Receiving Wide Coverage ...
StanChart Update: Standard Chartered is trying to settle New York state regulators' allegations it laundered money for Iran, ahead of a hearing scheduled Wednesday on whether the U.K. bank should keep its local license, the FT reports. However, there is a sizable bid-ask spread in the negotiations, as it were: Benjamin Lawsky's Department of Financial Services wanted $500 million, and StanChart came back with an offer of $5 million, which the regulator rejected. Although the U.S. Department of Justice was unsure whether to even bother pursuing a case against StanChart ("the conduct was less egregious than what investigators found at other banks," an anonymous source tells the British paper), Lawsky's agency "could intervene because it need only decide whether the bank meets safety and soundness standards to have a banking licence and does not have to prove the merits of the allegations." In an op-ed in the FT, Kishore Mahbubani, a Singaporean academic, writes that Benjamin Lawsky has become "a Lawsky unto himself." His unilateral decision to go after the U.K. bank "appears to have been driven by domestic political considerations, not by the merits of the case," Mahbubani writes. "In the strange political climate of the US, anyone who stands up to Iran is a hero." Lawsky could go public with his charges without the cooperation of nominally more powerful federal agencies because "it would be political suicide to take on a brave crusader battling against Iran. ... The big question that US regulators face now is whether their overall system will work to deliver a fair and balanced judgment on StanChart." For U.S. bankers, Lawsky's actions could have long-term consequences, Mahbubani warns: "Would another regulatory authority someday similarly retaliate against an American bank?" However, in the Journal's opinion pages (which are usually skeptical of regulatory and prosecutorial zeal), columnist L. Gordon Crovitz compares StanChart's alleged actions to the Bank of England's "appeasing Hitler" by transferring gold reserves to Germany's central bank in 1939. "Any bank that helps Iran's nuclear ambitions by undermining sanctions deserves all the harm done to its reputation," Crovitz writes. And for those who are just getting back from vacation and want to get up to speed on the developing StanChart story, this feature from the weekend FT is a good place to start.
Eye on JPMorgan: The FT has a pair of big stories on the bank today. One reports that JPMorgan aims to boost annual pretax earnings by $1 billion within five years by merging its investment and corporate banking divisions. The combination will "make it easier for bankers to sell an array of services to the largest companies in the world while cutting costs," the thinking goes. The other FT story profiles the new co-heads of the investment banking business, Daniel Pinto and Michael Cavanagh. On the retail side, JPM got tentative court approval for a $100 million settlement of a class action that accused the bank of raising minimum monthly payments for cardholders who were promised fixed rates, the Journal reports.
Wall Street Journal
The Democratic National Committee is moving some of its banking business from longtime provider Bank of America to union-owned Amalgamated Bank. President Obama's reelection campaign, however, is still banking with B of A, which helped pay for its headquarters city, Charlotte, to host next month's Democratic convention. Other Democratic and liberal groups have moved their money from B of A to Amalgamated since last year, when members of the Occupy Wall Street movement said they would only bank with the union shop, so to speak.
UBS floated $2 billion of "contingent capital" bonds, the first time it sold this kind of debt to U.S. investors.
Swiss bank Julius Baer has agreed to buy Merrill Lynch's wealth-management businesses outside the U.S. and Japan for about $880 million from B of A.
The FDIC sued 11 major banks for allegedly misleading Colonial Bank in the sale of $388 million of mortgage-backed securities during the heady years of 2005 to 2008. Colonial failed in 2009, as a result of fraud at its warehouse client Taylor, Bean & Whitaker Mortgage.
New York Times
"The same problems that plagued the foreclosure process … are now emerging in the debt collection practices of credit card companies," according to a front-page story in today's Times. Now emerging? American Banker's Jeff Horwitz reported this story in January.
The Times profiles CFTC head Gary Gensler, who's been "energized" by the Libor scandal.
On Aug. 29, the commissioners of the SEC will vote on chairwoman Mary Schapiro's proposal to tighten regulation of money market funds; columnist Gretchen Morgenson argues the plan would protect taxpayers from another bailout.