Breaking News This Morning ...
Receiving Wide Coverage ...
Reopened: Congress Wednesday passed a bill to fund the government through January 15 and raise the debt ceiling until February 7. This ends the government shutdown, with offices re-opening today. The Washington Post reports that the deal averts catastrophe, but leaves the U.S. economy open to new threats, given its accompanying "kick-the-can-down-the-road" deadlines. More big picture coverage is here: Wall Street Journal, New York Times, Financial Times
JPM Update: The Commodity Futures Trading Commission made its widely reported "London Whale" settlement with JPMorgan Chase official Wednesday. As anticipated, the settlement includes a $100 million fine and, according to the Times, an admission of "wrongdoing" tied to a Dodd-Frank law preventing banks from recklessly using a "manipulative device" in the credit derivatives market. Per the FT, one CFTC commissioner, Scott O'Malia, dissented in a vote on the settlement, believing it let the bank off too easy. "I am concerned that in a rush to join in on a settlement brokered by other regulators, the commission may be missing the opportunity to pursue allegations of greater wrongdoing price manipulation," he said. Still, Dealbook reports the CFTC's invocation of this Dodd-Frank rule which can be violated unintentionally should put other big banks on high alert: "With the rule beginning to bear fruit in this case, legal experts say, it could portend a wave of other actions against banks and hedge funds that build outsize trading positions." The latest settlement puts the total of JPM's "Whale" fines over $1 billion, but that wasn't the only bad news for chief executive Jamie Dimon to hit the news cycle yesterday. An anonymouse is now telling the Journal that Dimon did, in fact, step down as chairman of the lender's main bank subsidiary in July at the suggestion of the Office of the Comptroller of the Currency. (A spokesperson for the bank had previously denied the move was tied to any type of outside regulatory pressure.) But, hey, at least Warren Buffet believes Dimon can weather the regulatory storm.
BAC Earnings Revisited: The media's response to Bank of America's robust third-quarter earnings appears a bit muted, comparatively speaking at least. But while chief executive Brian Moynihan has escaped any severe pundit bloodlust, a few second-day takeaways have emerged. For instance, could legacy issues get ugly again? And what does the bank's decision to release $1.4 billion of reserves it set aside against loan losses portend for future earnings? "Reserve releases are a legitimate move, but they cannot last forever," notes the FT's Lex column. "This poses a few questions for investors. One is whether the U.S. economy can pick up before these reserve releases run their course. Another is at what level reserves become low enough that credit clouds become a worry again."
Mark Cuban Cleared: Celebrity billionaire Mark Cuban was cleared of insider trader charges by a federal jury on Wednesday. The jury's decision is framed as a setback for the Securities and Exchange Commission's tougher enforcement stance by both the Journal and the Times.
Wall Street Journal
A study finds that stockbrokers are being routinely allowed to strike customer complaints from their public records. "The systematic polishing of records raises a fresh concern about the oversight of brokers by the Financial Industry Regulatory Authority," the article notes.
This Heard on the Street column predicts the Federal Reserve won't start tapering its bond-buying program until March, as the central bank "will probably want to avoid doing anything to discomfit markets until the risk of another showdown" over government funding/the debt ceiling has passed.
New York Times
The latest report on the national mortgage settlement finds banks are running ahead of schedule in doling out relief, but critics maintain "too much relief was given to people who gave up their homes in short sales and not enough to help people retain their homes."
Columnist Andrea Peterson defends virtual currencies, including Bitcoin, in response to a white paper from McAfee that warns of their use in cybercrime. "I don't see anyone shying away from accepting paper dollar bills because someone, somewhere is using that same medium to buy cocaine," she writes.