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Morning Coffee: Libor's Facelift

Libor is “broken” and in need of a “complete overhaul,” but is too integral to the global financial system for it to be completely scrapped, the U.K.’s top financial regulator said on Friday.

In a ten-point plan aimed at restoring confidence in the benchmark interest rate, Martin Wheatley, head of the Financial Services Authority, said that the British Bankers' Association, a trade group currently charged with managing Libor, should be stripped of its responsibilities. Judging by its comments, the BBA seems more than happy to give up the reins.

Wheatley also laid out a number of initiatives meant to prevent a repeat occurrence of widespread rate manipulation, including bringing Libor underneath an independent global regulator and imposing criminal penalties on those who improperly fiddle with the rate. Bankers who contribute rate estimates will also be heavily vetted before being approved and audited on a routine basis after being selected.

Even with new rules in place, we surely haven’t heard the last of Libor. Potential liabilities for Barclays and other banks being investigated for manipulating the benchmark - Bank of America, Citigroup and J.P. Morgan Chase, among others - could reach as high as $176 billion, according to one recent estimate.

BofA Settles (WSJ)

In settlement of a class action lawsuit, Bank of America agreed to pay investors $2.43 billion for losses incurred during the firm’s 2009 acquisition of Merrill Lynch.

Pleading Guilty (Bloomberg)

Former SAC Capital Advisors analyst Jon Horvath is reportedly set to plead guilty to insider trading charges.

More to Come? (Forbes)

Job cuts on Wall Street have been significant, particularly in recent months, but the worst may be yet to come.

Tides Are Turning (Financial Times)

Boutique advisory firms, not handicapped by commercial banking units or intense regulatory scrutiny, are starting to steal market share from large, once dominant investment banks.

Switching Sides (FIN Alternatives)

Vinay Pande, Deutsche Bank's chief investment adviser, is leaving the firm along with his three-person investment team to join Brevan Howard Asset Management.

Pay-to-Play Settlement (Bloomberg)

Goldman Sachs has agreed to pay $14.4 million to settle charges that a former vice president, Neil Morrison, violated so-called “pay-to-play rules” by helping Massachusetts Treasurer Timothy Cahill with his unsuccessful gubernatorial campaign while soliciting business from the state.

Buzz Around the Office

Who Said Kids are Expensive (Yahoo)

A Norwegian family has won the lottery three times, each one within a day of the 29-year-old mom giving birth to her three children.

List of the Day: Working from Home

Working from home sounds like an ideal situation but, in reality, has its pitfalls. Here are a few.

  1. Spending all day in your pajamas gets depressing.
  2. Sure, you’ll spend more time with your family, but it’s not quality time.
  3. Work time and personal time tend to blur.

(Source: AOL Jobs)

AUTHORBeecher Tuttle US Editor

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The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.