The news at a glance
Dimon contrite over big loss; Fed proposes strict capital rules; Apple ditches Google Maps; Tracing MF Global’s collapse; Insurers to keep parts of Obamacare
Wall Street: Dimon contrite over big loss
Jamie Dimon, the CEO of JPMorgan Chase, apologized this week for the bank’s $2 billion trading loss but said it was not a sign of recklessness, said Zachary A. Goldfarb in The Washington Post. Testifying before the Senate Banking Committee, Dimon said that complex investments “morphed into something that, rather than protect the firm, created new and potentially larger risk.” But Dimon insisted that the bank had not acted irresponsibly. “We will lose some of our shareholders’ money, and for that, we feel terrible,” he said. “But no client, customer, or taxpayer money was impacted by this incident.”
Dimon, who “was largely treated cordially by the senators,” used the opportunity to take “swipes at regulatory reforms that he said fail to make sense,” said Dave Clarke and David Henry in Reuters.com. The Dodd-Frank law has created a confusing new system of overlapping regulators, he said. “I would prefer a simple, clean, strong regulatory system, with real intelligent design, but that’s not what we did.” But Dimon also admitted that “it’s possible” that the yet-to-be-finalized Volcker Rule, which would ban proprietary trading, may have limited some of the bank’s losses.
Banking: Fed proposes strict capital rules
The Federal Reserve wants U.S. banks to set aside significantly more money to guard against unexpected losses, said Marcy Gordon in the Associated Press. New rules proposed last week would require all 7,300 U.S. banks to hold at least 7 percent of their assets in capital reserves, up from a minimum of 2 percent now. Most banks would have until 2019 to comply, but the new provisions are “a real wake-up call” for community banks, which assumed that only larger, national institutions would be affected, said financial analyst Karen Shaw Petrou.
Tech: Apple ditches Google Maps
Apple is replacing Google Maps with its own mapping software, said Brad Stone in Bloomberg.com. The company announced that iPhones and iPads will soon run Apple’s new map app, with 3-D overhead visualizations of major cities, in order to ward off concerns that “it was becoming too dependent on its chief rival.” Apple also unveiled a new version of its mobile operating system, a revamped line of laptops, upgrades to the voice-recognition app Siri, and new agreements with Twitter and Facebook that make it easier for users to share updates.
Wall Street: Tracing MF Global’s collapse
The mystery of what happened to $1.6 billion of customer money at commodity brokerage firm MF Global is clearing up, said Tracy Alloway in the Financial Times. The trustee charged with recouping the funds, James Giddens, released a report last week implicating CEO Jon Corzine and other company officers in the loss of the money before the firm’s collapse in October. Giddens said MF Global willfully used segregated customer accounts to cover its own shortfalls. He said he’d decide within 60 days whether to sue Corzine and other former executives for “breach of fiduciary duty and negligence.”
Health care: Insurers to keep parts of Obamacare
Three major U.S. health insurers have promised to adhere to some popular provisions of the new federal health-care law, no matter how the Supreme Court rules on it, said Anna Wilde Mathews in The Wall Street Journal. UnitedHealth Group, Aetna, and Humana have pledged to continue allowing young people up to age 26 to stay on their parents’ plans and offering free preventive services like cancer screenings, whatever Obamacare’s fate. The insurers stopped short of pledging to extend coverage to people with pre-existing medical conditions.