STOCK MARKET WATCH -- Thursday, 5 July 2012

[Demeter]

15. Quantitative Easing is alive and well

Headlines from Financial Times:

China cuts rates amid growth fears: People's Bank of China; Economy slowing more quickly than Beijing expected

ECB cuts interest rates to historic low: Main policy rate cut to 0.75%, deposit facility cut to zero

Bank pumps £50bn into UK economy; Move follows rethink on inflation and growth

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Spain opens Bankia fraud probe--Former IMF chief Rato and 32 executives investigated

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Wells Fargo takes lead in bank lobbying

http://www.ft.com/intl/cms/s/0/f8ed4fc4-c557-11e1-940d-00144feabdc0.html#axzz1zkf6Lvoq

Wells Fargo spends more on lobbying from its Washington office than any rival, paying millions of dollars to influence mortgage rules, just as the San Francisco-based lender extends its lead in the market for home loans.

Last year Wells spent $7.8m on in-house lobbyists compared with $7.4m at JPMorgan Chase, a larger bank by assets, according to congressional filings. Citigroup, Bank of America, Goldman Sachs and Morgan Stanley trail in spending even though most of them have more diverse interests or bigger reputational challenges. If spending on lobbyists at outside companies is taken into account, JPMorgan retains a narrow lead but Wells is notable for the surge in its lobbying spending. The bank said its acquisition of Wachovia in 2008 was an explanation and it was “conservative” in disclosing the amount it spent seeking to influence the government.

“Our government activities and staff have naturally increased as the size of the company has doubled,” said Wells. “Wells Fargo is conservative and includes a broad range of government relations activity. It’s difficult to compare because reporting practices can vary.”

Even after the acquisition of Wachovia, Wells has continued to accelerate its spending, with an increase of more than 40 per cent between 2010 and 2011. Other banks’ spending is comparatively consistent. Meanwhile, Wells has transformed itself from a strong California bank into the largest US bank by market capitalisation and taken a 34 per cent share of the mortgage market, according to Inside Mortgage Finance, which collates industry data. “They’re buying the market,” said one official at a government-backed mortgage company.

Bank of America has deliberately ceded market share as it looks to rebuild its balance sheet. JPMorgan has avoided some of the “correspondent” business for home loans where banks buy loans underwritten by other companies. Wells has snapped it up...MORE