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.
Commerzbank may pay $600 million-$800 million to settle U.S. probe - sources (Reuters)
German lender Commerzbank AG is expected to pay between $600 million and $800 million to resolve investigations into its dealings with Iran and other countries under U.S. sanctions, sources familiar with the matter said. The penalty, previously reported to be more than $500 million, includes a demand from New York's top banking regulator, Benjamin Lawsky, for more than $300 million from the bank, the sources said.
Bank of China Denies Report Alleging Money Laundering Aid (Bloomberg)
Bank of China Ltd. denied a report by the state broadcaster alleging it broke the nation’s foreign-exchange rules by providing services that help clients move “dirty money” abroad. Reports by China Central Television and other media “contain discrepancies with and misunderstanding of the facts,” the Beijing-based lender said in a statement on its website late yesterday. “References to an ‘underground bank’ and ‘money laundering’ are inconsistent with the facts.”
Banks Racing to Pare Swaps Holdings Ahead of Rules, Goldman Says (Bloomberg)
Wall Street banks are racing to simplify their swaps holdings before new rules make it more costly to own the derivatives starting in 2017, according to a Goldman Sachs Group Inc. executive. They’re doing so increasingly through a process known as compression, said Andy Hudis, a managing director at Goldman Sachs who runs the credit valuation adjustment desk in London. Through this technique, offsetting transactions are eliminated so that a bank can reduce, say, 100 trades into 10 that give the identical position. Swaps helped cause and intensify the 2008 financial crisis given the opaque entanglements they created among banks. In response, global regulators took a series of steps to reduce risk, including boosting the amount of money they have to set aside to guarantee the transactions. Compression can help them reduce that burden, while also reducing market complexity.
Citi a ‘buy’ despite likely $7B settlement: Mike Mayo (CNBC)
The possibility that Citigroup will settle a U.S. mortgage probe for $7 billion isn't enough to dissuade CLSA bank analyst Mike Mayo from recommending the stock. "I still have my 'buy' rating on Citigroup," he said Wednesday on CNBC. "It's been painful recently and this year. I think Citigroup can handle a charge of $7 billion. Having said that, it's twice the number I originally expected. So, it hasn't been easy."
Mel Gibson says he has sympathy for Shia LaBeouf: ���My heart goes out to the poor guy’ (NYDN)
The “Lethal Weapon” star, whose career has suffered setbacks due to his various personal scandals, talked about the 28-year-old star’s troubles in an Indiewire interview published Tuesday. The actor gave the interview while at the Karlovy Vary Film Festival in the Czech Republic to receive a lifetime achievement award. Gibson has dealt with the fallout from his 2006 DUI arrest and the publicizing of his anti-Semitic remarks to his arresting officer. So it’s understandable he would have compassion for LaBeouf, who was arrested June 26 for disorderly conduct when attending a Broadway performance of “Cabaret.” "When I see someone like Shia LaBeouf with the bag on his head and stuff, my heart goes out to the poor guy. Because I think he's suffering in some way," said the Oscar winner, referring to the LaBeouf’s bizarre red carpet appearance at the February premiere of his film "Nymphomaniac." "Or why (else) would he do that?” he continued. “People are in line to sort of point the finger at him and say that he's this, that, or the other. It's easy to judge. But I'm sure he's going through some kind of personal, very painful, cathartic thing that he has to exorcise and get out there. And he'll probably play it out and come back...He'll be all right. I actually like the kid. I think he's good."