Breaking News This Morning ...
JPMorgan Earnings: JPMorgan Chase bested analyst expectations by reporting a 34% rise in earnings and net income of $5.7 billion for its third quarter. The boost in profit is related largely to a spike in mortgage loan originations that counterbalanced an additional $449 million in derivative losses courtesy of the London Whale and caused CEO Jamie Dimon to declare "we believe the housing market has turned the corner." Now if the nation could just fix its pesky fiscal cliff. Wall Street Journal, Financial Times
Receiving Wide Coverage ...
Analyzing the Tarullo Cap: Federal Reserve Governor Daniel Tarullo's call to cap U.S. financial firms (by restricting the amount of non-deposit liabilities they can hold to a fixed percentage of the economy) is still getting some press as news outlets mull over its implications. Though hard to say how Tarullo's cap would play out since he refrained from mentioning what this fixed percentage of GDP would be, thanks to this chart from the Journal, it's easy to see which financial institutions would be affected, were a version ever to get approved by Congress. (Spoiler alert: the primary targets would likely be JPMorgan Chase and Bank of America, which hold over $992 million and $889 million in non-deposit liabilities, respectively.) Meanwhile, Slate columnist Agnes T. Crane calls Tarullo's appeal "a telling sign" of how weak existing legislation (meaning Dodd-Frank) has become. "Two years after the 848-page Dodd-Frank financial reform act thudded onto desks across Wall Street, regulators, politicians and even banking grandees are back out on the stump talking up ideas that were left on the cutting-room floor," she writes. "It's increasingly evident that too big to fail remains too big a concern."
RBS Offers Shares of Unit: Royal Bank of Scotland will collect $1.49 billion or $1.3 billion, depending on who you ask, from an initial public offering of its Direct Line insurance business. Those figures make it one of the largest IPOs thus far this year in Europe as the ongoing debt crisis continues to affect markets. Back in 2009, the European Commission ordered RBS to sell its stake in the unit by 2014 as a condition of receiving stimulus funds. Wall Street Journal, New York Times
Wall Street Journal
China's younger demographics are pushing the country, which has long favored cash, toward credit use. Consumption loans (including mortgages, advances on credit cards, car and consumer loans) and credit card lending saw significant gains in 2011 versus 2010, according to the Boston Consulting Group. The paper says the push to expand further on lending could prove challenging "in a country where concepts such as consumer databases and credit scoring are still catching on."
In an effort to ease economic woes and meet tighter capital requirements, Dutch banks are asking the nation's savers "to become more patriotic and keep a higher percentage" of their pension funds (estimated to be around $1.159 trillion) in the Netherlands. The plan is being called the "orange solution" in honor of the Netherlands' national color.
Here's something we've scanned before in various forms: Merchants are rallying against the proposed Visa-MasterCard swipe fee settlement in a "last ditch effort" to block approval. A motion seeking preliminary approval for the deal is likely to be filed next week in U.S. District Court in Brooklyn, N.Y., prompting the merchants to rally the opposition.
Financial Times
U.S. Treasury Secretary Timothy Geithner calls BlackRock chief Larry Fink "on average once every 11 days" or "whenever he wants a first-hand account of how financial markets are interpreting government policies or reacting to the latest crisis."
Columnist Gillian Tett is taking issue with the U.K. Financial Services Authority's ease on certain capital requirements, asserting that it won't boost lending as intended. "What is crystal clear is that getting banks to make more loans is not something that can be done with regulatory tweaks alone," she writes, since capital requirements aren't the only regulations banks are concerned about, consumers and companies remain interested in deleveraging and certain sources of funding, such as wholesale markets, have closed.
New York Times
In an article that anticipated JPMorgan's mortgage origination spike, Dealbook suggests home loans are the key to big profits for banks and that "the temptation of bigger mortgage gains may come to outweigh the fears that some banks have" about re-embracing the market.
