An interesting mix of stories today. Financial malfeasance makes all of the front pages again. “Bank Deal Rankles Regulators” on page A1 of the Wall Street Journal (WSJ) is about how the Standard Chartered settlement with New York State could derail other investigations and has annoyed British regulators. The Financial Times (FT) has “StanChart rallies as settlement welcomed” on page 1 and a follow-up story on page 15, “StanChart pays hefty price for ‘small errors’,” which makes many of the points I did yesterday about the speed of settlement and the magnitude of the fine with respect to what Standard Chartered admitted. The thrust of the article is that the bank was forced to settle quickly, regardless of the merits of the case, because of the effect uncertainty would have on its business and because of a reluctance to go head-to-head with the regulators. I am not so sure, but we will see. My bet is that more problems will show up.
The front page of the New York Times (NYT) has “No Criminal Case is Likely in Loss at Corzine Firm,” about the collapse of MF Global. Two interesting things here: first is the emphasis that, once again, there is no punishment of individuals for business disasters, and second is the personalizing of the story, even to the headline. Again, I would say this is a growing trend; personal accountability will become a much bigger part of the financial industry, especially at the risk end, and rolling heads will become a mandatory part of settlements. Corzine, of course, is still on the hook from both a civil and regulatory perspective—a point the article makes explicitly.
Politics (of course) is the other major theme of the day. I can just copy that sentence and use it every day between now and November, can’t I? The split between the coverage in the WSJ, with “GOP Sees a Medicare Retort” on page A4 about Republicans’ answer to the charges of threatening Medicare, and the coverage in the NYT, with“Choice of Ryan Shifts the Focus from the Economy” about how Ryan’s ideology has supposedly made voters shift from the poor economy as a primary decision point, is not unexpected. What is interesting is that the FT—which, as a British paper has a certain detachment, but as a financial paper might be expected to be more consistent with the WSJ—actually hits on themes more like those of the NYT. On page 1, “Top donor presses Romney to take tougher line on bank regulation” is pretty self-explanatory and suggests, as I said yesterday, that the regulators are winning. On page 2, “Romney refuses to reveal tax cut targets,” “Polarized Wisconsin looks no easy win for Ryan,” and “Mixed results suggest cultural divide in Republican party” support the thesis that perhaps the NYT article has some substance. Overall, ideology has become the story—and it could swing either way.
One final theme for the day—the emerging class divide in the U.S. continues to widen as the economy remains weak. The front page of the WSJ has “California Boom Masks State’s Uneven Recovery,” about how, while some areas and socioeconomic groups are doing well, others are lagging. The NYT weighs in on page A14 with “Job losses persist for the less educated.” This will be a growing story as there are many groups of people—the less-educated, the young, and the older—who are all getting worse rather than better. Expect to see them highlighted in the campaign.
Quick note here: “Autonomy under fire,” a special report on page 7 of the FT, hits on the region/country problems I discuss in the Europe special report posts and is worth a read.
Have a great day!