Morning Scan

Thursday, May 12, 2011

Receiving Wide Coverage ...

The HSBC Diet: In an effort to cut costs, HSBC will scale back its retail banking and could pull out from some of the 87 countries where it now operates. An item in the Times' DealBook said: "HSBC said on Wednesday that it planned to cut jobs, scale back its retail banking operations and possibly sell its bank card business in the United States as part of a strategy to reduce costs as much as $3.5 billion in the next two to three years." Wall Street Journal, New York Times

AIG Shares for Sale: The Treasury Department will soon begin unloading its 92.1% ownership stake in global insurance giant American International Group, the company announced Wednesday, the latest step in the government's efforts to recoup the most high-profile bailout of the financial crisis. The Post reported AIG said in a statement that it plans to sell 300 million shares, a smaller stock offering than envisioned only months ago. At least 200 million of those will come from the Treasury's stockpile of 1.66 billion shares. The Journal warned, "But the deal still could end up being pulled if the government is unable to sell its shares at a profit, according to people familiar with the matter." Wall Street Journal, Washington Post

Law and Order: A jury Wednesday convicted Galleon Group founder Raj Rajaratnam on 14 counts of securities fraud and conspiracy related to insider trading. Wall Street Journal, New York Times

Meanwhile, the Journal said the Securities and Exchange Commission is investigating State Street 's foreign-exchange trading on behalf of pension funds. The Times, too, had a story on what to expect next: a crackdown on on outside-expert firms.

Wall Street Journal

Investors hacked away at Bank of America CEO Brian Moynihan at the bank's annual shareholder meeting Wednesday. Shareholders seemed extremely concerned about the bank's acquisition of mortgage lender Countrywide Financial and the woes that came with it. Moynihan asked shareholders to look beyond the mortgage mess to see the bank's strong growth prospects in other areas. The paper said Moynihan admitted the Countrywide buy exposed the bank to more housing debt "at the time just when you shouldn't have done it."

A bill that would replace Fannie Mae and Freddie Mac with private companies that could issue federal government backed mortgage-backed securities is expected to be introduced in the House Thursday. The idea may appeal to both Republicans, who want the mortgage system to be mainly private, and Democrats, who feel the government must back the mortgage market in some way.

Chalk one up for Moody's, Standard & Poor's, and Fitch. A federal Appeals Court panel ruled that the agencies aren't responsible for overrating mortgage-backed securities. The panel ruled that the ratings are "merely opinions" about the credit-worthiness of the securities, and as such are protected by the First Amendment.

Italy officially nominated Mario Draghi for the presidency of the European Central Bank, and, with backing from German Chancellor Angela Merkel, he is expected to win the post. The paper noted that would put the powerful bank in the hands of "an official from one of Europe's weaker economies, which has one of the biggest public debts in the euro zone." Draghi, it is expected, would be flexible on the debt crisis, and an inflation fighter.

Washington Post

Former SEC general counsel David M. Becker, whose departure from the agency earlier this year was clouded by questions about his inheritance of an account with Bernard Madoff, has returned to his former law firm, Cleary Gottlieb Steen & Hamilton.

, with contributions from Sean Sposito and Alex Ulam.