Banco Popular de Puerto Rico

Breaking News This Morning ...JPMorgan Earnings: JPMorgan Chase bested analyst expectations by reporting a 34% rise in earnings and net income of $5.7 billion for its third quarter. The boost in profit is related largely to a spike in mortgage loan originations that counterbalanced an additional $449 million in derivative losses courtesy of the London Whale and caused CEO Jamie Dimon to declare "we believe the housing market has turned the corner." Now if the nation could just fix its pesky fiscal cliff. Wall Street Journal, Financial Times

Breaking News This Morning ...Earnings: Citigroup

Breaking News This Morning ...Well, That Was Abrupt. The day after a generally positive earnings report (more on that below) CEO Vikram Pandit says he's "concluded that now is the right time for someone else to take the helm at Citigroup." That someone else is long-time company veteran Michael Corbat, who most recently oversaw the Europe, Middle East and Africa business and before that Citi Holdings, the company's garage sale of noncore assets. President and COO John Havens also resigned. Press release here.

Breaking News This Morning ...Earnings: Bank of America, Bank of New York Mellon, Comerica, US Bancorp, First Republic, M&T

Receiving Wide Coverage ...Citi's Shakeup, Day Two — Receiving Unsolicited Advice and Reassuring Everyone: Yesterday saw the introduction of new CEO Michael Corbat, and today Citi's rolling out the man who installed him atop the bank. Michael O'Neill "represents a new generation" of bank directors, the Times declares, citing his "unusual" decision to visit Citi's trading floors and take a close look at the bank's business lines after he became chairman of the bank earlier this year. O'Neill offers praise for former CEO Vikram Pandit to the Times, but declares that "Mike Corbat has a sort of single-minded data approach that is right for the job today."

Receiving Wide Coverage ...Times Are a-Changin': Sort of. On the silver anniversary of the Oct. 19, 1987, Black Monday stock market crash, the New York Times and the Wall Street Journal make prominent note of the event. "A Repeat of '29? Depression in '87 Is Not Expected," declared the Journal in a second-day story that it resurrects on its web site this morning. The Times went even gloomier the day after. "Does 1987 Equal 1929?" it asked. "It did not," notes Times' columnist Floyd Norris. "What it did signify was the beginning of the destruction of markets by dumb computers. Or, to be fair to the computers, by computers programmed by fallible people and trusted by people who did not understand the computer programs' limitations. As computers came in, human judgment went out." Behind the 1987 panic was a whiz-bang financial innovation of the era known as program trading—an early ancestor of high-frequency trading, which was supposed to enable the "smart money" to stay ahead of the market. It didn't. Just in case things went wrong, sophisticated investors circa 1987 hedged their bets with hedges then known as portfolio insurance, early predecessors of credit default swaps that were supposed to protect them against calamity. They didn't. So what lesson, a quarter-century on, is to be learned from Black Monday? That we are destined to learn little, reform less and repeat our mistakes, appears to be Norris' take-away. His column cites an Oct. 20, 1987, Journal quote in which Nobel economics laureate George Stigler says, "I don't think the economy looks like it did in 1929. The most violent and urgent of factors in the great crash was the collapse of the banking system. That can't happen anymore because of the Federal Deposit Insurance Corporation" and other safeguards. Stigler explained that deposit insurance and limits on leverage meant "you won't get the pyramiding effect" that cracked the financial system in 1929. The pyramiding, of course, didn't occur in 1987, when the market snapped back quickly. It came in 2008. Since then, the biggest bricks in our shaky pyramid—the giant handful of banks that now account for over half the entire system's assets—have gotten far bigger still. New York Times, Wall Street Journal

Receiving Wide Coverage ...Did Greg Smith Do Goldman a Favor?: More news outlets are echoing Dealbook's assessment of former trader Greg Smith's purported tell-all "Why I Left Goldman Sachs: A Wall Street Story" by stating that the book, due out today, isn't much of a tell-all at all. The FT says while Smith's account "paints an unflattering picture" of the investment firm, it doesn't "contain any blockbuster discoveries that could to lead to trouble for the bank's top executives" and, instead, focuses on "Mr. Smith's journey from summer intern to equity derivatives salesman in Goldman's London office." Meanwhile, a second Times review calls the not-so-tell-all "curiously short on facts" and says it actually might help bolster Goldman's reputation. "If Mr. Smith is the ultimate insider, and this is as bad as it gets — Mr. Smith in a hot tub at the Mandalay Bay Hotel in Las Vegas with a topless woman — then he hasn't made much of a case," the reviewer writes.

