| August 24, 2012
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Today's Top Stories
1. Wells Fargo suffers from drought
2. Bank of America changes policy on old accounts
3. Citigroup continues stealth break up
4. Spitzer defends global settlement
5. Citigroup's withering Nasdaq criticism Also Noted: Kaseya
Spotlight On... Jamie Dimon's language at issue
Citigroup capital plan passes; and much more... News From the Fierce Network:
1. "Wolf of Wall Street" coming to the big screen
2. Small bank TARP sales disappoint
3. Low latency race heats up
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Events > Investment Consultants Forum - The Crowne Plaza Times Square, New York, NY - March 2, 2012
> NFC Ticketing Europe 2012 - March 20-21 - London
> NYIF Essentials of Project and Infrastructure Finance - September 10-12 - New York, NY
> Investment Trends Summit - September 12-14, 2012 - The Four Seasons, The Biltmore - Santa Barbara, CA
> Investment Trends Summit - September 12-14, 2012 - Santa Barbara, CA
> NYIF Wealth Management Program - October 29- November 16 - St. Petersburg/Tampa FL
> NFC Payments USA Unites NFC Experts in Boston Once Again - October 29-30 - Boston, MA
> The Mobile Wallet Summit - November 28-29 - London
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* General ad info: Click here | Today's Top News 1. Wells Fargo suffers from drought The bloom has long been off the banking-insurance synergy rose, but some banks retain some insurance operations. For example, Wells Fargo's Rural Community Insurance stands as the largest approved provider of crop insurance. In 2011, it racked up $1.8 billion in sales, notes Bloomberg. American Financial Group is also active, as it sells crop insurance along with other forms of insurance. Unfortunately, the drought in the mid-west may raise the likelihood that these insurance units will have to pay out massively. Standard & Poor's says that crop insurers, by Wells Fargo, "may face losses that exceed $5 billion if this year's U.S. drought is worse than one in 1988. Underwriting losses will be a drag on earnings, but by themselves, will not affect the capital of most insurers that we rate," S&P said, adding that "We do not expect to take any rating actions solely because of crop insurance losses." Wells Fargo has reinsurance, but it may be that the accounting will require some paper losses. All in all, the drought would not appear to be hugely consequential to bank earnings. In fact, it presents some opportunities. At least one bank is sensing an opportunity to do right by local customers who have been hard hit, a good PR move to be sure. Credit unions are also sensing opportunities to extend more loans, the chagrin of banks. For more:
- here's the article Read more about: Wells Fargo, Insurance
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2. Bank of America changes policy on old accounts In part to head off mounting criticism, Bank of America has decided to change its policy on old, closed bank accounts, which the bank routinely revived if the account was targeted for some sort of automatic transaction, reports the Huffingtong Post. The policy was understandable on several levels. The bank pitched it as a service of course, but it also helped with customer retention and made the bank's overall account totals look good. Such practices, to be fair, would appear to be more rife at online brokerages, where it can be very difficult to actually close an account. They seem to exist forever with a penny in it. In any case, Bank of America's policy was heavily criticized by Consumers Union, which said the practice opened consumers up to hidden fees, and the bank has bowed to the inevitable. Rather than risk another public debacle, like the one that broke out over its proposed debit card fee, it has decided to change its policy. So no longer will electronic debits or credits automatically re-open a previously closed account. Consumers Union has hailed this as a major victory. It also took the opportunity to press for changes that would make it easier for people to switch banks. Banks would be wise to look into this now, as it is the sort of issue that will have the CFPB salivating before too long. For more:
- here's a Huffington Post article Read more about: Bank of America, Closed Accounts
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3. Citigroup continues stealth break up Citigroup CEO Vikram Pandit has been on something of a communications tour as late, talking up the bank's prospects and commenting on the idea that banks ought to be broken up. There's no doubt he'd rather talk about other things, but since a former Citigroup CEO put the break-up issue on the table, he really has no choice but to talk about it. He has walked an interesting tight rope on the issue and hasn't exactly broken ranks with the industry and come out in even mild favor of Weill's views. But he also notes that at his bank anyway, a kind of stealth break up has been underway via asset sales. Since coming aboard as CEO, he has sold off private-equity stakes, auto credits, retail mortgage portfolios, the Student Loan Corp., and insurer Primerica. As reported by Bloomberg, Pandit no longer views the bank as a traditional conglomerate selling a wide array of financial services via some sort of supermarket approach. "The 1998 merger of Citicorp with insurer Travelers Group Inc. didn't turn out to be everything people thought it was going to be," Pandit was quoted. "The focus of that merger, which was supermarket banking or financial supermarket, is a strategy that I don't believe is right for the times. Not only that, I don't believe it's right for our bank….Getting out of that strategy is what we've done. And now we focus on what is really the core banking business of this institution." This is an interesting approach to the issue. Other banks may follow suit as they address the break up issue. But the big issue in the debate is separating the investment banking from the commercial banking and perhaps even wealth management. As long as all that remains melded, albeit without any real synergies, the break up issue will be in the air. For more:
- here's the article Related articles:
Citigroup is already a little broken up Read more about: Citigroup
