Wednesday, August 24

Receiving Wide Coverage ...

Fed to the Rescue? Stock markets have rallied this week on the expectation, or hope, that Fed chairman Ben Bernanke, when he speaks Friday in Wyoming, will say the Fed plans to assist the markets by providing a third round of quantitative easing to lower long-term interest rates; or lowering the interest rate banks pay on their reserves, according to the Times. Likely not to be offered, to the consternation of the stock markets, is another round of stimulus spending. The Journal took a pessimistic stance, saying, the market's "optimism comes despite all signs to the contrary." New York Times, Wall Street Journal

Bank of America stocks fell again Tuesday. "The trading also showed that marketplace questions about the bank persist, despite CEO Brian Moynihan's campaign to reassure investors that the bank's strategy is working and its capital and liquidity positions strong," the Journal noted. The longer Moynihan denies the bank needs to raise capital, the more he's putting off the inevitable, and thereby increasing the cost of its eventual capital-raise, the Times said. Analysts agree that, fundamentally, B of A does not need more capital. But perception is more important than reality, DealBook says. Wall Street Journal, New York Times

Wall Street Journal

Things may be turning around for banks as the FDIC reported that the number of banks it considers to be problems fell for the first time since 2006, although 865 of the nation's more than 7,500 remained on the troubled list at mid-year. While bank lending rose 1% in the quarter, revenue dropped.

"Heard on the Street" noted that while the Fed has in recent years tried to be more open about what it does, yet its dollar-swap program remains secretive, since if it is known that a bank needed assistance, it would create a panic. By keeping it secret, the column says, the Fed is allowing investors to speculate which bank is in trouble. The solution, the column suggests, is to provide the information, but delay its release to allow the bank some time to solve its problem.

New York Times

Times' DealBook columnist Steven Davidoff asks who's right on the Capital One-ING deal: those who say the combination will make Capital One stronger because it will provide the bank with a more-stable source of financing for its credit card business, or those who say Capital One will become too large, in violation of Dodd-Frank? Davidoff sides with the former, but he says the more important issue is what the Fed's decision will mean for how it views the definition of "too big to fail" in the context of Dodd-Frank.

Jeff Horowith was named successor to Ron Sturzenegger as global head of real estate, gaming and lodging at Bank of America-Merrill Lynch.

Goldman Sachs and Citigroup dumped Standard & Poor's, in favor of Moody's Investors Service, to rate their $1.5 billion mortgage-backed securities sale.