Receiving Wide Coverage ...
Meet the New Boss… William Daley, a JPMorgan Chase alumnus, resigned as White House chief of staff after about a year on the job. He was succeeded by Jack Lew, a Citigroup alum, whom President Obama must really, really like and trust and respect given the optics of having another ex-banker in that job at a time when anti-Wall Street sentiment runs high. Exhibit A would be this headline from Gawker: “Citigroup Replaces JP Morgan as White House Chief of Staff.” It didn’t take long after the White House announcement for this Huffington Post story from July (when Obama nominated Lew to lead the Office of Management and Budget, a position he’s leaving to take the White House job) to show up on our Twitter feed. The article details the activities of Citi’s alternative investments unit during the years Lew ran it, and makes much of the fact that a “fund of funds” managed by said unit invested in John Paulson’s hedge fund. The implication is that Lew helped Citi indirectly profit from Paulson’s (prescient) bets against the housing market. But it’s not quite the same thing as the CDO shenanigans perpetrated by Citi’s investment bank, and even there we continue to wonder what any of the institutional investors on the other side of these trades was thinking when it was so obvious that the housing boom could not possibly end well. But we digress … The Journal’s editorial page reminds us that Daley came on to help Obama “repair relations with the business community and Republicans on Capitol Hill,” and clearly he did not succeed with the latter. You can find serious coverage of Daley’s departure in the Los Angeles Times, Wall Street Journal, Financial Times, New York Times, and Washington Post.
Processing Content
Wall Street Journal
Daley’s boss before Obama, Jamie Dimon, says the housing market is near its bottom. Sorry, but we just can’t resist quoting from the comment thread: “There’s lots of homes for sale here in [Florida], Jamie. If you’re so confident why not buy up a bunch yourself? Or maybe relax lending standards, since the collateral will be fine since housing prices will increase, ensuring positive equity in case of defaults ... right? Anybody know how much of the Fed’s $29B backstop of the [Bear Stearns] junk-pile is left? I suspect somebody needs to see home prices start to increase again.”
A story on the front of the “Money & Investing” section describes recent cooperative efforts by banks to fight online theft. A challenge to such initiatives has been bankers’ dyed-in-the-wool reluctance to share information with one another, the article says, but a sharp increase in attacks has persuaded them to work together more. “Just as the fraudsters collaborate with each other, we as an industry must collaborate,” a Bank of America executive is quoted as saying. As all the kids say on the Interwebs, collaboration FTW.
Remember BCCI? Another story on the front of Section C profiles Adil Elias, a one-time customer of that iconic failed bank, who’s spent the past 20 years fighting to recover money for BCCI depositors. They were once told the most they could hope to receive was 10 cents on the dollar, but so far they’ve reclaimed about $8.5 billion, or more than 86 cents on the dollar.
In case you missed it in the FT yesterday, it’s in the Journal today: the SEC wants U.S. banks to disclose more information about their European debt exposures. Here’s a nuance we didn’t pick up on until we read the Journal’s story: the guidance is nonbinding.
A Journal editorial castigates the Fed for its recent proposals to support the housing market. The central bank is compromising its independence with “rank electioneering,” the writers say.
We’ve been ignoring the soap opera involving Switzerland’s central banker the last few days (too far afield, we figured, and plenty else going on that was more directly relevant to banks in the U.S.) but his resignation made the front page of today’s Journal. Philipp Hildebrand stepped down “after emails appeared to undercut his assertion that he knew nothing of a currency trade worth more than $500,000 by his wife last summer.” And to be clear, she traded Swiss francs for U.S. dollars a few weeks before the Swiss National Bank intervened to prevent “le franc fort” from getting too fort.
Another fourth-quarter earnings preview, this one for Visa and MasterCard. Their results are expected to show improvement, given stronger holiday sales and increased card usage. The story goes to great lengths to explain that “Visa and MasterCard don’t lend to customers but make money by processing card transactions.” So why does the headline refer to them as “card issuers”?
Financial Times
Sir Richard Branson, whose Virgin Money has taken over the failed British bank Northern Rock, said he’ll offer “free” accounts, and the quote marks are his disclaimer. “Customers would pay less overall by accepting a small upfront fee, rather than the ‘hidden charges’ banks levy,” the FT says. Wonder where he might have found that idea.
New York Times
Still another fourth-quarter earnings preview, this one focused on the investment banks. “DealBook” wunderkind Andrew Ross Sorkin writes that even though Wall Street bonuses are expected to fall, the ratio of compensation to revenues at these shops is forecasted to climb. The money quote comes from veteran financial-services analyst Mike Mayo: “In the tug of war between employees and shareholders, the employees are winning.” And since high-ranking workers typically get the lion’s share of compensation, Mayo tells Sorkin, “Wall Street has its own 99 percent and 1 percent. The 1 percent continues to win against the 99 percent.”
Correction
While making a snarky comment about Jon Huntsman in yesterday’s Scan we misspelled his first name. To make amends, here again is a link to his trenchant op-ed calling to break up the big banks, and as a bonus here’s a link to Simon Johnson’s favorable appraisal of Huntsman’s positions on banking. Hey, did you know Huntsman’s running for president? Well, as of today he still is …
