Morning Bell

DOL's Borzi acknowledges difficulty of fiduciary-rule request
Phyllis Borzi, a Labor Department official, acknowledged that it might not be feasible for financial firms to provide requested information by a Jan. 15 deadline. The information is meant to help the department as it reproposes a rule that would subject retirement plan advisers to a more stringent fiduciary standard. "We are not trying to stall the process, but we do want the department to undertake the necessary analysis to determine whether such a regulatory change is beneficial to the millions of IRA holders who are trying to save for their retirements," said Lisa Bleier, a managing director SIFMA. Learn more about SIFMA's position on fiduciary. Reuters(1/9), InvestmentNews (free registration)(1/9)

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Dimon discusses U.S. economy, housing market, European crisis    Source: CNBC Jamie Dimon, CEO at JPMorgan Chase, said the U.S. economy is growing, but slowly. He said the housing market is close to bottoming out, but that problems will continue. He encouraged European officials, including European Central Bank policymakers, to resolve the region's debt crisis.CNBC (1/9), The Wall Street Journal (1/9), Forbes (1/9)

Industry News

Mortgage bond investors file more lawsuits against issuers
The Patton Boggs Mortgage Litigation Index reached a four-year high, indicating a number of mortgage-related lawsuits. "The increase in MBS litigation is partly driven by statutes of limitations on investors’ claims," said Patrick McManemin, a partner at Patton Boggs. "State claims against originators for alleged mishandling of portfolios, inadequate underwriting practices and misrepresentations regarding loan quality on the part of private and GSE litigants can only be preserved by filing lawsuits before claims expire." Housing Wire(1/9)

Wall Street firms reportedly consider freezing pay for some
Credit Suisse Group, Goldman Sachs Group and other Wall Street firms are considering freezing compensation for some analysts, associates and other junior bankers, sources said. However, there could be consequences. "There’s always the risk that people may go across the street for a better deal," said Joseph Sorrentino, a managing director at Steven Hall & Partners. "You have some potential future stars, and you want to make sure you keep them engaged and keep them happy and performing." Bloomberg(1/10)

Morning Bell

France and Germany warn Greece about bond swap
German Chancellor Angela Merkel and French President Nicolas Sarkozy warned Greece that it must reach an agreement with creditor banks on reducing its debt or no more rescue funds will be made available. Merkel and Sarkozy's meeting launches the next round in an effort to resolve Europe's debt crisis. Reuters(09 Jan.)

Talks on Greek debt restructuring near end, Rehn says: Olli Rehn, the EU's economic and monetary affairs commissioner, said talks with private investors on a haircut on Greek government bonds could conclude soon. Rehn said the writedown is expected to be about 50%, a level agreed upon last year. "There is no specific date [for when] this should be concluded, but of course the sooner the better," Rehn said. "We are, to my mind, reaching the final stages of the negotiations, and thus the talks could be concluded shortly as regards private-sector involvement." Reuters(09 Jan.)

Industry News

Cameron will veto transaction tax unless it's adopted globally
British Prime Minister David Cameron reiterated his pledge to veto an EU-wide tax on financial transactions unless the measure is adopted worldwide. "The idea of a new European tax, when you're not going to have that tax put in place in other places, I don't think is sensible and so I will block it," Cameron said. France and Germany are pressing for the tax. Reuters(08 Jan.)

European transaction tax worries exchanges and clearinghouses: Exchanges, clearinghouses and other market infrastructure are increasingly concerned that they are being sucked into the debate regarding Europe's proposed financial-transaction tax. Financial Times(tiered subscription model)(09 Jan.)

France's financial industry criticises proposed tax: French banks, institutional investors and others involved in the financial industry have voiced concerns about President Nicolas Sarkozy's plans to introduce a financial-transaction tax unilaterally. Financial Times (tiered subscription model)(08 Jan.)

City job openings dropped in December, survey finds
The number of job openings in London's financial-services sector plunged 43% last month and was down 8% in 2011, according to an Astbury Marsden survey. Financial Times(tiered subscription model)(09 Jan.)

JPMorgan's Dimon discusses Europe's debt crisis
JPMorgan Chase CEO Jamie Dimon encourages European officials, including European Central Bank policymakers, to do what they can to resolve the sovereign-debt crisis. He also says the US economy is growing, albeit slowly. CNBC(09 Jan.), The Wall Street Journal(09 Jan.), Forbes(09 Jan.)

