The Next Bailout? The Journal and the Times report today that the Federal Housing Administration's annual report, due later this week, will show that its financial condition has worsened considerably. The Journal story prominently suggests the agency may need to draw on taxpayer funds, a prospect downplayed somewhat in the Times article. If you're feeling déjà vu, it may be because on Tuesday American Banker's Kate Berry reported that the FHA was facing its own fiscal cliff.
JPMorgan Unplugged (Sorta): As punishment for allegedly submitting false information to an investigation, the Federal Energy Regulatory Commission banned JPMorgan Chase from trading electricity at market rates for six months. The suspension doesn't begin until April of next year to give the bank and the system operator time to prepare. And during the six-month penalty period, JPM will still be allowed to trade electricity at prices set by counterparties. "In essence, the order limits the bank's profits while allowing it to continue operating in power markets," according to the FT; the Journal says FERC wants "to make sure there was enough electricity on the grid to meet demand." This situation gives a whole new meaning to the phrase "Too Interconnected to Fail." The action from FERC against JPMorgan follows the agency's order against Barclays a few weeks ago demanding some $500 million; as finance professor John Alan James wrote in BankThink recently, this may be a stronger regulator than the big banks are used to dealing with.