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morning scan

Morning Scan: Stressed About Stress Tests; Buffett Bites Bankers

Receiving Wide Coverage ... Nothing But Stress: Foreign banks are stressed about the stress tests. Deutsche Bank and Santander are both expected to be called out by the Federal Reserve on Thursday, when the stress test results are announced, for lapses in risk management. Capital isn't the issue with foreign banks. Instead, it's how they measure and predict risks and losses. DB, Santander, Barclays, Credit Suisse, HSBC and UBS are "now spending heavily and recruiting project…

Morning Scan: Wells Fargo Caps Subprime Auto Lending; Holder's Deadline

Wall Street Journal The Dodd-Frank restriction on the Federal Reserve's authority to be a lender of last resort poses a threat to financial stability, Glenn Hubbard, former chair of the Council of Economic Advisers under President George W. Bush, and Hal Scott, a Harvard Law School professor, write in an op-ed for the Wall Street Journal. Restrictions on federal guarantees for bank deposits and money market funds also contribute to the threat. The Fed's lender-of-last-resort authority…

Morning Scan: CIT, OneWest Deal in Public Eye; Winters Cheered as Standard CEO

Receiving Wide Coverage ... CIT, Censures and Selfies: Bank chiefs don't often find themselves defending their business decisions to community members in a public hearing, but then again the $3.4 billion proposed merger between CIT Group and OneWest is a pretty big deal in more ways than one. CIT chief executive John Thain and OneWest CEO Joseph Otting told a panel of banking regulators in Los Angeles Thursday that their plan to create a $70 billion…

Morning Scan: Yellen Confronts Partisan Charges; Is Lending Club Overrated?

Receiving Wide Coverage ... Morgan Stanley Strikes Deal with DOJ: Morgan Stanley has agreed to pay $2.6 billion to settle charges that it misled investors about the quality of mortgage-backed securities during the run-up to the financial crisis. The deal will make a significant dent in the bank's 2014 earnings, lowering net income by $2.7 billion, or more than a third. The amount of the penalty was higher than analysts expected, according to the Wall Street…

Morning Scan: Fed Flexible on Rate Hike; JPM Battles Calls for Break Up

Receiving Wide Coverage ... The Oracle of D.C.: The papers offer varying interpretations of Federal Reserve chair Janet Yellen's testimony before the Senate Banking Committee. The New York Times says Yellen sought to give the central bank leeway in the timeline of its interest-rate increase. Fed officials could firm up plans to raise rates as soon as June at a March policy meeting, but "Yellen emphasized that patience remained the Fed's watchword, and that the persistence…

Morning Scan: HSBC Problems Aplenty; Precious Metals Probe Targets 10 Banks

Receiving Wide Coverage ... HSBC Sweats in the Spotlight: The hits keep on coming for HSBC. The U.K. bank on Monday announced subpar earnings for 2014 and lowered its financial targets, while chief executive Stuart Gulliver was pummeled with questions about the $7.7 million he opted to hold in a Swiss bank account through a Panamanian company until 2003. Tax experts tell the Times that Gulliver's arrangement was legal, but it's not terrific press for a…

Morning Scan: Caution Signs Ahead for Rollback of Bank Regs; U.K. Bank Woes

Wall Street Journal Dark clouds are hovering over the effort to amend Dodd-Frank and other bank regulations, in some measure because the new GOP leadership on Capitol Hill is trying to make changes beyond what banks have asked for. At a recent meeting at a Washington hotel, according to anonymous sources, Sen. Richard Shelby, R-Ala., reiterated his stance that he wants to axe the Consumer Financial Protection Bureau's independent funding stream; and Rep. Jeb Hensarling, R-Texas,…

