Banco Popular de Puerto Rico

Receiving Wide Coverage ...QE3 Surprise: In a departure from recent statements, Federal Open Market Committee indicated a willingness to step up bond purchases. Previously the Fed had hinted only that it might reduce monthly purchases. Now the official line is they could go up or down, depending on inflation and job growth. The upshot of all this Kremlinology: The shift to a neutral stance means the economy is still pretty weak. Wall Street Journal, Financial Times

Receiving Wide Coverage ...Jamie in the Hot Seat: When the nation's two most influential dailies simultaneously run stories in which federal authorities leak word that they're gunning for a megabank, it ain't no tempest in a teapot. That's the reality JPMorgan Chase's (JPM) Jamie Dimon woke up to this morning as the New York Times and Wall Street Journal published features quoting flies on the wall who describe meetings where government officials told the bank's top managers they're in a world of regulatory hurt. During a mid-April get-together, officials from the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York told Dimon, his fellow directors and certain members of his operating committee that they don't trust management, the Journal reports, citing "people familiar with the meeting." Both publications also report that JPMorgan Chase is in hot water with the Federal Energy Regulatory Commission, which has served it with a Wells notice accusing the bank and a Houston-based energy trading team of misrepresenting prices and overcharging California and Michigan for electricity (only the very young could miss the echoes of Enron.) Citing a confidential government document that was presented to the bank in March, the Times reports that the feds have concluded JPMorgan Chase devised "manipulative schemes" that transformed "money-losing power plants into powerful profit centers." Among the government's claims are that Blythe Masters, the bank's global commodities boss, gave "false and misleading statements" under oath. The bank disputed the allegations in a statement and said that no one lied under oath, according to the Journal. The claims that the bank engaged in fraud in the energy market come as regulators are looking into other areas where JPMorgan Chase is suspected of wrongdoing. The OCC is considering enforcement action over how it collected credit card debt (an area that over a year ago American Banker reported the OCC was scrutinizing. Authorities are also looking into the bank's possible failure to alert them of suspicions that Bernie Madoff was running a Ponzi scheme, the Times reports, citing "people who were not authorized to discuss the cases publicly." The mounting troubles come at a difficult time for Dimon. His lieutenants have been departing at a fast clip, and his credibility in Washington has been undermined by the London Whale trading losses, which also prompted his own board to cut his 2012 pay. On May 21, Dimon will face JPMorgan Chase shareholders and the results of a vote on whether he should retain both the chairman and chief executive titles. It's a humbling turn of events from just a year ago, notes the Journal, when Dimon was regarded as "the king of Wall Street." Wall Street Journal, New York Times

Receiving Wide Coverage ...Buffett Holds (Uneventful) Shareholder Meeting: Many members of the media spent the weekend with Warren Buffett, but the news coming out of Berkshire Hathaway's annual shareholder meeting — per articles in both the Times and the Journal — is that the Oracle of Omaha managed to avoid making any "big news." Buffett did engage in a discussion with "bear" Douglas Kass, who was invited to ask questions since he is "betting that the price of Berkshire shares will drop." But Kass "didn't draw much blood" and, overall, "Buffett largely reiterated positions he has stated publicly before — yes, he has decided on a successor, but, no, he is not saying who it is," notes the Journal. Perhaps those hoping for more details and/or insights can try following the Berkshire Hathaway chairman and CEO on Twitter.

Receiving Wide Coverage ...HSBC Earnings: HSBC's first quarter earnings almost doubled year over year, with pre-tax profit rising to $8.4 billion compared with $4.3 billion during the same period in 2012. The increase is attributed largely to all that cost-cutting the bank has been doing and a decline in bad debts. Expect the cost-cutting efforts to continue. Per the FT, "the bank is expected to close or sell a further eight to 10 businesses this year and next, in addition to the 49 already divested since 2011." Wall Street Journal, New York Times

Receiving Wide Coverage ...More Doubts Around Dimon's Dual Role: Another day, another round of worrisome headlines for JPMorgan Chase's Jamie Dimon. Major proxy firm Glass, Lewis and Co. has come out in favor of a shareholder's proposal that would split Dimon's dual role as CEO and chairman. Scan readers will recall that yesterday, the Journal reported three of JPM's largest shareholders — BlackRock, Vanguard Group and Fidelity Investments — "remain undecided" as to how they will vote and over the weekend, news broke that shareholder advisory firm Institutional Shareholder Services supported splitting up the roles. "I write a lot about how snowflakes trigger avalanches," tweeted "Currency Wars" author Jim Rickards. "The dump Jamie Dimon movement [is] starting to look like a blizzard." It remains unclear whether a majority of shareholders will actually vote to take away Dimon's chairman title. According to the Journal, Dimon told investors this week that he wants to keep both jobs, but most of the campaigning, thus far, has been left to other executives and directors. It's also unclear what will happen if the vote doesn't go Dimon's way. "The bank's board of directors does not want an independent chairman, but it seems unlikely they would ignore a majority vote to split the chairman and CEO roles during a time of heightened sensitivity of corporate governance matters and increasing criticism about America's big banks," this Forbes blog notes. There's also been speculation that Dimon might resign if the shareholders do go against him. At the very least, "while not binding, a majority vote to have a separate chairman and chief executive would be a heavy blow to the influential banker," this Dealbook article notes. The vote is set to take place May 21.

