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European Central Bank Cuts Rates: Full press release and snark at ZeroHedge.
Receiving Wide Coverage ...
The Fed Holds Its Fire: The central bank said it had once again overestimated the economic recovery, but that it would take no further easing measures for now. Chairman Ben Bernanke left the door open for the Fed to resume bond purchases later. Eagle-eyed Fed watchers note that three members of the Federal Open Market Committee who had dissented from the decisions to ease at the last two policy meetings voted with the majority this time (as opposed to casting dissenting votes for a monetary tightening). Charles Evans of the Chicago Fed, whom the FT calls “an outspoken advocate of more aggressive strategies to support the US economy even at the risk of higher inflation,” was the committee’s lone dissenter this time. “That could be read as a signal that the hawks have become less hawkish and the doves have become more dovish – in other words, that further policy easing could be on its way,” the FT says. One thing’s for sure: this economy is for the birds. Wall Street Journal, Financial Times, New York Times, Washington Post
Greece and the G-20: The Group of 20 will have plenty to talk about at its two-day summit in Cannes, which starts today. Greek Prime Minister George Papandreou this week called for a national referendum, not only on Europe’s proposed bailout package for his country, but also on whether Greece will remain in the eurozone. "Does Greece want to remain part of the euro zone or not?" German Chancellor Angela Merkel asked Wednesday. "That is the question the Greek people must now answer." Perhaps to underscore what’s at stake here, European leaders are withholding 8 billion euros of scheduled aid to Greece until the political question is resolved. The country has to make that much in bond payments in December. Under pressure from his French and German counterparts, Papandreou has agreed to expedite the referendum to as soon as Dec. 4, so there’s a chance default can be averted. But his own finance minister says the ballot is a bad idea and there’s talk that Papandreou could lose his majority in parliament before a vote of confidence, scheduled for Friday, which would bring down his government. (Just to be clear, a “government” in a parliamentary system is equivalent to what we ‘mericans call an “administration.” So its “collapse” wouldn’t mean there’d be riots and looting in the streets of Athens – well, no more than usual.) Wall Street Journal, Financial Times, New York Times
MF Global Autopsies: The SEC has joined the list of regulators investigating the demise of Jon Corzine’s brokerage, and has its sights set squarely on the former politician and Goldman Sachs alum, the Journal reports. The agency is looking at whether Corzine “made misleading statements about the $6.3 billion bet that sank the company,” the paper reports, citing anonymous sources. The CME Group, operator of major commodities exchanges, said Wednesday it had found “signs that MF Global made transfers from customer accounts ‘that may have been designed to avoid detection,’” according to a story in the Times. The paper also has a “tick, tock” narrative about the months and hours leading up to MF Global’s crash, complete with details like a team of executives from a potential buyer being “escorted into a windowless conference room.” FT columnist tells the story of Corzine’s fall a different way: as a parody of the fairytale “The Emperor’s New Clothes.” And the Journal’s “Overheard” column discusses an analyst report claiming that the MF Global debacle can ultimately be blamed on the Fed.
Wall Street Journal
A broad and lengthy front-page story takes stock of where we are three years after the financial crisis and a year after Dodd-Frank, and finds things are still pretty tenuous. Concern is widespread that “the world financial system has emerged from the 2008 crisis only partially fixed and still prone to instability.” If you’re thinking, “no kidding, Columbo,” scroll down to the bottom of this story. You’ll find a meaty discussion of the “tri-party repo” lending market, where just two institutions, JPMorgan and BNY Mellon, serve as clearing banks for all transactions. Regulators worry about the industry’s reliance on this duopoly to float “vast sums” for hours at a time before transactions settle. And in the middle of the story (after the throat-clearing intro) there’s a serviceable survey of the financial system’s well-known soft spots – money market funds, resolution of TBTF firms, and of course Europe.
“A state court judge has ruled that Illinois can move forward with a lawsuit alleging that Wells Fargo & Co. steered minority borrowers into risky mortgages at the height of the housing bubble.” This makes the case “the first fair-lending lawsuit brought by a state attorney general against a national bank to reach discovery.”
“MasterCard reported a 38% jump in third-quarter profit as spending and transactions made with its credit and debit cards increased.”
The headline for this one almost says it all. Following the settlements with Goldman, Citi and JPMorgan Chase, the “SEC expects to file further CDO charges” in the coming months. Merrill Lynch and S&P are among those under investigation for their roles in peddling repackaged mortgage securities that went kablooie; the five-year statute of limitations for dodgy deals from 2006 and 2007 is nigh.