Libor rigging scandal could spread to U.S. banks

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

Libor scandal could spread. A day after recently resigned Barclays chief executive Bob Diamond faced hostile questions from the British parliament, fears are growing that settlements could be coming from the dozen other banks under investigation for fudging numbers used to set the Libor interest rate, the Wall Street Journal reports. Bank of America and Citigroup are among the U.S. banks under investigation, but the Charlotte bank isn't saying whether it has set aside money for the possibility of a penalty, Bloomberg reports. The scandal has also put the the British bank's new U.S. wealth management unit in jeopardy, Reuters says. It's been billed as an alternative to offerings from Bank of America and most directly competes with JPMorgan Chase and Goldman Sachs.


ECB cuts rate. As expected, the European Central Bank cut its primary interest rate by 25 basis points this morning, The New York Times says. The next step is likely to be government bond purchases similar to quantitative easing in the U.S. Unexpectedly, China also cut interest rates today amid a slowing economy, the Times says.

Eminent domain. Some California cities say they are considering using eminent domain powers to seize underwater mortgages, cut principal and restructure them, and resell them, the Wall Street Journal reports. It is unclear whether this is legal, but the cities say they have a good case. Investors say this would only hurt the housing market, not help it, by increasing borrowing costs.



Fee disclosures. A number of banks, including Bank of America, have indicated they plan to adopt a simpler way of disclosing checking account fees, the Boston Globe reports. The model form was published by the Pew Charitable Trusts several months back.