Receiving Wide Coverage ...
State of the Union Addresses Wall Street: While not the main thrust of President Barack Obama's last State of the Union address, Wall Street was discussed over the course of the evening. In a line that garnered a round of applause, Obama said certain regulations and red tape needed to be cut for the private sector's benefit. But shortly thereafter he called for greater regulation of certain companies – including banks – to ensure they don't produce record profits at others' expense. As he put it: "Food stamp recipients didn't cause the financial crisis; recklessness on Wall Street did." As CNBC notes, the president's take on corporate wealth struck a chord with many who feel such a climate functions at the detriment of average Americans. But on the other hand, some lawmakers feel the president is not doing enough when it comes to regulatory relief – for more on that, head on over to American Banker for our take on the big speech The Financial Times, New York Times and Washington Post articles were more general and did not play up the Wall Street angle.
Insurers Facing a Break-Up: Major insurers are planning to break up – or facing calls to do so – as they struggle under the weight of being categorized as systemically important financial institutions (SIFI). MetLife revealed plans Tuesday to spin off its retail life and annuity business in the U.S. The decision comes as a result of its SIFI designation two years ago, which has subjected the insurer to more stringent capital requirements that it believes could limit its earnings. MetLife's choice to break its business apart rather than withstand increased Fed regulation will likely have a trickle-down effect on other major insurers, such as a Prudential and American International Group. Already, AIG had faced serious pressure from activist investors to split up its business. But a survey by Sanford C. Bernstein of the company's shareholders found 74% want the company to pursue a plan to "de-SIFI" and 86% want the company to "de-conglomerate and un-lock value by selling businesses and/or spinning divisions." Overall, with insurers, it seems the strategy is increasingly becoming one where if you can't take the regulatory heat, you shrink down a few sizes to get out of the SIFI kitchen. For more on MetLife's decision to break up, check out American Banker's coverage of the announcement.
Wall Street Journal
In the 2016 presidential election one spot of common ground is in attacking Wall Street, yet the banking industry has not quite figured out how to respond. Democrats and Republicans alike have taken shots at banking. On the Democratic side, Sen. Bernie Sanders has called for a return to Glass-Steagall, while Hillary Clinton wants to temper risky financial decision-making. And Republicans too have attacked the industry: Sen. Marco Rubio argues banks brag about their "too big to fail status," Ohio Gov. John Kasich questions Wall Street's ethic and Sen. Ted Cruz warns he won't bail out banks if elected. Sources told the paper that major banks, including JPMorgan Chase & Co. and Citigroup, are pressuring industry groups including the Financial Services Forum to address the takedowns with the candidates themselves. They want the group's advisers to talk with the campaigns and lay out how the industry has changed for the better in the wake of the financial crisis. Other big banks worry though that with public opinion so firmly against the banking industry such a move could backfire and be seen as the industry attempting to alter candidates' platforms.
A survey has found that for the first time more people are using mobile banking than heading into a physical branch. The survey by Javelin Strategy & Research found 30% of American adults used mobile banking weekly, as opposed to 24% who went to a physical branch with the same consistency. Javelin also noted roughly 25 million people used mobile banking for the first time in 2015. This news doesn't mean banks are closing their branches just yet. An SNL report found Huntington Bancshares opened 48 branches on net in 2015, the most of any bank, while JPMorgan closed the most at 195 net branches. Such a discrepancy could be because some consumers still feel safer conducting certain financial transactions in person rather than on a smartphone or a tablet, the paper notes.
The pot industry has added a former Fed employee to its roster. Privateer Holdings, a company that invests in cannabis businesses, has hired Dante Tosetti, a former bank examiner with the San Francisco Fed. With a background in examining banks for safety and soundness, Tosetti will work to ensure the company's transparency and to establish compliance standards while soliciting financial relationships with banks. Part of Tosetti's pitch will rest on the lucrative opportunities presented by the burgeoning pot industry – which is being held back in part by the dearth of banking access. Privateer is hoping Tosetti's credentials will help to make up for much of the concerns banks have about finding themselves on the wrong side of federal regulations regarding marijuana.
Financial Times
The Financial Conduct Authority, the U.K.'s main banking regulator, has come under fire recently for its choice to end a probe looking at the culture of retail and wholesale banks. In critics' minds, the choice to end the inquiry represents an example of the regulator being soft on banks. But the paper argues this approach is the right one for the FCA to take, noting it's more important for the regulator to enforce the rules than to change the industry's culture. As the FCA contends, each bank has a unique driving force and climate, which makes comparisons between institutions more difficult. While the FCA should certainly ensure banks treat customers fairly and don't break the law, the paper maintains it shouldn't be so concerned with day-to-day management issues. And ultimately, even if the regulator tried to address culture change, it would likely find it tough to achieve, since so much of any company's culture comes about organically.
New York Times
New York hedge fund Lion Point Capital could become the next corporate bank raider if it has its way with Ally Financial. Lion Point has begun pushing for changes at the bank in response to its lagging share price. In particular, the hedge fund has proposed two candidates for Ally's board and urged the company to explore a sale. In doing so, Lion Point has joined but a handful of activist investors that have taken on national banks in the wave of activism that has jumped from industry to industry in recent years. And Ally appears like a good target for such an activist campaign: It trades below book value and has lent to car buyers with imperfect credit, which increased its risk. But in many ways Lion Point may face an uphill battle in trying to emulate the success the likes of Michael Price had with Chase Manhattan. Already a systemically important institution, Ally would find just a handful of companies that could purchase it in whole or part if it explored a sale. Smaller banks would cross regulatory thresholds if they pursued a merger, while most larger institutions would be barred from even attempting one. Nevertheless, even if Lion Point succeeds in securing a board seat alone, its involvement in Ally raises the specter of other major banks seeing similar activist pushes.
Five Israeli banks have drawn the scorn of the United Methodist Church. The church's pension board decided this week to bar investment in the banks – Bank Hapoalim, Bank Leumi, First International Bank of Israel, Israel Discount Bank and Bank Mizrahi-Tefahot – for human rights reasons. The banks received the infamous distinction as a result of their financing of the construction of settlements in the Palestinian territories. Palestinian advocates cheered the decision – though some noted the church does still invest in other Israeli companies that arguably participate in similar activities. Meanwhile, observers believe the move will upset Israeli authorities, as it's seemingly the first case in which a church has blacklisted Israeli banks for pension fund investments.
Elsewhere ...
Quartz: Nigeria has lifted restrictions on the use of debit cards abroad after facing wide criticism, including from International Monetary Fund chief Christine Lagarde. The Nigerian government placed restrictions on debit cards after foreign reserves were depleted when oil earnings fell at the same time as imports remained high. The government banned the use of debit cards abroad and over-the-counter deposits of foreign exchange, which not only hampered Nigerian citizens' ability to travel abroad but also inconvenienced business owners who rely on foreign exchange. The move still is unlikely to be enough to fix the naira, which observers have called an overvalued currency.