Morning Bell

SEC alters boilerplate settlement language
The Securities and Exchange Commission tweaked its boilerplate language on settlements, although the changes don't affect the agency's general approach. "The new policy does not require admissions or adjudications of fact beyond those already made in criminal cases, but eliminates language that may be construed as inconsistent with admissions or findings that have already been made in criminal cases," said SEC Enforcement Director Robert Khuzami. The New York Times (tiered subscription model)(1/6), Bloomberg(1/6)

Industry News

Risky residential-mortgage bonds face investor revolt
Early last year, investors started warming to bonds backed by subprime and other risky residential mortgages, but many have since shunned the market. Some said the market's revival could be far off. "Once that confidence disappears, it doesn't really matter what the fundamentals are, and the fundamentals are not that strong, either," said Marina Tukhin, head of mortgage and asset-backed trading at Gleacher Descap. The Wall Street Journal(1/7)

Worried investors flock to money market funds
Although money-market funds on average are paying only 0.02%, investors put $91.7 billion into such funds in November and December 2011. Investors are seeking safety, but that could be a problem for both investors and the companies that run the funds. Barron's (special access for SmartBrief readers)(1/7)

• Other News

La BCE peut-elle devenir la Fed ?

Sous pression de la Commission, la Belgique se serre la ceinture

L'agenda Europe du 9 au 13 janvier 2012

Taxe tobin : la campagne électorale s'immisce entre Sarkozy et Merkel

Giulio Terzi di Sant’Agata : « Une Europe sans Italie ne peut pas exister »

Global regulators will press ahead with liquidity rules
Global regulators meeting in Switzerland pledged to move forward with tough bank liquidity rules. However, banks will be allowed to dip into their liquidity buffers if necessary. "Once the Liquidity Coverage Ratio has been implemented, its 100 percent threshold will be a minimum requirement in normal times. But during a period of stress, banks would be expected to use their pool of liquid assets, thereby temporarily falling below the minimum requirement," according to the Group of Governors and Heads of Supervision, which oversees the Basel Committee on Banking Supervision. Financial Times (tiered subscription model)(08 Jan.), Reuters(08 Jan.)

Basel members' implementation of rules will be reviewed: All members of the Basel Committee on Banking Supervisions, including the EU, Japan and the US, agreed to undergo "detailed" reviews of their implementation of capital rules for banks. Bank of England Governor Mervyn King said "the focus on implementation represents a significant new direction". The Telegraph (London)(08 Jan.)

Industry News

German adviser says 50% haircut on Greek debt isn't enough
Clemens Fuest, an adviser to German Finance Minister Wolfgang Schaeuble, said a proposed 50% writedown on Greek government bonds would not be enough. Fuest, an Oxford University professor, told a Greek newspaper that the haircut needs to be greater and involuntary. Bloomberg(07 Jan.)

Hungary's Orban is willing discuss issues with IMF
Hungarian Prime Minister Viktor Orban said he is willing to discuss any issues with the International Monetary Fund. The IMF and the EU made it clear that Orban's stance on a new law needs to change. The law curbs the independence of Hungary's central bank, officials said. Reuters(08 Jan.)

Risky residential-mortgage bonds face investor revolt
Investors started in early 2011 warming to bonds backed by subprime and other risky residential mortgages, but many have since shunned the market. Some said the market's revival could be far off. "Once that confidence disappears, it doesn't really matter what the fundamentals are, and the fundamentals are not that strong, either," said Marina Tukhin, head of mortgage and asset-backed trading at Gleacher Descap. The Wall Street Journal(07 Jan.)

Morning Bell

Fed report sparks speculation, roiling mortgage-bond market
The Federal Reserve's white paper on the housing market triggered speculation that the government might do more to help the troubled housing market. That speculation helped drive up Fannie Mae and Freddie Mac mortgage bonds as others declined. "The white paper increases the probability of [a third round of quantitative easing] centered on [mortgage-backed securities] as the paper emphasizes that housing is still a key problem with no easy solution," according to Morgan Stanley analysts. Bloomberg(1/5)

Industry News

Labor Department requests could extend debate over fiduciary plan
The Labor Department last month sent a letter to several industry groups, including SIFMA, asking their members for detailed data on customers' individual retirement accounts. The requests are expected to delay the department's proposed fiduciary standard for retirement plan advisers. SIFMA is seeking to meet with department officials to discuss the situation. Reuters(1/5)

Bondholders seek probe of RMBS issued by Wells Fargo
The law firm Gibbs & Bruns said its clients want an investigation into residential mortgage-backed securities issued by Wells Fargo. "Our clients continue to seek a comprehensive solution to the problems of ineligible mortgages in RMBS pools and deficient servicing of those loans," said Kathy Patrick, lead counsel on the case. Bloomberg(1/5), The Wall Street Journal(1/5)

• Other News

Wells Fargo names former hedge fund trader as CMBS head
American Banker (free registration)/Dow Jones Newswires (1/5)

Morning Bell

ECB official urges leaders to abandon Greek debt plans
Athanasios Orphanides, a senior member of the European Central Bank Governing Council, urged euro-zone leaders to forgo plans to reduce Greece's debt by involving private investors. Financial Times (tiered subscription model)(05 Jan.)

