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2. Should JPMorgan CEO give up chairman job voluntarily?

It didn't take long for at least two banks -- Bank of America and Wells Fargo -- to fall out of compliance with the historic mortgaged fraud settlement struck in February 2012 between mortgage banks and state attorneys general.

This is according to New York Attorney General Eric Schneiderman, who has indicated his intent to sue the two banks for "repeatedly violating" the settlement. Other states might follow suit.

The ballyhooed settlement included new servicing standards. For example, borrowers were given the right to see all loan documents to make sure a foreclosure was legal; they were given opportunities to modify their loan before facing foreclosure; lenders and servicers were required to have an appropriate number of well-trained staff members to promptly respond to distressed borrowers; and borrowers were given the right to deal with a reliable, single point of contact. In all, banks were required to honor 300 new standards.

"Such servicing standards were heralded as much-needed relief for homeowners who were ensnared in a maddening bureaucratic maze when seeking foreclosure relief. Homeowners seeking help with their mortgage were often unable to get through to a bank representative. Other times, they were asked repeatedly for the same documents multiple times," notes DealBook.

It continued, noting that, "When the settlement was being hashed out last February, housing advocates seized on the servicing standards as a crucial element of the settlement, but some doubted whether they would be backed by state and federal muscle."

The New York AG apparently intends to prove that there is muscle behind the order. In fact, the settlement was backed by a federal court order, and state attorneys general and the U.S. Department of Justice could always seek redress if the banks failed to honor terms. The deal allowed for "significant penalties" if the banks violate the court judgment. An independent monitor was set up to monitor banks' compliance.

What's likely going on is that banks simply underestimated their ability to comply at the ground level, where the phone calls from troubled mortgage holders are actually answered and processed.

In the end, banks are being penalized mainly because they simply lacked tools and the infrastructure to provide really good customer service. Unfortunately, the stakes are higher now, as such service is a matter of law and order.

For more:
- here's the item
- here's the background on the settlement

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By Jim Kim

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3. Bank of America meets this week in Charlotte, NC

With JPMorgan's annual shareholder meeting looming on May 21 in Tampa, the vote on whether to split the CEO and Chairman jobs has taken on a life of its own.

This is high corporate drama. Will the furious lobbying by the bank's board sway enough voters? Will corporate governance activists finally succeed in splitting the posts after years of trying? Will CEO and Chairman Jamie Dimon walk off the job if the resolution passes with more than 50 percent of the vote?

In one sense, the fact that the vote has taken on a life of its own is bad news for Dimon. The last thing he needs is for the vote to de facto act as a referendum on his performance, but that's exactly what it is becoming. I suggested that one solution would be for him to voluntarily give up the chairman position and find a solid outsider for the post. More banks seem to be trending in this position, and he would win lots of good will for such a move.

A Bloomberg columnist weighs in with similar views.

"Dimon, 57, would lose little by giving up the title. He probably would draw public praise for showing humility, rather than letting his ego drive the outcome. The company operated fine when it had different people in the two jobs. For Dimon, the extra designation shouldn't be worth fighting for. Doing so turns the issue into something bigger than it should be."

There is still time to make this move. Tactically, it would prove quite savvy, buying the board time for Dimon to turn things around before next year's annual meeting.

For more:
- here's the article

Read more about: Annual Shareholder Meeting, Jamie Dimon, CEO
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By Jim Kim

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4. Bank pay divide widens in Europe

Bank of America's shareholders will gather for their annual meeting this week, amid a much less emotionally charged climate than companies like JPMorgan Chase.

For management, this is a welcome relief. Bank of America CEO Brian Moynihan will be able to tout that the stock price has increased dramatically since the last meeting, and there are no votes that in any way could be called a referendum on his performance. There would appear to be no de facto litmus tests, but shareholders will still vote on some important issues.

For one thing, the bank faces a say on pay vote, as is normal. The issue will likely generate less heat this year. Last year, despite some loud protests, shareholders ultimately approved the executive compensation plans for work rendered in 2011. This year, pay is not likely to be as massive, as shareholder groups have not pressed for change ahead of the vote.

For 2012 work, about 92 percent of Moynihan's $12 million pay was in equity-based awards. Half of Mr. Moynihan's 2012 total incentive compensation was awarded in the form of performance restricted stock units that are earned by achieving specific return on assets and adjusted tangible book value growth performance goals over 2013-2015. The board has had clawback provisions in place since 2009.

Shareholders will also vote on six proposed new directors, a direct proxy access proposal, disclosure of political giving, a ban on giving to affect elections and a proposal to launch an independent review of mortgage operations.

For more:
-here's the item
-here's the issues as seen by the Charlotte Observer

Read more about: Bank of America, Say on Pay
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By Jim Kim

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5. Private equity fundraising down, but not out

A new survey of banker pay in Europe notes that the divide between U.S. banks and European banks has opened up.

"Some of the European investment banks are scaling back heavily and having to accept that they can't pay people at the same level as U.S. firms," one expert was quoted by Bloomberg.

The survey by Emolument found, in particular, that managing directors in JPMorgan's mergers advisory and underwriting teams earned an average of 1.1 million pounds for work rendered in 2012. That topped the table. Morgan Stanley came in second, with average pay of 903,000 pounds, followed by Goldman Sachs at 873,000 pounds. The worst paying U.S. bank was Citigroup, which paid managing directors an average 613,000 pounds.

In contrast, European banks paid far less on average. Barclays paid managing directors in investment banking an average 815,000, while RBS paid an average 745,000 pounds. UBS paid an average 693,000 pounds, Deutsche Bank paid an average 666,000 pound, and Credit Suisse paid an average 631,000 pounds.

European banks are suffering on two levels. For one thing, as harsh as the regulatory climate is in the U.S., it's even worse in Europe, where the proposals specifically aimed at banker pay have been more draconian. At the same time, the operating environment for European banks has been punishing, while the U.S. banks have shown strength, especially in their domestic operations.

For more:
- here's the article

Read more about: European Banks, executive pay
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By Jim Kim

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