Morning Scan

Wednesday, March 10, 2010

Receiving Wide Coverage ...

B of A Ends Debit Overdraft: The papers previewed B of A's announcement this morning that it's eliminating $35 overdraft fees on debit-card purchases. The Journal said the bank is trying to "stay ahead of a sweeping round of regulations." It noted that Citigroup already has a similar policy in place. The Times said the decision "could cost the bank tens of millions a year in revenue and put pressure on other banks to do the same." Wall Street Journal, New York Times

The Times also ran a letter to the editor from Sallie Krawcheck, B of A's president of global wealth and investment management, responding to a March 4 article about broker responsibility. The original article quoted a former Merrill Lynch employee as saying he learned how to be a good salesman and little else while at the bank. "Despite the claim of one former employee, we support our financial advisers in their service to clients by delivering the most robust professional development programs in the industry," Krawcheck wrote. "We are committed to ensuring that the move to higher fiduciary standards does not fall to the wayside. Clients deserve no less."

Another Journal story said attorneys for B of A have agreed to reimburse lawyers for a Miami developer after a U.S. bankruptcy judge in Florida criticized the bank's lawyers for trying "to score a litigation point" in an ongoing foreclosure dispute.

Fed Watch: The papers looked at the challenge the Federal Reserve faces in signaling a change in its policy stance. The Journal said, "Long before the Federal Reserve raises short-term interest rates amid an improving economy, it will need to signal to the public that a change is in the works. Central-bank officials are intensifying discussions about how to communicate that when the time comes." The Times said that while the Fed has ended most of its emergency lending programs it created in response to the financial crisis, "it now faces critical decisions in coming months about when and how to tighten monetary policy." Wall Street Journal, New York Times

Derivatives Regulation: The papers looked at growing calls in the U.S. and overseas to tighten oversight of derivatives trading, as European leaders pushed for a ban on speculative bets against government debt and U.S. CFTC Chairman Gary Gensler offered several recommendation to limit the use of credit-default swaps. The Times, said "even among policy makers, the exact role of credit-default swaps — which essentially provide insurance in the event a company or government defaults on its debts — remains the subject of fierce debate." The Post said the E.U.'s statement put Europe ahead of the U.S. in advocating for the restriction, since the White House has not endorsed an outright ban on trading. Wall Street Journal, New York Times, Washington Post

In the Post's "Deals" column, Allan Sloan said Wall Street's role in the Greek debt crisis should come as no surprise. "Wall Street makes most of its money these days by speculating. It doesn't care about the collateral damage that its activities can inflict on people, companies and entire countries — unless the result is embarrassment, punishment, regulation or some combination of these."

Not surprisingly, a Journal editorial had a different assessment: "Bets against Greek solvency are the result, not the cause, of Greece's debt problems. The way to turn speculator profits into losses is by reining in government and reviving private growth."

Wall Street Journal

The paper, citing unnamed sources, said Barclays is "on the prowl for another major acquisition in the U.S." after buying up Lehman's North American operations at the peak of the financial crisis. It is looking for "a retail bank at a good price that would give it more deposits and build on the presence of Barclays Capital" in this country.

A front-page story about growing popularity of bonds with survivor options said, "Billions of dollars in corporate bonds sold to retail investors come with an unusual provision that could be used to generate a fast profit. There's just one catch: Investors must team up to buy the bonds with someone who is about to die."

An article looked at fees Wall Street has earned selling "Build America Bonds" meant to spur jobs in struggling cities, "often charging municipalities higher costs than for traditional bond deals."

The paper, citing unnamed sources, said AIG is basing its upcoming round of bonuses and incentive pay on its new "forced ranking" system that measures the performances of about 10,000 employees. It said the insurer is "struggling to give incentives to employees to stay on" after the bonuses and a final batch of retention awards are paid out in the coming weeks.

A separate story said a $1.3 billion loan offering from AIG's aircraft leasing unit, International Lease Finance Corp. has met with strong investor demand, which will enable it to repay some maturing debt.

New York Times

The paper, citing unnamed sources, said Sen. Bob Corker "pressed to remove a provision from draft legislation that would have empowered federal authorities to crack down on payday lenders." The article noted that the payday industry, which is very influential in Corker's home state of Tennessee, has been one of the most vocal sectors in the financial services industry in fighting off efforts at federal regulation.

Washington Post

Op-Ed columnist Harold Meyerson lamented that the U.S. doesn't have much in the way of institutions of public finance that could lend money for major municipal projects, like the a $40 billion plan to double the rail system in Los Angeles.

Columnist Steven Pearlstein said Wall Street could learn from a new book, "Drive," by Daniel Plink, that reprises decades of often-overlooked psychology to show the limits of money in motivating employees. The book argues "performance bonuses may actually be counterproductive, particularly when the work requires initiative, judgment and creativity," Pearlstein said.


, with contributions from Kate Davidson and Sara Lepro.