Monday, June 11, 2012

Markets pointed higher after Spain's bank bailout

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Markets pointed up. Markets across Europe were up this morning after the $125 billion bailout for Spain's ailing banks was announced over the weekend, the Wall Street Journal says. U.S. futures were up as well. But the gains may be fleeting, since Europe's markets seem to be settling down already.

Boring won't work. Or will it? Many politicians have called for a return to "boring" banking, or forcing banks to return to plain vanilla lending rather than investment banking. Bloomberg's editorial board, though, says that won't work. It points out that the majority of the losses banks suffered during the financial crisis came from lending, not trading losses, and says that's it's more capital, not a return to boring banking, that will protect banks. Of course, a University of Chicago professor argues the opposite in a column in the Financial Times, pushing for reinstatement of the Glass-Steagall Act by praising its simplicity and ability to reduce the political power of banks.

Defending Dimon. The chairman of the New York Fed is defending the membership of JPMorgan Chase CEO Jamie Dimon amid calls for the executive to step down after his bank's $2 billion-plus trading loss, the Wall Street Journal reports. Still, Dimon is likely to leave at the end of the year because he is in the final year of his second term, which is the customary length of service.

Housing fix faltering. President Obama's 2009 plan to stem the worst of the housing crisis has largely failed because it wasn't bold enough, Bloomberg says.