Morning Scan

Thursday, July 21, 2011

Breaking News This Morning ...

Earnings: "BB&T's second-quarter profit climbed 46% as credit quality improved and loan growth picked up," the Journal reports. "Fifth Third Bancorp's profit more than doubled … [on] improving credit conditions and lower loan-loss provisions than a year earlier."

Receiving Wide Coverage ...

Dodd-Frank Birthday Bash(ing): The retrospectives keep coming. For those who've been living in a cave for the last few months, the Journal reports that whether the law ended "too big to fail" is a matter of debate. Meanwhile the Times' Dealbook interviews Barney Frank and (for the hibernators' benefit) provides a quick summary of bankers' objections to the law. Here's Frank's response to criticisms that the law is too vague: "It's precisely because we knew we couldn't get everything exactly right that we did leave room for the regulators." Why didn't the Times sit down with both authors of the legislation together? "Now that Mr. Dodd is a registered lobbyist representing the motion picture industry, federal law prohibits the two men from chatting about their law for a year." Onward and upward: today Federal Reserve chairman Ben Bernanke will appear before the Senate Banking Committee to give a status report on his agency's work putting Dodd-Frank's many provisions into practice. You can read the Journal's summary of his prepared testimony, or the whole thing here but as always the unscripted Q&A will be the most interesting part.

CFPB Controversy: Washington Post columnist Michelle Singletary writes that Obama "wimped out" by not nominating Elizabeth Warren to lead the consumer protection agency she conceived. Singletary quotes Warren: "Tell me what I did that was controversial." In the writer's estimation: "not a darn thing. She was attacked because she dared to call for simplicity in credit card agreements. She has advocated creating a single mortgage disclosure form that clearly lets people know how much and under what terms they are borrowing for a home. Yes, that's the outrageous and contemptible behavior the Republicans couldn't stand. How dare she actually want people to sign credit agreements and get loans they can understand, written in plain English?" Another Post article argues that a male-dominated Wall Street's attacks against Elizabeth Warren were fueled in part by a sexist agenda. Over at the Journal editorial pages you'll find a somewhat different point of view. In an op-ed, Sen. Richard Shelby reiterates the argument that without a board like those governing the SEC and FDIC, the CFPB is dangerously unaccountable. Along those lines, the Journal's editorial writers note that Warren's original blueprint from 2007 used as its model the Consumer Product Safety Commission (note the emphasis on that last word) which has a five-member bipartisan board and is subject to Congressional appropriations.

Wherever you stand on the CFPB, you'll find interesting the Post's profile of Corey Stone, the agency's official charged with overseeing credit bureaus. He has extensive experience in this area as the former chief executive of PRBC, the alternative bureau founded to help "thin file" consumers build a credit history by tracking their rent and utility payments. According to the article, it didn't go well.

Wall Street Journal

The Journal rounds up recent cost-cutting measures by financial-services firms in a time of rising regulatory costs and inauspicious top-line trends. The belt-tightening is going on everywhere from big commercial banking giants like Wells Fargo to investment banks like Goldman Sachs (listen to us — like Goldman Sachs? are there so many others left?) to tiny community lenders. Dead-weight branches are being closed and jobs are being relocated to cities with lower wages and cheaper rents.

When your bank says "no," your dentist may say "yes." A feature story looks at "hard money" lenders — individuals who extend mortgage financing as a personal investment. They're filling a void left by institutional lenders that have tightened guidelines since the housing crash, and earning a pretty penny: interest rates on these mortgages run around 14%.

New York Times

In an article about how banks, mutual funds and other asset managers are preparing for the possibility of the federal government defaulting on its debt, Wells Fargo Chief Financial Officer Timothy Sloan says, "Because nobody knows what is going to happen, nobody knows how to prepare."

Germany and France reached an agreement on a rescue plan for Greece, but details were not immediately disclosed. One of the key unanswered questions is whether Germany and France agreed to allow Greece to default.

After a lengthy delay, mortgage borrowers who were overcharged fees by Countrywide Home Loans will soon begin receiving proceeds from a $108 million settlement, the Federal Trade Commission said Wednesday.

Merchant-funded rewards for debit cards may fill the void that's being created by banks' decision to drop their own debit-card rewards programs.

Washington Post

The paper reports that "Wall Street" (this catchall term feels more anachronistic to us every day, but it remains ubiquitous) is rewarding Republican presidential hopeful Mitt Romney for his strong stance against new financial industry regulations. Most of his largest corporate contributors are financial industry leaders such as Morgan Stanley (oh right, that's the other big "Wall Street" firm that's still around), Bank of America and Goldman Sachs.

The SEC has rejected a proposed settlement with the executive of an auto firm in a clawback case brought under the Sarbanes-Oxley law. The case marks the first time that the SEC has attempted to hold an executive financially liable for accounting fraud perpetrated by others at his company. The rejection of the settlement came soon after the SEC took flak for a settlement in which it fined J.P. Morgan Securities but took no action against any of the firm's employees or executives.

, with contributions from Katherine Kane, Andy Peters and Alex Ulam.