October 13, 2011
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FIA Expo 2011
The Futures Industry Association (FIA) held its 27th Annual Futures & Options Expo in Chicago this week. Click here for FIA videos of the event.
--Related Stories:
CFTC Chairman Gensler addresses FIA Expo in Chicago
Good morning. I thank the Futures Industry Association (FIA) for inviting me to speak today and John Damgard for that kind introduction. This is the third year that I’ve spoken at FIA’s Chicago event, and it’s always a good opportunity to hear directly from the futures industry.I would like to start by taking a moment to talk about what we’ve been up to at the Commodity Futures Trading Commission (CFTC) since I spoke with you at your Chicago conference last year and more recently at your event in Boca. Before I do that, I’d like to thank and recognize each of my fellow Commissioners: Mike Dunn, Jill Sommers, Bart Chilton and Scott O’Malia for their dedication and significant contributions.
http://jlne.ws/rjhOz0
Mortgage bankers grapple with consumer outrage
Reuters via Yahoo! News
U.S. mortgage bankers attending an industry conference in Chicago this week received something they did not originally bargain for -- a heavy dose of the consumer anger against the financial system that has boiled into protest rallies across the country.
http://jlne.ws/qbIJv5
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Federal Reserve Seeking Comments On Volcker Rule
The Federal Reserve Board on Tuesday requested public comment on a proposed regulation implementing the so-called "Volcker Rule" requirements of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 619 generally contains two prohibitions. First, it prohibits insured depository institutions, bank holding companies, and their subsidiaries or affiliates (banking entities) from engaging in short-term proprietary trading of any security, derivative, and certain other financial instruments for a banking entity's own account, subject to certain exemptions. Second, it prohibits owning, sponsoring, or having certain relationships with, a hedge fund or private equity fund, subject to certain exemptions.
Comments on the proposal will be received through January 13, 2012.
To submit a comment to the Fed regarding the proposed regulation, click here.
http://jlne.ws/qpb5Ji
--Christine Nielsen
Lead Stories
Fitch Reviewing Global Trading and Universal Banks; Places Seven on Rating Watch Negative
Pr-Inside: Press Release
In conjunction with a broad assessment of the ratings for the largest banking institutions in the world, Fitch Ratings is conducting a review of the global trading and universal banks in its rating portfolio. As part of that review, Fitch has placed the Viability Ratings (VRs) of seven and the long-term Issuer Default Ratings (IDRs) of six global trading and universal banks on Rating Watch Negative. At the same time, Fitch has placed the short-term IDRs of four of the banks on Rating Watch Negative.
http://jlne.ws/pB9lnb
30-year mortgage rate jumps to 4.12%
By Ruth Mantell, MarketWatch
Following some better-than-expected employment data, the average rate on the 30-year fixed-rate mortgage jumped higher to 4.12% in the week ending Oct. 13 after hitting a record low of 3.94% in the prior week, Freddie Mac reported Thursday. "An employment report that was better than market expectations helped to lift long-term Treasury bond yields and mortgage rates as well," said Frank Nothaft, Freddie Mac's chief economist, in a statement.
http://jlne.ws/q6qel0
America’s six key lessons for a ‘Euro Tarp’
By Gillian Tett, Financial Times
“We told you so”. That captures the reaction of many American bankers and policymakers towards Europe these days. Ever since America unveiled its own troubled asset relief programme in 2008, observers in Washington and New York have muttered darkly about Europe’s failure to grasp its banking nettle.
http://jlne.ws/nBOOJ9
Banks oppose data-sharing rule
Fort Wayne Journal Gazette
Banks are pushing the Consumer Financial Protection Bureau to limit information-sharing with states out of concern that attorneys general could file lawsuits based on data collected by the agency's examiners.
http://jlne.ws/pA8Y6j
Why The Bank/Brokerage Marriage Has Failed
Forbes
It's hard enough to be an advisor today without having to defend the reputation of your company. If you work for a brokerage that is owned by or part of a bank, however, this is exactly the position that you find yourself in.
http://jlne.ws/rneM4H
Minutes Of The Federal Open Market Committee, September 20-21, 2011
Press Release
The Federal Reserve Board and the Federal Open Market Committee (FOMC) on Wednesday released the attached minutes of the Committee meeting held on September 20-21, 2011.
