Banks Can't Stop Stepping On Own Anti-Regulation Message: Seven And A Half Things To Know

12/06/2012 08:02 am ET
  • Mark Gongloff Managing Editor, Business and Tech, The Huffington Post

Science has determined that people need to know 7.5 things per day, on average, about the world of business. You can't argue with science. Lucky for you, the Huffington Post has an email newsletter, delivered first thing every weekday morning, boiling down the day's biggest business news into the 7.5 things you absolutely need to know. And we're giving it away free, because we love you, and also science. Here you go:

Thing One: Big Banks Behaving Badly: Like many of us, gigantic banks have a time-management problem. Just as you'd love to leave work early to catch your kid's soccer match, banks desperately want to spread word about the dangers of too much bank regulation. But they can never get around to it because they are always too busy drafting press releases about their latest debacles and/or crimes. There just aren't enough hours in the day!

The latest volume of Richard Scarry's Great Big Book Of Bank Cock-Ups will include the news, via Reuters, that HSBC is emptying out the ceramic-kangaroo coin caddy by the bedside -- don't forget the watch! -- to come up with $1.8 billion to settle charges that it stood by and let Iranians and drug lords and who knows who else just stone-cold launder money all day through its branches. That sounds like a great deal of money to you and me, but it will be far preferable for HSBC to pay this rather than to face actual criminal prosecution, Reuters notes. Can you send an entire bank to jail? HSBC says it is cooperating with the years-long investigation.

Meanwhile, another ginormous European Bank, Deutsche Bank, spent last night fielding calls and typing emails about a Financial Times report that three of its former employees claim it hid $12 billion in credit-derivative losses during the crisis. This accounting ruse helped the bank maintain a facade of strength and avoid a government bailout, according to the former employees. The bank calls the story old news and says an internal investigation revealed nothing wrong. Still, that's another day lost in the battle against regulating credit derivatives.

Meanwhile, giant U.S. bank Wells Fargo had to deal with the news that the Securities and Exchange Commission had accused one of its bankers of being at the center of an insider-trading ring involving nine other people. Wells put the banker on leave immediately and said it was cooperating with the probe. Of course, everybody in America pretty much insider-trades all of the time, if Peter Lattman's New York Times story about the government's probe of the hedge fund SAC Capital is any indication. But dealing with messes like this means banks just have less time to lobby Congress to cut the SEC's funding.

Tighter regulation is another reason, along with sagging revenue, why the big banks need to get smaller. Citigroup took another step in that direction yesterday, laying off 11,000 people just in time for the holidays. There will be many more bank layoffs to come. Maybe if they shrink enough, the big banks will eventually get a little more manageable.

Thing Two: Cliff Watch! There wasn't much movement in fiscal-escarpment talks yesterday. There was a lot of hardening, though. President Obama insisted that any deal must include a way to stop Republicans from holding the debt-ceiling hostage and creating another crisis like last August. Negotiator-In-Chief Tim Geithner said the government was getting ready to go over the cliff of tax hikes and spending cuts due to take effect next year, a sign the White House is not getting ready to crumble. Both Obama and Republicans again made their cases to business leaders, for no apparent reason.

But there were enough hopeful signs of a deal to keep CNBC off its fainting couch, including House Republicans rallying around Speaker John Boehner, who was treated roughly by conservatives yesterday after giving a teensy bit in negotiations. Their support maybe gives Boehner more room to cut a deal, although it will not stop the grumbling of the conservatives.

Thing Three: Socialism Costs Insurance Companies $1.5 Billion: Obama's hated health-care reform has slowly and inevitably become less hated in recent months, and a new study suggests it might eventually become even more not-hated in the months to come. The Huffington Post's Jeffrey Young writes that a new Commonwealth Fund study finds that Obamacare saved health-care customers about $1.5 billion in 2011 by making insurance companies more efficient.

Thing Four: U.S. To Become Saudi Arabia: I hope you enjoy being fabulously wealthy, because it turns out the U.S. has so much natural gas as a result of all the fracking and drilling we're doing that it makes sense to start exporting it all over the world, according to a new study by NERA Economic Consulting for the Energy Department. The study claims we can export lots of gas and rake in the profits, while still keeping gas prices low at home and enjoying our cool new flaming drinking water. U.S. manufacturers, who have been enjoying low gas prices lately, are not fans of the study, the New York Times notes. U.S. oil and gas producers, on the other hand, love it.

Thing Five: Amazon's Hidden Cash Pile: Amazing news: Amazon runs not through South America like you learned in school, but through Luxembourg. According to Reuters, the online retailer runs so much cash through a unit in the tiny European nation that it has accumulated a $2 billion tax-free war chest for global expansion. Amazon says it pays all the taxes it is legally required to pay. Which is, sadly, probably true.

Thing Six: Apple Rotten: Remember when Apple was the greatest company in America? You know, two months ago? It feels like forever ago now, with Apple shares down 24 percent from their record high set on September 21. They tumbled six percent yesterday alone, their worst single day in four years, Reuters writes, amid worries about growing competition in mobile devices.

Thing Seven: Political Football May End Up In Chinese Hands: Clean-energy battery maker A123 Systems, which received $133 million in government grants before going bankrupt, opening Obama up further to accusations of socialism during the election, is up for auction today. The Washington Post writes that it could end up being bought by China, which is less averse to socialism and is thus stomping America in green-energy technology.

Thing Seven And One Half: Subway Not Always Horrible: Because there has been so much awful subway news lately, please enjoy this video, via Gawker, of Jay-Z explaining who he is to an elderly subway passenger.

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8:30 a.m. ET: Initial Jobless Claims for the week of Dec. 1

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