Morning Scan: Fears Raised on Hack of Phone-Card Maker; JPMorgan's Cyber Army

Receiving Wide Coverage ... Hacked Off: So much for mobile banking. The Dutch company Gemalto, the world's largest maker of SIM cards for mobile phones, was hacked by a joint team from the National Security Agency and the U.K.'s counterpart intelligence agency. (The report comes from documents leaked by NSA whistleblower Edward Snowden to the website The Intercept.) Gemalto sells its SIM cards to AT&T, Sprint, T-Mobile, Verizon and other telecom companies. Gemalto's financial institution clients…

Morning Scan: Timing of Interest-Rate Hike Questioned; Subprime Borrowing Booms

Receiving Wide Coverage ... Tapping the Brakes?: Hold your horses on that rate increase. According to analyses in the Financial Times and the New York Times, members of the Federal Open Market Committee appear to remain divided over when to start raising short-term interest rates, based on minutes of the committee's Jan. 27-28 meeting, released on Wednesday. (The Wall Street Journal, however, offers a somewhat-more bullish view of the minutes.) A "premature" rise in rates could…

Morning Scan: Prosecutors Raid HSBC's Swiss Offices; B of A CEO Takes a Pay Cut

Receiving Wide Coverage ... Swiss Search HSBC Offices: Geneva public prosecutors launched what appeared to be a surprise raid on HSBC's Swiss offices Wednesday morning as part of a criminal probe into the bank's alleged money-laundering misdeeds. Prosecutors issued a public statement saying the search came in response to "recent public revelations" about the Swiss unit, an apparent reference to the vast files provided by whistleblower Herve Falciani to several media outlets. Among other things, the…

Morning Scan: Russian-Speaking Group's Cyber Attacks Detailed; Losing Their Patience

Receiving Wide Coverage ... The Russian Hacker Mob: Russian-speaking gangs of hackers have stolen millions of dollars since 2013 from banks in the U.S., Eastern Europe and Russia and according to the Russian computer-security firm Kaspersky Lab, the Wall Street Journal reported. The Financial Times' report on the same study said the thieves' total haul may be closer to $1 billion. Most alarming is the lab's claim the cyberattack is still active. The Kaspersky Lab issued…

Morning Scan: JPMorgan Executives Out Amid Asia Probe; What's Next for Amex?

Editor's note: Morning Scan will not publish on Monday, Feb. 16 in observance of the Presidents' Day holiday. We'll be back on Tuesday, Feb. 17. Receiving Wide Coverage ... JPMorgan's Asian Shake-Up: JPMorgan Chase is forcing two executives out the door amid a federal investigation into the bank's hiring practices in Asia, anonymous sources told the Wall Street Journal and Financial Times. The executives are Todd Marin, vice chairman of Asia Pacific investment banking, and Catherine Leung,…

Morning Scan: B of A Tapped Retail Unit for Risky Trades; Disclosures 'Useless'

Wall Street Journal Bank of America used federally insured retail deposits to finance risky trades by its European investment banking unit, the paper reports. The bank says it no longer engages in the practice, which is aimed at helping hedge funds and other clients avoid taxes. Regulators had previously questioned Bank of America about the reputational and legal risks associated with dividend arbitrage, and now a bank employee has made whistleblower submissions to the Securities and…

Morning Scan: Fed Tries to Bond with GOP; Do Felony Pleas Still Scare Banks?

Receiving Wide Coverage ... Fed Up: The audit the Fed bill has made a comeback in the new Republican-controlled Congress, but it's still got plenty of detractors. The New York Times' Neil Irwin argues the Fed is already pretty darn transparent and well-audited, especially compared to other government institutions. "When people say they want to audit the Fed, what they really mean is 'The Fed is doing things I disagree with,'" he writes. The Wall Street…

Morning Scan: Powell Pans 'Audit the Fed'; DOJ Wants Felony Forex Pleas

Receiving Wide Coverage ... Pushback Against 'Audit the Fed': Federal Reserve Board Governor Jerome Powell took a stand on Monday against the "Audit the Fed" bill that's been gaining traction among some Republicans legislators. Powell himself is a member of the GOP, but he's no fan of the proposal to subject the central bank to policy audits by Congress. The plan could reverse "decades of deliberate effort by the Congress to insulate the Fed from political…