http://jlne.ws/qaHSTB
Monetary policy: Progress, of a sort
The Economist
THOSE frustrated by the timidity of the Federal Open Market Committee can take some comfort in the fact that it is not, as a body, a dangerously dogmatic bunch. The FOMC is cautious, and quite conservative when it comes to moving away from its overarching focus on price stability, but it is responsive.
http://jlne.ws/oDoPNQ
U.S. Treasury Secretary Timothy F. Geithner Testimony Before The Committee On Banking, Housing, And Urban Affairs
Press Release
http://jlne.ws/ne7T1C
U.S. Treasury Secretary Geithner To Host APEC Finance Ministers Meeting, November 9-10, 2011
Press Release
The U.S. Department of the Treasury today announced that Treasury Secretary Tim Geithner will travel to Honolulu, Hawaii to host the 2011 Asian-Pacific Economic Cooperation (APEC) Meeting of Finance Ministers on November 9-10, 2011.
http://jlne.ws/oWQtyj
Wall Street Sees ‘No Exit’ From Financial Woes as Bankers Fret
By Max Abelson, Bloomberg
Wall Street executives, facing demonstrators camped for a fourth week in New York’s financial district, say they’re anxious and angry for other reasons. An era of decline and disappointment for bankers may not end for years, according to interviews with more than two dozen executives and investors. Blaming government interference and persecution, they say there isn’t enough global stability, leverage or risk appetite to triumph in the current slump.
http://jlne.ws/oSerPs
The Trade: Between the Lines, Wall St. Banks Face a Deficit of Trust
New York Times
Morgan Stanley is a safe and solid investment bank by almost any measure, but diminished trust in the financial system has sent its shares down 42 percent this year.
http://jlne.ws/o46ORf
Schizophrenia about debt
by Gavyn Davies, Financial Times
What is the four letter word which best defines our era? Undoubtedly, debt. An unprecedented build up of debt – mainly private, not public, it should be noted – was the force behind the global boom which ended in 2008. And now the difficulty of escaping from debt threatens to become the dominant problem of the present decade.
http://jlne.ws/n6ngu8
GOP senators vote to defeat Obama's jobs bill
By ANDREW TAYLOR and BEN FELLER, Associated Press
United against Barack Obama, Senate Republicans voted Tuesday night to kill the jobs package the president had spent weeks campaigning for across the country, a stinging loss at the hands of lawmakers opposed to stimulus-style spending and a tax increase on the very wealthy.
http://jlne.ws/pZ4oP0
Pimco’s Gross makes U-turn on Treasuries
By Dan McCrum and Michael Mackenzie in New York, Financial Times
Bill Gross has made a big U-turn in the investment strategy of his $242bn fund after a high-profile bearish call on the US Treasury market backfired, triggering deep underformance by the world’s largest bond fund.
http://jlne.ws/qpF7RX
Europe hits banks with tougher capital test
Reuters via Yahoo! News
Europe's banks will have to achieve a significantly stronger capital position under a quick-fire regulatory health check and may need to raise some 100 billion euros ($137 billion), banking and regulatory sources said on Tuesday.
http://jlne.ws/nwreYn
Moody’s downgrade hits UK banks
By Michael Hunter, Financial Times
London’s banks fell on Friday after Moody’s cut its rating on a dozen UK financial institutions, sending the sector to the bottom of the FTSE 100. Support from defensive stocks left the index flat overall.
http://jlne.ws/r9Bgi3
Fitch Says Portugal Ratings May Still Be Cut to Junk
StreetInsider
Fitch Ratings has maintained Portugal's local- and foreign-currency Issuer Default Ratings (IDR) of 'BBB-' and Short-term IDR of 'F3' on Rating Watch Negative (RWN). Portugal's 'AAA' Country Ceiling is unaffected
http://jlne.ws/nOMTkJ
FITCH RAMPAGE: Rater Slashes Spain And Italy
Business Insider
Fitch is on a rampage with both Spain and Italy getting cut in the last few minutes.
http://jlne.ws/q1io9d
Fitch: US CMBS Delinquencies Drop To 8.6% In September
Dow Jones Newswires
Delinquencies in U.S. commercial mortgage-backed securities declined a second month in a row, helped by a turnaround trend for hotels, Fitch Ratings said.
