Banco Popular de Puerto Rico

We assumed the story on the front of Section C of the Journal was more important than the one inside. Dead wrong.

Receiving Wide Coverage ...Messy MF: Regulators looking for that missing $600 million have a big problem, the Journal reports this morning. It turns out that MF Global’s recordkeeping was “in shambles,” as an executive from Interactive, the brokerage that almost rescued Jon Corzine’s firm, puts it. People who’ve examined the books have found “incomplete transactions, numbers that didn't seem to add up and other inconsistencies,” the Journal says. Meanwhile, the CFTC has decided to audit every futures trading firm “to verify that customer money is protected,” the Times’ “DealBook” says. We certainly hope so, for the sake of all those goldbugs who thought they were flocking to safety by investing in gold futures. The FT has a neat video in which one of its journalists reminds us that the CFTC proposed a year ago to restrict the range of options for investing customer funds – including a pullback from, you guessed it, foreign sovereign debt. Now Bart Chilton, a CFTC commissioner, wants to revive this plan, and has cleverly branded it the “MF Global rule.” (The other fun part of the video is the interview footage of Corzine from last summer, in which he sounds like Rip van Winkle talking about how much the financial system had changed during his hiatus as a politician.) Incidentally, we made a judgment error in yesterday’s Scan and picked the wrong MF Global story to mention. It’s yesterday’s papers, as they say, but if you want a link to the story we should have told you about, and an explanation of our goof, click here.

Receiving Wide Coverage ...Repurposing REOs: A story on the front-page of the Sunday Times reports that in Merced, California, "the downturn in the real estate market has presented an unusual housing opportunity for thousands of college students," namely foreclosed McMansions now available for rent on the cheap. This development has rubbed salt in the wounds of local homeowners who owe more than their similarly luxurious houses are now worth. "Everybody on this street is underwater and can't see any relief," says "an out-of-work English teacher who paid $532,000 for a house that is now worth $221,000," who tells the Times that the area "was supposed to be an edge-of-town, Desperate Housewifey community … These students are the reverse." Living the student life in the ruins of someone's subprime suburban dream "sounds like fun - and definitely better than the dumps I lived in going to college," comments the Calculated Risk blog. "Unfortunately these might be the nicest homes they live in for a number of years ..." (More on that below.) Meanwhile, the Los Angeles Times reports that in Las Vegas, "America's foreclosure capital," a number of abandoned properties are being repurposed as marijuana grow houses. What a shame. We bet that unlike previous occupants, many of whom undoubtedly lied about their incomes on loan applications (either voluntarily or under pressure from salespeople), the pot growers might actually generate enough cash flow to cover a monthly mortgage payment. Hey, maybe there's a solution in this to the "shadow inventory" that's hanging over the housing market. It can even be summed up in a catchy slogan: "Legalize it … then monetize it."

Receiving Wide Coverage ...Occupy Somewhere Else (for a While): Police in New York cleared Zuccotti Park, the site of the Occupy Wall Street protests, in a surprise raid Tuesday morning. The demonstrators were told the move was temporary and they could return later, but if and when they do the structures they erected to keep warm (illegal fire hazards, according to authorities) will be gone. The Post quotes a sanitation worker as saying, “We’re gonna disinfect the hell out of this place.” (Oh, that’s the New York Post, if you were wondering.) The tabloid has an accompanying editorial entitled “Time’s Up, Children.” Hmm, maybe we’re reading too much into the nuanced writing, but we’re beginning to think maybe the Post doesn’t hold the protestors in high regard? We went to the Village Voice site for a different perspective and found some news we might use (“Occupy Wall Street Vows to Shut Down Subways” – aw jeez, please don’t) and a Tweet that demonstrates 140 characters can convey a lot (“Me: 'I'm press!' Lady cop: 'Not tonight.'”) OK, we’d better get back to banking now… Wall Street Journal, New York Times, New York Post, Daily News (New York), Financial Times

Receiving Wide Coverage ...Occupying Hearts and Minds: The papers took a stab at weighing the future of the Occupy Wall Street protests in the daylight of a "cleared and power washed" Zuccotti Park. The Times said "questions endure about whether…the movement might lose momentum or drift into irrelevancy" without its central piece of street theater. But some organizers "acknowledged that the crackdowns by the authorities in New York and other cities might ultimately benefit the movement, which may have become too fixated on retaining the territorial footholds." Wall Street Journal, New York Times

Receiving Wide Coverage ...The Fitch-Slap: "Unless the Eurozone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen." This warning Wednesday from the credit rating agency Fitch sparked a sharp sell-off in financial stocks late in the trading session. Fitch left its ratings for banks unchanged but said the "risks of a negative shock are rising." Wall Street Journal, Business Insider, Bloomberg

Receiving Wide Coverage ...Occupying the Streets: Thousands of Occupy Wall Street protestors took to the streets of Manhattan, attempting to delay the opening of the New York Stock Exchange and making their presence felt among commuters on the subway trains and Brooklyn Bridge. The "National Day of Action" marked the movement's two-month anniversary and came several days after the demonstrators were evicted from Zuccotti Park. The atmosphere was tense and sometimes violent as some demonstrators clashed with police. A handful of people were injured, and several hundred were arrested. There were similar but smaller marches in other cities across the country, with similar dust-ups. New York Times, New York Post, Daily News (New York), Village Voice, Wall Street Journal, Financial Times

Receiving Wide Coverage ...R.I.P. Theodore Forstmann: The pioneer of leveraged buyouts died Sunday at 71. Forstmann was credited with coining the term "barbarians at the gate" to describe takeover artists like himself, inspiring the title of the 1990 bestseller about the buyout of RJR Nabisco (a deal that he lost to KKR). In addition to its obituary for the founder of Forstmann, Little, the Times' "Dealbook" also has a compilation of remembrances about him from prominent figures including Colin Powell and Henry Kissinger.

MSNBC has unearthed a leaked memo from a Washington lobbying firm proposing to the American Bankers Association that it develop a "response" to Occupy Wall Street costing $850,000.

Receiving Wide Coverage ...More Bad News for B of A: "Bank of America's board has been told that the company could face a public enforcement action if regulators aren't satisfied with steps taken to strengthen the bank," the Journal reports, citing anonymous sources. Meanwhile, the FT notes that a federal judge's ruling will allow the attorneys general of New York and Delaware to intervene in Bank of America's controversial $8.5 billion mortgage bond settlement. "The action concerns far more than the financial interests of a few sophisticated investors" that agreed to the deal, the judge ruled.