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morning scan

Morning Scan: Brits Prep for EU Split; Banks Pass Stress Tests

Receiving Wide Coverage This is not a drill: Britain has voted to leave the European Union in a stunning outcome to Thursday's referendum. The decision is already shaking the markets and will reshape the country's place in the world for years, if not decades to come. Wall Street Journal, New York Times, Financial Times, Washington Post …

Morning Scan: Tough Talk from Lawsky's Successor

Receiving Wide Coverage ... No boots: She might not be "Clint Eastwood," but she's about to get pretty familiar with the good, the bad and the ugly when it comes to banking. Maria Vullo, the top financial regulator in New York, warned the banking industry Wednesday that she has no intention of going "easy on serious misconduct." The comments were part of her first public remarks since assuming the role, after being confirmed by the state Senate…

Morning Scan: Yellen's Not Out of the Hot Seat Yet

Receiving Wide Coverage ... Shaky at best: If you're looking for definitive answers on the state of the economy, best consult your local fortuneteller. Federal Reserve Chair Janet Yellen gave current economic conditions a mixed review before the Senate Banking Committee on Tuesday, citing "considerable uncertainty." Wall Street Journal, New York Times, Financial Times, Washington Post …

Morning Scan: Fed's Big 'Stress Test' Reveal Ahead

Receiving Wide Coverage ... The Federal Reserve has a way of injecting "stress" back into the term "stress tests" — at least for Bank of American and Citigroup, which have both stumbled during the examinations in recent years. An analysis by the Wall Street Journal finds that the two banks could have returned as much as $24 billion more to shareholders if the level of dividends and share buybacks they offered had matched those of competitor Wells…

Morning Scan: DAO Attack Aftermath; IEX Approved

Receiving Wide Coverage... DAO-saster: If there's a simple rule for bank robbing, it's "follow the money." As investors and consumers put their funds online and adopt new technologies — like cryptocurrency — so go the outlaws. That appears to be one takeaway from Friday morning's theft of more than $50 million of the digital currency Ether. The hackers targeted the Decentralized Autonomous Organization, a fund built around the currency, which could spell the project's demise. …

Morning Scan: FSOC: We Played by Rules in MetLife Designation

Receiving Wide Coverage… Round 2: Right now, the score is MetLife: 1, FSOC: 0. But the government is looking to even the odds. MetLife won a major victory in federal district court this spring when a judge threw out its "systemically important" label, ruling that the Financial Stability Oversight Council fell short in proving that the insurer deserved the designation. …

Morning Scan: Home Depot Plays Chip Card in Suit vs. Card Networks

Receiving Wide Coverage… No Rate Hike. Wall Street Journal, New York Times, Financial Times, Washington Post. Eternal Feud: It's the banking sector's version of the Hatfields and the McCoys: the merchants and the card companies are at it again. And this time, there's a tech twist. Home Depot has filed an antitrust lawsuit against Visa and MasterCard, charging that retailers pay too much on transactions from debit and credit cards and that the card issuers are in cahoots…

Morning Scan: Synchrony Rattles Markets; Flash Boys Redux

Receiving Wide Coverage… Credit-quality alert: How are the consumer credit markets doing? To quote the Magic 8-Ball: "outlook not so good." Synchrony Financial, the largest U.S. issuer of private-label credit cards, said Tuesday that its chargeoff rate is likely to rise by 20 to 30 basis points over the next year, as some borrowers struggle to get on top of overdue payments. Wall Street Journal, Financial Times …

Morning Scan: New Finra Chief; More Basel Hand-Wringing

Receiving Wide Coverage ... Finra's New Boss: Former Securities and Exchange Commission official Robert Cook will take the helm as chief executive of the Financial Industry Regulatory Authority later this year. The move comes as the self-policing body expands its oversight of stock market trading activities and rogue employees. Though it's historically been criticized by some for levying meager fines against the financial industry, Finra has been flexing its muscle lately, according to the Wall Street Journal.…

Morning Scan: CFPB's Pricey Ad Campaign; a Basel Gambit?

