Monday, July 9, 2012

Earnings season brings worries of weak results

Welcome to the morning roundup. Here's a look at today's banking and finance headlines.

Earnings. Companies begin reporting second-quarter earnings this week, and many have already warned investors that profits will be lower than expected, the Wall Street Journal reports. That's due in part to slowing demand from customers, particularly in Europe. JPMorgan Chase & Co. and Wells Fargo & Co. are set to report results Friday, with Charlotte-based Bank of America to follow next week.

Barclays. The focus in the Barclays rate-rigging scandal turns to regulators today, the New York Times reports. Paul Tucker, a deputy governor at the Bank of England, is set to give evidence on whether senior government officials pressured Barclays to lower its Libor submissions.

Community banks. More than 800 community banks lend less than half their deposits, far below the rate of their peers, Reuters reports, suggesting not all small banks live up to their reputation as "kinder, gentler versions of their big-bank brethren."

Drug cartel used BofA accounts. A Mexican cocaine-trafficking cartel used Bank of America Corp. accounts to invest money in a U.S. horse-racing operation, the Wall Street Journal reports. The ties between the violent Los Zetas drug gang and the Charlotte bank were described in an affidavit filed in federal court last month, the Journal writes. Bank of America hasn't been accused of any wrongdoing.

Bankers lose on their own firms. Workers at the five largest Wall Street banks saw the value of company stock in their 401(k) accounts, sometimes the biggest holding in those plans, fall more than $2 billion last year, Bloomberg reports.


Garth Vader said...

Barclays could not have manipulated LIBOR by itself. There are 16 banks that are polled. The 4 highest and 4 lowest numbers are thrown out and the middle eight are then averaged. So if only Barclays was fudging its figures, the overall LIBOR number would have still been accurate. The manner in which LIBOR is calculated makes it impossible for it to have been rigged without an industry-wide conspiracy, most likely involving the Bank of England and the Federal Reserve as well.