http://jlne.ws/nUuKm8
Fitch Downgrades Spain To 'AA-' - Outlook Negative
Press Release
Fitch Ratings has downgraded Spain's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'AA-' from 'AA+'. The rating Outlook is Negative. Fitch has simultaneously affirmed Spain's Short-term rating at 'F1+' and the Country Ceiling at 'AAA'.
http://jlne.ws/qgIBfA
For Women Bankers, a Subdued Awards Party
By MICHAEL J. DE LA MERCED, NY Times
In most years, American Banker’s Most Powerful Women in Banking awards gala is a time for the finance industry’s top female executives to dress up and let their hair down a little. But this year, while the glittering dresses and red carpet entrance remained, the gala was a bit more subdued.
http://jlne.ws/ppuzIy
Wall Street Protests Inspire Ire Over Bank Recruiting
By KEVIN ROOSE, NY Times
As protesters affiliated with the Occupy Wall Street movement continue to camp out in lower Manhattan’s Zuccotti Park, students at some of the nation’s top colleges are also taking up the banner of antibank activism, beginning with their schools’ on-campus recruiting programs.
http://jlne.ws/oI8DMo
TABB Says Proposed Margin Rules For OTC Interest-Rate Derivatives Will Severely Damage Swaps Market Liquidity
Press Release
Regulatory mandates requiring firms to post initial margin on over-the-counter derivatives (OTCD) are among the biggest changes that Dodd-Frank legislation is set to bring about. According to TABB Group estimates issued today in new research, these new margin rules will cause OTC interest-rate derivatives market participants to shoulder at least $1.4 trillion in new capital charges globally within the next three to five years.
http://jlne.ws/o8UBxt
Volcker Rule
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SEC proposes Volcker rule, swap dealer plan
Sarah N. Lynch, Reuters
The U.S. Securities and Exchange Commission agreed on Wednesday to seek comments on a major plan that would restrict banks from trading for their own profits or investing in hedge funds.
http://jlne.ws/nIf7IO
Volcker Rule Is Out, How Much Will It Hurt?
Forbes
The draft proposal of the Volcker Rule asks many questions that both banks and their critics hope to answer.
http://jlne.ws/nkmXEX
Citigroup's Vikram Pandit: Volcker Rule May Strike the Right Balance
Wall Street Journal Blogs
Citigroup CEO Vikram Pandit said the controversial Volcker Rule may strike the right balance between speculation and capital, and he uttered some sympathetic words for the Occupy Wall Street protests.
http://jlne.ws/q1aHoV
Volcker Rule: sicknesses and cures confused
Financial Times
Whether it’s because Paul Volcker has reached an age beyond criticism, or there are few details, or banks are utterly friendless these days, the so-called Volcker Rule rumbles forward, in spite of being one of the silliest bits of the Dodd-Frank Act. This week, more details of the new legislation emerged and the Federal Deposit Insurance Corporation is expected to release the full proposal on October 11. The Volcker Rule is silly for two reasons. First, it fundamentally confuses sicknesses and cures.
http://jlne.ws/oYNM7W
FDIC Votes to Approve Volcker Rule for Banks
CNBC
U.S. regulators on Tuesday released for public comment the Volcker rule proposal that will restrict Wall Streets ability to trade for its own profit, setting off what is expected to be a fierce lobbying campaign to weaken the crackdown.
http://jlne.ws/o3y9zL
Goldman May Drop Bank Status Over Volcker Rule, Hilder Says
By Michael J. Moore, Bloomberg
Goldman Sachs Group Inc. and Morgan Stanley may consider dropping their status as bank holding companies to avoid expenses tied to the Volcker rule, said David Hilder, an analyst at Susquehanna Financial Group LLP.
http://jlne.ws/orgE8O
Events
The European Exchanges Summit
October 17 - October 18, 2011
Marketforce and the IEA discuss key issues with Europe's industry leaders
http://jlne.ws/roaBqg
FIA Chief Compliance Officer Bootcamp And Dodd-Frank
October 24, 2011
FIA looks At Role Of Compliance Officer Under Dodd-Frank
http://jlne.ws/plwBMV
7th Annual FIA Asia Derivatives Conference
November 29 - December 1, 2011
FIA looks at the futures and options industry in Asia
http://www.futuresindustry.org/asia-2011.asp
Economic News
U.S. August International Trade in Goods and Services
By Alex Tanzi, Bloomberg
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total August exports of $177.6 billion and imports of $223.2 billion resulted in a goods and services deficit of $45.6 billion, virtually unchanged from July, revised. August exports were $0.1 billion less than July exports of $177.7 billion. August imports were $0.1 billion less than July imports of $223.3 billion.
