Monday, July 30, 2012

Bank of America already considered, rejected breaking up

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

Break up BofA? Nope. Bank of America's top executives and board members have already considered -- and rejected -- breaking up, illuminating a thought process that makes the increasing pressure from regulators and even industry insiders to separate apart the country's largest banks unlikely, the Wall Street Journal says. CEO Brian Moynihan recommended that the board not spin off Merrill Lynch because it had become profitable, and said getting rid of it could expose it to liquidity issues. Moynihan also rejected putting Countrywide in bankruptcy because of the legal implications. (Bonus appearance in the article from former First Union CEO Ed Crutchfield, who now seems to be questioning the big bank model. He told the WSJ that putting "gargantuan, completely unrelated businesses under one roof is probably not a good idea.")

Deposit insurance lobbying. Banks are lobbying Congress to extend an expanded deposit insurance program  created during the financial crisis that is now set to expire, Reuters reports. The Transaction Account Guarantee program insured all deposits in checking accounts, beyond the $250,000 limit insured by the FDIC. Community banks in particular are in favor of the program since it helped persuade large depositors to bring them their business.

Wells growing in Asia. Wells Fargo will increase it's staff in Asia by 10 percent in the next three years, Bloomberg reports, even as other banks are pulling back in the region. The bank's staff there focuses on corporate banking services to large Asian companies.

More Libor. British banking regulators are launching a review of how Libor is set, governed and regulated, as investigations into rate-rigging continue, The New York Times reports. The result could be criminalization of Libor manipulation.


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