Morning Scan: HSBC in Hot Water; Follow the Luxury Real Estate Money

Receiving Wide Coverage ... HSBC Under Fire: HSBC's Swiss unit colluded with wealthy clients including "international criminals" to help them avoid paying millions of dollars in taxes, according to what The Guardian calls "the biggest bank leak in history." The Swiss private bank routinely handed untraceable bricks of cash over to clients and conspired with clients to hide undeclared accounts from tax authorities, according to files from the period between 2005 and 2007 that were obtained…

Morning Scan: Ally Financial's Leadership Shakeup; Colorado Pot Lenders

Receiving Wide Coverage ... Ally's Shakeup: The New York Times and the Wall Street Journal both take a closer look at the leadership shakeup at Ally Financial. Unnamed sources tell the Times that former Ally Financial CEO Michael Carpenter was politely shown the door because the Ally board was frustrated the company had "stagnated" during his tenure and Carpenter appeared to "lack the vision" needed to dig the bank out of its rut. Furthermore, Carpenter wasn't…

Morning Scan: UBS in Tax-Evasion Hot Water Again; Somali Remittances

Receiving Wide Coverage ... The Swiss and Taxes: And you wonder how the Swiss banking industry got its reputation as a haven for tax evaders? The Justice Department and the Federal Bureau of Investigation are examining Swiss bank UBS for allegedly helping its American wealth-management clients avoid taxes by putting their money into investments that are banned in the U.S., the Wall Street Journal reported. This isn't the first time UBS has run afoul of U.S.…

Morning Scan: S&P Re-Examined After $1.5B Settlement; B of A Request Denied

Receiving Wide Coverage ... Not So Fast: So now that Standard & Poor's has signed off on a $1.5 billion settlement, you'd think the credit ratings agency would be able to move on from the incident and reclaim the industry's reputation? Not so fast, my friend. The Journal takes a closer look at a statement of facts signed by the Justice Department and S&P, and finds troubling signs. The New York Times, on the other hand,…

Morning Scan: S&P, DOJ Reach Hard-Won Deal; Lending Club Joins Up with Alibaba

Receiving Wide Coverage ... Long Time Coming: It's been a long and bloody road to a $1.37 billion settlement between Standard & Poor's and the U.S. Justice Department. The deal, announced Tuesday, resolves accusations that S&P misled investors about the credit quality of mortgage-backed securities in the run-up to the financial crisis. But the media coverage is far more focused on what happened during the two years it took the parties to reach an agreement. S&P…

Morning Scan: First Mariner CEO's Second, Covert Career; What's 'Culture'?

Wall Street Journal Edwin Hale Sr., the founder and former chief executive of First Mariner Bancorp in Baltimore, confessed that he covertly worked for the Central Intelligence Agency for about 10 years in the 1990s and 2000s. Hale made the confession in his recently published biography, "Hale Storm." The CIA used agents posing as employees of Hale's bank (the article doesn't specify whether they were employees of First Mariner, or of Bank of Baltimore, Hale's previous…

Morning Scan: Ally Licks Wounds from GM Snub; Apple Pay's Ripple Effect

Receiving Wide Coverage ... Deutsche Downer: Deutsche Bank's quarterly results beat analysts' expectations, but the bar was pretty low to begin with given that analysts had forecast a loss. "A single quarter aside, the performance of the stock and of the company has simply been poor," writes the Financial Times' Lex team. The column recommends Deutsche consider spinning off "some or all" of its retail banking units and consider boosting returns by growing its asset management…

