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2. Ex-analyst in jail over alimony

Banks are being forced to rationalize their consumer platforms like never before. The new decisions criteria are punishing in some regards, making it much less likely for a specific consumer-interaction venue to remain viable if it doesn't cover its own costs. One obvious sign: the on-going drive to reduce bank branches across the industry.

Another reflated reflection of the new mindset is the trend toward for fewer teller windows. As noted by the Boston Globe, Bank of America is phasing out more drive-through teller services in Massachusetts and elsewhere across the country because of declining traffic.

One key issue obviously is the rise of new consumer banking technologies. "The drive-through teller, like many other services, is finding it harder than ever to compete with the conveniences of technology. At a time when customers can deposit a check by taking a photo of it on their mobile phone or visiting an automated teller machine 24 hours a day, the idea of stuffing checks and deposit slips into a cylinder, sending it through a vacuum tube, and communicating with the teller through a static-y intercom seems almost quaint."

The drive to reinvent the modern branch will play out over many years. There are a few times a year, when I find drive-throughs really convenient. That said, I doubt I'll miss them too much.

For more:
- here's the article

Read more about: Bank Branches, tellers
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By Jim Kim

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3. Billionaire wins in suit against JPMorgan

Ari Schochet, former analyst of Citadel Investment Group, has gone to jail no less than eight times for failing to pay alimony. You might find him an immediately scornful figure, a deadbeat that deserves prison time.

But the facts make his case a little more complex.

Bloomberg offers an interesting look at what happens when a high-earners lose their jobs after a divorce. After earning up to $1 million a year, so he says, Schochet hit a tough career stretch, making it hard to make his alimony and child support payments that hit $100,000 a year at one point.

It's not that he doesn't want to pay; he can't. The jobs just aren't there for him. "It's a circle of hell there's just no way out of," Schochet was quoted. "I paid it as long as I could." And then he went to jail.

This has cropped up as an issue in a lot of states, where tweaks to alimony laws are likely over the next few years. That's way too late for the likes of Schochet and others. Let's face it, divorce isn't exactly a rare occurrence in the industry, where punishing hours are the norm, especially for the young-ish up and comers.

Schochet hasn't given up. "Since April, he has managed to leave the jail following each appearance" after a judge "acknowledged his efforts to secure a well-paying job."

As of now, however, Schochet works part-time as an entry-level stock transfer agent, "a job that leaves him with about $100 a month in disposable cash after garnisheeing and taxes."

"It's amazing how small you can live," Schochet was quoted. "I'm down to paying for electricity, water, my cell phone, Internet and gas. Friends help out with whatever else I need."

All in all, life is better than one might think. He's got a steady girlfriend and "job prospects."

For more:
- here's the article

Read more about: analysts
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By Jim Kim

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For JPMorgan Chase, the hits keep coming.

A judge has ruled in a high-profile breach-of-contract suit by billionaire Len Blavatnik against JPMorgan Chase. Blavatnik was awarded $50 million in damages in New York after a supreme court judge found that JPMorgan had "breached its investment guidelines" when it invested too much of his $1 billion in subprime mortgage-backed securities that later incurred substantial losses, as noted by the Financial Times.

It wasn't a complete victory. Blavatnik was seeking $100 million and a declaration that the bank was negligent, which the judge declined to give.

Blavatnik's investment carried an agreement that the bank would not invest more than 20 percent of his funds in mortgages. But the invested funds hit 60 percent, according to the verdict.

All in all, there was enough in the judgment for Blavatnik to claim a significant victory. "I hope that this decision sends a clear message to JPMorgan that they have to honour their obligations to their clients," Blavatnik was quoted. "There are a lot of people out there who, I understand, feel they have been wronged by JPMorgan but cannot afford to take on a huge bank. They shouldn't have to."

To be sure, this is yet another legal setback for a bank that has emerged as a litigation magnet, along the lines of Bank of America and Goldman Sachs a few years ago.

To be sure, the bank has been cranking out earnings at a record clip, and setting aside more funds to cover these additional losses has thus not been overly onerous. Still, the case contributes to the perception that the bank lacks controls in critical areas.

For more:
- here's the article

Read more about: Litigation, JPMorgan Chase
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4. Rates business takes a hit

By Jim Kim

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5. NYSE vs. Nasdaq on outage timeline

FICC business across the board seems poised to slow. Much of the attention has been focused on the commodities business. But more people are waking up to the fact that the rates business is due for a slow-down as well.

"Investment banks are set to shrink the business of trading government bonds and other interest rate products after revenues in their main profit engine have dropped drastically this year," according to the Financial Times.

"A number of global investment banks from Credit Suisse to Citigroup are making further steps to reduce assets in their so-called rates businesses amid expectations of more muted returns and revenues."

Unfortunately, offsetting the losses in rates revenue is not going to be easy, as it became the largest piece of the revenue pie in most FICC operations. In the past year, according to one consulting firm, such revenue accounted for about one-fifth of total investment banking revenues. We've certainly gotten used to active bond sales and trading activity leading the way.

Unfortunately, in the first half of 2013, rates revenue has fallen 36 percent, according to Coalition.

It would be east to blame regulation requiring more capital held to backstop specific trades as well as a move to electronic trading venues. But there are other issues as well. Core bond trading may be on the decline, amid the perception that bond trading activity is due to for a secular drop.

For more:
- here's the article

Read more about: Ficc, Rates
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By Jim Kim

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