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4. Spitzer defends global settlement The news that Goldman Sachs was shuttering its Hudson Street independent research initiative has led to a new round of hand-wringing about the state of independent research. The conventional wisdom seems to be that once the vaunted "global settlement" of charges of tainted research against 10 big banks expired, which it did in 2008, the once strong wind powering the industry has died down. Eliot Spitzer, whose office negotiated the deal when he was state AG, defended the deal to the Financial Times. "I think we accomplished something. There are a lot of independent research firms out there, some doing well and others not. Goldman has other business models and other priorities." He also noted that "We accomplished what we wanted, the public is much more aware of these conflicts…At the time, it was the most fundamental restructuring of Wall Street that had taken place in decades. The problem was that the research that was proffered to the public as independent and unbiased was in fact biased." The real issue in my mind was the business model. The soft-dollar approach seemed to predominate in the end, but there are fewer soft dollars to go around right now, and sell-side research, for better or worse, is still seen as must-have. In the end, the independent research industry never found a business model with real staying power, hence the Hudson Street news. There are plenty of independents with innovative products, often linked to specific industries, that are finding many willing buyers. For more:
- here's the article Read more about: analysts, Global Settlement
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5. Citigroup's withering Nasdaq criticism For Nasdaq OMX, the Facebook fiasco is not going away. In fact, the woes are multiplying, and so perhaps are the ultimate costs. There could be some significant changes in store for the exchange company if Citigroup succeeds in its efforts at persuading the SEC that Nasdaq's handling of the situation and the proposed restitution were both terribly inadequate. Citigroup has released a blistering letter to the SEC that criticizes Nasdaq at every turn, painting a damning portrait of an exchange company that rushed to win the IPO mandate, relied on flawed, untested processes, blamed technical glitches not human error, and offered a pittance in relief. "Nasdaq's only interest in accommodation was to satisfy the public perception that it failures will not result in investor losses. While the $62 million pool in this SEC Submission is a larger cash contribution, that is perhaps sufficient to mislead the investing public to believe that Nasdaq is standing up for its obligations; however, compensation paid by market maker and broker participants to their customers far exceeds the sum Nasdaq has proffered by a multiple of roughly seven. Nasdaq's proposal simply fails to take into account the confusion its known design flaw, insufficient failover procedures and reckless business judgment had on the market participants that trade there." The letter reflects a great deal of anger at the way the post-fiasco negotiations went down, as the vitriol was somewhat surprising, accusing management of negligent behavior, blaming the disaster not on technology glitches . But on risky, misguided, self-interested human decisions it really is quite a read. The top market makers disagree on the Nasdaq proposal, as Knight ultimately supported the final offer while Citigroup and possibly others are not having it. For more:
- here's the article Related articles:
SEC to address technology issues in September
Structural issues in the IPO market must be solved Read more about: Citigroup, Nasdaq
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Also Noted | This week's sponsor is Kaseya. |  | Ten Effective Habits of Indispensable IT Departments
It's no secret that responsibilities are growing while budgets continue to shrink. Enact these ten IT habits throughout your financial institution to help you cut costs, create operational efficiencies and align IT to business goals. Download Today!
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SPOTLIGHT ON... Jamie Dimon's language at issue The CEO of JPMorgan Chase is famously combative, so when he used the f-word recently in an interview with New York magazine, I took it as a sign that Jamie Dimon hasn't really changed much since the catastrophic Whale Trades. His PR people should probably talk to him though, as they certainly don't want his foul language to take on a life of its own. Reporters likely go into interviews with him hoping he will use such language, as it makes for good copy. Article Company News:
> Fitch rates Schwab's new notes. Article
> Citigroup capital plan passes. Article
> Goldman Sachs: Fed to so something. Article
> AIG rescue ends well. Article
> Who is the bad boy of the bond market. Article
> New gig for ex-Janus CEO. Article
> UBS raps Nasdaq plan. Article
Industry News:
> Financial scams stay in the family. Article
> Gold rallies again. Article
Regulatory News:
> SEC turns to Dodd-Frank on money funds. Article
> Ex-RBS trader on Libor scandal. Article
And Finally … Google building a red team. Article > Controls for automated trading. Can you rely on the sell-side alone? Wednesday, August 29th, 11 am ET / 8 am PT Join us for this informative and thought-provoking webinar, lead by renowned Capital Markets expert Richard Bentley, VP of Capital Markets, Progress Software . And learn how you can better mitigate and manage the risk of automated trading. Register today! > Webinar: Network Security: Emerging threats require updated Best Practices- September 12, 2pm ET/ 11am PT The security picture at financial services seems to be getting cloudier by the day. While many banks have awoken to the risks imposed by possible network breaches, the landscape continues to morph, raising the stakes. Cyber criminals continue to refine their techniques and to develop more advance hacking methods to compromise corporate networks, and they are as sophisticated as ever. The very notion of Best Practices in the realm of network management and security continues to evolve. We take a look at current trends and up-to-date practices. Register today!