Editorial: Greece might not be able to avoid default: Greek Prime Minister Lucas Papademos said this week that he expects an agreement on a 50% haircut on the country's sovereign bonds within two weeks. "The trouble for Athens is that the prime minister's statement looks increasingly doubtful, and avoiding default may no longer be possible," according to this Wall Street Journal editorial. The Wall Street Journal(06 Jan.)

Industry News

Investors remain wary of European stocks and bonds
Investors continue to buy US government bonds five months after the country's credit rating was downgraded. Meanwhile, credit rating agencies have threatened to cut ratings of several European nations, contributing to investor concerns. Bank shares in Europe led declines in stock prices Thursday. "It's indicative of the sense that things aren't great in Europe," said Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics. "The panic that the euro was bound to collapse in the next six months has subsided, but that doesn't mean that Europe is in any way out of the line of fire." The New York Times (tiered subscription model)(05 Jan.)

Hungary's bond auction fails to attract enough investors: Analysts warned that Hungary's central bank might need to act to prevent investors from selling assets, after an auction of sovereign bonds failed to hit its target. Financial Times (tiered subscription model)(05 Jan.)

UK lenders expect credit availability to increase
British banks plan to bolster the availability of credit to households and corporations this quarter as long as they still have access to funds, according to the Bank of England. "While lenders expected credit availability to increase a little to the household and corporate sectors in the coming quarter, factors such as the economic outlook and tighter wholesale-funding conditions were expected to have a negative impact on credit availability," the BoE said. The Wall Street Journal(05 Jan.), Bloomberg(05 Jan.)

Morning Bell

Labor Department might delay deadline for fee disclosure
The Labor Department might postpone the April 1 deadline for providers of 401(k) plans to comply with new fee disclosure rules, sources said. The industry would welcome a delay. "We are very happy to work with the Department of Labor on expanded fee disclosure, but we need to know what it is we are complying with," said Lisa Bleier, a managing director at SIFMA. Read the SIFMA letter. Reuters(1/4)

Industry News

Primary dealers expect more quantitative easing from Fed
Primary dealers don't expect the Federal Reserve to raise interest rates soon, but they do expect more quantitative easing, according to a Fed survey. The banks are not very optimistic about the economy, expecting gross domestic product growth of about 2.1% this year, and 2.5% next year. The Wall Street Journal/MarketBeat blog(1/4)

Number of troubled loans linked to CMBS up in December
More than 9.5% of loans tied to commercial mortgage-backed securities were delinquent by 30 days or more in December, compared with 9.51% in November, according to Trepp. The delinquency rate for offices has been climbing for months, while the overall rate has remained around 9%. The Wall Street Journal/Developments blog(1/4)

Investment-banking fees dropped 6% globally in 2011
Fees earned by investment banks fell 6% worldwide last year, as income from Asian nations dropped sharply. Investment-banking fees in India fell 33.2%, while fees in Asia-Pacific were down 12.5%, according to Thomson Reuters. The Telegraph (London)(1/4)

Passaic Valley students dominate N.J. Stock Market Game
Business students at Passaic Valley High School will be honored for winning the fall edition of the 2011 New Jersey Stock Market Game, which is sponsored by SIFMA's Foundation for Investor Education. "The high school division was swept by business students from Passaic Valley who held first, second and third places in the fall game out of 2,200 teams in the entire state," said Kevin Ketcho, a financial literacy teacher. "The students won another grand championship, which makes it an unprecedented three-year run." NorthJersey.com (Hackensack, N.J.) (free registration)(1/5)

Fitch warns about retained securitisations
Fitch Ratings said European banks have been restructuring packaged debt deals they use as collateral to secure funding from the European Central Bank, allowing their ratings to fall. Financial Times (tiered subscription model)(04 Jan.)

