Receiving Wide Coverage ...
Senate Housing Finance Reform Plan Drops: The newly unveiled Corker-Warner plan enjoyed strong support Tuesday from various quarters senators of both parties, the White House and mortgage industry reps all sounded positive notes but the papers remind their readers that the overhaul is still likely going nowhere. Right now House Financial Services Committee Chairman Jeb Hensarling, R-Texas, is the most obvious obstacle. But as American Banker's Victoria Finkle notes, the top Democrat (Sen. Tim Johnson) and Republican (Sen. Mike Crapo) on the Senate Banking Committee might be another roadblock, since neither endorsed the plan. The FT reports that the price of preferred shares of Fannie Mae and Freddie Mac were largely unchanged Tuesday, reflecting an apparent belief among investors that the two mortgage giants might still be resurrected in some form. On the substance of the bipartisan Senate plan, the Washington Post provides some detail on its downpayment and skin-in-the-game requirements.
China Allays Fears of 2008 Moment: The papers give different interpretations of the latest moves by China's central bank to calm the country's nervous credit markets. The FT writes that Tuesday's statement from the People's Bank of China struck an "emollient tone." (Scan cops to having had to look up this adjective; for the similarly unlettered, it means "softening.") The New York Times agrees that the central bank's statement was "apparently meant to soothe investors' nerves" but then adds that another goal was to "maintain pressure on banks deemed to be carrying too much risk." The good news, everyone concurs, is that China's interbank lending rates have fallen sharply since last week, when there were fears of a Lehman Brother-style meltdown. Separately, the New York Times' Editorial Board calls for major reforms to the Chinese banking sector, including a reduction in the influence that Communist Party officials have on loan decisions.
Housing's Mixed Signals: The news that U.S. housing prices jumped 12% between April 2012 and April 2013, the largest increase since the height of the last bubble, yields a crop of state-of-the-housing-market stories. In general, concerns about rising interest rates are tempered by reassurances about the low level of available inventory and a recent rise in the sale of new homes. Wall Street Journal, New York Times, Washington Post
Sir Mervyn's Last Stand: During his 103rd and final appearance before a parliamentary committee, Sir Mervyn King came out with guns blazing. The outgoing Bank of England chairman, who's championed tighter regulation of the banking sector, alleged that U.K. politicians have inappropriately lobbied regulators on behalf of specific banks. "It is no good making speeches in general saying we want an effective supervisor and then, when it comes to an individual bank, asking the supervisor to back down," the FT quotes King saying. The Journal calls his allegations "extraordinary," noting that Chancellor of the Exchequer George Osborne denied knowing of any undue pressure.
Corzine Has Company: Following a New York Times scoop that the Commodity Futures Trading Commission is preparing civil charges against former MF Global head honcho Jon Corzine, the Journal cites anonymice to report that underling Edith O'Brien has also received warning that she may be hit with a civil enforcement action. O'Brien, an assistant treasurer at the brokerage firm who moved money around before its failure and has since spoken to law-enforcement officials, received criminal immunity, according to the Journal. But she is apparently not shielded from civil liability. Reuters explains that under the legal theory regulators are contemplating using against Corzine, they would also have to file charges against other former MF employees.
The Case that Never Ends: New York's highest court has ruled that a 2005 lawsuit against former AIG chief Maurice "Hank" Greenberg can proceed. The eight-year-old case involves alleged accounting improprieties that predate the insurer's bailout in 2008. Empire State Attorney General Eric Schneiderman wants Greenberg banned from participating in the securities industry and from serving as an officer or director of a public company. Wall Street Journal, New York Times
Wall Street Journal
Interest rates on some federal student loans appear poised to double on July 1, the paper reports, citing interviews with senators who have been involved in efforts to broker a bipartisan deal to stave off the rate increase. The upper chamber's current focus on immigration reform gets blame for the impasse. The Journal does not discuss the likely impact of a rate increase on private student lenders, but rising costs on federal loans could make private borrowing a more attractive option for some more credit-worthy students.
State regulators from California, New York and Virginia are warning Bitcoin exchanges that they could be shut down if they violate state money-transmission laws, the Journal reports, citing unnamed sources. The moves signal that states are now joining the feds in cracking down on Bitcoin. The state-level actions are also upending how digital-currency companies do business. "Bitcoin businesses are spending a lot of time and energy figuring out how to stay out of California," an exec at one such company is quoted saying.
A Fed president will tell House lawmakers Wednesday that the Dodd-Frank Act did not end the expectation that too-big-to-fail banks will receive government assistance at times of crisis. Jeffrey Lacker, president of the Richmond Fed, is expected to call on policymakers to eliminate regulators' ability to provide temporary financing to a failing firm, as well as the Fed's ability to make emergency loans under Section 13(3) of the Federal Reserve Act. The testimony will be music to the ears of House Republicans, who have been making similar arguments for years now. Former FDIC chair Sheila Bair, current FDIC vice chair Thomas Hoenig, and Dallas Fed President Richard Fisher are also scheduled to testify at Wednesday's hearing.
European banking lobbyists appear to be winning the fight against a financial transaction tax. The plan is being delayed by at least six months. Officials from various European countries worry about its impact on the continent's economy and sovereign bond markets.
In the saying-things-you-will-later regret department, U.S. bankers have company across the pond in Ireland. The FT has a pair of reports on revelations from the Irish Independent that Anglo Irish execs were joking back in September 2008 about the "fantastic" prospect of nationalization. They were also singing the opening bars of the German national anthem, an apparent reference to the exploding Irish bank's strategy of using the government's guarantee to attract foreign deposits. A top Irish government official frets that the recordings will make it harder for the country to win debt relief from other European Union nations.
New York Times
Royal Bank of Canada gets some positive press for its New York trading desk's efforts to slow customers' orders so as to "evade high frequency traders." The paper notes the bank's recent rise in the ranks of U.S. stock trading firms, dubbing it "the financial equivalent of the Tortoise and the Hare."