Testimony to Offer JPM's Take on MF Global Fund Transfer

Receiving Wide Coverage ...

MF Money Still Gone, Congress Still Piqued: A congressional hearing today offers up JPMorgan's view of the MF Global meltdown, with a deputy counsel for the bank describing JPM's haggling over the source of the transferred funds. Diane Genova is expected to testify that, after JPM noticed that it was being paid with $200 million in customer funds, "it would be prudent and appropriate to ask MF Global to confirm that these transfers had been made in compliance" given that the company was tanking. Evidently the response was so convincing, Genova's prepared remarks say, that JPMorgan "reached out to Mr. Corzine to explain J.P. Morgan's understanding of how the London overdrafts had been covered," and to request confirmation that everything was on the up and up. When the letter was not returned signed, JPM called MF Global's deputy general counsel, Dennis Klejna, who assured that the funds were tranferred from excess money in company accounts and the leeter went unsigned because it was too broad. Meanwhile, it looks like some MF Global employees were aware of a stated shortfall in customer accounts well before the company's collapse. But key officials say they were assured it was just an accounting mishap. Wall Street Journal, New York Times

BBA Tinkers with Libor 2.0: The British Bankers Association, which publishes the London Interbank Offered Rates, is talking with U.K. regulators and large financial institutions about reworking the "code of conduct" and statistical methods to launch an improved version of Libor this summer. Among the institutions being consulted about possible improvements are Barclays, the Royal Bank of Scotland Group, and HSBC Holdings. All of them are likely to offer valuable assistance, Bloomberg notes, given that they're under investigation for alleged manipulation of the index. Financial Times, Bloomberg

Wall Street Journal

Bank of America is eying a greater role on the global stage by assembling an international advisory group, say "people familiar with the situation." The bank is also looking to replace a few members of its graying board of directors with international figures. The story provides a friendly review of the plan, couching last week's poaching of a top international investment banker with the bank's assurance that it would be able to "maintain our current momentum." Since the Journal doesn't really ask the question, we will: What exactly is B of A's competitive advantage overseas again? And in the absence of competitive advantage, how do they earn more than their cost of capital? The move is at odds with the bank's capital need-driven sale of overseas assets such as its stakes in China Construction Bank.

Financial Times

The paper gets the scoop that the CFPB is seeking to lower the bar for borrowers seeking to contest mortgages based on faulty disclosures. While borrowers can already challenge banks on such matters by filing a lawsuit, the CFPB argued in a Monday court filing that borrowers need only submit a letter to the bank to demand reconsideration. That read goes against a number of previous judicial rulings. "Experts said the CFPB's move would probably result in even higher compliance costs for lenders, who will now be forced to respond to borrowers' requests within 20 days to avoid losing their right to contest the cancellation," the FT says.

New York Times

In a bit of a late hit, the Times notes that the $25 billion national foreclosure settlement will allow banks to count toward the settlement money they have already spent on practices that don't prevent foreclosure, such as bulldozing abandoned homes and waiving unpaid balances from short sales. Cue fist-shaking by consumer advocates. But economist Mark Zandi tells the Times that the problem's one of capacity: "After looking at the data in detail, I'm beginning to wonder if you're going to find enough homeowners where principal reduction works in a meaningful way," Zandi said.

In a reminder that every silver cloud has a dark lining, Dealbook notes that the continued lack of a European meltdown has disappointed private equity. Hopes of a continental buffet of fire-sale bank assets have been dashed by the ECB's easy lending terms.