Receiving Wide Coverage ...
Shutdown: The government shut down after House Republicans and Senate Democrats failed to reach a funding deal before the midnight deadline. Big picture coverage is here: Wall Street Journal, New York Times, Financial Times, Washington Post
Wells Settles with Freddie: Wells Fargo has agreed to pay $869 million to Freddie Mac to resolve repurchase liabilities on faulty mortgages it sold to the government-sponsored enterprise before 2009. Citigroup signed a similar repurchase deal with Freddie last month for $395 million, while Bank of America settled its repurchase obligations with Freddie back in 2011 by paying about $1.28 billion. Both Citi and B of A also previously settled mortgage repurchase claims with Freddie's counterpart Fannie Mae. "Wells is continuing negotiations with Fannie," the FT reports. Its Freddie settlement, meanwhile, "won't hit the bank's earnings because
it already set aside money for the deal at the end of the second quarter," notes the Journal.
Meanwhile, Over at the House of Morgan: The Journal reports that the Justice Department's pursuit of criminal charges in its mortgage-backed securities probe into JPMorgan Chase "is based in large part on information from a person inside the bank who is aiding the government." This JPM insider, who has reportedly provided the DOJ with emails suggesting the quality of JPM's mortgages was overstated, isn't named and it's unclear if she (gender is disclosed later in the article) still works at the bank. Meanwhile, the FT reports CEO Jamie Dimon and other big bank executives are set to visit with President Barack Obama on Wednesday during the annual meeting of the Financial Services Forum, though the agenda is likely to include the debt ceiling and not JPM's anticipated $11 billion settlement. And Dealbook has two columns on the nation's biggest bank. In the first, Peter J. Henning wonders if JPM should treated as a recidivist, given its string of recent enforcement actions and ongoing regulatory scrutiny. "Dealing with corporate recidivism presents a challenge to the government to figure out how to make sure an organization tries to change its culture," he writes. "The SEC and other regulators do not have the authority to pursue higher penalties for repeat offenders, something they may want to seek from Congress." In the second, Peter Eavis argues industry experts should refrain from treating JPM like a victim. "Law enforcement agencies cannot simply ignore evidence of mortgage missteps as a favor to JPMorgan for its crisis-era actions," he writes. "It is their job to ferret out wrongdoing and press forward with legal actions, if there are reasonable grounds for doing so."
CFTC Enforcement Chief to Leave: Commodity Futures Trading Commission enforcement chief David Meister will leave the agency this month, according to insider reports provided to the New York Times and the Journal. Meister is expected to announce his decision formally sometime today. His "departure foreshadows the exit of Gary Gensler, the agency's chairman, whose term expires in December," the Times notes.
New York Times
A group with the Occupy Wall Street movement is creating an Occupy-branded prepaid debit card. The Occupy Money Cooperative is currently raising money via its website to cover initial operating costs to launch the product. The low-fee card would be available to anyone who signs up via the website, once the group meets its fundraising goal. Its creation has caused division in the Occupy movement as many members dislike the idea of the "Occupy name emblazoned on a financial product" as well as partnering with Visa, which needed to be involved in order for the card to be widely accepted. Still, the card's creators, which include "a Cornell law professor, a former director of Deutsche Bank and a former British diplomat," are hoping to turn Occupy into a "recognized financial services brand." According to the article, "the cooperative hopes to offer loans and other services that would benefit millions of people who do not use traditional banks."
In an Economix column, Annie Lowrey interprets FT Alphaville's explanation of how a debt ceiling crisis could become a financial crisis: "A debt-ceiling crisis could throw sand a whole lot of sand into the gears of the financial system, making it impossible for market participants to tell 'good' collateral from 'bad' collateral."
