get the Volker Rule in place, it took work from five separate regulatory agencies. Dodd says some tweaks are needed to Dodd-Frank but with the current hostile environment in Congress, he is reluctant to revisit the legislation.
Jamie Dimon caused a stir in the mortgage community with his threat to end JPMorgan Chase's participation in the Federal Housing Administration mortgage insurance program. With JPM and others having paid to settle suits brought as a result of loans insured by the program originated during the mortgage boom, it is no wonder the bank is considering cutting ties. But National Mortgage News readers have their own views about Dimon's statement, saying he should look in the mirror.