Receiving Wide Coverage ...
The Mary Jo White Hearing: "Not a single senator voiced even slight opposition to President Obama's pick to head the Securities and Exchange Commission," the Post reports, despite what the Journal described as "pointed questions from lawmakers about whether her time spent defending Wall Street banks would impinge on her ability to police Wall Street." Importantly, Mary Jo White indicated flexibility on reforming money market funds, telling the Senate Banking panel that "any new rules would not interfere with 'the value' of the funds," according to the Times, which says the remark "alarmed investor advocates." Wall Street Journal, New York Times, Washington Post
Cyberattacks: JPMorgan Chase's consumer website was hit with another denial of service attack as intelligence officials warned senators about escalating cybersecurity threats from criminals, terrorists and hostile governments. The sequestration budget cuts will undermine the nation's defenses against such threats, complained Director of National Intelligence James Clapper. On the kinda-reassuring side: Banks, along with Internet service providers, are generally "pretty good" at protecting their networks, unlike power companies, according to Army Gen. Keith Alexander, head of the U.S. Cyber Command.
Wall Street Journal
During the same Senate Banking hearing as White, "Richard Cordray answered polite questions … but there were no signs he will be confirmed for a full term as director of the Consumer Financial Protection Bureau. There was little talk of a compromise to resolve criticisms of the regulator's structure that Republicans have raised."
"Discover Bets on Housing Rebound, Expands Into Home-Equity Lending"
"Paper stock certificates, already reduced to novelty status in the financial markets, are poised to get even rarer. Depository Trust & Clearing Corp. is seeking to end the issuance of new securities certificates and speed up moves to take older ones out of circulation."
Financial Times
Mortgage bond investors are threatening to cut back purchases or demand higher yields on new private issues to "retaliate" for the OCC settlement that ended the large banks' foreclosure reviews. Since the banks can fulfill part of their obligations under the $9 billion settlement by modifying loans serviced for others, bondholders say they are once again being punished for servicers' errors. Private-label mortgage bond issuance has been sparse, and an investor boycott could keep it so, meaning the government (taxpayers) would continue to take most of the credit risk in housing.
The Basel Committee's chairman said it is forging ahead with two rules banks have fought to delay. The committee intends to finish a rule this year that will make banks disclose leverage ratios (unadjusted for risk) beginning in 2015 and have a minimum 3% ratio by 2018. The net stable funding ratio rule, which will require closer matching of maturities between assets and liabilities, should be done by 2014, Chairman Stefan Ingves said. According to the FT, "Bankers argue that leverage caps penalize low-risk, high-volume businesses like trade finance and mortgage lending that are crucial to economic growth. They also say the NSFR will undermine maturity transformation, a fundamental purpose of banking." However, Ingves also said the committee is considering possible simplification of the entire Basel III regime.
