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Banks: JPMorgan faces new investigations

JPMorgan Chase is in hot water, said Jessica Silver-Greenberg, Ben Protess, and David Barboza in The New York Times.The Securities and Exchange Commission has opened a civil bribery probe to determine whether JPMorgan “hired the children of powerful Chinese officials to help the bank win lucrative business in the booming nation.” While regulators have not accused the bank of any wrongdoing, the SEC’s requests for employment records suggest that it sees a pattern of the bank “routinely” hiring young associates from well-connected Chinese families in order to get an edge on opportunities in state-controlled businesses such as the China Railway Group.

That wasn’t the largest U.S. bank’s only brush with the law this week, said Dan Fitzpatrick and Devlin Barrett in The Wall Street Journal.The Justice Department is also investigating JPMorgan Chase’s role in energy markets. Last month, the bank agreed to pay $410 million to settle allegations raised by the Federal Energy Regulatory Commission that it manipulated energy markets in California and the Midwest. While the bank did not admit wrongdoing in its settlement, the case has spurred federal prosecutors in Manhattan to take a closer look at the bank’s activities. Overall, JPMorgan is now facing at least seven federal investigations.

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Buyouts: Barnes & Noble founder drops plans

Barnes & Noble isn’t going private after all, said Jessica Wohl and Phil Wahba in Reuters.com. The bookseller’s shares fell this week after the company’s founder and chairman, Leonard Riggio, abandoned plans to take part of the company private. Riggio had earlier said he planned to make a bid for the chain’s website and retail stores, splitting them off from the company’s Nook and college bookstore units. “Riggio’s change of heart came as the company reported a 10 percent decline in sales at its bookstores and BN.com website for the last quarter.”

Retail: Ackman quits J.C. Penney board

“Boardroom brawling at J.C. Penney Co. has claimed its latest casualty,” said Tiffany Hsu in the Los Angeles Times. Bill Ackman, whose hedge fund is Penney’s largest shareholder, stepped down as a director last week amid ongoing disputes over the company’s management and leadership. The retailer’s shares have been in free fall, losing more than half their value since late 2010. Ackman, whose hedge fund owns a 16.5 percent stake in the chain, “declined to say whether he planned to dump his shares in the company.”

Economy: Euro zone on the upswing

Europe’s recession may finally be over, said Angeline Benoit and Jeff Black in Bloomberg.com. Gross domestic product in the European Union rose 0.3 percent in the April–June period, according to EU data. The news brought an end “to six straight quarters of contraction, the longest slump since the euro’s debut in 1999.” The stabilization was mostly due to Germany and France, which “both showed faster-than-projected expansions in the quarter.” But while the region’s overall outlook brightens, “parts of southern Europe remain mired in a slump,” as Spain and Greece face continued high unemployment.

Debt: Consumers back to borrowing

Consumer confidence is improving, said Eric Morath in The Wall Street Journal. New data from the Federal Reserve Bank of New York showed last week that auto lending has increased by $20 billion since the first quarter, “the largest gain in seven years.” Up, too, were credit card balances and mortgages, suggesting that “after years of struggling to shed debt, Americans are finally gaining enough confidence in their finances to step up borrowing.” The new data also indicated that household debt dropped by $78 billion last quarter to $11.15 trillion.