Wall Street Journal Election season is heating up, but the presidential candidates aren't the only ones shelling out for advertising. The Consumer Financial Protection Bureau is launching its own campaign to educate the public about its online tools and resources. As such, the agency is now devoting a larger portion of its budget to advertising compared with nearly every other federal agency, according to a review of government records by the Wall Street Journal. …

Morning Scan: Fintech Charters; De-Risking Remittances

Wall Street Journal A number of fintech companies have been inquiring about obtaining a fintech charter, realizing that being more regulated could make it easier for them to run their businesses than not, according to Comptroller of the Currency Thomas Curry. Nonbank fintech companies currently operate outside the boundaries of federal oversight. Many of them see that as a business advantage but some also worry their business will clash with the rules of loan making or…

Morning Scan: CFPB Dodging FOIA; Living Will Deadline Extended

Wall Street Journal Online lender Prosper has paused its relationships with loan-referral websites LendingTree and Credit Karma as it works to get investors to buy more loans. Marketplace lenders have been facing a slowdown and waning investor confidence, especially since events at rival Lending Club led to the ousting of its chief executive. Prosper's lending volume is expected to fall in the second quarter. It fell 12% in the first quarter from the fourth quarter of…

Morning Scan: Lending Club Twist; Post-Crisis Blame Game

Receiving Wide Coverage ... Treading Water: Renaud Laplanche, co-founder and former chief executive of Lending Club, is rumored to be in talks with banks and private equity firms regarding financing a buyout of the online lender. After his ousting in May, Laplanche had engaged the firms in preliminary talks about acquiring and taking Lending Club private, though they may not lead to a deal. Meanwhile, Lending Club has postponed its annual meeting to June 28 because…

Morning Scan: Undoing Dodd Frank; Wells Fargo Makes Plans

Receiving Wide Coverage ... Dodd-Frank Replacement Plan: House Financial Services Committee Chairman Jeb Hensarling has a plan to revamp the Dodd-Frank Act and replace it with a capital-based alternative, which banks could opt into if they meet certain requirements, like a 10% leverage ratio (U.S. banks are currently required to meet a leverage ratio of 6%). "Think of it as a market-based, equity-financed Dodd-Frank off ramp," that will "relieve financial institutions from regulations that create more…

Morning Scan: Junior Banker Focus; Fintech Regulation Vacuum

Receiving Wide Coverage ... Juniorization: While investment banks have cut compensation costs by 21% on average since 2009, they've only made staff cuts of 3% in the same time. Companies have been increasing their employee retention efforts initiative to improve the work-life balance of its more junior bankers. Once able to attract young talent with a large salary alone, banks must compete with the technology industry and other areas of finance that offer young workers competitive…

Morning Scan: Overheated Auto Lending Sector Worries Dimon; Tougher Stress Tests Coming

Receiving Wide Coverage ... Auto Loans in the Spotlight: All of those TV and radio advertisements from car dealerships could be coming back to bite the banks making loans for new cars. Speaking about the overheated market for auto lending, Jamie Dimon, CEO of JPMorgan Chase, said "someone is going to get hurt." Not JPMorgan, of course. "It won't be us," Dimon said. Probably community banks. …

Morning Scan: Mortgage Laws Put Lenders in a Bind; Rappers' Fraud Confession

Receiving Wide Coverage ... State of Banking, Continued: The regulatory push for banks to take fewer risks in mortgage lending has also meant that banks are issuing fewer mortgages to African-Americans and Hispanics. As part of the new regulatory scheme, banks have moved into making high-dollar mortgages because they carry less risk, the Wall Street Journal reports in its ongoing series on the state of banking. In the process, low-income and middle-income consumers are finding it…

Morning Scan: Community Banks Enjoy Rebound; Tarullo's Influence

Receiving Wide Coverage ... Return to Form?: Community banks are doing very well, thank you very much, Mr. Dimon. But it's not necessarily a return to the salad days of pre-2008. The Wall Street Journal's ongoing series on the banking industry looks at the state of community banking, and pronounces the sector healthy, but facing serious issues. …

Morning Scan: Broad Questions About Banking's Future Amid Pressures

Receiving Wide Coverage ... Banking's Identity Crisis: Banks are in the midst of a period of upheaval, as the industry seeks to reinvent itself amid huge changes in consumer preferences, banking technology and the regulatory landscape. Fintech disruptors will probably be subsumed into the larger banking universe, although their ideas will live in. Ultimately, the old ways of banking will die only when those banks that lived through the financial crisis move on. …

Morning Scan: Payments Without Borders; Cyber Hack Attacks

Receiving Wide Coverage… Not Without a Trace: Security researchers have found evidence linking North Korea to three recent attacks on Asian banks — in the Philippines in October, Vietnam in December and the $81 million theft from the central bank of Bangladesh in February. They said in each event the attackers used a piece of rare but identical code seen in just two cases before: the Sony hack in 2014 and one on South Korea banks…

