Receiving Wide Coverage ...
“Uneven and Modest”: That’s how Fed chairman Ben Bernanke characterized the economic recovery in his semi-annual Humphrey-Hawkins testimony before Congress. Bernanke also said during his testimony that regulators are likely to delay implementation of the Volcker rule, which is supposed to take effect in July. The Dodd-Frank Act allows the agencies to delay implementation by up to two years, he said. Wall Street Journal, New York Times, Washington Post, Financial Times
At Least They’re Getting Bonuses: Cash bonuses for securities industry workers in New York are expected to drop 14% this season, state comptroller Thomas DiNapoli said. Or “only 14%,” as the Times put it, noting that industry profits are down by more than half. Wall Street Journal, New York Times, Financial Times
Wall Street Journal
A front-page story says Bank of America plans to overhaul checking account fees so as to nudge customers to buy more products, maintain certain balances or “bank online” (which we guess means “go paperless,” but that isn’t spelled out in the article). New monthly fees ranging from $6 to $25, depending on the account type, are being tested in several states; customers can avoid these by engaging in the more profitable behaviors for the bank. An eventual national rollout may or may not include an account with a flat fee that can’t be avoided no matter how good a customer you are. The Journal notes that B of A is risking further backlash, what with the outrage over last year’s abortive attempt to charge $5 for debit cards.
Massachusetts’ securities regulator fined State Street $5 million over its role as investment manager for a CDO stuffed with dodgy subprime mortgage bonds that the hedge fund Magnetar helped select. Magnetar was also shorting some of the underlying assets, a salient fact that State Street failed to disclose to the investors on the other side of the trade, according to Secretary of the Commonwealth William Galvin, who said he’s investigating other deals like this.
Speaking of “legacy assets” (a euphemism that makes us think of a college fraternity reluctantly accepting an alumnus’ awkward kid brother) … Fannie Mae said it’s stopped doing new business with Bank of America, not the other way around, as B of A has claimed. Whoever dumped whom, the reason is an impasse over Fannie’s attempts to make the lender repurchase billions of dollars of stinko mortgages that were sold to the GSE in happier times (probably, in most cases, by B of A’s albatross known as Countrywide.) The real question, according to the “Heard on the Street” column: “Who will be left footing the bill: B of A shareholders or taxpayers?”
Still more legacy mortgage-backed securities coming home to roost: Following the Wells notices from the SEC that Wells Fargo and Goldman Sachs disclosed Tuesday, JPMorgan revealed Wednesday that it got one, too. According to the FT, the SEC is building its cases against banks by digging up warnings the institutions had received (and allegedly ignored) from due-diligence firms like Clayton that mortgages being securitized didn’t meet underwriting standards.
The rating agency Fitch warned that the $25 billion robosigning settlement could undermine investors’ confidence in mortgage-backed securities, since the banks reportedly will be able to earn credit by writing down loans they service for third parties. Notice how we say “reportedly.” Because no one really knows what’s in the settlement because there are still no legal documents. (As of 8:30 a.m. Eastern today, “coming soon” remains the status.) Just as a judge wants to see the mortgage note before letting a lender foreclose on someone, we won’t believe anything until we see some hardcore evidence.
The FT ran a short obituary for Terri Dial, one of the most prominent women executives in the banking industry, who passed away at 62. “Nicknamed ‘the human cyclone’ for her rapid ascent and sometimes forceful attitude to business, she was a proponent of adopting quickly some of the technological changes that have shaken up retail banking in the past two decades.”
New York Times
The Times profiles Wilbur Ross, the billionaire private equity investor who’s been quite active in the banking sector in recent years. Despite his past successes, “over the last year, Mr. Ross has struggled to raise a new fund.”
The “Bits” blog says that following last year’s hype, the march toward mobile payments “seems to have stalled. What little news there is around mobile payments seems incremental at best. For example, Visa and Samsung developed an application that will let Samsung phone owners who also happen to be at the 2012 Olympics pay for items there with their phones.”
And, Lastly ...
The New Yorker: We highly recommend reading this vividly detailed and laugh-out-loud funny account of the scene at the recent World Economic Forum in Davos. Here's a sampling: "She wanted to introduce me to [Mick] Jagger, but first she needed to tell me something about my attempts to understand and convey the Davos scene. She fixed me with a fierce look and said, 'Be humble. Do you understand? Be humble. Because this is your first Davos.'"