Receiving Wide Coverage ...
StanChart Redux: This morning's editions of the Journal and the FT offer behind-the-scenes accounts of the Standard Chartered saga from different perspectives. The Journal describes how New York regulator Benjamin Lawsky blindsided his counterparts in Washington and London by forging ahead with money-laundering charges against the U.K. bank while the other agencies were still investigating. The FT's story focuses on StanChart's response — the bank considered suing Lawsky for reputational damage, the British paper says. But Lawsky's threat to revoke StanChart's license to clear dollar transactions spooked shareholders. Both papers quote analysts who found the settlement amount of $340 million paltry in light of Lawsky's initial bluster and the bank's earnings power (StanChart made about $4 billion in the first half of this year). As often, we find the reader comments on these stories nearly as interesting as the news itself. "This episode simply illustrates the cost of doing business in [the] US now for banks who trade where [the] US wants complete hegemony," comments an FT reader. "Banks should identify it as a business risk similar to that which oil companies operating in Russia view the vagaries of the Russian legal system." And it seems the now-infamous foulmouthed StanChart banker who complained about "you [expletive] Americans" is in good company. Another Journal article says European companies are complaining that "banks acting for them are refusing to handle legitimate trades with Iran for fear of falling afoul of U.S. regulatory authorities. They claim the situation has put them at a disadvantage to U.S. businesses whose trade with Tehran is soaring."
Wall Street Journal
A "tick, tock" narrative piece describes the role JPMorgan Chase played in rescuing Knight Capital from the precipice a few weeks ago. As the lead bank on the brokerage's credit line, JPM "found itself in a familiar position" after the Bear Stearns, Washington Mutual, Lehman and MF Global dramas. This one has a happier ending.
The Treasury Department installed two directors on the board of Ally Financial (formerly GMAC), which has yet to pay back $12 billion of the $17 billion of Tarp funds it got.
Not to be overshadowed by fellow Empire State politician Lawsky, New York Attorney General Eric Schneiderman subpoenaed documents from seven large banks concerning their role in the Libor-rigging scandal.
New York Times
"No Criminal Case Is Likely in Loss at MF Global": "Investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear."
An article looks at the surging issuance of high-yield, below-investment-grade debt (we're feeling too polite this morning to say "junk bonds") by companies including the commercial lender CIT Group.
The paper travels to the German town where Treasury Secretary Timothy Geithner's grandfather lived and interviews local residents who share his surname and may or may not be his relatives. They disapprove of U.S. pressure on Germany to bail out other European countries.