Receiving Wide Coverage ...
Dodd Goes It Alone: Sen. Chris Dodd, D-Conn., said he would unveil a financial overhaul bill without Republican support next week. The Journal said "the gamble is a bid to speed progress, but it raises the chance that Congress won't be able to push through a substantive regulatory overhaul." The Times said the move increases "the likelihood of a bitter partisan showdown." The Post said it "puts pressure on GOP senators by creating a sense of urgency and forcing the debate into the open … Republicans opposed to key elements of the bill, such as new protections for consumers, would have to make their case publicly." Wall Street Journal, New York Times, Washington Post
A Journal editorial said having no financial reform bill is better than one that is rushed and partisan.
Obama to Tap Yellen: The Journal, citing unnamed sources, said President Obama plans to nominate San Francisco Fed President Janet Yellen as vice chairman of the Federal Reserve Board. The paper called Yellen "one of the more dovish policy makers among the Fed's 12 regional bank presidents," and "a key advocate of the Fed's policy of near-zero interest rates and a massive expansion of the central bank's balance sheet." Another story said a majority of economists polled by the paper said the central bank played the biggest role in rescuing the economy from the financial crisis. An Op-Ed by Alan S. Blinder, a professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve Board, said Fed Chairman Ben Bernanke needs all the wise counsel he can get as he unwinds expansionary policy and tackles financial reform.
Lehman Autopsy: A report by a U.S. bankruptcy-court examiner investigating the collapse of Lehman Brothers blamed senior executives and auditor Ernst & Young for serious lapses that led to its undoing. The Journal said the report "paints the most complete picture yet of the free-wheeling culture inside the 158 year-old firm, whose chief executive Richard S. Fuld Jr. prided himself on his ability to manage market risk." The Times called the document "the Wall Street equivalent of a coronor's report," saying it "lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing." Wall Street Journal, New York Times
The Journal's "Heard on the Street" looked at claims that in the months preceding Lehman's collapse the firm used transactions dubbed "Repo 105" to make its balance sheet look safer than it was. "The dark irony of all this is that banks have long argued that repo financing — which allows banks to borrow for a short-period against collateral — is one of the safest parts of a bank's liabilities. However, it is highly vulnerable in times of panic, as the credit crisis showed."
AIG Recoups Retention Payments: The papers, citing unnamed sources, said AIG reached an agreement with the Obama administation's pay czar to recoup $45 million in controversial 2009 retention payments made to employees. The money will be recouped in part by reducing retention awards slated for employees who already have left the firm. Wall Street Journal, Washington Post
HSBC Heist: HSBC said a former employee stole data on about 24,000 accounts in its Swiss private bank that wound up in the hands of French authorities, in what the Journal described as the "latest case to highlight the complications that arise when stolen bank information ends up in the custody of governments eager to chase tax cheats." The Times said the revelation "was the latest in a fight over tax evasion that has strained relations between Switzerland and its neighbors." Wall Street Journal, New York Times
Wall Street Journal
A front-page story said U.S. consumers are shedding debt at the fastest rate in more than six decades, largely through a wave of defaults. It said the trend underscores the depth of their financial troubles but could also help clear the way for a stronger economic recovery.
Citigroup CEO Vikram Pandit said the bank is poised to return to "sustained profits" after being kept afloat by government support during the market meltdown. He said the sell-down of unwanted assets by Citigroup may not impose a drag on profits.
"Heard on the Street" said investors should "think twice before using Mr. Pandit's thesis as a reason to pile into Citi shares."
New York Times
Democratic Congressional leaders reached a tentative deal that should allow for President Obama's overhaul of federal student loan programs to be easily passed by the Senate. The paper said the student loan bill "would end government payments to private, commercial student lenders, leaving the government to lend directly to students. It would also redirect billions of dollars to expand the Pell grant program for low-income students, and to pay for other education initiatives."
An Op-Ed by Ronald Mann, a professor of law at Columbia, called for major changes to the U.S. bankruptcy system to help consumers who are struggling under the weight of mounds of bad debt.
Washington Post
Friday's lead story said a growing number of homeowners who are seriously delinquent in their mortgage payments are threatening a second wave of foreclosures, just as the housing market has begun to stabilize.
Business columnist Steve Pearlstein said the Hollywood Stock Exchange — a new Wall Street "futures" market where investors could wager on the success of upcoming movies — is a logical extension of a recent trend in financial markets, which "have long since outgrown their original purpose — to raise capital for real businesses — and have now turned themselves into high-tech casinos offering endless opportunity for speculation."
Elsewhere ...
An article in Vanity Fair's Money Issue profiled BlackRock CEO Larry Fink's "rebound from a humiliating failure to become the financial fulcrum of Washington and Wall Street."