Tuesday, September 11, 2012

One bailout down, more to go

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

AIG bailout finishing up, more still around. The Treasury's sale of about $18 billion in stock of insurance giant AIG the government bailed out in 2008 is a big step in unwinding one of the most unpopular crisis-era bailouts, The New York Times says. But Uncle Sam still has plenty more to do. The government still owns big chunks of General Motors, Ally Financial, and many smaller stakes in community banks around the country.

Hiding trading risk. Derivatives traders at banks like JPMorgan Chase and Bank of America are planning to skirt new rules designed to safeguard the financial system by allowing to post lower-quality collateral to back their trades, Bloomberg reports. The clients then receive a loan of higher-rated Treasuries to nominally meet the rules -- a process known as "collateral transformation."

Governments enjoy low rates. Savers aren't thrilled with low returns on their deposits, but governments are loving the low interest rate environment, The New York Times says. They're able to refinance debt and borrow cheaply, saving money. Added bonus: government policy helps set the rates.

Research department shakeup. Bank of America is changing things around in its research department after London-based Gary Baker, head of European equity strategies, left the bank, Bloomberg says.