Banco Popular de Puerto Rico

Receiving Wide Coverage ...Freddie vs. Banks Over Libor: Freddie Mac is suing more than a dozen banks and the British Bankers Association, alleging it incurred substantial losses as a result of Libor-rigging. The alleged losses are related to swaps transactions and mortgage securities the GSE had linked to Libor. The suit claims the BBA participated in the rigging "to protect revenue it generated from selling Libor licenses and to appease the banks that were on the Libor panel," the FT reports. Freddie's counterpart, Fannie Mae has yet to file suit, but told the Journal it was "weighing that possibility." Banks caught in Freddie's crosshairs include B of A, JPMorgan Chase, Citigroup, Credit Suisse, Deutsche Bank, RBS, Barclays and UBS.

Receiving Wide Coverage ...Bernanke on Fed Policy … and TBTF: The Federal Reserve issued its latest policy statement yesterday and, as expected, plans generally remain the same. The central bank will keep short-term interest rates low and continue buying $85 billion a month in Treasuries and mortgage-backed securities indefinitely. But both the Journal and the Times posit the Fed is eyeing a wind-down. Per the Journal: "Fed Chairman Ben Bernanke … said the central bank would vary the amount of its monthly bond purchases depending on how the economy is performing. This means it could slowly dial them down from the current pace as it becomes more convinced that the job market is improving." Per the Times: "Bernanke's remarks suggested that the Fed would reduce its asset purchases if job growth continued at the current pace." The Times article goes on to note, however, that the change is at the very least "a few months away." Meanwhile, Bernanke did spice up what many believed would be a "boring" press conference by saying he agreed with Sen. Elizabeth Warren's stance on "Too Big to Fail" banks. "It's a major issue," Bernanke said. "I never meant to imply that the problem was solved and gone. It's still here."

Receiving Wide Coverage ...Fearing a Minsky Moment: The more stable financial markets appear, the more unstable they're becoming. Until a crisis — or Minsky moment — hits, that is, when everyone rushes for the exit simultaneously. Such a moment appears to be on the minds of banking regulators these days. They warned on Thursday about the dangers lurking in the booming market for loans to struggling companies. The controls and quality checks applied by lenders when extending so-called leveraged loans have deteriorated, according to a joint warning issued by the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. Regulators questioned whether some banks are doing enough to accurately gauge the risks inherent in such loans. They also declared that they'll closely monitor the underwriting of such credits, which are typically used to finance buyouts or acquisitions, as well as the ability of firms to manage their lending and withstand loan-related losses. Certain debt agreements include features that wind up weakening lender protections by excluding meaningful maintenance covenants (sometimes known as covenant lite), or include features that limit a lenders' ability to take action in the event of a weakened borrower performance. Additionally, regulators characterized as "aggressive" the capital and repayment structures for some transactions. "Financial institutions unprepared for such stressful events and circumstances can suffer acute threats to their financial condition and viability," according to a quote from regulators cited in the Wall Street Journal. The updated guidance covers transactions by borrowers whose leverage exceeds industry norms. It focuses on several areas, including establishing a sound risk management framework; improving underwriting standards; accurate reporting and analytics; and realistic risk-rating of leveraged loans. "It is important that banks provided leveraged financing to creditworthy borrowers in a safe and sound manner," regulators said. The guidance comes amid a broader debate at the Fed over how the financial system is responding to it's efforts to keep interest rates near zero and whether the resulting risk-taking may also threaten financial stability, noted the Journal. It's the sort of question Professor Minsky would have lauded. Wall Street Journal, American Banker

Receiving Wide Coverage ...Cyprus Bailout: Remember that time back in college when your professor told you your score on the final exam would be the entirety of your grade, so you sort of blew off those little quizzes he gave throughout the semester? And how you ended up panicking a few days before the test, staying up all night on coffee or something stronger, and miraculously pulled off a B-minus?