http://jlne.ws/phYKdY
Initial jobless claims inch down to 404,000
By Jeffry Bartash, MarketWatch
Slightly more than 400,000 people filed new applications last week for unemployment benefits, keeping claims at a level typically associated with weak hiring trends, U.S. government data showed Thursday.
http://jlne.ws/qmk9xQ
Economix Blog: A Low in Gallup's Economic Confidence Index
The New York Times
Americans have given their economy a vote of no confidence. Or at least, very little confidence.
http://nyti.ms/q6Xt5e
Monthly And Annual Wholesale Trade, Full Report
http://jlne.ws/n1vvhM
Firms & Banks
JPMorgan Q3 net falls; bank readies pink slips
By David Henry, Reuters
JPMorgan Chase & Co's quarterly earnings fell 25 percent, excluding an accounting gain, as the European debt crisis pushed investment banking clients to the sidelines.
http://jlne.ws/nMQqPC
Goldman Sachs to Employees: Avoid Occupy Wall Street
CNBC
Several people at Goldman Sachs have said that they have been told to stay away from the Occupy Wall Street protests in Zuccotti Park.
http://jlne.ws/q8duIi
U.S. takes action against failed Calif. bank execs
By Dan Levine and Sarah N. Lynch, Reuters
Two former executives of a bank that received a $300 million federal bailout before its collapse during the financial crisis are facing criminal and civil fraud charges for their role in trying to conceal loan losses.
http://reut.rs/pE5RQ0
Day of reckoning for Goldman, Morgan Stanley
CNN Money
Goldman and Morgan have had two years to figure out what they want to be in the post-financial crisis world: Are they investment banks or bank holding companies? The Volcker Rule may change it all again.
http://jlne.ws/npjWJw
J.P. Morgan Announces Successful Transition to Three-Way Trade Confirmation for Tri-Party Repo Clients
Business Wire
J.P. Morgan today announced that its active tri-party repo clients have successfully completed the transition to three-way trade confirmation as mandated by the Tri-Party Repo Market Infrastructure Reform Task Force. By value, 99% of all tri-party repos
booked daily through J.P. Morgan are now confirmed by both counterparties.
http://jlne.ws/n65ZzP
Bank of America executive to get $6 million in exit pay
Associated Press
Sallie Krawcheck and Joe Price, the two top Bank of America executives who were ousted last month, are getting hefty severance packages. In a regulatory filing on Friday, Bank of America Corp. said Krawcheck will receive $6 million and Price will collect $5 million as part of a severance agreement which also includes health coverage benefits for a year.
http://jlne.ws/pQhVBS
HSBC restarts foreclosure activity
The Buffalo News
HSBC Bank USA and HSBC Finance Corp. have restarted some of their mortgage foreclosures in New York State and certain other markets, about 11 months after the bank suspended home seizures in the wake of national controversy industrywide over improper foreclosure paperwork.
http://jlne.ws/nKAmHQ
Citigroup Said to Halt Soliciting Some Japan Retail Business
Bloomberg
Citigroup Inc. (C) stopped soliciting clients for some retail banking products in Japan as it awaits the outcome of a government investigation into its compliance with local rules, two people with knowledge of the matter said.
http://jlne.ws/pZkH7i
UBS Says Worst of China Lending Panic, Hysteria May Be Over
BusinessWeek
The worst of the "panic and hysteria" over informal lending in China may be over as the city of Wenzhou works with businesses and the central government to stabilize credit, UBS AG said.
http://jlne.ws/obP93a
**CN: Dear UBS, when will the panic and hysteria end in the U.S.?
HSBC Says North America Chief Booker Departing, Names Dorner as Successor
Bloomberg
HSBC Holdings Plc appointed Irene Dorner as group general manager, president and CEO of HSBC USA. HSBC Holdings Plc (HSBA) said Niall Booker, group managing director and chief executive officer of HSBC North America Holdings Inc., is leaving the company.
http://jlne.ws/phOgxU
Krawcheck Steps Down From Post at Wall St. Regulator
By BEN PROTESS, NY Times
Sallie L. Krawcheck and the Financial Industry Regulatory Authority have officially parted ways.
http://jlne.ws/ncnpRc
**CN: That's the former "Mrs. Clean" of the Wall Street and banking worlds. She had just joined the FINRA board in August.
