Banco Popular de Puerto Rico

Receiving Wide Coverage ...There's a New Bobbie, Er, Mountie in Town: The surprise announcement that Mark Carney, Canada's central banker, will cross the pond to head the Bank of England could be viewed as a shot across the bow for global banks operating in the London regulatory haven. Granted, Carney is a Goldman Sachs alumnus (or "a member of the Government Sachs Club," as a Times headline put it). But he also has a history of ruffling bankers' feathers, and not just Jamie Dimon's. An economist tells the FT, "Carney is known to be fairly tough with commercial banks in Canada. His public comments suggest he is no great fan of 'light-touch' regulation. He also appears to have little time for arguments that higher bank capital buffers are preventing economies from growing." Beyond simple questions of tough or soft, the Journal notes that Carney "has been a vocal advocate of coordinating bank supervision between countries. That has not always been the philosophy among British regulators, who sometimes have embraced a go-it-alone strategy." Though he will again be playing the role of central banker, Carney's dealings with bankers will go well beyond monetary policy, since the BoE is set to take over much of the financial regulation done by the soon-to-be-scrapped Financial Services Authority. According to the FT's "Lombard" column, Carney "is credited with helping steer his country clear of the banking crisis. … And as chairman of the Financial Stability Board, the Canadian has an appreciation of the risks posed by shadow banking." That will surely come into play when he's policing the City, the shadowy home of the London Whale and AIG-FP. Is it churlish of us to note that Carney's wife, a British environmental activist, has called global financial institutions "rotten or inadequate" and expressed admiration for the Occupy movement, according to the Telegraph? The Economist goes as far as to speculate that before his five-year term at the BoE expires Carney might be lured back to this side of the Atlantic … to succeed Ben Bernanke at the Fed.

Receiving Wide Coverage ...Housing: The same market that dragged the U.S. into a nasty recession "is now a key economic driver at a time when other sectors are slowing," the Journal reports this morning. While GDP growth limps along and businesses fret about the fiscal cliff, "an improving housing market is buoying consumers' spirits and giving the economy its biggest lift since the real-estate boom." Mortgages remain hard to come by, but to the extent they can take on debt, homeowners are feeling more confident about doing so, and home equity borrowing is on the rise this year, the article says. The Journal's "Heard on the Street" column argues that the housing recovery could even "escape unscathed" from the broad economic damage that would occur if Congress failed to make a budget deal before Jan. 1. An economist quoted in the Post cautions that the housing market is about to head into the slow holiday season, so the price gains registered in September will be "the last hurrah" for the year. And in the bigger picture, it may take "more than a decade" for prices to rebound enough to erase all the negative equity weighing on consumers, he says. Meanwhile, the Times reports that an FHA rule change is encouraging development of condominiums in mixed-use, rather than residential-only, projects.

Receiving Wide Coverage ...Nice Try, Guys: The Fed will require foreign banks with major operations here to house them in entities subject to the same capital rules as U.S. banks, central bank Gov. Daniel Tarullo said. The papers interpret his speech as a thinly veiled repudiation of Deutsche Bank and Barclays, which moved their stateside investment banking shops out of Fed-supervised holding companies to avoid having to inject them with billions of dollars. The Journal's "Heard on the Street" column calls the regulator's move prudent, considering that "the Fed had to lend billions of dollars to foreign banks during the financial crisis … The Fed is rightly taking the view that it, and U.S. taxpayers, can't risk being left holding the bag should parent companies be unable, or unwilling, to provide a backstop" — an unfortunately plausible scenario given the state Europe's in.

Receiving Wide Coverage ...Mortgage Morass, Continued: Bankers can be forgiven for mistaking the mortgage cops for a pack of raving hyenas that just won't end its pursuit. In the latest twist, the Justice Department argued Wednesday that the $25 billion mortgage settlement finalized earlier this year between the federal and state governments on one side and five big banks on the other doesn't buy Wells Fargo (WFC) immunity from being sued by the feds yet again over mortgage foreclosure practices, Bloomberg reports. Wells had earlier declared that it no longer regards itself as liable for the claims — a view DOJ lawyers termed "flatly inconsistent" with the terms of the earlier settlement. The current case, in a New York federal court, is premised on accusations that Wells officials originated loans insured by the Federal Housing Administration that they knew failed to meet its requirements and resulted in "substantial losses," says Bloomberg. The DOJ submitted its claims to U.S. District Judge Rosemary Collyer, who earlier this year approved the $25 billion pact. In another sign that that deal has done little to end the stream of mortgage-related lawsuits, another federal judge earlier this week ruled that the Federal Housing Finance Agency may proceed with cases charging Bank of America (BAC), Citigroup (NYSE: C), HSBC and Credit Suisse (CS) of wrongdoing in the sale of securities backed by residential mortgages. Bloomberg, Reuters, American Banker

