SOURCE: Paragon Financial Limited

Paragon Financial Limited

May 23, 2012 08:20 ET

U.S. Banking Industry Set for Tougher Regulations After JPMorgan Loss

The Paragon Report Provides Stock Research on Bank of America and Citigroup

NEW YORK, NY--(Marketwire - May 23, 2012) - After an impressive start to the year bank stocks have faltered recently. The SPDR KBW Bank ETF (KBE) has fallen nearly 7 percent in the last month on growing concerns of Greece leaving the European Union, and the likelihood of tougher U.S. banking regulations after the JPMorgan trading losses. The Paragon Report examines investing opportunities in Banking Industry and provides equity research on Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C).

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"Washington's policy response to the losses of '07 (through) '09 was already tough, but now the (JPMorgan) episode has caused a new flare-up of emotions, thus final Volcker rules are likely to be painful," JMP Securities analyst David Trone wrote. The Volcker rule, which is still being written, prohibits banks from trading for their own profit. The Federal Reserve has stated it will begin enforcement of the rule in 2014.

Recent general election results earlier this month have shown that Greek anti-bailout parties have been gaining ground. The recent ballot proved to be inconclusive and a new vote is set for June 17, without the rescue package it is likely that Greece will leave the European Union.

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JPMorgan Chase last week announced that Ina Drew, Chief Investment Officer, has made the decision to retire from the firm. Ina has served the firm for more than 30 years, most recently as head of their Chief Investment Office. Matt Zames, currently co-head of Global Fixed Income in the Investment Bank and head of Capital Markets within the Mortgage Bank, will succeed Ina as the firm's Chief Investment Officer and continue in his mortgage-related responsibilities.

Morgan Stanley last month reported net revenues of $6.9 billion for the first quarter ended March 31, 2012 compared with $7.6 billion a year ago. For the current quarter, the loss from continuing operations applicable to Morgan Stanley was $78 million, or a loss of $0.05 per diluted share compared with income of $984 million, or $0.51 per diluted share, for the same period a year ago.

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