Holiday Notice: The Morning Scan will publish next on Monday, Jan. 6. Happy new year and best wishes.
Receiving Wide Coverage ...
Volcker Rage Continued: The slow-motion car wreck that is the Volcker Rule took its latest gory spin Thursday when regulators sought to assuage banker rage over its uncertain treatment of trust preferred securities, or Trups. The securities which are issued mainly by banks and insurers and have debt and equity characteristics became a flashpoint for bankers following the Dec. 10 release of the final Volcker Rule, which cast a pall over the future of banks' Trups holdings. On Monday, Zions Bancorp (ZION) announced Volcker was forcing it to
Europe Downgraded. Anyone Care?: The European Union was stripped of its triple-A credit rating by Standard & Poor's one day after its 28 national leaders took the final steps toward completing a banking union agreement that some officials believe is unworkable, reports the Financial Times. The rating agency said the downgrade to AA-plus reflects EU disagreements over common budgetary support mechanisms and the bloc's increasingly fragile financial profile. Such ratings agency moves frequently prove to be lagging, rather than leading, indicators, Bloomberg notes. "Investors often ignore ratings, as evidenced by the rally in Treasuries after the U.S. lost its top grade at S&P in 2011," it writes. "Yields on sovereign securities last year moved in the opposite direction from what ratings suggested in more than half of 32 upgrades, downgrades and changes in credit outlook."
Forex Intrigue: "Call me a snitch. Call me a rat. But call me at home 'cause that's where I'm at." The world's leading foreign exchanges bankers appear to be taking this jailhouse rhyme to heart as a probe into currency manipulation heats up. "Banks are racing to betray their competitors to avoid possible European Union fines for rigging foreign-exchange markets," reports Bloomberg, citing a person with knowledge of the EU's preliminary investigation. Lenders are vying to emulate UBS and Barclays Plc, which dodged penalties of about $4.4 billion by ratting on manipulators of interest-rate benchmarks, its source says. The moves come as regulators in the U.S., U.K., Europe and Asia are probing the $5.3 trillion-a-day foreign-exchange market following reports that dealers have been front-running client orders and attempting to rig benchmarks. At least 11 banks have disclosed investigations, and Citigroup (NYSE:C), JPMorgan Chase (JPM) and Barclays have suspended or put on leave senior currency traders. Now, say Wall Street Journal sources, the probe has unearthed what some bankers believe is evidence senior London-based traders frequently colluded to manipulate currencies. The evidence, in the form of electronic chat-room messages (won't they ever learn?), appears to show what banks have feared for months: that traders from different banks shared information about client orders and agreed to a sequence for placing their own trades to their advantage, the Journal says. As the investigation has intensified, bankers have shown their ability to adapt and learn by volunteering more often and with more information on currency markets than they did during investigations into Libor and Euribor rigging. "The reality is that if there any skeletons, they are going to come tumbling out of the cupboard," Stephen Smith, a lawyer at Reynolds Porter Chamberlain LLP in London, told Bloomberg.
Wall Street Journal
The Federal Reserve's holdings of bonds and other assets has
New York Times
The Securities and Exchange Commission weighed enforcement actions last year against several large financial companies but then
Elsewhere ...
Bloomberg: Investors, from multibillion-dollar hedge funds to individuals buying as few as 10 properties, have acquired more than one million homes in the past three years, Bloomberg reports. Most started out paying cash; now, as the bet on rental housing turns into an industry,