Receiving Wide Coverage ...
QE3,the Weekend After: The analysis of whether the Federal Reserve's latest round of quantitative easing is likely to accomplish anything continues. The Journal suggests big bank stocks will get a boost from Fed chairman Ben Bernanke's big move since it will increase lending and bank-revenue growth. It's also likely to underpin "the nascent housing recovery" and "extend the recent refinancing wave that has lifted mortgage revenue at a host of banks." But, according to the FT, the Fed's plan isn't likely to have an immediate effect on the larger economy since many banks are struggling to process back-logged mortgage applications, which could keep "rates on home loans elevated." And this Times article suggests banks may not be encouraged to push mortgage rates down as low as they could go since "by keeping the rates elevated, they are able to earn much larger profits when they sell the mortgages into the bond market." The collective assessment sounds an awful lot like the criticism of government stimulus efforts we've heard before: good for big banks on Wall Street, of little help to those on Main Street.
EU Divided on Banking Plans: Plans to add a new single bank supervisor in the eurozone hit a snag over the weekend with German, Swedish, Dutch and Danish ministers all voicing opposition to its January 1, 2013 start date. According to the Journal, there is also "widespread concern" over other aspects of the plan, including whether the supervisor should oversee smaller banks in the eurozone and whether authorities in non-eurozone countries would find themselves marginalized from key regulatory decisions. All 27 EU member states have a veto on the plan, the FT reports. Two senior diplomats privately said they expect the negotiations to run for up to a year. Advocates of the plan feel its swift implementation is necessary to alleviate economic woes in many of Europe's struggling countries.
Down with Basel III?: Both the Journal and the FT have stories highlighting the call to reject Basel III Federal Deposit Insurance Corp. board member Thomas Hoenig made late last week at American Banker's Regulatory Symposium (see AB's story here). In a speech, Hoenig said the Basel III capital rules, as they stood, were too complex and likely to be gamed by "the most brazen and connected banks." He also suggested rejecting the accord and replacing it with a simple formula that calculates the ratio of "tangible equity" to "tangible assets." The FT points out Hoenig is the second senior regulator to speak out against the Basel III accord. Just last month, Andy Haldane, executive director for financial stability at the Bank of England, told central bankers that "it may be time to rethink" Basel III's architecture. Wall Street Journal, Financial Times
Wall Street Journal
Waypoint Real Estate Group LLC, "a major investor in U.S. foreclosed homes," has obtained a $65 million loan from Citigroup so it can add more properties to its portfolio. The real estate firm specializes in purchasing distressed properties and turning a profit by renting them out. The paper says a bigger financing deal between Waypoint and Citigroup is also in the works and expected to close within the next few weeks.
Regulators closed Truman Bank in St. Louis on Friday. The failed bank is being taken over by Simmons First National Bank in Pine Bluff, Ark. The closure brings the nationwide tally of bank failures to 42 for the year.
Deutsche Bank board member Werner Wenning says he's in favor of pay caps on corporate bonuses. The stance puts him at odds with co-chief executive Anshu Jain, who wants a change in pay structure, but prefers to "retain flexibility over bonuses without a formal pay cap."
New York Times
The list of banks under investigation for money-laundering violations got longer over the weekend and lot closer to home. JPMorgan Chase, Bank of America and "several other Wall Street giants" are under scrutiny from regulators "led by the Office of the Comptroller of the Currency," who believe the banks may have insufficient safeguards in place to guard against sanctions violations that exist around transactions with countries like Cuba and Iran. JPMorgan and Bank of America declined to comment.