Receiving Wide Coverage ...
Questioned: The Securities and Exchange Commission has stepped up its probe into Wall Street's foreign hiring practices. Anonymice are telling their favorite news outlets that Citigroup and Morgan Stanley have both received letters requesting information to determine whether the banks violated the Foreign Corrupt Practices Act. Scan readers will recall that, back in August, JPMorgan Chase revealed the regulator was investigating whether the bank habitually hired the children of prominent Chinese officials to win business. Sources told the FT the new requests "did not amount to a formal investigation and that multiple banks had been contacted with similar questions in the wake of the JPMorgan allegations."
New Subprime Boom? Oh boy. Dealbook and the Journal published similar stories, stating that investors, in a quest for yield, have seemingly once-again acquired a taste for volatile loan securities. The Journal focuses on the investment vehicles collateralized loan obligations, specifically while Dealbook reports on the loans themselves. According to its article, the loans are being made to small businesses. They are leveraged and covenant-lite, which one banker toward the end of the article describes as "purgatory, because you can watch your company degrade but not trip any covenants that allow you to call a default."
FDIC Report: The Federal Deposit Insurance Corp.'s report on third-quarter bank earnings revealed a $1.5 billion drop in profit year-over-year. The reason for the drop? JPMorgan Chase's persistent legal woes. Other than that, the regulator found "positive trends across the industry, with overall growth in commercial and consumer lending except for a slowdown in the pace of mortgage loans," notes the Journal. Moreover, "banks appear headed into a new phase of the post-crisis credit cycle where they might actually soon begin to reap some benefits from higher interest rates," writes American Banker Deputy Washington Bureau Chief Joe Adler.
Wall Street Journal
An article highlights PNC Financial's decision to move its call center to a renovated space in Pittsburgh. Other companies, including eBay and Zappos, have spruced-up call centers as well. One consultant tells the papers the updates make sense given call-center employees are handling more complex questions than they did years ago. "Companies are more likely to keep call-center operations in the U.S. today than they were 10 years ago," another expert notes.
Standard & Poor's estimates the biggest U.S. banks "may need to pay between $56.5 billion and $104 billion on legacy mortgage settlements with investors and counterparties."
New York Times
The International Monetary Fund wants to shift its approach to bailouts and move to more upfront losses for bondholders. The proposal, however, is meeting stiff opposition from the global banking lobby, European policymakers and the U.S. government. "Despite tough talk on both sides of the Atlantic about making bond investors share the cost of bailouts with taxpayers, the world's largest economies seem to have accepted the dire warnings advanced by investors and bankers that the IMF's proposed new approach would badly roil still-fragile credit markets in Europe," the article notes.
Dealbook features a short profile of Alfred Feld, Goldman Sachs' longest-serving employee who died this week in Florida. He was 98 years old and had worked for the firm for more than 80 years. "Mr. Feld started out at Goldman as a messenger in the mail department making $624 a year," the article notes. "He was quickly promoted to office boy for the five partners of the firm. In 1936, he was promoted to research analyst, covering the railroad industry and 12 years later he [became] a stock broker."
Editor's note: Morning Scan will not publish on Thursday, November 28 and Friday, November 29 in observance of the Thanksgiving holiday. We'll be back on Monday, December 2.