Editor's note: Morning Scan will not publish on Monday, Feb. 15 in observance of the Presidents’ Day holiday. We’ll be back on Tuesday, Feb. 16. Receiving Wide Coverage ... AIG Makes Deal with Activists: It looks like American International Group will live to see another day – and without activist investor pressure. The insurer formed a pact with activist investors Carl Icahn and John Paulson: In exchange for two seats on the board, Icahn and Paulson will
Receiving Wide Coverage ... Yellen vs. Congress, Round 1: Caution was the word during the first of two days of Federal Reserve Board Chair Janet Yellen's semiannual testimony before Congress. While she wouldn't signal the central bank's plan as far as interest rates are concerned, she did confirm that falling stock prices and the volatility seen in other financial markets concern the Fed. But Yellen did not give way to doomsday predictions either. While she expressed
Quickens Ad Miscalculation?: Quicken Loans continues to see pushback in the press regarding the ad it aired during the Super Bowl for its new product, Rocket Mortgage. The advertisement described how the Rocket Mortgage app worked essentially, that you push a button in the app to start an expedited mortgage application process. And, Quicken posited, when its easier to get mortgages a domino effect occurs that benefits the national economy. But, as The Upshot
Receiving Wide Coverage ... Banks' Stock Slump: Investors have turned on the world's biggest banks so far this year. The KBW Nasdaq Bank Index slipped more than 3% on Monday and has fallen roughly 20% since the start of the year. And many of the largest banks' stock dropped more than 4% Monday. The health of banking behemoths has become a trigger for worry – since a slump in bank stocks can signal turbulence in the
Receiving Wide Coverage ... CEO Slashes Bonus: Credit Suisse chief executive Tidjane Thiam has asked his company's board to cut his bonus. His request comes just days after the bank reported a loss of roughly $5.88 billion in the fourth quarter, which led to a 12% drop in price in the company's stock on the Zurich exchange Thursday. The larger-than-expected quarterly loss resulted from a write-down following a reassessment of the value of Credit Suisse's investment
Receiving Wide Coverage ... Democratic Candidates Debate: Wall Street took top billing amongst the topics of Thursday's Democratic presidential debate between remaining contenders Sen. Bernie Sanders, of Vermont, and former Secretary of State Hillary Clinton. Throughout the evening, Sanders repeatedly criticized Clinton for her connections to the financial services industry – and the way in which those connections appear to have benefited her campaign's bank account. "What being part of the establishment is, is in the
Wall Street Journal The water-contamination disaster in Flint, Mich., may have a new consequence: mortgage lenders appear ready to put a clamp on most home purchase loans. Lenders have started to require that home buyers must provide proof that a property they want to buy does not have contamination. Nonbank lender Michigan Mutual and banks Wells Fargo and Bank of America have sent notices saying they won't make loans on a properties that don't have drinkable water.
Wall Street Journal Regulators are putting more pressure on compliance officers at large banks and, as a result, turnover in the job category has soared. Banks have been pressed to hire more compliance officers in recent years to deal with the crush of new regulation. But at the same time, many are getting out of the job. About three dozen senior bank compliance officers quit their jobs last year, according to the headhunter firm Sheffield Haworth.
New York Times Tellers have become a serious threat to bank security, according to law enforcement and prosecutors. Because teller jobs offer low pay and are not as important as they used to be, due in large part to mobile banking, the positions are sometimes attracting workers with criminal intent, according to an article in the New York Times. The job provides unusually direct access to customers' personal details. Rich and elderly customers are most at
Wall Street Journal Depository Trust & Clearing will stop facilitating certain types of repurchase agreements between securities dealers, cutting a link that allows large banks to borrow from one another, unnamed sources said. The move affects about $45 billion in daily repo loans. The move principally affects Bank of New York Mellon, the largest bank that clears interbank repo loans. JPMorgan Chase also has a unit that's involved in this type of repo clearing.
Wall Street Journal Equity analysts and economists have had a hard time predicting where the price of oil is heading. JPMorgan Chase's analysts have cut price forecasts twice in two months, with the latest prediction for Brent an average $31.50 per barrel in 2016. Previous estimates from JPMorgan were $51.50 back on Dec. 18, and $54.75 in October. Analysts from Credit Suisse Group and Citigroup have also repeatedly lowered their estimates to keep up with the
Receiving Wide Coverage ... Fed Holds Steady: In its first meeting of 2016, the Federal Open Market Committee chose to keep interest rates the same, as expected, but the central bank did not rule out future increases. The FOMC post-meeting statement conveyed concerns about global growth and the state of financial markets. To some observers, that indicates the Fed's view of the economy has worsened since it hiked rates in December, according to the New York
Receiving Wide Coverage ... AIG's Restructuring Examined: American Insurance Group released its plans Tuesday for a corporate restructuring aimed at appeasing restless investors, but already critics have begun to poke holes in the plan. The insurer plans to separate its company into nine units that can be spun off at any time. It plans an initial public offering for its mortgage insurance unit and decided to create a legacy portfolio for non-strategic assets in a manner
Breaking News This Morning ... JPMorgan Settles Lehman Claims: JPMorgan Chase & Co. will pay $1.42 billion in cash to the Lehman Brothers Holdings creditors, settling most of the remaining claims from the failed investment bank. In particular, the settlement relates to $6.3 billion of clearing-related claims and $2.3 billion of derivatives-related claims, two of the three major pieces of litigation pending between the two entities, the Financial Times noted. Lawyers for the estate of Lehman
Receiving Wide Coverage ... Did the Fed Mess Up?: To put it mildly, it's been a rough few weeks for equity markets and the global economy. Slides in corporate profits, stocks, commodities and even industrial production have left some invoking the "R" word: recession. Others are kinder merely arguing we're entering a bear market after a very extended bull run. But, as discussions of what caused the market and economic downturns stir, one common cause
Breaking News This Morning ... Earnings: 4th quarter earnings from SunTrust Banks, Citizens Financial Group. Wall Street Journal Digital Asset Holdings just wrapped up a $50 million capital raise from a group of 13 investors that includes JPMorgan Chase, Citigroup, BNP Paribas and Accenture. The Blythe Masters-led company may announce more funding from additional banks in the coming weeks, unnamed sources told the Wall Street Journal. Read American Banker's story on the $50 million investment here.
