Banco Popular de Puerto Rico

Editor's Note: The Morning Scan is off Monday, Presidents' Day. We'll be back on Tuesday, Feb. 21.

Receiving Wide Coverage ...Greek Bailout, Act II: This may finally be it. A bailout pact to end the Greek financial drama that has threatened to end in a global economic tragedy.

Receiving Wide Coverage ...Like A Marine: Let's begin today with a treatise on morals involving two of the business media's favorite topics: Greece and the U.S. housing market. As the New York Times notes, contract issues are at the forefront of both.

Receiving Wide Coverage ...Hold it, They've Got Ideas: A funny thing happened on the way to the Republican presidential debate last night - a candidate actually made a policy proposal. Before all the name-calling, piling on the front-runner du jour and renewed etymological analysis of the word "conservative," Mitt Romney offered a plan to cut personal income taxes on the same day President Obama proposed to cut the corporate tax rate (more on that in a moment). But the Romney tax plan hardly came up in the debate, the Journal reports. In fact, the economy took a backseat to social issues and the latest round of posturing among the candidates vying for the GOP nomination, the Times says.

Receiving Wide Coverage ...Woeful Results in Europe: Considerable attention was paid to Europe's biggest banking companies, which reported sizable quarterly and full-year losses in recent days as they continue to struggle with their exposures to sovereign debt and grapple with the potential fall out from another Greek bail out. Weighed down by exposures to Greek government debt and other impaired assets, Royal Bank of Scotland, Crédit Agricole and Dexia reported quarterly losses. The Financial Times made a video to cover the results. RBS however touted its progress in purging bad assets.

Receiving Wide Coverage ...Wells Fargo: The FT has a pair of admiring stories on the bank. One depicts Wells as a stalwart that shunned the exotic-mortgage boom of the previous decade and is now being rewarded for its conservatism with an unprecedented 30.1% share of mortgage originations (a position that fallen archrival Countrywide’s Angelo Mozilo once dreamt of). It might be a bit of an overstatement to say Wells “stayed out of the game” of pushing the underwriting envelope (remember those first-lien home equity lines the bank was flogging in 2006?), but clearly it’s suffered less from that period’s excesses than its peers. In the other FT story, chief executive John Stumpf lays out Wells Fargo’s expansion plans, which include growth via acquisitions in wealth management and insurance and purchasing assets from European institutions that are downsizing.

Receiving Wide Coverage ...M&A, or Lack Thereof: It is now harder for U.S. banks to make acquisitions “than at any point in at least the last 20 years,” thanks largely to regulation, the FT reports. Aside from longstanding antitrust and accounting rules, a new impediment is the Fed’s consideration of “financial stability” in approving merger applications, as required by Dodd-Frank. Although the regulator approved PNC’s deal for Royal Bank of Canada’s U.S. retail business and Capital One’s takeover of ING Direct, the Fed “put both banks through the wringer and showed a much more conservative approach to new ‘financial stability’ responsibilities than anyone in the sector thought.” Meanwhile, JPMorgan Chase is worth less than the sum of its many parts, in the estimation of veteran banking analyst Mike Mayo. He released a note making the case for breaking up the company ahead of JPM’s investor conference scheduled for today. Quips a Times reader in the comment thread: “Great idea. Once it's broken up, there will be an immediate opportunity to improve the value of the business through consolidation.”

Receiving Wide Coverage ...The Loan Arrangers: Happy days are here again. Sort of. After a string of quarters pulling back from risk, banks are finally signaling the time is right to grow again.

Receiving Wide Coverage ...“Uneven and Modest”: That’s how Fed chairman Ben Bernanke characterized the economic recovery in his semi-annual Humphrey-Hawkins testimony before Congress. Bernanke also said during his testimony that regulators are likely to delay implementation of the Volcker rule, which is supposed to take effect in July. The Dodd-Frank Act allows the agencies to delay implementation by up to two years, he said. Wall Street Journal, New York Times, Washington Post, Financial Times

Receiving Wide Coverage ...Crisis, Reform and Redress: In an op-ed in the Journal, Treasury Secretary Timothy Geithner says financial companies that complain about regulatory reform must have “crisis amnesia”: “My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system.” Of course, one can agree on the need for reform while questioning the kind of reforms that have been enacted. For example, in an op-ed in the FT, former FDIC head William Isaac and former Wells Fargo chief Dick Kovacevich argue that imposing “breathtaking” capital requirements is a less-than-ideal way to discourage reckless risk-taking. Equity holders, they note, have less power, and less incentive, to control risk than creditors do. As an alternative, Isaac and Kovacevich suggest requiring big banks to regularly issue senior and subordinated long-term debt, whose holders would absorb losses ahead of the FDIC and hence shield taxpayers. The mandatory debt issuance would subject banks to “market discipline”: “A risky bank would have to pay higher interest and ultimately might not be able to issue debt, which would curtail growth and force it to adopt a new strategy.” (The piece does express some qualified support for Dodd-Frank’s “living wills,” however.) The question of how to prevent another meltdown to one side, Phil Angelides, who chaired the Financial Crisis Inquiry Commission, wants to make sure those responsible for the one we just went through get their just desserts. “After the savings-and-loan debacle of the late 1980s, more than 1,000 bank and thrift executives were convicted of felonies. But today the rate of federal prosecutions for financial fraud is less than half of what it was then,” Angelides writes in the Times. The president’s new mortgage securities fraud task force holds promise, Angelides says, but the Obama administration must give it the proper tools, mandate and budget to succeed in investigating and prosecuting mortgage mischief. Wall Street Journal, Financial Times, New York Times.