Banco Popular de Puerto Rico

Receiving Wide Coverage ...Moynihan's Big Payday: Brian Moynihan got a big raise in 2012. According to a regulatory filing (and one person "familiar with the matter" who was kind enough to fill in some gaps), the Bank of America CEO's overall pay package totaled $12 million. This includes a $950,000 salary and $11.1 million in restricted shares, which, together represent a 70% increase over his pay in 2011 and the "largest since he took over the Charlotte, N.C., company in 2010." The raise is related to "an improved performance" last year as B of A's shares advanced 109% and net profit jumped by 189%. If you're wondering where Moynihan, "the lowest-paid chief executive among the six giant U.S. banks and securities firms" in 2011, now falls on the executive pay scale, the raise puts him ahead of JPMorgan Chase's Jamie Dimon — who, recall, got Whaled in 2012 — and Morgan Stanley's James Gorman, who also took a pay cut this year. He will still make less, however, than Goldman Sachs' Lloyd Blankfein and Wells Fargo's John Stumpf. Financial Times, Wall Street Journal

Receiving Wide Coverage ...Whispers at the Federal Reserve: Is the Fed getting ready to end its stimulus efforts? That's what some folks are wondering after minutes from the January Federal Open Market Committee meeting indicated "widening divisions among [Fed] officials" about the central bank's current monetary policy (which, recall, involves monthly purchases of about $85 billion in long-term bonds and mortgage-backed securities for an indefinite period). The stock market posted its biggest loss of the year upon learning "many" officials had expressed concerns that the ongoing QE3 could encourage excessive risk-taking and promote inflation. These concerns could lead the Fed to "taper or end" its asset purchases before unemployment improves substantially, an FT article notes. But investors' worry over QE3's imminent end may be premature since Fed chairman Ben Bernanke remains committed to the program. "We view Mr. Bernanke as being firmly in charge of the committee, and very dovish indeed," one analyst quoted in the Times wrote in a note to clients. He went on to predict the asset purchases will continue at the current pace for the rest of the year. "The prevailing sentiment at the Fed, as conveyed by the minutes as well as recent remarks, is that the central bank's efforts to pump tens of billions of dollars into the economy every month should not end anytime soon," a Washington Post story echoes.

Receiving Wide Coverage ...Citi's Executive Pay Plan: Citigroup is revamping its executive pay plan by now linking a portion of an executive's total compensation to the "company's performance relative to other big banks." These so-called "performance share units," payable three years after the firm meets performance goals, are being introduced after investors revolted against a proposed $15 million compensation package for former (and ultimately ousted) CEO Vikram Pandit in April. The new structure "will pay 40% of awards in cash, 30% in deferred stock and 30% in performance share units," the FT says. To get the maximum pay in the new category, CEO Michael Corbat "will have to achieve a return on assets of 0.85% and deliver a total shareholder return above four peers," the FT reports. Executive pay, generally, has remained a point of contention following the financial crisis, but any kudos Citi was set to reap for its revamped bonus plan were dwarfed by the announcement that CEO Corbat, who took over for Pandit in October, was being awarded $11.5 million for 2012. This compensation package puts him on par with B of A CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon, despite the fact that, as Shanny Basar tweeted, Corbat's "only been CEO for 2 minutes." As this New York magazine blog post notes, "if Corbat made $11.5 million under the new rules, think about what he could have raked in under the old." Wall Street Journal, Bloomberg

Receiving Wide Coverage ...Consumer Debt Traps: The lead front-page story in Sunday's Times examined large banks' role in supporting online payday lenders that get around state interest-rate restrictions by locating offshore. At issue is the banks' automatic debiting of borrowers' accounts to pay the interest, authorized by the customers when they take out the loans. The problem is that the banks often continue to withdraw money to pay the loans even after accountholders ask them to stop. "I don't understand why my own bank just wouldn't listen to me," says one borrower. The article suggests this is driven by the megabanks' desire to rack up overdraft and nonsufficient-funds fees, rather than by incompetence. The CFPB and FDIC are investigating banks' involvement with this kind of lending, while New York financial regulator Benjamin Lawsky is probing the banks' role in helping the nonbank lenders evade state interest caps, the Times reports. … Another Times article looks at the struggles of young veterinarians to service the debt that paid their veterinary school tuition. … A special report on wealth management in today's Journal leads with "12 Debt Myths That Trip Up Consumers." Myth No. 2: "Credit cards from your favorite retailers are a good deal."

Wall Street JournalThe paper gives a status report on the more than 30 private civil suits against 16 large banks over Libor manipulation. Combined with the regulatory fines, these suits could cost the industry tens of billions in the coming years, a law professor says. Interestingly, while some plaintiffs claim lenders were harmed because borrowers paid too little interest as a result of Libor-rigging, others argue borrowers were harmed because they paid too much. And a retired San Francisco cable-car driver says that because the benchmark rate on his adjustable-rate mortgage was artificially low, he's stuck paying an inflated spread over the life of the loan.

