Banks Behaving Badly Day; Round Up Usual Suspects: Opening Line
We’re getting a sense of the fallout from Banks Breaking Bad, certainly a show coming to some fast-lane Web-TV channel soon.
Credit Suisse pleaded guilty and will pay a $2.6 billion fine, which will be a bit of a bite, reducing second-quarter earnings by $1.79 billion. (The bank had net income of about $964 million in the first quarter, for perspective.)
The fine will cut the bank’s common equity ratio to 9.3 percent, the lowest among 16 global investment banks. This is causing some concern among investors and analysts, Elena Logutenkova and Jeffrey Vögeli write today.
Credit Suisse won’t lose its license and doesn’t expect to lose business for helping Americans evade taxes through its secret Swiss bank accounts. Moreover, it might offer a blueprint for the roughly dozen other Swiss banks under U.S. investigation for years to put their troubles behind them, Giles Broom reports.
At BNP Paribas, which U.S. prosecutors accuse of doing business with sanctioned countries (Iran, Sudan, Cuba), the road could get a little rougher. What was going to be a $3.5 billion fine now is said to be headed north of $5 billion, Greg Farrell reports. In addition, a ban on U.S. wire transfers, suggested by New York banking regulator Benjamin Lawsky, could cost the bank some customers, who will go somewhere else for the service and may wind up staying there, Yalman Onaran writes.
Next up, we’ll get to see what happens with three banks that have decided to fight the law in Europe. As Gaspard Sebag reported yesterday just after we published, JPMorgan, HSBC and Credit Agricole (is there something about the French?) were formally accused of cooperating on the manipulation of Euribor.
They didn’t agree to the settlement deal taken by six other firms, including Societe General (French), nor did ICAP, which is about to receive its own charges, EU antitrust chief Joaquin Almunia said yesterday.
No one’s losing his job, though, and no one’s losing the right to stay in business in the U.S. and to potentially do it again, so it sounds like the cost of doing business.
“Why would a bank be afraid of facing criminal charges if it just means paying some fines like in a lawsuit and continue business as usual?” Keefe, Bruyette & Woods’s Fred Cannon asked Onaran, presumably rhetorically.
+ The Federal Reserve releases minutes from the April 29-30 FOMC meeting at 2 p.m. Washington time. For the U.S. economy team’s “Fed Watchers Guide to Minutes,” click here.
+ The BOE released minutes from the Monetary Policy Committee’s May 7-8 meeting a short time ago, which showed that arguments in favor of raising interest rates were growing stronger.
+ The BOJ held off from increasing stimulus, saying that while an economic contraction is projected for this quarter, companies’ plans to boost investment are adding to signs that growth may bounce back.
+ Yellen speaks at NYU’s commencement at Yankee Stadium at 11:00 a.m., unless she’s uninvited.
+ The National September 11 Memorial Museum opens to the public.
+ Stanley Fischer’s confirmation as member of the Federal Reserve board of governors is scheduled for 12:15 p.m. today in Washington following last night’s vote in the Senate to end debate on it. However, his confirmation as the Fed’s vice chairman and Yellen’s No. 2, may require a second vote, and that might not come until next month.
In the primaries for U.S. midterm elections yesterday, Mitch McConnell, the Senate minority leader, defeated Tea Party-backed businessman Matt Bevin, while in Idaho, U.S. Representative Mike Simpson, an Appropriations subcommittee chairman and ally of House Speaker John Boehner, survived a Republican primary challenge from Tea Party-aligned Bryan Smith.
In Pennsylvania, Republican Bill Shuster, chairman of the House Transportation and Infrastructure Committee, beat the Tea Party’s Art Halvorson, John McCormick reports. And in Georgia, none of the Tea Party challengers for the Republican nomination for senator advanced to the runoff, which will be contested by former Dollar General CEO David Perdue and U.S. Representative Jack Kingston.
We’re sensing a theme here.
Sticking with election issues, we arrive at a new outreach effort targeting the wealth gap devised by the AFL-CIO and debuting next week in a national seminar tour of select cities.
It starts with a game of musical chairs. Except instead of 11 people vying for one of the 10 seats set up in the seminar, there’s one dude who’s lying across seven of them. The others fight for what’s left.
As unpalatable as the topic might be for some, it’s not going away.
Lorraine Woellert examines the union’s outreach to promote more political action on the issue.
“Labor leadership and the groups around it think their future rests on marrying the rising electorate of Hispanics and African-Americans to these themes of economic justice,” Yale University professor Jacob Hacker says. “The big problem in our political system isn’t economic inequality, it’s the degree to which economic inequality is spilling over into political inequality.”
JD.com, the Chinese Amazon.com, is seeking as much as $1.7 billion in its U.S. initial public offering today. At the top end of the range, JD.com would be valued at $24.6 billion. The ADRs will trade on Nasdaq under the symbol JD starting tomorrow. JD.com also plans to sell shares in a private placement that will provide additional net proceeds of $1.2 billion.