Industry News

France and Germany accept that era of triple-A ratings might end
Credit rating agencies warned that downgrades are possible for European governments, prompting markets to brace for a cut to top-rated nations, including France and Germany. While a downgrade could hit Paris hard, Berlin is expected to weather the change relatively well. "There is a question about the balance of power if we see France downgraded first," said Mark Wall, an economist at Deutsche Bank. "If we move to a world in which France is not triple-A, will Germans see themselves as carrying the financial bags for the rest of Europe? There may be a political impact at the national level." Reuters(04 Jan.)

Hungary cancels bond-swap auction amid default fears
The Hungarian government called off a bond-swap auction as investors fear the country will spark another crisis. Traders are betting that Hungary will become the first EU country to default on its debt. "We are very near boiling point in Hungary with a crisis that may escalate into something much more serious than a simple macroeconomic crisis," Societe Generale's Benoit Anne wrote in a note. "The EU is extremely concerned about the latest political developments and the potential EU response will -- no doubt -- be harmful to investor confidence." The Telegraph (London)(04 Jan.)

International investors flock to UK government bonds
The UK's status as a safe haven from euro-zone turmoil and the Bank of England's quantitative easing have increased demand for gilts. In October and November, global investors purchased £28.87 billion in UK government bonds, a record amount for a two-month period. Financial Times(tiered subscription model)(04 Jan.), The Telegraph (London)(04 Jan.)

Investment-banking fees dropped 6% globally in 2011
Fees earned by investment banks declined 6% worldwide last year, as income from Asian nations dropped sharply. Investment-banking fees in India plunged 33.2%, while fees in Asia-Pacific fell 12.5%, according to Thomson Reuters. The Telegraph (London)(04 Jan.)

Morning Bell

Fed to announce forecasts for key interest rate
Federal Reserve Chairman Ben Bernanke, chairman of the Federal Reserve, has been trying to improve transparency at the central bank. That includes announcing the interest-rate forecasts of the Fed's policymakers. The Federal Open Market Committee's "participants decided to incorporate information about their projections of appropriate monetary policy" in their Summary of Economic Projections beginning this month. Bloomberg(1/3), Reuters(1/4), The Wall Street Journal(1/4)

Industry News

Insiders expect muni market to again prove Whitney wrong
Analyst Meredith Whitney famously predicted that "hundreds of billions of dollars worth" of municipal-bond defaults would occur in 2011. Whitney was wrong, and other analysts say a major increase in defaults is also unlikely this year. "Given the remaining effects of the slowdown in the economy, you could have a marginal increase in defaults," said John Hallacy, a strategist at Bank of America Merrill Lynch. "I don't see it being a spike." InvestmentNews/Bloomberg(free registration)(1/3)

Fidelity shifted FX trades from BNY Mellon in 2009
Fidelity Investments started moving foreign-exchange trades from Bank of New York Mellon in September 2009, long before the controversy over trading costs emerged. In internal e-mails, BNY Mellon executives discussed "significant lost business" from Pyramis Global Advisors, the institutional arm of Fidelity, and from Fidelity Canada. The Boston Globe (tiered subscription model)(1/4)

• Other News

Industry-funded study suggests Volcker rule would cost investors $315B
Financial Times (tiered subscription model) (1/2)

Firms plan to issue RMBS deal by May 17, SEC filing shows
Housing Wire (1/3)

Une Commission procédurière face à une Hongrie toujours plus autoritaire

Sans nouvelle aide, la Grèce pourrait abandonner l’euro

L'Allemagne privée du portefeuille de l’économie à la BCE

Morning Bell

European banks sell covered bonds to cut funding costs
UBS issued €1.5 billion in five-year covered bonds, while ING Bank issued €1.75 billion in 10-year bonds, sources said. The banks sold the top-rated bonds to satisfy demand from investors and reduce funding costs. "The reignition of the credit markets must come from the ultra-safe issuers first," said Ivan Comerma, head of treasury and capital markets at MoraBanc. Bloomberg Businessweek(04 Jan.), Financial Times (tiered subscription model)(03 Jan.)

Industry News

Germany likely would keep safe-haven status amid rating cuts
Standard & Poor's warned that a mass rating downgrade of euro-zone nations is likely. Germany is among them but could still see its status bolstered as a safe-haven investment. Reuters(03 Jan.)

France hasn't been told of any rating cut, official says: A French government official said the country has not been notified of any downgrade to its triple-A credit rating. "We have received absolutely no notification from any ratings agency whatsoever as of now," the official said, indicating that Standard & Poor's is still reviewing the rating. The Wall Street Journal(03 Jan.)

