Banco Popular de Puerto Rico

Receiving Wide Coverage ...Third Verse, Different from the First: Treasury Secretary Timothy Geithner clarified to lawmakers Thursday that President Obama "does not believe that we get to determine how profitable individual financial institutions are across the country." This followed Obama's remark in a televised interview Monday that banks "don't have some inherent right" to "a certain amount of profit" and his suggestion that the government could stop Bank of America's $5 debit card fee. There was also some fairly tough talk about banks from Geithner himself in public appearances on the intervening days. Yet appearing before the Senate Banking Committee Thursday, the Treasury secretary said the administration's goal is simply "to have a system of oversight and protection where consumers understand what they are being charged." Which, to us, sounds a lot closer to what the acting head of the Consumer Financial Protection Bureau, Raj Date, has been saying. (Geithner also made some reassuring remarks about the safety of the U.S. banking sector, which boosted financial stocks.) In another sign that cooler heads may yet prevail on the matter of bank fees, Washington Post personal finance columnist Michelle Singletary asks her readers to look at the bigger picture: "Just because something was free once doesn't mean it can be offered free forever, right? Don't the banks have a right to charge for the convenience they provide to customers who don't want the burden of carrying around cash or a checkbook? Isn't your time worth money?" But before bankers and their lobbyists start tweeting and emailing her column around, they should be forewarned: Singletary goes on to advise consumers who are repulsed by new debit fees to go back to paying with cash.

Receiving Wide Coverage ...Regulators Defend Basel III: The Bank for International Settlements issued a report attempting to debunk bankers' arguments that requiring big global institutions to hold extra capital would squelch economic growth. Wall Street Journal, Financial Times.

Regions Financial Corp. has narrowed the bidders for its Morgan Keegan securities unit down to two, The Financial Times reported late Monday. The Blackstone Group L.P. and the Carlyle Group have joined forces, and Thomas H. Lee Partners is the other, the paper reported.

Receiving Wide Coverage ...Volcker Rule Unveiled: …but it's hardly final. Regulators' official proposal requested public comments on hundreds of questions, sowing concern in some corners that financial industry lobbying could eventually result in a watered-down final rule. Indeed, the Journal's coverage includes a sidebar describing the behind-the-scenes wrangling between industry representatives and regulators thus far. "When it comes to face time, no one can top Wall Street," the story says. Critics also say the proposal "gives banks too much leeway to interpret the rule as they see fit and could permit exactly the type of activities the rule is supposed to prevent," according to a separate Journal article. However, the Times' "DealBook" says the proposal "contained a few unfriendly surprises for the banks," including a ban on paying bonuses to bank employees to "encourage or reward proprietary risk-taking." One of the authors of the Volcker section of Dodd-Frank, now an industry lawyer, is quoted as calling the proposed compensation rule a "huge" change. Pardon us for being dim, but if the Volcker rule is supposed to get banks out of proprietary trading, should anyone be surprised that it would forbid banks to give employees incentives to do such trading? Wall Street Journal, New York Times, Washington Post.

Breaking News This Morning ...Earnings: JPMorgan Chase reported a third-quarter profit of $4.3 billion, or $1.02 a share, on $24.4 billion of revenue. Ahead of the bank earnings season that kicks off today, the Journal's "Ahead of the Tape" identifies a few potential bright spots amid what is bound to be an overall bleak picture. Business lending, mortgage refis and unrealized securities gains are among the possible "rays of sunshine," along with the fact that expectations are so low that "some positive surprises are likely," the column says. Also in the Journal, the "DealJournal" blog lists four themes to watch for in JPMorgan's report today. Topping the list, naturally, is exposure to Europe.

Receiving Wide Coverage ...JPMorgan Sets the Tone for 3Q: …and it ain't reassuring. The company posted its first year-over-year decline in quarterly earnings since the nadir of the financial crisis, in large part due to a drop in investment banking fees. Also unsettling: the company is tempering its aggressive growth plans for retail bank branches. Financial stocks slid on the news, given that JPMorgan Chase is considered one of the better-run large banks; if it's doing fair-to-middling, that can't bode well for the company's peers, which are scheduled to report their third-quarter results next week. Revenues from JPMorgan's investment bank declined because the August downgrade of the U.S. debt rating and the European crisis have discouraged clients from issuing securities or making acquisitions. And the results would have looked even weaker were it not for an accounting quirk. On top of everything else, chief executive Jamie Dimon said JPMorgan is slowing the release of loan-loss reserves. "We are just trying to be conservative here," he told investors. According to the Journal's "Heard on the Street," this was regarded as "a canary-in-the-coal-mine moment for all banks. It is especially troubling since reserve releases have driven earnings gains at many banks in recent quarters." It was uninspiring enough when banks relied on the realization that "credit problems aren't as bad as we thought" to fuel the bottom line; now it may turn out that the problems aren't as not-so-bad as they thought, Dimon's assurance that "the recovery is still here" notwithstanding. Also in the Journal, the "DealJournal" blog notes that JPMorgan has exhausted its regulatory allowance of share buybacks for this year, and quotes Dimon as complaining that when it comes to managing capital, "It's hard to tell what we're supposed to do. … The regulators need to give not just J.P. Morgan Chase, but the banking industry, more guidance." The "Overheard" column in the Journal reports that the usually pugnacious Dimon sounded uncharacteristically apologetic on the company's earnings call — though he did take a dig at a New York Times reporter who asked about compensation expenses. Speaking of the Times, the "Reuters BreakingViews" column lauds Dimon's efforts to put his best foot forward, noting his sly segues from talking about the business to proselytizing about policy (e.g., he pivoted from an explanation of Chase's debit card revenue to a swipe at the Durbin amendment). Looking ahead to next week's reports from the other big banks, the FT's "Lex" column advises investors to "beware good news," by which they mean "don't lose sight of bona fide signs of improvement." (Or that's what we think they mean, based on the last two paragraphs of the piece. British irony goes over our heads sometimes.) And one more Journal story says the regional banks are expected to show continued improvement, in part because of commercial loan growth, not to mention the fact that these institutions don't rely much on investment banking for revenues. Wall Street Journal, New York Times, Financial Times

Companies that strive for “stickiness” usually get glowing coverage in The New York Times’ business section, but when big banks achieve it, they get a not-so-flattering story on page one.

Breaking News This Morning ...Earnings: Citigroup, Wells Fargo, First Horizon, Charles Schwab

Breaking News This Morning ...Earnings: Bank of America, State Street

Breaking News This Morning ...Earnings: U.S. Bancorp, Comerica, PNC, Bank of New York Mellon, New York Community, Northern Trust