Tue, May 22, 2012
Nasdaq shareholders mum on Facebook IPO
By John McCrank
NEW YORK (Reuters) - Not a single shareholder asked a question at Nasdaq OMX's annual meeting on Tuesday, just days after ...
Tue, May 22, 2012
Facebook IPO shows galactic divide between investors
By Lauren Young
NEW YORK (Reuters) - It's no surprise to anyone that big investors get preferential treatment on Wall Street.
Investors expressed disappointment ...
Tue, May 22, 2012
Wells Fargo highlights risk management
By Rick Rothacker
(Reuters) - Wells Fargo & Co
The fourth-largest U.S. bank by assets also raised its return on assets target during an investor day for analysts, even as executives repeatedly stressed their focus on carefully managing risks in the bank's operations.
"You can't take out-sized risk in the financial services industry, and we do our best not to do it," Chief Financial Officer Tim Sloan said during a day of presentations by top executives in New York.
The San Francisco-based bank has emerged from the financial crisis as one of the strongest in the United States. But analysts posed questions about its securities portfolio and its investment banking ambitions following JPMorgan's trading blunder.
Wells Fargo does not do any "centrally directed macro portfolio hedges," Chief Risk Officer Mike Loughlin said in response to an analyst's question. The bank also does not run its $230 billion securities portfolio like a business line. Instead it uses these investments to balance the bank's risk from interest rate changes, said Treasurer Paul Ackerman.
Teams led by Sloan and wholesale banking head Dave Hoyt manage Wells Fargo's securities portfolio, spokeswoman Mary Eshet said.
Bank of America
As another example of Wells Fargo's attention to risk, Sloan said the bank's credit default swaps portfolio grew too large three years ago, but has now been reduced to about a quarter of its original size. JPMorgan's trading strategy involved credit default swaps, a kind of derivative that was at the center of the 2008 financial crisis.
Wells Fargo aims for a return on assets of 1.3 to 1.6 percent, depending on the economic and regulatory environment, Sloan said. That top range exceeds the 1.5 percent target the bank laid out in 2010 and compares with a 1.31 percent ratio in the first quarter of this year.
Banks lately have been struggling to boost revenue at a time of weak loan demand and tight lending margins.
OPEN TO MORE DEALS
After expanding to the East Coast with its 2008 purchase of Wachovia Corp, Wells stepped back from doing acquisitions as it merged operations. But since the second quarter of last year, it has completed or agreed to seven deals to buy loan portfolios, business units or other companies.
Chief Executive John Stumpf said the bank does not have to do any acquisitions, but is interested in the right opportunities, including insurance firms, wealth management firms and more loan portfolios.
In its latest deal, the bank agreed to buy a prime brokerage firm, allowing it to offer clearing and other services to hedge funds for the first time.
In a question-and-answer session, NAB Research analyst Nancy Bush said the purchase of Merlin Securities set off a "tremble" among investors and asked how big the bank needs to be in the capital markets business. Stumpf said the bank's goal is to be able provide a broad array of services to corporate customers with which it has deep relationships.
In another presentation, community banking head Carrie Tolstedt said Wells plans to open more branches, a contrast to Bank of America, which is closing and selling branches. Wells has more than 6,200 U.S. branches, the most of any U.S. bank.
The bank is also rolling out new technology to speed service and cut costs, Tolstedt said. Touchscreen pads in teller lines will allow customers to receive receipts via email and to transfer funds, she said.
Mortgage head Mike Heid said the bank has options for reducing the negative impact mortgage servicing rights -- the right to collect payments from borrowers -- can have on its capital ratios under the new international standards called Basel III. The bank is looking at creating a market for selling these rights, while retaining the ability to collect payments. Some real estate investment trusts have expressed interest in the idea, Heid said.
Wells Fargo shares closed up .86 percent at $31.67 on Tuesday. The shares have climbed about 15 percent this year, better than the 11 percent increase in the KBW Bank Index <.BKX>.
(Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by Gerald E. McCormick, John Wallace, Matthew Lewis and Leslie Gevirtz)
Tue, May 22, 2012
Yahoo under Levinsohn seen shifting to content, advertising
By Joseph Menn
SAN FRANCISCO (Reuters) - With two of its most distracting conflicts resolved in the past week and a half, Yahoo Inc hopes ...
Tue, May 22, 2012
Exclusive: Massachusetts subpoenas Morgan Stanley for Facebook
By Jessica Toonkel
NEW YORK (Reuters) - Massachusetts Secretary of Commonwealth William Galvin has issued a subpoena to Morgan Stanley over an analyst's discussions ...