Receiving Wide Coverage ...Ease on Down the Road: Chairman Ben Bernanke defended the Fed's asset purchases and signaled they will continue until the job market firms up. He addressed concerns that by driving down interest rates for a long period of time, the Fed's easing encourages inappropriate risk-taking: While the central bank is cognizant of that danger, he said, low rates "also serve in some ways to reduce risk in the system, most importantly by encouraging firms to rely more on longer-term funding, and by reducing debt service costs for households and businesses." Wall Street Journal, Financial Times, New York Times, Washington Post

Receiving Wide Coverage ...More on JPMorgan Layoffs: According to a story in the Post, the more than 10,000 job cuts the bank announced this week speak volumes about JPMorgan's views on the housing market, good and bad. On the bright side, "foreclosures at the bank have tumbled … which is why most of the employees receiving pink slips are those that were hired to handle mortgage defaults." But JPMorgan is also cutting jobs in mortgage production, reflecting its view that "heightened competition" will nibble at the outsized margins it's been enjoying, the article says. (Where's that competition going to come from in such a concentrated origination market, you ask? Some argue there'll be room for upstarts after the refis fade.) The FT's "Lex" column notes that no cuts were announced in investment banking, and suggests that the downsizing of JPMorgan is a case of "cyclical staffing adjustments," not "structural change." Also, Rolling Stone's Matt Taibbi has a more-NSFW-than-usual interpretation of JPMorgan CEO Jamie Dimon's testy exchange with analyst Mike Mayo at the recent investor day. Reader discretion strongly advised before clicking. We're including it because Taibbi has influenced public perception of financial companies (see: Goldman Sachs), not for the yuks — but don't say we didn't warn you.

Receiving Wide Coverage ...The Sequester: It's scheduled to take effect sometime today, with a last-minute budget deal considered unlikely. For banks, that means budget cuts at regulators, further delaying Dodd-Frank rulemakings, not to mention indirect effects on the industry from the broader economic impact, as American Banker recently explained. For big-picture coverage: Wall Street Journal, Financial Times, New York Times, Washington Post

Receiving Wide Coverage ...Executive Pay: The global crackdown on executive pay continues. Swiss voters backed a plan over the weekend that places severe limits on how companies pay their executives and directors. These limits give shareholders (including pension funds holding shares) a binding say on executive compensation, prohibit bonuses from being awarded to executives joining or leaving the firm and require "annual re-elections for directors." Firms that violate these rules could face heavy fines equal to six years in salary or face a prison sentence of up to three years, the New York Times reports. The plan, which could be implemented in 2014 or 2015 (or maybe even later) depending on whether you talk to its supporters or opponents, will apply to all companies listed in Switzerland. This includes UBS, which is among the companies the Journal says will be affected "most dramatically" by the initiative due to "their relatively large payrolls and because they need to recruit employees from around the world." The approval of the Swiss proposal follows a move late last week by the European Union to cap bankers' bonuses at twice their salary. An op-ed posted on Dealbook is critical of the EU's move, expressing that bankers will find a way to skirt the rule, and suggests paying bankers like waiters, capping their salaries and requiring them to rely on tips. "Banks boast so often about serving customers that it would mean they really have to practice what they preach — or expect a welter of forlorn-looking bankers following clients out of offices asking what they did wrong," the author notes. "The chance of seeing that alone surely makes paying bankers in tips worthy of consideration."

Receiving Wide Coverage ...Fannie-Freddie Merger: One big step for housing reform? Federal Housing Finance Agency acting director Edward DeMarco unveiled plans on Monday to merge certain parts of government-controlled mortgage giants Fannie Mae and Freddie Mac in order to "create a common platform for issuing mortgage-backed securities." Details on this plan were scarce, but the merger of certain "back-office functions" would involve forming a new company with its own CEO, management and headquarters. This firm will be jointly funded by Fannie and Freddie. The aim is to "create a single standard for issuing securities that could survive independently if the two companies no longer exist," Bloomberg reports. No timeline was given for when the new company would start issuing securities, but it is "unlikely" to take place this year. Congress and the White House will ultimately have to "decide how the securitization platform is operated, and whether it should be privatized." Reaction to the plan, thus far, has been minimal, largely because news of its existence broke late yesterday. BankThink's resident Risk Doctor Cliff Rossi, who has championed combining Fannie and Freddie before, told the Journal, the merger would "signal to the market that the status quo since 2008 for the [companies] is changing." But not everyone was feeling kind toward Fannie and Freddie, which have collectively received $190 billion in taxpayer aid since 2008. "Put all your rotten eggs in one basket," one Post reader commented. "That's sometimes the only way," another reader responded.