Lawmakers in Congress appear to be stepping up to the plate for banks; that is, banks that would like to hold collateralized debt obligations backed by trust-preferred securities. Zions Bancorporation is one of these banks. “Democratic members of the House Financial Services Committee sent a letter to regulators Tuesday saying they believe the agencies have the authority to exempt banks with less than $15 billion in assets [to continue to hold trust-preferred CDOs].” Zions Banc is not one of these banks ($55 billion in assets). Moving on, regulators across the pond are also making life easier for banks: “global regulators diluted a planned debt limit for banks amid warnings that the rule would penalize low-risk financial activities and curtail lending.” The Basel Committee has agreed to adjust the leverage ratio to “give lenders more scope to use an accounting practice known as netting to calculate the ratio, and ease proposals on how lenders determine the size of their off-balance sheet activities.” The new changes may level the playing field between US and International banks: “US banks will welcome the change because their accounting rules have allowed them to net derivatives, while European banks, whose accounting rules require gross positions, will be able to net and not be at a disadvantage to US rivals.” Meanwhile, the Federal Reserve is jumping on the foreign-exchange probes bandwagon: they will be joining “authorities from London to Washington probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market to maximize their profits…[The Fed’s] oversight can include international operations of US banks and the US operations of foreign banks.” Finally, working at Wells Fargo may come at a cost: “One former branch manager who worked in the Pacific Northwest described her dismay at discovering that employees had talked a homeless woman into opening six checking and savings accounts with fees totaling $39 a month.”
Mercedes and Volkswagen Target America
Daimler Chief Executive Dieter Zetsche says in discussions about additional plant capacity, “North America is one scenario.” He went on to say that expanding capacity at its current factory in Tuscaloosa was not likely. Meanwhile, Volkswagen is doubling down on its goal of 1 million VW and Audi sales in the United States by 2018 by investing $7bn in a new sport utility vehicle. Volkwagen is expected to build the new SUV at one of its two North American factories: Chatanooga, TN or Puebla, MX.
Simulated Disaster is Always Better Than the Real Thing
China’s Romandisea Seven Star International Cultural Tourism Resort is getting its own “life-size version of [the Titanic, and] will allow hundreds of people at a time to experience simulation of shipwreck.” Meanwhile, “China’s second-biggest brokerage said record debt threatens to trigger a financial crisis as borrowing costs jump to unprecedented highs despite a cooling economy.”
The European Commission and the OECD are guilty of insider forecasting: “in seeking ‘inside’ information on how budgets are evolving, EC and OECD economists make themselves susceptible to the ‘political bias’ of the government they are assessing.”
“Target and Neiman Marcus were not the only retailers hit by a massive data breach over the Christmas holiday, as at least three other “well-known” retailers also fell victim to the attack.” By the way, the original estimate of 40 million customers’ card numbers stolen has been revised to also include 70 million customers’ names, addresses, phone numbers and email addresses.
Fun Fact: Stanley Fischer “was the Ph.D. thesis adviser to Ben Bernanke when [Bernanke] was a student at Massachusetts Institute of Technology. He also taught Mario Draghi, Larry Summers, and Greg Mankiw.”