Receiving Wide Coverage ...
Shake-Up at B of A: Bank of America reshuffled its executive ranks, and in the process ousted two well-known executives, Sallie Krawcheck and Joe Price. Krawcheck's departure in particular is garnering a lot of attention because she is one of the most prominent women in financial services. The Journal's "Deal Journal" blog noted that before joining B of A, Krawcheck had been demoted and then cashiered by her previous employer, Citigroup. She's in good company, the blog noted, as Erin Callan (formerly of Lehman Brothers), Zoe Cruz (formerly of Morgan Stanley) and Heidi Miller (formerly of JPMorgan Chase) all rose to senior positions, only to be shown the door in recent years. "Each top woman who leaves or is forced from her post will spark anew the 'whither women' questions and stories about why Wall Street is dominated by dudes. At this point, Wall Street would love a few more top-ranking women, if only to stop those pesky questions." (We might add that there may be heightened sensitivity since this news broke the same day that Yahoo ousted CEO Carol Bartz.) Another Journal story says the management restructuring shows that a spin-off of Merrill Lynch is unlikely, because B of A's business units are "being further aligned, making a spinoff much harder…. The restructuring puts the wealth-management business of Merrill's thundering herd under David Darnell, now a co-chief operating officer in charge of the bank's retail arm and all consumer units. …Meanwhile, the investment bank operations are being consolidated with corporate banking operations and other units tied to companies and institutional investors, which will be headed by Tom Montag, the other newly minted co-chief operating officer." Plus, the story says, Krawcheck had become "the face" of the brokerage business and thus the logical head for a newly independent Merrill, and now she's on her way out. Let's zoom out to look at the bigger picture: Bank of America announced the changes after a trading session in which its stock price once again dipped below $7, leading us to once again wonder how close the company's market cap is coming to the value of one of Angelo Mozilo's bespoke suits. B of A Chief Executive Brian Moynihan "is expected to set out thousands of job losses across the bank as part of a presentation next week on 'New BAC' — his turnround strategy," according to the FT. Wall Street Journal, New York Times
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Wall Street Journal
New bank regulations will hurt the economy, a banking association said. Wait, you could write that pretty much any day of the week; we need qualifiers to show what the news is here. New bank regulations in the U.S. and Europe will hurt the global economy, an international banking association said. There, that's better. To be precise, it's the Institute of International Finance; you can find their 123-page report here or just read the Journal's summary.
The Manhattan District Attorney's office subpoenaed investors in mortgage-related deals put together by Goldman Sachs during the boom years, the Journal reports, citing anonymous sources. Specifically, prosecutors are looking for information about how Goldman marketed these investments. Although the firm settled the infamous Abacus case with the SEC last year, Goldman has been on the New York prosecutors' radar since a scathing Senate report came out last year.
A page-one story examined the plight of older Americans who are reaching their 60s with so much debt that they can't retire. Mortgage debt, lower home values and insufficient savings are major culprits. "I imagine I'll be working until I'm 70," says Christine Shiber, a 59-year-old Methodist minister in California.
New York Times
Billionaire hedge fund manager George Soros told the Times that the European government debt crisis "has the potential to be a lot worse than Lehman Brothers." There are questions whether Europe's banks can ride out the crisis, because some are having a difficult time securing loans they for daily operations. One bank strategist with UBS said he's worried about a deposit run as banks start to hoard cash.
During Richard Cordray's Senate confirmation hearing, the president's nominee to be the first director of the Consumer Financial Protection Bureau said he'd like "to streamline and cut back" regulations, the Times reports. But as you might imagine given the acrimony that has surrounded Capitol Hill hearings concerning the CFPB, "Republicans were not buying it."
The SEC announced it would not appeal a court ruling that struck down the agency's proxy-access rule, which would have made it easier for shareholders of listed companies to oust directors and put their own candidates on boards. Since that regulation had been written to put into practice a part of the Dodd-Frank legislative overhaul, the July court ruling had opened the possibility of challenging various other parts of the reform law. Had the SEC pursued an appeal (possibly to the Supreme Court), the Times' Dealbook says, the agency would have had to contend with Eugene Scalia, a "famed regulatory lawyer" and the son of … yeah, you guessed it.
Washington Post
Everything you ever wanted to know about the Carlyle Group...? The D.C.-based private equity firm is preparing for a $100 million initial public offering and has filed papers with the SEC. When and where the IPO will happen isn't revealed, but "the filing launches Carlyle's regulatory review process with the SEC, allowing disclosure of the company's financial information in waves." The Post says the move has been anticipated and "follows a similar transition by two other major private equity rivals, The Blackstone Group and Kohlberg Kravis & Roberts."
Columnist Ezra Klein says Mitt Romney's proposed economic team, including Harvard's Greg Mankiw and Columbia Business School's Glenn Hubbard, is the most interesting part of his economic plan announced Tuesday: Though they both advised George W. Bush, "they also have some ideas that are not, at the moment, Republican orthodoxy." Klein likes that these choices suggest "that Romney is interested in regularly consulting serious economists, and that he's willing to prize, in some cases, expertise over expedience."
The Fed may buy more long-term Treasuries in a bid to lower mortgage rates, the Post reports - though rather than printing money the central bank would finance these new purchases with proceeds from sales of short-term paper. This potential move had been dubbed "the twist," and for an infographic that does a splendid job of illustrating why that is (along with a critique of the strategy) we turn your attention to Tuesday's "Heard on the Street" column in the Journal.