Receiving Wide Coverage ...Good Euros and Bad Euros: The accomplished fact of losses for large depositors to resolve Cyprus' insolvent banks rippled through markets, newspapers and the commentariat. German Chancellor Angela Merkel's hard line against the offshore banking haven prevailed, but fresh worries that depositors in other countries with weak banks might flee reinvigorated doubts about the viability of the euro. An interview in the FT with Eurogroup President Jeroen Dijsselbloem was a focal point. He said that now that financial markets have achieved a state of relative calm, losses for bank creditors instead of taxpayer bailouts are in order. Later he appeared to walk back those remarks, saying rescue deals should be tailored to specific situations.

Receiving Wide Coverage ...More Cyprus: The FT surveys some of the fallout from efforts to shore up Cyprus' insolvent banks, noting that the damage is rippling in all directions and hitting businesses only loosely related to the country's formerly booming offshore financial sector. Some analysts are predicting the Cypriot economy will shrink 10% or more this year, the FT reports.

Receiving Wide Coverage ...Reopened: Cypriot banks reopened this morning, after being closed for nearly two weeks due to the country's financial crisis, but there are limits to what customers can do at their branches. Per the Post, cash withdrawals will be limited to 300 euros ($383) per person a day, transactions with other countries will be capped at 5,000 euros and those travelling won't be able to take more than 1,000 euros (as well as the equivalent sum in foreign currency) along for the trip. Cypriot banks were "braced" for an outflow of money once doors reopened, but, according to this Journal article, things thus far have been fairly quiet. "For the moment … the only crush at the branch was from the swarms of foreign journalists that have descended on the island over the past few days," the paper reports, adding that some Cypriots are waiting until the weekend to make withdrawals in order not "to topple the banks" the government is trying to protect. Meanwhile, U.S. markets are slipping because "investors just can't get past Europe" and German politicians are worried about all the criticism Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble have received as a result of the controversial Cyprus bailout. Another Journal article outlines how Cyprus' big banks ended up in financial ruin. The short version: It involves a lot of bad bets on Greece. It also appears regulators did little to flag (or stop) the exposure. Per the article, "both Cypriot banks passed Europe-wide stress tests in 2010, relieving them of pressure to change course. They passed again in 2011."

Receiving Wide Coverage ...In Cyprus, Patrolling Borders, Pointing Fingers: Cyprus is trying to tighten its borders against attempts by some depositors to bypass capital controls on banks and move money off the island, the FT reports. Police have upped patrols in the southern town of Limassol in an effort to frustrate efforts to extract money from the island by boat. Rules in place since Thursday prevent depositors from taking more than 1,000 euros a day out of the country. At least three people trying to leave the island with more than 200,000 euros in cash on them have been stopped by authorities, according to the FT. Officials are said to be investigating withdrawals from both the Bank of Cyprus and Laiki Bank in the early morning house of March 16 before the country's first bailout package was inked.

Receiving Wide Coverage ...A Goldman Specialty: Today was a morning of scattered financial coverage: the only story to be covered by more than one outlet is a Securities and Exchange Commission filing revealing that Goldman Sachs will launch a specialty finance company. The vehicle will use Goldman and investor money to purchase the high-risk debt of unrated midsized US companies, but don't call that prop trading – it's a business development corporation! And under the Jumpstart Our Business Startups Act of 2012, it qualifies as an "emerging growth company" which doesn't need to comply with a full slate of financial reporting rules. Wall Street Journal, Financial Times

Receiving Wide Coverage ...SEC Unveils Social Media Rules: The Securities and Exchange Commission has decided that companies can use Facebook, Twitter and other social media outlets to disclose key information about operations. But there's one catch: investors must be told what handles, Facebook pages, etc. these updates will be posted to. According to the Post, this disclosure rule essentially mimics the guidance issued by the SEC regarding company websites in 2008. Regarding the new social media rule, one former SEC enforcement official tells Dealbook, the "they did a really good job of splitting the baby." But this Journal blog hints that the SEC's clarity on social media may not be a game-changer. "While companies may now feel freer to use Facebook or Twitter to disseminate key information, in practice many are likely to play it safe and won't rely solely on social media sites as a distribution channel for such news," the author writes.