Tue, May 22, 2012
"Fiscal cliff" could cause U.S. recession: CBO
By Lucia Mutikani and Kim Dixon
WASHINGTON (Reuters) - A stalemate over how to tackle a series of fiscal deadlines at year's end would ...
Tue, May 22, 2012
JPMorgan, CFTC held talks a day after losses revealed
By Alexandra Alper
WASHINGTON (Reuters) - JPMorgan Chase & Co officials met with the U.S. futures regulator one day after revealing a $2 billion loss on trades booked in London, according to information from the Commodity Futures Trading Commission.
Five JPMorgan officials met with Democratic Commissioner Mark Wetjen to discuss the overseas reach of U.S. swaps reforms, which the banking industry has argued will put U.S. banks at a disadvantage and increase the cost of hedging.
But JPMorgan's now infamous trades -- which could generate up to $5 billion in losses and are now under investigation by the CFTC and other agencies -- have appeared to harden the CFTC's resolve to create a robust overseas regulatory regime.
The CFTC is in the process of finalizing some of the most critical swaps rules required by the 2010 Dodd-Frank financial oversight law.
"Some commenters have expressed the view that if a transaction is done offshore, it should not come under Dodd-Frank," CFTC Chairman Gary Gensler said on Tuesday at a Senate Banking Committee hearing about JPMorgan's trading losses.
"The law, the nature of modern finance and the experiences leading up to the 2008 crisis, as well as the reminder of the last two weeks, strongly suggest this would be a retreat from much-needed reform," Gensler said, referring to JPMorgan's losses.
The faulty portfolio was built on layers of supposedly offsetting bets with credit derivatives tied to corporate bonds.
The failed hedging strategy was executed by JPMorgan's Chief Investment Office in London.
Those trades, which are also under investigation by the Securities and Exchange Commission and the FBI, have prompted Chief Executive Jamie Dimon to suspend a $15 billion share repurchase plan and shaved roughly $30 billion off the market value.
Dimon revealed the trading losses on May 10.
On May 11, according to CFTC records released on Tuesday, Wetjen met with a group of JPMorgan officials to discuss "cross-border issues."
Among the attendees was JPMorgan's managing director and associate general counsel, Don Thompson, who testified before Congress earlier this year.
Overseas swaps regulation "not only goes beyond congressional intent, but harms the competitiveness of U.S. financial institutions with global businesses," Thompson said at a February House Financial Services panel.
Thompson echoed the arguments of many U.S. banks, which say broad cross-border swaps rules would force them to charge customers more than their unregulated competitors, driving customers away.
The CFTC and JPMorgan declined to comment on the May 11 meeting.
JPMorgan executives and Dimon have been a frequent presence in Washington, lobbying against what they say are excessive regulatory proposals that will constrain consumer credit and hurt economic growth.
JPMorgan and its units have met with the CFTC roughly 30 times since Dodd-Frank became law in July 2010, according to the CFTC's website.
Citigroup, Barclays and Morgan Stanley representatives also met with Wetjen on May 11 to discuss the same issue, according to the website.
REFORM PUSHBACK WEAKENS
The CFTC was tasked by Dodd-Frank with boosting transparency and limiting risk in the $708 trillion over-the-counter global swaps market.
Risky derivatives trading at overseas subsidiaries of firms like insurer American International Group severely damaged the U.S. financial system during the 2007-2009 credit crisis.
The global profile of risk prompted Congress to give the CFTC broad authority to regulate overseas swaps activity that has a "direct and significant" impact on U.S. commerce.
U.S. banks, including JPMorgan, had mounted a full court press to convince the agency to spell out a more limited view of its authority, while pushing bills through Congress to reduce it by law.
But the momentum behind the push has faded as financial reform advocates have pointed to JPMorgan's trading losses to highlight the need for tough overseas rules.
Last week, a House Agriculture panel suspended consideration of a bill that would have exempted the vast majority of foreign trades from some Dodd-Frank rules.
Republican Committee Chairman Frank Lucas cited the JPMorgan trading losses as a reason for the panel to slow down.
CFTC Commissioner Bart Chilton said the agency must be careful not to "overshoot" with rules that cut too deeply into the authority of foreign regulators, but agreed that the trading losses made a case for tough overseas application.
"The JPMorgan circumstance exemplifies that these are global markets and just because something is done in a jurisdiction outside of the U.S. doesn't mean that it doesn't impact U.S. customers, markets or potentially our economy," he said in an interview.
Gensler similarly called the trades a "stark reminder" of how overseas trading can transfer risk to the United States at a Financial Industry Regulatory Authority conference in Washington on Monday.
There he also laid out key elements of guidance the CFTC plans to release shortly on the reach of swaps rules.
