There’s never an absence of news impacting financial stocks, but weeding through all of it can be a chore in and of itself. To that end, here are five of today’s biggest finance-related stories.
1. Fannie Mae’s record profit
In September of 2008, the U.S. government had to step in and seize the then-ostensibly private mortgage giants Fannie Mae and Freddie Mac. The plan at the time was to prevent their failure, stabilize the mortgage market, and to then gradually wind the entities down. As The Wall Street Journal noted at the time, “[Treasury Secretary Henry] Paulson’s weekend announcement represented one of the most sweeping interventions in financial markets since the Depression, essentially putting the government in charge of helping finance American mortgages.”
The question of what to do with at least Fannie Mae became slightly more complicated today, after the now-government controlled entity reported its largest annual net income in its history — click here to see the press release. For the fiscal year 2012, it earned $17.2 billion — $7.6 billion of which came in the fourth quarter alone. “Solid business fundamentals such as improving performance of our book of business and improvements in the housing market led us to report the largest annual and quarterly net income in the company’s history,” said Susan McFarland, executive vice president and chief financial officer. “We expect to remain profitable for the foreseeable future and return significant value to taxpayers.”
2. Bank of America exercises its Fed-given rights
That didn’t take long. Less than three weeks ago, the nation’s largest banks learned whether or not they’d be allowed to return more capital to shareholders following the Federal Reserve’s comprehensive capital analysis and review. For its part, as I discussed here, Bank of America Corp (NYSE:BAC) got the go ahead to repurchase $5 billion in common stock and $5.5 billion in preferred shares. And as promised, it notified investors yesterday in this press release that it had submitted redemption notices for the latter. The move contributes to Bank of America Corp (NYSE:BAC)’s efforts to simplify and boost its capital base in the face of the Basel III requirements.
3. Former SEC chief goes through revolving door
The line between Washington and Wall Street became a little less distinct today, after the former chairwoman of the Securities and Exchange Commission, Mary Schapiro, announced that she will be joining the consulting firm Promontory Financial Group, which has “built a reputation as a shadow regulator by hiring scores of former government officials,” according to The Wall Street Journal.
To say that Shapiro is a prime catch for lobbying firm is an understatement. She’s spent “28 of the last 32 years as a regulator” and is the only person to have led all three of Wall Street’s biggest regulators: the SEC, the CFTC, and FINRA. But don’t get the wrong idea, “In my case, there’s no revolving door … I won’t ever be going back to government,” Shapiro said in an interview with the Journal. That, of course, misses the point. While she and Promontory refused to disclose what she’ll be paid, it’s safe to assume that it’ll be more than the $165,000 that she earned in her last job.