Receiving Wide Coverage ... Barclays Job Cuts: Barclays plans to cut about 1,000 jobs worldwide, according to the Wall Street Journal, or up to 1,200, the Financial Times said, as new CEO Jes Staley implements his turnaround plan. Some of the job cuts will be in the U.S., however most will come from Asia, including its businesses in cash equity research, sales and trading and convertible bond trading. Barclays will also exit Brazil, Russia, Taiwan and
Breaking News This Morning ... Earnings: Goldman Sachs' fourth-quarter earnings fell on a $5 billion regulatory penalty. Wall Street Journal Bank of America took a hacksaw to its expense base during the fourth quarter, slashing expenses by 2% from a year earlier, in part by firing employees, according to American Banker's report on its earnings. B of A may want to find a sharper blade. Much of the cost-cutting at B of A has come from its mortgage-servicing
Breaking News This Morning ... Earnings: 4th quarter results from Bank of America, Morgan Stanley, M&T Bank, Comerica Receiving Wide Coverage ... The Death of Bitcoin?: Bitcoin is dead. Long live bitcoin. Bitcoin developer Mike Hearn proclaims that bitcoin's litany of problems — from the domination of Chinese bitcoin miners, to bitcoin's superslow distributed network, to the open fighting amongst members of the bitcoin community — has now officially doomed the technology. Time to bury bitcoin and start
Breaking News This Morning ... Earnings: It's a banner day for 4Q reports from megabanks and regionals: Citigroup, Wells Fargo, U.S. Bancorp, PNC and Regions Financial. And there are two M&A deals in Chicago, from buyers Wintrust and Royal Financial. Goldman Sachs Faces Huge Fine: Goldman Sachs will pay the largest regulatory penalty in its history as part of a settlement regarding its sale of mortgage bonds before the financial crisis. Goldman settled with the complainants, which
Breaking News This Morning ... Earnings: JPMorgan Chase Receiving Wide Coverage ... Earnings Season Begins: As banks head into earnings season, an air of investor pessimism pervades. Banks' shares have fallen more than 5% recently and the KBW Nasdaq Bank index is down almost 20% from its most recent peak, according to the Wall Street Journal. Weak capital markets are likely to have hampered fixed income, currency and commodity returns. And the December rate increase courtesy of the
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 –
Wall Street Journal Has the presence of institutional investors caused this country's biggest banks to act as if they were a big monopoly? That's the question a group of economists asked in a paper. The scholars found banks will make their customers pay more in fees and offer less in interest on deposit certificates when institutional investors invest in competing banks. Consequently, the presence of the same investor from company to company can begin to make
New York Times Investment bankers the world over are salivating at the fee bonanza that would emerge from a potential Saudi Aramco IPO. If it went public, Saudi Aramco, the state-owned oil producer in Saudi Arabia, could generate a market value the equivalent of 12 Apples, or about $7 trillion. And that's based on a 2010 estimate.
Wall Street Journal Is it a case of He Who Must Not Be Named? No, it's not Voldemort from the Harry Potter series. It's the Structured Equity Finance and Trading group at Bank of America, also known as SEFT. Why has the division been sent to the penalty box? Because regulators have stepped up the pace of investigations into the type of dividend-tax trades made by SEFT. Unnamed sources say regulators are looking into whether the
Wall Street Journal Considering JPMorgan Chase's experience with failing to tell its wealthy clients where it was investing their money, perhaps this item is not a surprise. Mutual fund giant Vanguard Group set a record in 2015, reeling in $236 billion from investors. It's the largest annual flow of money to a mutual fund company in history, according to Morningstar.
Wall Street Journal Bank stocks, measured by the KBW Nasdaq Bank Index, rose 35% in 2013, boosted by hope that then-Fed Chairman Ben Bernanke would raise interest rates, David Reilly writes in a short "Overheard" column. Then 2014 arrived and the waiting game began. The KBW index rose only 7% for the year, trailing the overall market's performance. Things got worse last year, as bank stocks lost 1.6% for the year.
Wall Street Journal Presidential contender Donald Trump doesn't have a public record to analyze, but he does have a business record. The Journal, in its analysis of that record, shows Trump at his weakest, and his most heartless, in his dealings with Citigroup. In 1990, Trump's Atlantic City-fueled debt load was about to get the best of him, according to Citi banker Robert McSween. Trump arrived at Citi's office one night, upon being summoned to work
Editor's note: Morning Scan will publish next on Jan. 4, 2016. Happy holidays and happy new year from all of us at American Banker and SourceMedia. Wall Street Journal Christmas came early for foreign banks this year, thanks to the Federal Reserve. This year, units of foreign banks raked in around $6.25 billion in interest on the reserves they store with the central bank. Because of the Fed rate hike, these interest payments will double. The prospective
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