Banco Popular de Puerto Rico

Breaking News This Morning ...B of A Settles with Fannie: B of A has agreed to pay $10.3 billion to settle claims that it sold bad loans to Fannie Mae. Under the terms of the settlement, the bank will pay Fannie $3.6 billion, and will also spend $6.75 billion buying back mortgages from the housing giant at a discount to their original value. The settlement is likely to wipe out B of A's earnings for the quarter, the FT reports. New York Times, Wall Street Journal

Receiving Wide Coverage ...B of A Settlement: "An albatross that the bank has fought hard to loosen," that's what a Washington Post article on B of A's $11.6 billion settlement with mortgage giant Fannie Mae calls the bank's acquisition of Countrywide, which has now collectively cost B of A more than $40 billion in losses. It remains unlikely that the bank's most recent related payoff will help them shake that bird entirely. According to this American Banker article, several analysts think, moving forward, B of A's mortgage woes will linger with one writing in a research note that the bank's "financial penance for legacy issues will continue." And, even if the litigation is over, the apparently accursed acquisition's already had a lasting effect on the megabank's business model. Both the Post and the Times point out that the settlement represents B of A's continued efforts to pull out of the mortgage market, since the bank was required to sell off about 20% of its already scaled back loan servicing business to pay off Fannie Mae. This retreat, of course, isn't exactly a good thing. "This is part of a broader consolidation of banks and that is something that we should all be very, very concerned about," one analyst told Dealbook. "Anything that leads to less competition can only be bad for consumers." "You have less competition, and as a result the pricing has gotten worse," another told the Post. "Mortgage rates should probably be closer to 3.25 rather than 3.5. One of the reasons they aren't is because banks aren't that competitive and don't have to be to get business."

Receiving Wide Coverage ...Seriously, AIG?: We had a feeling the Internet was going to let out a collective groan once the news that AIG was considering a lawsuit against the federal government over its $182 billion bailout was picked up by news outlets and made the rounds on Twitter. (To summarize, the firm is being asked to join a suit originally launched by former CEO Maurice Greenberg, who claims the terms of the bailout were too harsh and deprived shareholders of billions of dollars.) And, oh, what a collective groan it was. "AIG, bailed out by U.S., may now sue U.S., claiming bailout terms were too harsh. We should counter-sue for stupidity," Berkeley professor and former U.S. Secretary of Labor Robert Reich tweeted with a link to an article from ABC news explaining the potential suit. "AIG considers suing government for bailing it out, world implodes in on itself," one Washington Post headline reads. Blogger Andrew Borowitz penned a satirical letter from AIG to the taxpayers for the New Yorker. (Sample line: "by suing … we are standing up for one of the most precious American rights of all: the right to sue someone who has just saved your life.") And David Weidner from MarketWatch goes so far as to suggest the government retaliate by charging AIG with treason.

Receiving Wide Coverage ...Qualified Mortgage Rules: Several news outlets (American Banker included) are out with a breakdown of what is in the Consumer Financial Protection Bureau's new mortgage standards, ahead of its press conference on the subject later today. Key points of the rules include prohibitions from offering mortgages with deceptive teaser rates or ones that require no documentation from borrowers, restrictions from charging borrowers excessive upfront points and fees and a somewhat unexpected safe harbor legal protection for prime qualified mortgage loans. Notably, to meet the much-anticipated QM standard, in most cases, borrowers' total debt payments can't exceed 43% of their pretax income. No minimum down payment has been set. Strict documentation of a borrower's ability to repay a loan must be maintained if a lender is to take advantage of the safe harbor.

Receiving Wide Coverage ...Amex Swings the Ax: The tectonic shifts that are reshaping finance struck American Express (AXP) late Thursday when it released its fourth quarter earnings ahead of schedule, along with the bombshell that it's planning to eliminate 5,400 jobs, or 8.5% of its staff. The Wall Street Journal describes the job cuts as Amex's biggest retrenchment in a decade. Most of the reductions will involve the New York-based company's (sorry, Mayor Bloomberg) travel business, which Chief Executive Kenneth Chenault said "is being fundamentally reinvented as a result of the digital revolution." The company will take $895 million in fourth-quarter charges to cover severance pay, the cost of revamping a membership-reward program and a slew of customer refunds linked to the regulatory settlement involving card practices that allegedly violated a range of consumer protection laws. All told, Amex took a $95 million charge that it said in a statement "deals with fees, interest and bonus rewards as well as an incremental expense related to the consent orders entered into with regulators last October." Thursday's plan is the fourth round of big job cuts at Amex since 2001, which together have eliminated more than 18,000 positions, the Journal reports. It's also the latest in a wave of financial-industry job cuts announced in recent weeks, including reductions at Citigroup (NYSE:C) and Morgan Stanley (MS). American Express's focus on affluent borrowers has enabled it to bounce back from the financial crisis more quickly than many peers, the Journal notes, but it has nevertheless seen demand suffer as consumers deleverage. Amex's customer card spending, its biggest revenue driver, climbed 8% in the fourth quarter, while card write-offs stood at 2%, the lowest rate among big card issuers, says Bloomberg News. "Against the backdrop of an uneven economic recovery, these restructuring initiatives are designed to make American Express more nimble, more efficient and more effective in using our resources to drive growth," Chenault said in the statement. Wall Street Journal, Bloomberg News, Financial Times, American Banker

Receiving Wide Coverage ...Debt Ceiling Update: A Journal article this morning looks at Treasury's options for paying the nation's bills should Congress refuse to raise the $16.4 trillion federal borrowing limit. These option include "selling assets such as gold or mortgage-backed securities ... cutting all spending by 40% ... delaying trillions of dollars of payments to employees, Social Security recipients, contractors and others" or paying the government's bills only as tax revenue become available. The last proposal is considered "most viable," according to the paper, but the general takeaway seems to be none of these contingency options are good. This is problematic since another showdown over the debt ceiling is looking increasing likely. Recent estimates from the Bipartisan Policy Center, a Washington think tank, say Treasury will run short of cash between Feb. 15 and March 1 unless the debt ceiling is raised.

Receiving Wide Coverage ...JPM's Parking Tickets: The Fed and OCC hit JPMorgan Chase with enforcement actions related to last year's $6 billion trading loss and inadequate anti-money laundering controls. The orders include no monetary fines or admission of wrongdoing, just remediation steps (wryly summed up by the FT's Alphaville blog: "Look into my eyes: you will implement the Action Plan.") Then again, as one journalist tweeted while the news was disseminating Monday afternoon, "in all fairness, I think the initial monetary penalty of $6 billion was plenty." Also, regulators left the door open to further action, and there are reportedly pending investigations of the trading loss from the U.K. Financial Services Authority, and in the U.S. from the SEC, CFTC and Sen. Carl Levin's Permanent Subcommittee on Investigations. On Wednesday, the bank is expected to release an internal report criticizing management's handling of the London Whale debacle, and, as earlier reported, bonuses are likely to be cut for CEO Jamie Dimon and former CFO (now vice chairman) Doug Braunstein. Wall Street Journal, Financial Times, New York Times, Washington Post

Breaking News This Morning ...Earnings: JPMorgan, Bank of New York Mellon, Comerica, M&T, Northern Trust, U.S. Bancorp, Goldman Sachs

Breaking News This Morning ...Earnings: Bank of America, BB&T, Citigroup, Fifth Third, Huntington, PNC

Breaking News This Morning ...Earnings: SunTrust, Morgan Stanley, General Electric