Morning Scan: Basel Gets Tough; OneWest's 'Risky' Email Campaign

Receiving Wide Coverage ... A Patient Fed: When analyzing the Federal Reserve's statements about its timeline for raising short-term interest rates, it helps to have practiced close reading in college. The Fed said Wednesday it plans to be "patient" in adjusting monetary policy, which "means the central bank isn't likely to raise rates at its next two policy meetings," the Wall Street Journal reports. In other words, a rate hike wouldn't come until June at the…

Morning Scan: Thieves Steal Wells Fargo's Gold; Citi to Ease Screening Criteria

Receiving Wide Coverage ... Gold Rush: Three armed robbers stole historic gold nuggets from Wells Fargo's corporate museum in San Francisco on Tuesday. The masked suspects crashed their sports-utility vehicle into the entrance of the museum and broke into the display case while holding a security guard at gunpoint, according to reports. At an estimated value of $10,000, the nuggets are hardly a staggering haul, but the New York Times notes they have sentimental value: "the…

Morning Scan: Davos Drama Over Capital Rules; Investors Crave Subprime Auto Loans

Receiving Wide Coverage ... Pushback Against ECB Rules: Last week's World Economic Forum in Davos, Switzerland, gave European bankers unhappy with stricter capital rules a chance to air their grievances. The Financial Times reports bankers in Davos argued that tough capital requirements will render the European Central Bank's quantitative easing less effective. They say the initiatives work at cross-purposes: QE is meant to encourage investors to take on riskier assets that invigorate the economy, while the…

Morning Scan: Apple Pay Traction; RBC CEO Mystery Shops

Wall Street Journal Retailers large and small, not to mention the head of strategic partnerships at Visa, told the Journal that many more customers are using Apple Pay than other mobile-wallet services, such as Softcard, the mobile-wallet services formerly known as Isis that's backed by AT&T, Verizon and T-Mobile. The reasons: Apple's consumer gadgets are popular; banks and credit unions have been aggressively marketing the services; and consumers' cybersecurity concerns after breaches at Home Depot and…

Morning Scan: RBC Takes Second Shot at U.S.; Dimon's Paycheck

Receiving Wide Coverage ... Canadian Invasion: The Wall Street Journal, Financial Times and Reuters (via the New York Times) all take a closer look at Royal Bank of Canada's decision to acquire City National in Los Angeles. RBC may have stubbed its toe in its previous American incursion with RBC Centura (which it later sold to PNC), but City National is a different play. The California bank has a big presence in wealth management, particularly managing…

Morning Scan: Europe's QE Plan; Investors 'Panicking' About Oil-Heavy Banks

Breaking News This Morning ... Earnings: KeyCorp, Huntington, BB&T, BankUnited Receiving Wide Coverage ... European QE: The European Central Bank is expected to launch a quantitative-easing program that could include the purchase of about 50 billion euros worth of bonds each month (equivalent to about $58 billion). Europe hasn't embarked on a QE program during the recent years of economic tumult. But the state of the continent's fragile economy prompted the move, said Matteo Renzi, Italy's prime minister.…

Morning Scan: Obama Plans to Fight for Dodd-Frank; Walmart's Latest Move

Breaking News This Morning ... Earnings: Fifth Third, U.S. Bancorp Receiving Wide Coverage ... SOTU from POTUS: Banking and finance played a lead role in President Obama's State of the Union address on Tuesday night. For one, Obama vowed to keep Dodd-Frank intact, saying the law's rules and the creation of the Consumer Financial Protection Bureau are protecting American consumers. However, Obama avoided direct bashing of banks, declining to take up the same rhetoric as Sen. Elizabeth Warren,…

Morning Scan: U.S., Europe Diverge on Interest Rate Plans; Robot Bank Teller

Breaking News This Morning ... Earnings: Regions Wall Street Journal The Journal notes the divergent paths down which the U.S. and European central banks appear to be heading. The Federal Reserve, on the one hand, still appears ready to raise short-term rates, sometime, perhaps, around the middle of this year. The European Central Bank, on the other hand, looks set to engage in a round of quantitative easing, in which it will purchase hundreds of billions of euros…

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