Fed Sets October End for Bond Buying (WSJ)
Federal Reserve officials agreed at June’s policy meeting to end their bond-buying program in October, putting an explicit end date on the experiment for the first time and closing a controversial chapter in central-banking annals with results still the subject of immense debate. The central bank has reduced bond purchases in $10 billion increments this year, to $35 billion a month from a peak of $85 billion. The tentative plan outlined in minutes of June’s meeting, released Wednesday, is to reduce bond purchases in increments at its next three policy meetings, including a $15 billion reduction in October, leaving it to buy no bonds in November. “If the economy progresses about as the [Fed] expects, warranting reductions in the pace of purchases at each upcoming meeting, this final reduction would occur following the October meeting,” the Fed said in the minutes.
Argentina and holdout creditors flood papers in ad war (Reuters)
Argentina published legal notices saying it wouldn’t be responsible for a default because it deposited money with Bank of New York Mellon at its central bank. U.S.-based BNY Mellon, the indentured trustee, is seeking Griesa’s guidance on what it should do with the money. Key holdout creditor Jay Newman, portfolio manager at Elliott Management Corp, had an opinion piece published in the Financial Times reiterating a desire to negotiate. This was followed up by an ad from the American Task Force Argentina, a lobbying group supported by Elliott and others that calls for Argentina to abide by the court ruling and pay its debts. “Argentina has been putting out misinformation in lieu of negotiating,” Robert Shapiro, co-director of American Task For Argentina (ATFA), said from Buenos Aires where he plans to hold a press conference with the local media. “We decided to put out ads that set the record straight in case Argentina says it was forced to default.” ATFA placed a full-page ad in the Financial Times on Tuesday, which was repeated in the Wall Street Journal on Wednesday, titled “The Facts of Argentina’s Debt Dispute.” Argentina fired back at the ATFA with another full-page ad on Wednesday titled: “VULTURE FUNDS: FACTS SHOW THAT IT IS NO MYTH THAT THEY ARE VULTURES.” Attempts to reach Argentina’s embassy in Washington, which e-mailed copies to the media, were unsuccessful.
Bank of America Again Requests 5-Cent Dividend (WSJ)
The Charlotte, N.C., lender is asking regulators to reapprove a five-cent-a-share quarterly dividend, according to people familiar with the matter, a test of its ability to please investors and appease the Federal Reserve at the same time. Bank of America received permission from the Fed in March to boost its quarterly payout from one cent a share to five cents. But the bank had to withdraw the plan, which also included a $4 billion share buyback, a month later, after discovering it had miscalculated capital levels. That was especially disappointing to shareholders, because the Fed had rejected a similar dividend increase in 2011. The bank submitted its new plan in May and said the overall request was smaller than the one put forth in March but didn’t provide any details. According to some of the people familiar with the matter, the bank requested a smaller buyback in its new plan. Its latest dividend request, which would cost the bank an extra $1.7 billion a year, hasn’t previously been reported.
Scottish Banks Brace for Independence Vote (WSJ)
Visitors arriving at Edinburgh airport are greeted with a large Royal Bank of Scotland Group advert stating “This Is Home.” The bank’s management isn’t sure for how long. In September, Scotland will vote whether to become independent from the rest of the U.K. after more than three centuries of union. “Like many other companies we are having to consider the possible business implications of a Yes vote and our response,” says RBS Chairman Philip Hampton, adding, “There is a great deal of uncertainty.” Adding to the complexity: RBS is controlled by the British government following a bailout. Polls suggest the independence campaign may fall short in September’s referendum. But there still remains a large swath of undecided voters and lots of unanswered questions. With only a few weeks to go until the vote, it is unclear whether an independent Scotland would retain European Union membership; what currency it would use; how much of the U.K.’s debt it would assume; and how bond markets would rate its debt. Banks and other lenders may have to revisit credit decisions on millions of customers and rethink pension plans for thousands of staff, for instance.
Corrupt Politicians Sent Each Other Sexy Valentine’s Day Texts (About Money) (Daily Intel)
We already knew former Queens city councilman Dan Halloran had a lot of love to spread around — he had sexual relationships with at least two young staffers — but testimony in White Plains federal court yesterday revealed he didn’t reserve his romance for the young women working beneath him. “Tell me you love me,” read the text message he sent to former Bronx County Republican Party Chairman Joseph Savino after helping him secure a $15,000 bribe on Valentine’s Day in 2013. Read more »