Receiving Wide Coverage ...
Eye on Auditors: You know it's a slow day in the U.S. banking world when the only story that qualifies as "receiving wide coverage" is about proposed legislation that would prevent the Public Company Accounting Oversight Board from forcing companies to periodically rotate their auditors. Late Monday, the House overwhelmingly approved a bill that would block the PCAOB from requiring companies to change auditors an idea that was first proposed by the agency's chairman, James Doty, in 2011. The House vote is a victory for public companies, which have long argued that mandatory auditor rotation would not improve quality because it takes years for auditors to fully understand the companies they cover. The bill's sponsors said the legislation was meant to send a message to European regulators, who are considering auditor term limits. Wall Street Journal, Financial Times
Lock 'Em Up: The bigger news was across the pond, where the British government formally endorsed a parliamentary commission's set of recommendations on improving banking standards. George Osborne, the chancellor of the Exchequer, said Monday that the proposals presented last month would create a stronger and safer banking system by making bankers more accountable for their actions. Most notably, the government backs the idea of prosecuting senior executives who engage in "reckless misconduct" and jailing those found guilty. The New York Times played it straight, but the Financial Times took issue with the idea that banks would be safer if they employed full-time chairmen. Columnist Jonathan Guthrie called the argument "unconvincing," noting that that HSBC's full-time chairman, Douglas Flint, failed to forestall a massive money-laundering fine in the U.S., and that chairmen at Lloyds and Royal Bank of Scotland have done credible jobs "despite indulging in polygamous directorship." New York Times, Financial Times
Wall Street Journal
The London interbank offered rate will no longer be set in London. Citing sources familiar with the matter, the Journal is reporting that the key benchmark rate that has been controlled by the British Bankers Association since the 1980s is being sold to NYSE Euronext, the company that controls the New York Stock Exchange. British authorities have been seeking a new owner since last year after some of the country's largest banks were accused of manipulating the rate for their own gain.
Central bankers across the globe are experimenting with curbs on mortgage lending in an effort to slow rapid increases in home values in upscale neighborhoods. In South Korea's Gangnam district, for example, regulators are requiring buyers to come up with 50% downpayments and Canada changed its mortgage insurance rules (resulting in larger monthly payments) and is requiring at least a 20% downpayment on homes costing $1 million or more. Central bankers everywhere else are watching these experiments closely, among them Federal Reserve chairman Ben Bernanke.
At least half a dozen merchant banks have cropped up since the 2008 financial crisis, touting themselves as practitioners of old-fashioned relationship banking, according to a feature in the Journal.
New York Times
Spanish banking authorities have rescued many of the country's biggest banks, but ordinary citizens who lost their life savings when they bought into risky investments peddled by those banks were not so fortunate, according to a report in the Times. Many have taken to the streets in front of offices of its new nationalized bank, Bankia, to protest, and the government has responded by setting up teams of arbitrators to determine if investors were defrauded.
How are credit unions responding to a general decline in consumer overdrafts? By raising overdraft fees, according to a new report from Moebs Services. While banks have largely held median overdraft fees at $30 the last two years, credit unions, on average, have raised theirs from $25 to $28 to make up for decrease in overdraft volume, Moebs concludes.
In case you missed Scan and the Journal yesterday, the Post now reports Fannie Mae and Freddie Mac are making money again and investors say it's not fair that the federal government is reaping the benefits. In a suit filed in U.S. District Court in Washington late Sunday, the hedge fund Perry Capital alleges that the Treasury Department and the Federal Housing Finance Agency violated federal law last year when they amended the terms of the 2008 bailout to essentially allow the government to keep the bulk of Fannie's and Freddie's profits. Perry Capital is not seeking damages but is asking the court to strike down the amendment so that investors can share in the profits.