Banco Popular de Puerto Rico

Breaking News This Morning ...PNC, USB and M&T: "PNC Financial Services Group Inc., U.S. Bancorp and M&T Bank Corp. notched solid second-quarter profit gains as the three regional lenders continued to see marked declines in the funds reserved to cover potentially bad loans." (Journal)

Receiving Wide Coverage ...Dodd-Frank Birthday Bash(ing): The retrospectives keep coming. For those who've been living in a cave for the last few months, the Journal reports that whether the law ended "too big to fail" is a matter of debate. Meanwhile the Times' Dealbook interviews Barney Frank and (for the hibernators' benefit) provides a quick summary of bankers' objections to the law. Here's Frank's response to criticisms that the law is too vague: "It's precisely because we knew we couldn't get everything exactly right that we did leave room for the regulators." Why didn't the Times sit down with both authors of the legislation together? "Now that Mr. Dodd is a registered lobbyist representing the motion picture industry, federal law prohibits the two men from chatting about their law for a year." Onward and upward: today Federal Reserve chairman Ben Bernanke will appear before the Senate Banking Committee to give a status report on his agency's work putting Dodd-Frank's many provisions into practice. You can read the Journal's summary of his prepared testimony, or the whole thing here but as always the unscripted Q&A will be the most interesting part.

Receiving Wide Coverage ...Contemplating Disaster: Regulators are giving banks scant guidance on how to deal with a possible government default or downgrade, the Journal reports this morning. The big banks "are spending hundreds of hours on contingency planning scenarios," the article says. But without certain answers, it's hard to plan. For instance, "Fed officials haven't said if their collateral requirements would change after a default, which would affect banks' ability to borrow from the central bank's discount window." Indeed, "several bankers said they have been surprised how little federal regulators have been prodding them for details of their plans. [Italics added by Morning Scan.] Federal regulators are most likely trying to take a hands-off approach to avoid promoting a panic." On the bright side, the lead story in the Journal reports that Obama and Boehner are close to a budget deal, so maybe this whole exercise will turn out like Y2K. Maybe.

Receiving Wide Coverage ...Two Tales of A Nation: The deal on debt relief for Greece will remove uncertainty, helping prevent a loss of confidence in banks, said Charles Dallara, the managing director of the Institute of International Finance, the Times reported. Dallara was a negotiator for the deal. The Post reported that Moody's cut Greek debt three notches to Ca and warned that the nation will likely default before stabilizing. Wall Street Journal, Washington Post

Receiving Wide Coverage ...A Split Decision: Deutsche Bank said Anshu Jain, head of its investment bank, and Jürgen Fitschen, the German bank's head of regional management, will become co-CEOs of the bank next year when Josef Ackermann retires. One holdup, according to the Times, had been that Jain, a native of India who is not fluent in German, is regarded as not ready to assume the statesmanlike duties required of Deutsche Bank's chief. The Journal said the decision to have co-CEOs is "a compromise solution that could complicate decision-making at the top." The Post said the bank's stock prices rose after the announcement. Wall Street Journal, New York Times, Washington Post

Wall Street JournalSquabbling over who should pay less has delayed a settlement between banks and 50 state attorneys general over the mortgage foreclosure mess, sources told the Journal. "The latest disagreement among banks is a contrast to the largely unified public stance taken by financial firms as they work to put the foreclosure woes behind them," the paper said.

Receiving Wide Coverage ...To Downgrade or Not to Downgrade… At a hearing on Capitol Hill the president of Standard & Poor's, Deven Sharma said that some newspapers have misreported his company's position on the U.S. debt crisis as having set a $4 trillion deficit reduction target in order for the country to preserve its triple-A credit rating. He said that some of the plans being considered that would reduce the U.S deficit by less than $4 trillion, actually would allow the United States to preserve its rating, the Post reported. The Journal, however, said Sharma said the rating agency was taking a wait-and-see attitude. The Times' take? The U.S. is unlikely to default on its debt but the credit rating depends on cutting spending and reducing the deficit. Wall Street Journal, New York Times, Washington Post

Receiving Wide Coverage ...Fighting May Move to the Courts. House Republicans are calling on the Securities and Exchange Commission to provide an accounting of the time and money it spent on a failed plan that would make it easier for shareholders to fire members of corporate boards. A federal appeals court killed the SEC plan several days ago, the Post reported. But, the ruling could have greater implications, according to the Journal. The court ruling has given business leaders hope that if their appeals for changes in Dodd-Frank are nixed by regulators and lawmakers, the courts may be a last option.

The paper quotes First Niagara CEO John Koelmel as saying it will eventually have to do a capital raise to support the larger balance sheet. Antitrust issues may also arise, FT says.

Breaking News This Morning ...HSBC Earnings: The British bank said Monday it will cut up to 30,000 jobs and it reported a better-than-expected first-half profit. HSBC is selling 195 branches, mostly in upstate New York, to First Niagara (more on that below.) Wall Street Journal, New York Times