Receiving Wide Coverage ...Big Bank CEOs vs. the Fiscal Cliff: Big bank CEOs are intensifying their efforts to get Congress to deal with the looming fiscal cliff, convening to discuss the issue over lunch at JPMorgan Chase CEO Jamie Dimon's house and releasing a letter intended to sway legislators toward a budget compromise. "We write today to urge you to work together to reach a bipartisan agreement to avoid the approaching 'fiscal cliff,' and take concrete steps to restore the United States' long-term fiscal footing," says the letter, which was signed by Dimon, Bank of America CEO Brian Moynihan, Citigroup CEO Michael Corbat and several others. But many news outlets have been quick to criticize the big bankers' oh-so-noble efforts. A Bloomberg article calls the letter "worthless" since Congress isn't wrangling over whether to address the deficit — like big bankers, legislators generally agree that's a good idea — but rather on how exactly to do so. "Instead of these wise men giving members of Congress permission to buck their own parties, the CEOs fail to explain what such a bipartisan agreement should look like," staff writer Brendan Greenley writes. Meanwhile, Slate blogger Matthew Yglesias quickly points out the letter itself presents a contradiction, since the fiscal cliff is a policy to reduce "the ratio of federal debt to GDP over the medium term," and suggests what big bankers really fear is not another recession, but rather an expiration of the Bush tax cuts that would come with going over the cliff. "It's easy to see why you'd care a lot about that if you happened to be a multi-millionaire bank CEO, but it has basically nothing to do with the 2013 growth outlook," Yglesias writes. "If you care about inequality, jumping off the cliff offers by far the best chance for addressing it."

Receiving Wide Coverage ...Romney's Reserve: Various news outlets are following up on a Times article from Binyamin Applebaum that focuses on potential Federal Reserve chairman replacements for Ben Bernanke should Republican candidate Mitt Romney win the upcoming presidential election. (It should be noted some attention is also being given to potential Obama appointees, given Andrew Ross Sorkin's recent disclosure Bernanke isn't interested in another term once his current one expires in January 2014, but with much less fervor, perhaps, since another Obama appointee is generally considered less likely to dramatically overhaul monetary policy. Romney, on the other hand, has criticized recent Fed attempts to stimulate the economy.) Applebaum's article focuses on three likely Romney candidates — R. Glenn Hubbard, who served as chairman of the Council of Economic Advisers under President George W. Bush, his successor N. Gregory Mankiw and John B. Taylor, a Stanford University economics professor — with the general takeaway being that Taylor, "an outspoken critic of Fed policy" is most likely to implement a hawkish overhaul. (QE4 never, perhaps?) However, a subsequent analysis from FT blogger Robin Harding suggests it may be impossible for any new Fed chairman to turn a bunch of doves into hawks, given the term limits of its existing governors and the current body of regional presidents. "Even if a president Romney appointed a hawkish Fed chairman in 2014, around half the voting membership of the FOMC would probably be doves who had backed current policy," Harding writes. "Any change towards more hawkish policy initiated by a new chairman would have to be slow and gradual, which is just how the designers of the Federal Reserve System wanted it." This sentiment was echoed by Reuters blogger Felix Salmon, who also believes a major revamp would be difficult, even from a hawk like Taylor. "The Fed board isn't a bunch of muppets, rubber-stamping whatever the chairman wants," he writes. "It's pretty easy to build a consensus around low interest rates when inflation is low. Taylor, by contrast, would be trying to build a consensus around higher interest rates when inflation is low — and that's much more difficult."

Receiving Wide Coverage ...A Countrywide Haunting: Bank of America found itself on the receiving end of a $1 billion mortgage lawsuit filed by the federal government on Wednesday. Federal prosecutors are accusing the bank of carrying out a scheme ("called the 'Hustle' and 'High Speed Swim Lane'") started by its Countrywide unit that defrauded government-backed mortgage agencies Fannie Mae and Freddie Mac "by churning out loans at a rapid pace without proper controls." B of A is denying wrongdoing. The case appears to be the latest move in the government's renewed crusade to punish mortgage lenders for their part in the 2008 financial crisis. JPMorgan Chase found itself on the receiving end of a civil lawsuit related to Bears Stearns' bad lending practices earlier this month with New York Attorney General Eric Schneiderman promising more cases were on the way. But many people — including former FDIC chairman Sheila Bair, who said in a meeting with American Banker recently she doubted the effectiveness of lawsuits and enforcement actions brought against institutions and not individuals — see the actions as a "too little, too late" scenario. "If Countrywide committed 'spectacularly brazen' fraud, why can't the [government] identify any individual perpetrators?" Times reporter Binyamin Appelbaum tweeted following the lawsuit's announcement. Federal prosecutors could apparently identify individuals involved (which, perhaps, can be seen as more of an issue). As a follow up tweet from Reuters blogger Alison Frankel noted: "The complaint actually identifies two Countrywide officials by name but they're not named as defendants." Washington Post, New York Times,Wall Street Journal, Financial Times