Receiving Wide Coverage ...Another Foreclosure Error: First, the OCC and Federal Reserve oversaw a foreclosure review process that benefited independent consultants more than actual homeowners. Next, the regulators replaced this costly foreclosure review with a settlement that gave only $300 to most affected borrowers. Then some of the checks mailed to borrowers bounced. Now regulators have disclosed that nearly 100,000 borrowers received checks for less than what they were owed, due to a clerical error by Rust Consulting, the firm hired to distribute the payments. (The New York Times article about the error begins: "At least these checks cleared.") Rust has been ordered by the Fed to fix its mistake by sending supplemental checks to affected borrowers. These checks are expected to go out as soon as May 17. Meanwhile, Jon Stewart may want to issue an update to his very recent Daily Show segment (with a cameo from American Banker Editor in Chief Neil Weinberg) on just how bungled this review/settlement has been. Wall Street Journal, Washington Post

Receiving Wide Coverage ...More JPM Woes: California Attorney General Kamala Harris is suing JPMorgan Chase over alleged credit card debt collection abuses. Per the lawsuit, JPM "engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period." The bank, thus far, is declining to comment on the lawsuit. Various news outlets report other enforcement actions from regulators concerning the collection issues may follow. These developments shouldn't surprise American Banker readers. Risk management editor Jeff Horowitz broke the news of a pending OCC probe when he profiled the bank's aggressive credit card collection practices back in March 2012. New York Times, Financial Times, Washington Post, Wall Street Journal, American Banker

Receiving Wide Coverage ...Doormat Directors: With little more than a week to go before JPMorgan's annual meeting, some shareholders are wondering whether Lee Raymond, the board's lead director, "has been an effective counterbalance" to chairman and CEO Jamie Dimon, the Times reports. If they conclude that Raymond, a former CEO of Exxon-Mobil, has been too lax in his oversight of the bank's management, these shareholders may vote to split the chairman and CEO roles. In her weekly column, Gretchen Morgenson takes a broad look at the ways in which "directors of public companies often let down their outside shareholders" in areas such as succession planning and pay for performance.

Receiving Wide Coverage ...More JPMeeting Previews: JPMorgan's annual meeting is a week from today, and the curtain-raisers keep coming. "Shareholders are taking a close look at financial relationships between some J.P. Morgan Chase board members and the company they oversee," according to the Journal. For example, the bank underwrote a bond issue, provided a line of credit and made charitable contributions to the American Museum of Natural History, run by Ellen Futter, a JPMorgan director. ("J.P. Morgan won the bond issuance as the result of a competitive bid, and the bank provided financing for the museum before Ms. Futter joined the bank's board, said a person close to J.P. Morgan," who must be a brave whistleblower risking his or her job to let the world know that the bank did nothing wrong.) Notably, the shareholders scrutinizing these conflicts are union pension funds, a category that chairman and CEO Jamie Dimon recently scoffed at as distinct from "real money" investors. Meanwhile, media baron Barry Diller tells Times columnist Andrew Ross Sorkin that the push to sever the chairman and CEO roles at JPMorgan "isn't about good governance; it's about busybodies … shaming a superb C.E.O." Sorkin writes that "the question before shareholders has moved beyond simply a philosophical debate about whether corporations should have a separate chairman and chief executive. The vote increasingly appears to have become a referendum on Mr. Dimon personally." On that score, the columnist reminds readers: "the incontrovertible fact remains that JPMorgan is still one of the best-performing banks on Wall Street under Mr. Dimon." The CEO is likely to quit "if he receives the equivalent of a no-confidence vote. Plus, there is no clear successor waiting in the wings." (A Times reader asks in the comment thread, "whose fault is it that 'there is no clear successor waiting in the wings?'") Interestingly, Ira Millstein, a corporate governance lawyer and prominent supporter of the independent-chairman model, acknowledges to Sorkin that "one size may not necessarily fit all." Hank Paulson's quoted in there stumping for Jamie, too.

Receiving Wide Coverage ...Sick of JPMorgan Yet? The Times' "Deal Professor," Steven Davidoff, calls the fight over the upcoming JPMorgan shareholder vote "silly." Though severing the chairman and CEO roles has improved governance at many companies, he writes, "not all companies are alike," and he finds the benefits of the independent-chair model for a large, complex bank dubious. "No study to my knowledge has ever found that companies that do such a split are better at risk management. … Does anyone really think that the JPMorgan board sits with complex spreadsheets looking at the bank's risk positions? Does anyone think it should?" Davidoff doubts an independent chairman would have prevented the London Whale debacle. Echoing colleague Andrew Ross Sorkin's column yesterday, he suggests the vote is more a referendum on chairman and CEO Jamie Dimon, and on big banks, than on corporate governance. … A news article in the Times reports that Dimon has been seeking counsel from Wallace Shawn, er, Lloyd Blankfein, about how to live in the uncomfortable spotlight of Congressional and media scrutiny. … Shareholder support for severing the chairman and CEO roles "is running slightly ahead of the 40% it received last year," the Journal reports, citing an anonymous source. (At Gallup or Zogby?) … Some big shareholders who want Dimon to remain chairman nevertheless plan to vote against re-election of certain directors, the FT reports. Ellen Futter, in particular, is "a lightning rod for corporate governance activists, whose qualifications to serve on the board's risk committee have been questioned." She runs the American Museum of Natural History (cue the dinosaur jokes) and is a former director of AIG who resigned from that board in July 2008, shortly before the government takeover (cue more dinosaur jokes). … The paper also reports that trading revenues in JPMorgan's investment bank are on track to post a double-digit gain this quarter from a year earlier. … We'll give the last word to a Journal reader who commented, "It is remarkable the amount of coverage this story is getting. Don't you guys have anything else to write about?"