Receiving Wide Coverage ...
Every Banker for Himself: Sources tell the Times the London Interbank Offered Rate scandal is leading banks to turn on one another. Government and bank officials close to the Libor investigations say implicated banks are using Barclays' $450 million settlement as a "guidepost" in their discussions with authorities. The go-to line seems to be that one's bank wasn't as bad as its counterparts and, therefore, should not be so severely penalized.
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Meanwhile, the FT reports regulators are investigating communications that Philippe Moryoussef, the ex-Barclays trader believed to be at the center of its interest rate scandal, had with the Dutch bank Rabobank concerning "trading positions related to Euribor." HSBC, Société Générale, Deutsche Bank and Crédit Agricole have also been implicated by similar communications.
Small Banks Speak Out: Commercial bankers used a July conference call with the Office of the Comptroller of the Currency to voice concerns about the forthcoming Basel III rules. According to the Journal, executives at small banks believe the rules will severely hamper their ability to lend to small businesses and homeowners since they will need to hold significantly more capital against loans. Bankers say the new capital rules, designed to rein in big banks, unjustifiably hurt them. They are asking regulators to consider an extension due to the rules' complexity. Regulators are urging these banks to voice concerns in comment letters due Sept. 7.
Many are sympathetic to the small banks' plight. "After they retire, make these regulators take all their hard earned wages and savings and start up a bank," one Journal reader commented. "Let's see how they like it." Another commenter simply wrote, "The laws of unintended consequences strike again." Small banks' beefs with regulation go well beyond Basel III: Late last week, Independent Community Bankers of America chief Camden Fine told Bloomberg News the sight of the Consumer Financial Protection Bureau's 1,099-page proposal on mortgage disclosure forms makes him "physically ill."
Knight Gets Rescued: Knight Capital Group struck an eleventh-hour deal with investors on Sunday that will keep the brokerage firm alive following a software malfunction that led to a $440 million trading loss. According to the Times, the deal is worth about $400 million. Investors in the transaction arranged by Jeffries Group include TD Ameritrade, the Blackstone Group, trading firm Getco and Stifel, Nicolaus & Co. Knight might have fallen otherwise. The Journal reports the Securities and Exchange Commission denied the brokerage firm's request to reverse the trades shortly after its rogue computer program made them.
Wall Street Journal
The CFPB certainly stays busy. A series of recent filings suggests the bureau has launched a "broad probe" into whether mortgage insurers violated RESPA. American International Group, Genworth Financial, MGIC and PHH are all currently being investigated amid longstanding allegations from state officials that mortgage insurers pay banks to win business through captive reinsurance arrangements. Genworth, MGIC and PHH are cooperating with the investigation, but deny any wrongdoing.
Financial Times
Although the Federal Reserve continues to monitor direct Eurozone exposure, U.S. banks believe the indirect "knock-on effects" of Europe's continuing debt crisis pose the biggest threat to their business. They're also worried (though not as worried) about the U.S. fiscal cliff.
