Breaking News This Morning
HSBC Faces New Inquiry: British tax authorities say they are looking into a list of HSBC clients with bank accounts in Jersey, the largest island in the English Channel, after receiving a tip from a whistle-blower. The data allegedly shows that "drug dealers, gun runners and bankers facing major fraud investigations had accounts with the bank in Jersey," the FT reports. HSBC told the Times it was aware (and subsequently looking into) a client data breach, but that it has not been formally made aware of the external investigation yet. The bank added it plans to "cooperate fully" with the authorities.
Receiving Wide Coverage ...
JPMorgan Moves Beyond the Whale: The Federal Reserve has given JPMorgan Chase the go ahead to repurchase $3 billion of its shares in the first quarter of 2013, a plan that had been formerly halted by the more than $6 billion in trading losses caused by the now infamous London Whale. This is apparently not just good news for JPMorgan — which will seek approval for a new, unspecified full-year buyback program next year — but other banks as well since it indicates they "may get a receptive hearing from the Fed during the next round of stress tests, slated for early next year, and be free to return still more capital to shareholders," the FT reports. The Fed's approval, issued on Monday, was disclosed in a quarterly filing that also announced the megabank had reached a settlement with the Securities and Exchange Commission related to Bear Stearns' mortgage-backed securities sales practices. No estimate was provided as to how much this settlement will cost JPMorgan, but Reuters points out the bank did raise "its estimate of how much litigation could cost the firm above its legal reserves in the filing to $6 billion from $5.3 billion disclosed three months ago."
Banking Legislation, Post-Election: Echoing a few Dealbook articles from yesterday, the Journal suggests the finance industry will now move to "trim" some parts of Dodd-Frank in lieu of launching a full-scale attack on the legislation following the re-election of President Obama. This new battle plan, however, may not go over without a hitch, since as an American Banker article points out, many Congressional Democrats remain just as interested in ensuring the law's implementation. The Journal says Congress' ability to strike a deal regarding the fiscal cliff is expected to serve "as an indication of the level of cooperation likely" regarding any Dodd-Frank modifications. And how is this for a headline: "Banking's 'Worst Nightmare' Takes Her Fight to Senate"? The Journal, perhaps unsurprisingly, is referring to Massachusetts Senator-elect Elizabeth Warren, who, among other things, is likely to join the ranks of Congressional members championing a return to Glass-Steagall. "There may be a lot of bankers this week wishing Elizabeth Warren had been appointed director of the Consumer Financial Protection Bureau after all," the article notes.
Meanwhile, Dealbook has moved on to analyzing how an Obama administration may approach GSE reform — the one major area where, American Banker noted, there is bipartisan agreement on the need for congressional action. "The best person to fundamentally change how housing works may be a president who won't be running for office again," the article argues. However, it also points out a full-on government pullback from the housing market (i.e. winding down Fannie and Freddie) hinges largely on whether banks are willing to "pick up the slack" and that this "appetite" from financial institutions will be just as heavily influenced by how new rules for the market — most notably, the forthcoming regulations regarding qualified mortgages — plays out.
Wall Street Journal
Bank of New York Mellon has settled with the state of Virginia regarding allegations it "charged hidden markups on currency transactions to Virginia's employee pension fund." The deal prohibits the state from pursuing litigation against BNY Mellon, and requires the bank offer reduced fees in the future. It also involves a $1.1 million payment to a whistleblower group, which includes Grant Wilson, "who spent two years as a secret informant while sitting on the bank's Pittsburgh trading desk." The whistleblower payout will be made by the state of Virginia.
Former Goldman Sachs trader Matthew Marshall Taylor has been accused by the Commodity Futures Trading Commission of "defrauding the investment bank of $118 million and concealing a futures position worth more than $8 billion."
New York Times
Here's a light Friday read: this article looks at the Commodity Futures Trading Commission member Bart Chilton's inclination to wax poetic about arcane financial matters.