It's the weather, stupid! At least, that is, according to rookie Federal Reserve Chair Janet Yellen. In her inaugural testimony before the Senate banking committee Thursday, she said that it was at least partially to blame for recent economic softness. This implies that recent problems are due largely to the snow and the cold, therefore they're not intrinsic and the Fed doesn't have to veer away from its current course. This, naturally, includes the tapering of the current round of quantitative easing, the latest of many indications that the program will continue as planned.
The economy was indeed buffeted more than expected at the end of last year. The Department of Commerce released its second reading for real Q4 GDP, saying that the indicator grew at a 2.4% annual clip. That was down quite a distance from the DoC's first estimate of 3.2%, but the market expected the stumble, and no one seems too spooked by the new number.
Meanwhile, relations between Bank of America (NYSE:BAC) and the long arm of the law got a frostier this week. On Tuesday, the bank admitted in a disclosure that a wing of the U.S. Attorney's Office for the Eastern District of New York is investigating whether it complied with the rules of a Federal Housing Administration home lending program. And, oh yeah, the bank's also being investigated for its machinations in foreign-exchange markets here and abroad as part of a wider probe conducted by several regulatory authorities. As a result, Bank of America raised its estimate for litigation expenses to a chunky $6.1 billion, up a cool 20% or so from its previous estimate of $5.1 billion.
Going in the opposite direction in terms of legal fees is, apparently, Wells Fargo (NYSE:WFC). On Wednesday, the bank submitted an SEC filing revealing that it's shaved nearly $50 million from its own estimate to bring the total down to $951 million. It seems to be holding certain other expenses steady; a day later, in another filing, it said it awarded CEO John Stumpf $1 million in restricted shares for fiscal 2013. This was the same amount he was granted the previous year, when he took home more than $19 million in overall compensation. His total pay package for last year hasn't yet been disclosed, but if it's anywhere near the previous level it would put him on almost equal footing with the very well paid Jamie Dimon, chief executive of JPMorgan Chase (NYSE:JPM).
Will Dimon continue to reap that big salary? There's a chance he won't. Earlier this week, his company held its Investor Day, in which it revealed it will cut around 8,000 full-time and contractor positions, mostly in its home loans unit. Mitigating this somewhat was the news that it'll add roughly 3,000 jobs in control functions such as compliance. In addition to announcing the firings and hirings, the firm also trimmed its estimate for return on tangible common equity for this year, saying it should come in as much as one percentage point lower than the previous anticipation of 16%.
Job cuts have been part of the recent past for Citigroup (NYSE:C), and with its could-be-better performance of late they might be again. Either way, CEO Michael Corbat seems to be aiming for a steady, more conservative future for his sprawling firm, saying in an interview with Bloomberg this past Monday that "if you use the words banking and boring in the same sentence, I'll take it." But that might leave shareholders cold if they want a more dynamic and ambitious strategy from the man managing their investment.
Brrr. Cold news nearly all around for the majors this week, not to mention the overall economy. Hopefully a spring thaw is on the way.