In a major blow to banks, Gensler said that transactions between a foreign entity and either an overseas branch or a guaranteed affiliate of a U.S. firm will face U.S. regulation.
(Reporting By Alexandra Alper; Editing by Kenneth Barry, Bernard Orr)
Tue, May 22, 2012
Funds with Facebook hammered as proxy by shorts
By Ross Kerber
(Reuters) - Some investment funds have paid a price for their friendship with Facebook since the social networking giant went public last ...
Tue, May 22, 2012
Analysis: Golden age or bubble? Plane-makers walk the line
By Kyle Peterson
CHICAGO (Reuters) - From a chilly perch in Burnsville, Minnesota, Tim Zemanovic has an usual perspective on the global aircraft market, which ...
Tue, May 22, 2012
JPMorgan lobbied CFTC a day after losses revealed
By Alexandra Alper
WASHINGTON (Reuters) - JPMorgan Chase & Co
The five JPMorgan officials visited the CFTC to discuss the overseas reach of U.S. swaps reforms, which the banking industry has argued will put U.S. banks at a disadvantage and increase the cost of hedging.
But JPMorgan's now infamous trades -- which could generate up to $5 billion in losses and are now under investigation by the CFTC and other agencies -- have appeared to harden the CFTC's resolve to create a robust overseas regulatory regime.
The CFTC is in the process of finalizing some of the most critical swaps rules required by the 2010 Dodd-Frank financial oversight law.
"Some commenters have expressed the view that if a transaction is done offshore, it should not come under Dodd-Frank," CFTC Chairman Gary Gensler said on Tuesday at a Senate Banking Committee hearing about JPMorgan's trading losses.
"The law, the nature of modern finance and the experiences leading up to the 2008 crisis, as well as the reminder of the last two weeks, strongly suggest this would be a retreat from much-needed reform," Gensler said, referring to JPMorgan's losses.
The faulty portfolio was built on layers of supposedly offsetting bets with credit derivatives tied to corporate bonds.
The failed hedging strategy was executed by JPMorgan's Chief Investment Office in London.
Those trades, which are also under investigation by the Securities and Exchange Commission and the FBI, have prompted Chief Executive Jamie Dimon to suspend a $15 billion share repurchase plan.
Dimon revealed the trading losses on May 10.
On May 11, according to CFTC records released on Tuesday, a group of JPMorgan officials met with Commissioner Mark Wetjen to discuss "cross-border issues."
Among the attendees was JPMorgan's managing director and associate general counsel, Don Thompson, who testified before Congress earlier this year.
Overseas swaps regulation "not only goes beyond congressional intent, but harms the competitiveness of U.S. financial institutions with global businesses," Thompson said at a February House Financial Services panel.
Thompson echoed the arguments of many U.S. banks, which say broad cross-border swaps rules would force them to charge customers more than their unregulated competitors, driving customers away.
The CFTC and JPMorgan did not immediately respond to requests for comment about the May 11 meeting.
JPMorgan executives and Dimon have been a frequent presence in Washington, lobbying against what they say are excessive regulatory proposals that will constrain consumer credit and hurt economic growth.
JPMorgan and its units have met with the CFTC roughly 30 times since Dodd-Frank became law in July 2010, according to the CFTC's website.
Citigroup
REFORM PUSHBACK WEAKENS
The CFTC was tasked by Dodd-Frank with boosting transparency and limiting risk in the $708 trillion over-the-counter global swaps market.
Risky derivatives trading at overseas subsidiaries of firms like insurer American International Group
The global profile of risk prompted Congress to give the CFTC broad authority to regulate overseas swaps activity that has a "direct and significant" impact on U.S. commerce.
U.S. banks, including JPMorgan, had mounted a full court press to convince the agency to spell out a more limited view of its authority, while pushing bills through Congress to reduce it by law.
But the momentum behind the push has faded as financial reform advocates have pointed to JPMorgan's trading losses to highlight the need for tough overseas rules.
Last week, a House Agriculture panel suspended consideration of a bill that would have exempted the vast majority of foreign trades from some Dodd-Frank rules.
Republican Committee Chairman Frank Lucas cited the JPMorgan trading losses as a reason for the panel to slow down.
On Monday, Gensler said the JPMorgan trades highlight the need for tough overseas swaps regulations and called the losses a "stark reminder" of how overseas trading can transfer risk to the United States.
At a Financial Industry Regulatory Authority conference in Washington he laid out key elements of guidance the CFTC plans to release shortly on the reach of swaps rules.
In a major blow to banks, Gensler said that transactions between a foreign entity and either an overseas branch or a guaranteed affiliate of a U.S. firm will face U.S. regulation.
(Reporting By Alexandra Alper; Editing by Kenneth Barry)
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