Receiving Wide Coverage ...
Europe's Banking Woes Burgeon: Perhaps because of the long weekend in the U.S., this morning's banking news is dominated by headlines about Europe … and things aren't looking up. The Journal reports the French government rushed to bail out the "small, but key" Caisse Centrale du Crédit Immobilier de France (CCCIF) over the weekend after the mortgage lender requested aid to pay down bonds that were due on Monday. The $6.3 billion loan provided to CCCIF follows the French government's bailout of Franco-Belgian lender Dexia last year. French Prime Minister Jean-Marc Ayrault said in a radio interview while the county's financial sector is largely strong, both bailouts were necessary because of the areas they were focused on: housing and local governments.
Meanwhile, according to the Times, Spain's financial system has become so unstable; consumers are pulling not just their money, but also themselves out of the country. The FT reports Spain's state rescue fund elected to loan Bankia €4.5 billion on Monday, following the big bank's announcement it lost €4.4 billion during the first half of the year. The dire circumstances have led the Spanish government to take new measures to secure "European Union aid funds," the Journal says. The country is also moving forward with efforts outlined by its initial bailout deal with EU officials and creating a "bad bank" to help its beleaguered financial industry. This "bad bank," or, alternately, asset management company, will try to attract private investors in order to limit costs for taxpayers.
The Journal also reports European Central Bank President Mario Draghi is hinting the ECB may buy government debt maturing in two to three years in an effort to help flailing economies. More details may (or may not, because you know how these talks go) become clear during the ECB's monthly policy meeting this Thursday.
Wall Street Journal
Auditing firms continue to disappoint. According to the U.S. Public Company Accounting Oversight Board, "Big Four" auditor KPMG had deficiencies in 12 of the 52 audits that were reviewed by the watchdog during its 2011 inspection period. These deficiencies include a failure to appropriately address financial misstatements and enforce disclosure requirements. The firm was also called out in several instances for not gathering enough evidence to determine if a company's internal controls were effective. KPMG says it has "conducted a thorough evaluation" of the review and is "committed to continually improving" its efforts, which is a bit ironic considering the PCAOB found deficiencies in the exact same number of audits last year.
For those really interested in the GSEs, a Journal article adapted from reporter James R. Hagerty's new book "The Fateful History of Fannie Mae," which suggests Congress may find it "difficult" to return to a free home loan market in the future.
Indian banks need to raise $90 billion by 2018 in order to meet Basel III capital requirements.
British regulators are looking to tackle killer computers. Two senior Financial Services Authority executives have sent nine of "the main high street banks" a letter, asking them to detail the efforts being taken to avoid software glitches and to provide the names of senior managers who could be held responsible for said glitches. The request comes two months after a software update at Royal Bank of Scotland left millions of customers without access to their bank accounts for up to three weeks.
New York Times
An ex-partner of Dewey & LeBoeuf is accusing Citibank of conspiring with management at the now defunct law firm to hide Dewey's "true financial condition" in the months leading up its collapse. The allegations were made in response to a lawsuit the bank filed against ex-partner Steven P. Otillar in an attempt to recoup payment for a $210,000 loan. Otillar alleges this loan was made as part of fraudulent scheme to keep the firm afloat. Citibank declined to comment.
Former Lehman Brothers banker William Vereker has stepped aside as joint head of investment banking for Japanese brokerage firm Nomura as part of a "$1 billion cost-cutting" initiative.
Established companies like American Express and General Motors are opening up offices in Silicon Valley and investing in local start-ups in order to innovate.