Just in: May 21 (Bloomberg) -- Russia and China reached a deal to supply natural gas through a new pipeline between the two countries, paving the way for hundreds of billions of dollars in fuel sales over the next three decades.
Chris Christie, master budget planner as New Jersey’s chief executive, deftly closed the unexpected deficit caused by a shortfall in income taxes foreseen by no one in his administration by reversing a pledge to shore up the state’s pension system.
Christie, who has made fiscal rectitude a pillar of his political message, said he would sign an executive order giving himself permission to alter this year’s payment, and will ask lawmakers to approve next year’s reduced contribution, Elise Young and Terrence Dopp reported last night. Since his first run for governor in 2009, Christie has cited similar lapsed contributions by predecessors as gimmicks he said contributed to the state’s poor fiscal health.
But don’t tell him that.
New York Big Deal City may be making it harder on them, but the artists and creative forces that Patti Smith and David Byrne have advised to start looking for greener pastures are staying as close to the Sheep Meadow as they can.
In today’s Cities column, Esmé Deprez goes in search of the vanishing artist class and finds them right where we left them. Well, not exactly: They’re mostly scattered to the outer boroughs, a little more cramped and perhaps a little poorer. But they’re still here. In fact, their numbers are rising.
“For all the artists leaving, there’s also more coming in on the bus every day,” Mark Rossier of the New York Foundation for the Arts tells her. The number of painters, sculptors, musicians and dancers in New York rose to 141,000 in 2012 from 109,000 in 2000, according to U.S. Census data.
Someone has to serve you dinner, after all.
Hemp was as ubiquitous in the earliest days of American agriculture as tobacco, and beside the edible products that it yields, as a textile, it’s every bit the good sheet that canvas is.
Matthew Boyle finds that while the U.S. has finally recognized hemp as distinct from its cannabis cousin, a federal ban on commercial cultivation remains in place.
Which is why the Canadian companies are getting the jump on sales of nutritious hemp foods, once people get past “snicker factor.” The bigger retailers are taking notice -- Costco, Safeway and Whole Foods are selling products like “hemp hearts,” the inner kernel of hemp seeds that go great on cereal, yogurt or salads.
Which should help with the munchies.
Brian Sullivan, our weather ace, is checking in.
“The big three meteorological agencies continue to keep to the status quo: El Nino is coming, but it’s not here yet. Australia reported overnight (Tuesday) that they were keeping the odds at 70+ percent and Japan a few days ago restated its belief El Nino is coming as well.
‘‘So, we basically sit and wait. In the meantime, though, we have a new resource: One of the U.S. experts and her colleague has started an ENSO blog, which can be found here. I recommend everyone who wants to know about ENSO to check it out. There is a pretty good graphic in there showing the impacts along with time frames for those impacts. Link here if you just want to see the map.
Brian, what is ENSO?
‘‘I forgot to explain ENSO. ENSO is the name the science community uses for El Nino. ENSO stands for El Nino Southern Oscillation. It is a hat tip to the fact that this event is more than just the Pacific Ocean getting warm. In addition to the sea surface temperatures rising, there has to be a corresponding change in the atmosphere above the Pacific. ENSO also covers La Nina, a cooling of the sea surface, which also has an impact on the atmosphere.’’
+ The Miami Heat got a combined 45 points from Dwayne Wade and LeBron James last night to beat the Indiana Pacers 87-83 and even their NBA Eastern Conference final at one game apiece.
+ The Cleveland Cavaliers, with a 1.7 percent chance, won the NBA’s draft lottery last night for the right to pick first in the June 26 amateur draft. Milwaukee came in second, Philadelphia came in third. It’s the second consecutive year the Cavaliers have won the pick and the third year in four. Something ain’t right.
+ Steve Kerr, the newly appointed coach of the Golden State Warriors, said his travel schedule as a television analyst for NBA broadcasts got between him and Knicks President Phil Jackson’s failed effort to hire him. Presumably none of the cities where Kerr could be found for a couple hours had airports.
Arthur Gelb, former managing editor of the New York Times, died yesterday in New York at 90. The litany of his influence at the newspaper is too long for this space.
We’ll remember him best for being perhaps the foremost authority on playwright Eugene O’Neill (1888-1953), author of such masterpieces as ‘‘Long Day’s Journey Into Night,” “The Iceman Cometh,” and “Beyond the Horizon,” among others. O’Neill is the only American playwright to win a Nobel Prize, and also won four Pulitzers.
Gelb, with his wife Barbara, wrote what’s widely considered the definitive biography, “O’Neill,” in 1962, then expanded it in 2000 with “O’Neill: Life With Monte Cristo.”
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