JPMorgan Pay Fueled Risk Amid London Whale Loss: Report (Bloomberg)
JPMorgan, the biggest U.S. bank by assets, compensated chief investment office traders in a way that encouraged risk-taking before the unit amassed losses exceeding $6.2 billion, a Senate committee said. Pay that rewarded “effective risk management” would have suggested the synthetic credit portfolio functioned as a hedge, the Senate Permanent Subcommittee on Investigations said yesterday in a report on the New York-based bank’s so-called London Whale loss. Instead, compensation practices suggest the bets “functioned more as a proprietary-trading operation.”
JPMorgan Report Piles Pressure on Dimon in Too-Big Debate (Bloomberg)
Dimon misled investors and dodged regulators as losses escalated on a “monstrous” derivatives bet, according to a 301-page report by the Senate Permanent Subcommittee on Investigations. The bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary regulator, sometimes at Dimon’s behest, investigators found. Managers manipulated risk models and pressured traders to overvalue their positions in an effort to hide growing losses.
Ina Drew Says Subordinates’ Deception at JPMorgan Let Her Down (Bloomberg)
Ina Drew, who was forced to leave JPMorgan Chase amid a record trading loss last year, said she relied on other executives to manage a complex book of credit derivatives and didn’t learn of their “deceptive conduct” until after she left the company. “I was, and remain, deeply disappointed and saddened to learn of such conduct and the extent to which the London team let me, and the company, down,” Drew said in testimony prepared for delivery in the Senate today.
Credit Suisse Banker Extradited To US (NYP)
Former Credit Suisse banker Kareem Serageldin, the highest-ranking Wall Street executive to be charged for crimes tied to the mortgage meltdown, is coming home to face the music, The Post has learned. The 39-tear old Yale graduate was indicted by a Manhattan federal grand jury in February 2012 — along with two Credit Suisse colleagues — for allegedly covering up losses in a $3.5 billion toxic mortgage portfolio as the real estate market was collapsing in 2007. The UK’s Home Secretary Theresa May, who is responsible for Great Britain’s immigration and citizenship, signed off last week on the extradition of Serageldin, a person with knowledge of the case told The Post.
Goldman Sachs, JP Morgan Hit (WSJ)
The Federal Reserve Thursday dealt a blow to J.P. Morgan Chase and Goldman Sachs, citing weaknesses in their "stress test" capital planning that could hamper their funneling more dividends and share buybacks to investors. The central bank also denied capital plans submitted by BB&T Corp. and Ally Financial Inc. But the Fed at the same time cleared 14 other banks to boost payouts to shareholders, including Citigroup Inc. and Bank of America Corp., both of which in past years had capital requests rejected by the central bank. The Fed also approved a reduced repurchase plan from American Express Co., in the only instance of a bank winning approval for a plan resubmitted to the regulator under a new stress-test wrinkle this year.
Mila Kunis Rotates From Cash to Stocks (CNBC)
The star of films such as Ted, Friends With Benefits and the TV series That 70s Show told CNBC in London: "I've just started investing in stocks, which is new for me." "I'm an advocate of like put things in the bank, put it in a CD (a certificate of deposit), be safe. And I've been pushed kind of forward to take chances and then learning a little bit about the stock market and companies," she said.
Abe Says Japan Will Join Trade Talks (WSJ)
Japanese Prime Minister Shinzo Abe announced Friday that his country will take a seat at the negotiation table of the U.S.-led Trans-Pacific Partnership free trade negotiations, a move that may pit him against powerful farm lobbies ahead of upper house elections this summer. "This is our last chance to join the TPP and take part in the rule-making," Mr. Abe told reporters Friday at a news conference to mark his decision to join the talks. "For Japan to remain inward-looking means we are giving up on the possibility of growth."
Stifel Agrees to Acquire Fixed-Income Group From Knight (Bloomberg)
Knight’s European institutional fixed-income sales and trading team is also part of the deal, which includes about 100 people, Stifel said today in a statement, without disclosing terms. The group covers high-yield and investment-grade corporate bonds, asset-backed and mortgage-backed securities, emerging markets and fixed-income research.
No 'Irrational Exuberance' in Stocks Now: Greenspan (CNBC)
Greenspan said in a "Squawk Box" interview that stocks by historical standards are "significantly undervalued" even considering the recent moves higher. He added that the payroll tax increase didn't dent spending because of rising asset prices.
Could Hungary Be Thrown Out of the EU? (CNBC)
Hungary's increasingly aggressive moves against media, judiciary and central bank independence will be discussed by European Union heads of states on Friday, raising the possibility that Hungary could be thrown out of the EU. The European Union is concerned Hungary may be flouting EU rules on human rights, after its parliament voted this week to amend its constitution to allow legislation to bypass approval from the constitutional court. Hungary had defied calls from the European Commission to delay the vote.
The Taco That Built 15,000 Jobs (ABC)
It may take a village to raise a child. But all it takes to raise employment is a taco. That seems to be the situation at Taco Bell, anyway, which added 15,000 employees last year, company chief executive Greg Creed told the Daily Beast, largely on one new product. Creed attributes the success to Doritos Locos Tacos, which the company rolled out in March, 2012 and was the “biggest launch in Taco Bell history,” he told the Beast. Throughout 2012, the 170-calorie taco, whose shell is made from a nacho cheese Doritos in a collaboration with Frito-Lay, 375 million were gobbled up, which averages out to about one million per day. But why stop there? On March 7, it launched Cool Ranch Dorito Locos Tacos. The slogan? “Collect All Two.” “We believe we can add 2,000 new restaurants in the next 10 years, because what we have is proprietary and exclusive. Nobody else can make a Cool Ranch Doritos Taco. And that’s just in the U.S.,” Creed told the Beast. Creed was traveling today and unavailable to talk to ABC News, a spokesman said.