Greece warns it could be forced out of euro in 3 months
The Greek government warned that rescue plans for the country must be agreed upon within three months or it will leave the euro. Spokesman Pantelis Kapsis said negotiations with the International Monetary Fund, the EU and the European Central Bank would "determine everything". The Guardian (London)(03 Jan.)

European banks remain reluctant to lend among themselves
Euro-zone banks borrowed nearly €500 million in three-year funds from the European Central Bank at the end of last year, most of which has returned to the central bank in the form of overnight deposits. While the system is flush with liquidity, financial institutions remain reluctant to lend to one another. Reuters(03 Jan.)

Morning Bell

Partisan disputes in Congress might give muni bond market a break
President Barack Obama and others proposed rules that threaten the tax exemption of the municipal securities market, but partisan quarreling in Congress might put them off for a year, tax experts say. Industry groups, however, remain concerned. "I think the big issue on Capitol Hill is whether there will be any curtailment or elimination of the tax-exemption" for municipal bonds, said Michael Decker, managing director and co-head of the municipal securities division at SIFMA. The Bond Buyer (free content)(1/3)

Industry News

Bondholders could lose $315 billion under Volcker rule
An Oliver Wyman study, conducted for SIFMA, estimates that U.S. corporate bond investors could suffer paper losses of $315 billion as a result of the Volcker rule. Learn more about the Volcker rule. Financial Times(tiered subscription model)(1/2)

Leveraged loan market is expected to start 2012 strong
Financiers and private-equity firms expect the leveraged loan market in the U.S., unlike that in Europe, start strong this year, Helen Thomas writes. Financial Times (tiered subscription model)(1/2)

Deal makers are increasingly optimistic about 2012
Steadier credit and stock markets add to confidence that this year will be better for mergers and acquisitions. "The dialogue has gotten back on track," said Steven Baronoff of Bank of America Merrill Lynch. "If Europe doesn't go off the rails, you'll see a return to long-term positive factors." The New York Times (tiered subscription model)/DealBook blog(1/2)

Analysts remain bullish about municipal bonds
In 2011, municipal bonds defied predictions by returning an average 10%, outpacing equities and other asset classes. Analysts do not predict the same return this year, but they say the market still will do well. "Assuming economic growth stays slow, and the Federal Reserve keeps interest rates low, municipals won't diverge too much from the pattern we had in 2011," said Matt Fabian, a senior analyst at Municipal Market Advisors. InvestmentNews (free registration)(1/1)

L'adoption de l'euro par la Lituanie reportée

Le déficit espagnol pourrait avoir explosé en 2011

Morning Bell

Germany and France plan summit to discuss Europe's crisis
French President Nicolas Sarkozy plans to meet with German Chancellor Angela Merkel on Monday in Berlin to discuss ways to resolve the euro-zone debt crisis. Sarkozy and Merkel will prepare for a late-January summit with leaders from all EU countries. European leaders aim to reach an agreement on closer economic integration and budget surveillance. The Wall Street Journal(03 Jan.)

2012 likely will be tougher than 2011 for Europe: In 2011, investing in Europe was a roller-coaster ride of panic, elation and market volatility. This year is expected to be similar, if not worse. Most economists are forecasting a recession in Europe, and the debt crisis is far from over. The Wall Street Journal(03 Jan.)

Industry News

Speculation mounts about Greek debt writedowns
A Greek news website reported that Germany is looking into pushing for a 75% writedown on Greek government bonds that are held by private creditors. The German government, however, is not commenting on the report, instead saying that negotiations on reducing Greece's debt could come to a conclusion soon. Bloomberg(02 Jan.)

UK will address excessive financial-services pay, Cameron says
UK Prime Minister David Cameron vowed that the government will take additional steps to tackle "excess" compensation in the financial-services industry. Cameron also discussed the economy in his New Year's message. Bloomberg(01 Jan.)

Private equity in Europe turn toward asset-backed loans
GE Capital is predicting a surge in asset-based lending in Europe this year, as private-equity groups strive to fill a financing gap. Financial Times (tiered subscription model)(30 Dec.)

Deutsche Boerse-NYSE Euronext saga continues
The case team at the EU competition authority handling the proposed merger of Deutsche Boerse and NYSE Euronext is expected to issue a draft recommendation soon. Many market insiders expect EU officials to oppose the deal. AdvisorOne.com(02 Jan.), Financial Times (tiered subscription model)(02 Jan.)

L'agenda Europe du 2 au 6 janvier 2012

Copenhague préside l’UE pendant six mois

Les dirigeants européens s’attendent à une année 2012 difficile