Regulators
Speech By SEC Chairman Mary Schapiro: Statement At SEC Open Meeting: Registration Of Securities-Based Swap Dealers And Major Security-Based Swap Participants
Press Release
http://jlne.ws/nsJOPD
FSB calls for ‘aggressive’ action on OTC derivative reform
By Jeremy Grant in Johannesburg, Financial Times
Countries committed to overhauling their over-the-counter (OTC) derivatives markets must “aggressively push forward” to meet next year’s deadline because only a “few” have the rules in place, the Financial Stability Board has warned. The warning, from the Basel-based body made up of central bankers and regulators, is a sign of growing concern that G20 nations are falling behind in meeting commitments made in 2009 in the wake of the 2008 financial crisis to overhaul the $600,000bn OTC derivatives markets.
http://jlne.ws/qkMwM9
Regulators stand up for new capital rules
By Patrick Jenkins, Banking Editor, Financial Times
Global regulators insist the economic cost of implementing tough new rules on bank capital requirements will have only a tiny effect on global growth, with their latest estimate putting the impact at barely a tenth of the industry’s own projection.
http://jlne.ws/qjR38L
Merkel: Banks should be recapitalised without delay
AFP via Yahoo! News
Banks should be recapitalised as quickly as possible, if needed, German Chancellor Angela Merkel said Thursday, as concerns grow that the eurozone debt crisis is turning into a credit crunch.
http://jlne.ws/p0E5zO
CDS
CME Buyside CDS Clearing Volumes Overtake ICE
Dow Jones
CME's CDS clearing arm cleared $1.9B in CDS last week and has now cleared $8.9B in CDS for buyside customers since the service launched, overtaking buyside CDS clearing tally of ICE Clear Credit, at $8.7B since launch.
CDS clearing nears real time
By Telis Demos, Financial Times
Wall Street has continued the slow process of remaking fixed-income trading amid pending regulatory reforms and pressures to cut costs, with announcements this week of new products to clear credit swaps and track bond trades in real time. MarkitSERV, a joint venture between Markit and the Depository Trust and Clearing Corp, announced on Tuesday it had completed near-real time clearing for credit-default swap trades by several large dealers.
http://jlne.ws/p8XPNU
The New York Fed Report, Hedging and Market-Making
DerivatiViews
Last week, derivatiViews commented on the New York Fed’s study on the CDS market. The study confirmed in many ways our own research and provided some important new data on market participants and their activity in the CDS market. We only wish we could see more OTC derivatives analyses from the New York Fed and other, well-regarded regulatory bodies. This week we address market-making and hedging, another topic covered in the report.
http://jlne.ws/pZFQ0O
Global News
Slovakia Ratifies Euro Bailout Fund
By Radoslav Tomek and Peter Laca, Bloomberg
Slovakia approved Europe’s enhanced bailout fund, completing ratification across the 17 euro countries as the region’s leaders prepare for a summit.
http://jlne.ws/qlQ3Zh
Norway Banks Can Absorb Credit Crisis Shock, Johnsen Says
BusinessWeek
Norway's banks are ready to absorb the first shocks from a potential debt crisis that risks engulfing Europe, Finance Minister Sigbjoern Johnsen said.
http://jlne.ws/o6jd9a
EU banks could shrink to hit capital rules
By Patrick Jenkins and Brooke Masters in London and Alex Barker in Brussels - Financial Times
Leading European banks say they would rather sell assets than raise expensive new capital to meet compulsory demands from the European Union for higher capital ratios, threatening a further contraction of credit to the enfeebled eurozone economy.
http://jlne.ws/mTT8ge
Beijing acts to help stabilise banks
By Simon Rabinovitch in Beijing, Financial Times
Beijing will buy additional shares in the country’s biggest banks, an expression of state support for the beleaguered stock market that paid instant dividends with a rally in the final minutes of trading on Monday. The move by Central Huijin, the domestic arm of China’s sovereign wealth fund, is intended to help stabilise the pillars of the country’s financial system, the official Xinhua news agency said.
http://jlne.ws/oc9Kkp
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