Transition Period for Swaps Rules; Dimon Fights Back

Receiving Wide Coverage ...

Dodd-Frank's Swap Trading Transition: The Office of the Comptroller of the Currency has sent letters to some of America's biggest banks granting them a two-year transition period to comply with a Dodd-Frank requirement that could curtail swap trading, Reuters reports. The rule, the wire service says, "attempts to keep certain risky trading activity out of entities that receive government backstops, such as deposit insurance or access to the Federal Reserve's discount window." The Wall Street Journal quoted Kenneth E. Bentsen Jr., president of the Securities Industry and Financial Markets Association, saying: "The action from the OCC gives them clarity on what they need to do, and when they need to take action, to restructure this part of their businesses." New York Times, Wall Street Journal

Jamie's Got His Swagger Back: The JPMorgan Chase chief sharply rebuked allegations that bank executives withheld information from investors during the "London whale" scandal — a return to the combative style Jamie Dimon once embodied, the Financial Times says. "There was no hiding, there was no lying, there was no bull____ing. Period," the FT quoted Dimon saying during the Morgan Stanley investor conference Tuesday. The Wall Street Journal says Dimon also addressed claims made by the Office of the Comptroller of the Currency that "J.P. Morgan wasn't always transparent with its regulators about the problems. Mr. Dimon said Tuesday, 'We tried to tell them but we didn't know sometimes.'" Dimon added that the bank would fight any investor lawsuits claiming the contrary, the FT reports. Perhaps, the paper says, Dimon was emboldened after last month's annual company meeting where shareholders gave him a vote of confidence. At the investor conference, Dimon also repeated his past apology... sort of. "I don't know what more I can say," the FT quoted him. "Bad strategy, badly vetted, badly monitored, badly controlled. Embarrassing. Terrible. Sorry." Financial Times, Wall Street Journal

Financial Times

JPMorgan Chase. Bank of America. CitiGroup. Guess what? They're still "too big to fail," reports the Financial Times. The newspaper cites this week's changes in Standard & Poor's ratings guidance. Part of the ratings agency's decision is based on "new proposals from regulators." S&P analysts, the newspaper says, still think the federal government could potentially bailout the operating subsidiaries of the biggest banks — though a wholesale bail out of their holding companies is unlikely. "Reflecting the rating agency's belief that the operating companies could still be bailed out, S&P improved its outlook on the debt of Bank of New York Mellon, State Street and Wells Fargo from 'negative' to 'stable' to follow an improved outlook on the sovereign debt of the US. If government support persists then the ratings should move in tandem."

New York Times

Dealbook reports that the inevitable has just begun — interest rates are rising. That means it will soon become more expensive for governments to raise funds and potential homeowners to take out a mortgage. "The first tremors have been felt most sharply on investment products that were reliant on low rates, like bonds issued by American companies. But the movement is quickly spreading out into the real economy."

New York regulators are accusing life insurers of making shady, private deals that misstate those companies' books by billions. The practice, DealBook reports, could be placing policyholders at risk and putting taxpayers on the hook for another potential bailout. In New York alone, officials say, this so-called "shadow insurance" has boosted life insurers' ledgers by $48 billion. "These complex private deals allow the companies to describe themselves as richer and stronger than they otherwise could in their communications with regulators, stockholders, the ratings agencies and customers, who often rely on ratings to buy insurance."