Morning Scan: Citi Fined $425M; Rare Financial Crime Charges

Receiving Wide Coverage… Citigroup was fined $425 million by the U.S. Commodity Futures Trading Commission Wednesday, for claims that it tried to manipulate several interest-rate benchmarks between 2007 and 2012. However, it appears the bank could avoid any criminal charges, as the Department of Justice said it had closed its investigation already told Citi it would not prosecute over Libor. Wall Street Journal, Financial Times, New York Times. Wall Street Journal …

Morning Scan: Libor Looms Over 2Q Results; In Swift We Must Trust

Wall Street Journal JPMorgan Chase, Citigroup, Bank of America and other banks could take a hit to their second quarter profit from litigation charges and fines, as a Libor manipulation case revived earlier this week raised the possibility of liability for violation of antitrust laws. Such violations could require them to pay triple damages. But for now, it remains to be seen what, if any, penalties are incurred. Firms that choose to deal with the problem…

Morning Scan: BofA Libor Ruling Overturned; Swift Security

Receiving Wide Coverage ... Overturned: A $1.27 billion penalty against Bank of America was overturned Monday by a federal appeals court. A three-judge panel said federal prosecutors failed to prove Countrywide Financial, later acquired by B of A, had defrauded Fannie Mae and Freddie Mac when it sold them troubled loans in 2007 and 2008. While it found Countrywide knew it was selling faulty loans there was a lack of evidence of intent to deceive at…

Morning Scan: Banks Keep Branches; P2P Lending Not a Threat

Wall Street Journal Enough with the big bank-small bank divide, says First National Bank of Dennison chairman and chief executive Blair Hillyer. Competition between differently sized banks is better for customer experience and better for business, he says. It's difficult when all banks are operating "with Washington as our co-CEO," but nevertheless it is important "to work together if we're going to remain relevant in this brave, new financial world." His comments came in a letter…

Morning Scan: Lending Club's Morgan Stanley Ties; Credit Cards Soar

Wall Street Journal As Columbia Law School professor Robert Jackson noted in an op-ed on Thursday, there needs to be a source of real competition for the credit-card pushers, namely online marketplace lenders, so consumers with below-average credit scores can have access to credit at somewhat reasonable rates. Because there's clearly demand. Credit card balances in the U.S. could hit $1 trillion this year. That would be near the $1.02 trillion peak posted in July 2008. The…

Morning Scan: Google, Which Banned Payday Loan Ads, Is a Payday Loan Investor

Wall Street Journal Google last week said it planned to ban advertising from payday lenders, in a bid to offer protection to its consumers from predatory loans. Oh by the way, Google is an investor in the payday lender LendUp. Google has been involved in every equity round that LendUp has staged, via its parent company's venture capital arm. LendUp has raised a total of $150 million in debt and equity, making it one of Silicon…

Morning Scan: JPMorgan Seals Off Swift Security Holes; Title Lenders Targeted?

Wall Street Journal JPMorgan Chase is trying to seal off potential gaps in its security system by limiting which employees can access Swift. Unnamed sources said JPMorgan began reducing employee access in recent weeks. The move comes after two Asian banks were breached through the use of Swift's global interbank messaging service. …

Morning Scan: Laplanche's Final Days at Lending Club; Treasury Market Watchdog

Receiving Wide Coverage ... Laplanche's Selective Disclosure: The Justice Department would like to have a few minutes with the founder of LendingClub, and a few of his former colleagues at the online marketplace lender. A DOJ grand jury subpoenaed the company on Monday, LendingClub said in a regulatory filing, without disclosing details of the nature of the subpoena. LendingClub said it's cooperating. LendingClub also said Monday it's looking for additional funding for its loans. …

Morning Scan: LendingClub's Burned Investors; Swift Hack Victim ID'd

New York Times Investors were getting the short shrift from online marketplace lender LendingClub before its chief executive quit amid allegations of improper loans, news that sent its stock into a tailspin. That's because LendingClub was stingy in its disclosure of crucial financial data, making it difficult for investors to assess the company's financial health, Gretchen Morgenson writes for the Times. …

Morning Scan: Cyberthieves Use Swift; HSBC Says No to Iran

Receiving Wide Coverage ... Swift Attack: Swift has reported a second attack involving its messaging system, this time targeting an unidentified commercial bank. Details emerged as investigators continue trying to solve the $81 million cyberheist involving the New York Fed and the Bangladesh central bank. This second attack suggests those behind it were sophisticated in their strategy and did not depend on weaknesses in the Swift system. In both incidents the thieves had at least one…

'If Your Bank Isn't Integrated with Siri, Your Bank Is Irrelevant'
Moven founder and all-around fintech evangelist Brett King discusses how financial institutions can survive a future where artificial intelligence is widespread and plastic cards are no more.
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