| > Investment Consultants Forum - The Crowne Plaza Times Square, New York, NY - March 2, 2012 This conference provides a unique environment for developing dialogue between plan sponsors, managers and consultants. This event will feature panel-driven discussions focused on specific investment techniques of fixed income and hedge fund managers, the evolving role of institutional consultants, the manager evaluation process and more. Register today. > NFC Ticketing Europe 2012 - March 20-21 - London Come and join MasterCard, Renfe, Deutsche Bahn, Visa Europe, Orange, Arriva Netherlands, O2 and many more for the first event to bring together the whole NFC Ticketing industry for discussion, debate and quality networking. Click here. > NYIF Essentials of Project and Infrastructure Finance - September 10-12 - New York, NY This is a practical course that provides executives, whether as financiers, sponsors, or professional support, an opportunity to understand the risk-return character of limited recourse projects from multiple perspectives. Case studies span a variety of sectors and geographical regions. This course will not use in-depth models involving Excel™, but the instructor (a broad-based finance and investment executive with global experience throughout the U.S., Europe and the emerging markets of Latin America and Asia who has negotiated numerous transactions, including mergers and acquisitions, public offerings, mezzanine financings, international bank syndications, corporate valuations and fairness opinions) will review modeling approaches with examples. Register today. > Investment Trends Summit - September 12-14, 2012 - The Four Seasons, The Biltmore - Santa Barbara, CA The Investment Trends Summit is an educational forum focused on analyzing trends for the future, and exploring ways to implement new strategies in investment plans. Speakers and attendees will discuss topics such as investor's perspectives, investment management theories, and more. Register Today! > Investment Trends Summit - September 12-14, 2012 - Santa Barbara, CA Opal Financial Group's Investment Trends Summit will serve as an educational forum focused on analyzing trends for the future, as well as exploring ways to implement new strategies in particular investment plans. As one of our Platinum Series Events, we have designed this investment trends conference to meet the needs of money managers, senior pension fund officers and trustees who prefer smaller, more structured programs. By limiting this event to select managers, participants will be able to more carefully examine a distinct set of topics specifically tailored to their interests. > NYIF Wealth Management Program - October 29- November 16 - St. Petersburg/Tampa FL The 3-week Program captures the best practices and insights from corporate thought leaders and wealth management firms. This modular suite of classes is designed to prepare client-facing professionals with the knowledge and skills to meet and add value to wealthy individuals and families. The Program explores the following topics: Global Economic Impact on Wealth, Consultative Discussions and Recommendations, Asset Allocation and Portfolio Optimization, Lending and Leverage, Tax and Intergenerational Planning, and Maintaining Good Relationships with Investment Clients. Register today. > NFC Payments USA Unites NFC Experts in Boston Once Again - October 29-30 - Boston, MA NFC Payments USA (Oct 29-30th)is back for its second year, hosting 150 senior level delegates to debate industry challenges and facilitate the roll out of NFC payments. Speakers include Best Buy, PayPal, Verizon, Barclaycard, T-Mobile, Best Buy, VISA, Capital One, MasterCard. Click here for more information. > The Mobile Wallet Summit - November 28-29 - London The Mobile Wallet Summit is the only show that looks at the future of mobile transactions. It brings together every industry you find in your physical wallet, loyalty, identity, ticketing and payments and provides a forum for debate on how they will fit on your mobile.
| > Get Subscriptions to the Leading Finance Magazines for FREE Mercury Magazines offers top Finance titles for Free to professionals. No Credit Card Required. Stay Ahead in your Industry. Sign up now. > Whitepaper: Using Modern CRM to Attract and Retain Advisors and Clients Learn how this “next generation” CRM delivers game-changing benefits over early CRM options and can help your organization attract and retain top tier talent, foster customer loyalty, and grow assets under management or increase share of wallet/household. Download here. > Whitepaper: Ten Effective Habits of Indispensable IT Departments It's no secret that responsibilities are growing while budgets continue to shrink. Enact these ten IT habits throughout your financial institution to help you cut costs, create operational efficiencies and align IT to business goals. Download Today! | ©2012 FierceMarkets This email was sent to kumaresan.selva.blogger@gmail.com as part of the FierceFinance email list which is administered by FierceMarkets, 1900 L Street NW, Suite 400, Washington, DC 20036, (202) 628-8778.
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