Receiving Wide Coverage ...UBS Nears Libor Deal: UBS is expected to reach a settlement with U.K. and U.S. authorities over its involvement in the London interbank offered rate-rigging scandal by the end of this year, several news outlets are reporting this morning. Even more notable is the fact that this settlement is expected to supersede the $450 million Barclays agreed to pay over similar charges. (A unnamed FT source "close to the talks" estimates the fine is likely to be higher than $500 million.) UBS acknowledged that talks are underway, but declined to comment on the specifics. Should it pan out, a large settlement "would increase the likelihood that other financial institutions would face stiff penalties," the New York Times' Dealbook reports. The Royal Bank of Scotland is also apparently in "advanced talks" with regulators, though a resolution is less imminent. Financial Times, New York Times, Wall Street Journal

Receiving Wide Coverage ...SEC Sues Auditing Firms: The Securities and Exchange Commission is suing Chinese affiliates of the Big Four accounting firms Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers as well as BDO for failing to produce documents related to fraud investigations at nine China-based companies. Charges were filed against the auditors as part of a larger investigation into the Chinese companies themselves, following a string of "so-called reverse mergers" that led to billions of dollars in investor losses. Depending on how this plays out, the case could wind up having broad implications. The Journal reports the affiliates could wind up being barred from auditing U.S.-traded firms, which "could complicate the audits of multinational companies doing business in China." Meanwhile the FT says the move "could lead to the wholesale delisting of Chinese companies from the U.S. stock market" since it could leave Chinese companies in the U.S. without auditors. (The Journal actually echoes these concerns in a separate article.) Not surprisingly, the Big Four auditors say they plan on working with regulators to find a "diplomatic solution."

Receiving Wide Coverage ...HSBC Sells Insurer: Well, we knew this was coming. HSBC has sold its entire stake in Chinese insurer Ping An to the Charoen Pokphand Group, a conglomerate backed by Thai billionaire Dhanin Chearavanont. (Interesting to note, as most papers do, the group is primarily known for its agribusiness, not financial services, empire, "particularly the production of livestock feed, chicken farming and rice trading.") The deal netted HSBC $9.4 billion, which means, over the long haul, the bank is "is making six times what it paid for" the insurer. The sale is part of HSBC's ongoing effort to shed assets, cut costs and streamline its business. According to Dealbook, the bank "has sold more than 40 noncore assets and has booked about $4 billion in gains on those sales this year alone" following chief executive Stuart Gulliver's takeover at the beginning of 2011. Following the deal, Gulliver said ''China remains a key market for the group.'' The bank has expressed interest in increasing its stake in China's Bank of Communications, though it will need regulatory approval to do so. Wall Street Journal, Financial Times

Receiving Wide Coverage ...StanChart to Settle … Again: Standard Chartered expects to pay another $330 million in order to settle claims by U.S. agencies that it violated U.S. sanctions. Negotiations with the U.S. Department of Justice, the U.S. Treasury Department, the Federal Reserve and the Manhattan district attorney's office are currently underway and expected to close "very shortly." You may recall that the U.K.-based bank has already paid $340 million to settle rebel regulator Benjamin Lawsky's anti-money-laundering allegations related to transactions with Iran earlier this year. That charge will affect the bank's earnings in March, but StanChart still expects pretax profit to be roughly 5% higher than last year's $6.78 billion and, according to Finance Director Richard Meddings, the bank remains "firmly in growth mode." Wall Street Journal, New York Times, Financial Times

Receiving Wide Coverage ...Bonds, Bonds, Bonds: The FT and the Journal printed articles this morning that indicate the bond market is booming. According to the FT, "in order to lure conservative investors away" from the much maligned money market fund industry, fund management groups are launching (and pushing) "ultra-short" bond funds that will invest in short-term government and corporate paper. This type of investment vehicle, launched by six fund managers over the last few months and being eyed by several others, is worth considering because, as one manager told the paper, "it retains a lot of the features that give flexibility to money market funds, things like check-writing and no trading restrictions." But these investments may be short-term for a reason. According to the Journal's article — which also nods to a spike in investor interest in bonds over the past few years — some fund managers (perhaps, not the same ones the FT talked to?) believe there are "hidden dangers lurking" in the market. "Bond math dictates that losses will be magnified when interest rates are low, and when bond maturities are long, as they are now," the paper notes.

Wall Street JournalIn what is either an oversight or an extreme dislike of jargon, the Journal managed to write an 800-word article on the imminent expiration of the Transaction Guarantee Program (TAG) without once using the phrases "Transaction Guarantee Program" or "TAG." The gist is that the Senate would re-up the program, the Republican-dominated House won't, and small banks are seething and fighting for an extension.