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morning scan

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…

Morning Scan: More Panama Paper Fallout; Mortgages Go Private

Receiving Wide Coverage ... Kerry Meets with European Banks: U.S. Secretary of State John Kerry met with European banking leaders Thursday to urge them to increase lawful business ties with Iran and ensure them they won't be punished for doing so. The visit is part of a push to ensure Tehran receives the relief the U.S. pledged in January. Executives at Standard Chartered, HSBC, Barclays, Deutsche Bank, BNP Paribas, Santander, Lloyds Banking Group and Royal Bank…

Morning Scan: Regulating P2P Lenders; Global Bank De-Risking

Receiving Wide Coverage ... Here Comes the Fintech Regulation…: The U.S. Treasury Department released a paper Tuesday urging the need for greater transparency in the online lending industry through stronger regulatory oversight. The FT cited it as the first attempt by a U.S. regulator to produce a framework for an industry that emerged during the financial crisis. That marketplace lenders and other fintech companies are subject to far less regulatory scrutiny compared to legacy financial institutions…

Morning Scan: Disrupting P2P Disruptors?; Big Dividends

Receiving Wide Coverage ... Growing Pains: The toppling of Lending Club chief executive Renaud Laplanche Monday is sure to bring heightened investor scrutiny and concerns about the peer-to-peer business model of the broader online lending industry, which has already been reporting slowing investor demand for loans or drops in lending volume this year, and now needs to prove its members won't be the ones getting disrupted, the Journal says. Legacy banking institutions have been welcoming to…

Morning Scan: LendingClub Woes; Dimon's Fintech Warning

Receiving Wide Coverage ... Laplanche Resigns: LendingClub chief executive and chairman Renaud Laplanche resigned after an internal review of loan sales found $22 million in near-prime loans to a single investor, against that investor's instructions. Separately, the investigation also showed a failure to report personal interests held in a third-party fund to the board's risk committee, as the company was mulling an investment in the same fund. President Scott Sanborn will become acting CEO and director…

Morning Scan: CFPB Arbitration Plan May Face Legal Challenge; Bitcoin 'Creator' Bows Out

Receiving Wide Coverage ... Reaction: The reaction to the Consumer Financial Protection Bureau's proposal to prevent banks from using mandatory arbitration to block class-action lawsuits was swift and, for the most part, predictable. Not surprisingly, the financial industry (and Rep. Jeb Hensarling, R-Texas) blasted it. "Consumers will get less and pay more," the American Bankers Association's president, Rob Nichols, said. …

Morning Scan: CFPB Set to End Mandatory Arbitration for Consumers

New York Times The Times has a curtain-raiser on the Consumer Financial Protection Bureau's proposal to let consumers bring class-action lawsuits against banks and other financial-services companies, rather than be forced into mandatory arbitration. Read a concise account of the CFPB's proposal by American Banker's Kate Berry here. The proposal, if approved, would be a "major setback for banks, credit unions, credit card companies and many other financial firms," AB reports. In fact, the proposal would…

Morning Scan: Prosper's Layoffs Show Marketplace Lender Backlash

Wall Street Journal The backlash to online marketplace lenders is in full swing. Prosper Marketplace will fire 171 workers and its CEO won't take a salary, as loan volume declines and investors purchase fewer loans. The company will close a Utah office that's assigned to making loans for medical procedures, as it will make cuts totaling about 14% of its workforce, which is based in both San Francisco and Phoenix. Prosper's chief risk officer is being…

Morning Scan: Fed Targets Derivatives in Bank-Bailout Prevention Plan

Wall Street Journal In another attempt to prevent taxpayer-funded bailouts of large banks, the Fed is scheduled to vote today on proposal related to derivative contracts. Hedge funds and asset managers like Pacific Investment Management Co. would lose their contractual right to terminate financial contracts with big banks. As it currently stands, asset managers can terminate contracts with a bank if the bank files for bankruptcy, and the asset manager doesn't have to get in line with…

Morning Scan: Stripe Leads Fintech 'Revolution'; Bitcoin Creator Revealed?

Wall Street Journal Silicon Valley is investing in a startup that seeks an old-fashioned bank charter. Yes, you read that correctly. Warburg Pincus, which has plenty of experience investing in community banks, is leading an investment round in Varo Money, which is developing a mobile-banking app. Varo, led by former American Express and Wells Fargo veteran Colin Walsh, will partner with banks at first but may eventually seek its own charter, so it can accept deposits…

Morning Scan: ABA v. Congress; Why Banks Love Credit Cards

Receiving Wide Coverage… The American Bankers Association has pressed the idea of taking Congress to court over its decision last year to cut yearly dividend payments from the Federal Reserve to its member banks. The measure is part of a broad highway spending bill that "violates several legal principles" like breach of contract and taking of property without just compensation, ABA president Rob Nichols noted in a letter he wrote to Congress Thursday. Banks are required…

Morning Scan: Online Lenders' Legal Woes; What's New at Goldman

Wall Street Journal Goldman Sachs is looking at adding banking services for its online deposit-taking platform, including checking accounts and electronic-bill payments. Whether it would issue debit cards or paper checks, though, remains to be seen (it could well stick to its savings accounts, though, and it’s not interested in pushing into credit cards). “We are focused on integrating the platform, ensuring its smooth functioning and delivering high levels of customer service,” a Goldman spokesman said.…

Morning Scan: Citi Pay Plan OK; FinCEN’s Calvery’s Next Step?

Receiving Wide Coverage ... Voicing Some Objection: About two-thirds of Citigroup shareholders endorsed the bank’s executive pay package in a vote at its annual meeting Tuesday (compared to the 93% average of shareholder support for executive pay packages in the S&P 500 last year). Just 63.6% approved Citi’s plan, which proxy advisors strongly discouraged after chief executive Mike Corbat received a 27% raise (to $16.5 million) despite shareholder returns that have lagged that of competitors. Objections to the…

Morning Scan: Reinventing Goldman; Rise of the Analyst-Activist

Receiving Wide Coverage ... Goldman’s Goings On: Goldman Sachs has opened an online bank offering high-yield savings accounts (1.05%, 100 time more than at any Big Four bank) and certificates of deposit (1% on one-year CDs; 2% on five-years) for the average Joe, begging the question from industry observers: why is Goldman so hungry for retail deposits? First, financial regulation. Consumer deposits are a steadier and lower-cost source of funding than short-term loans from other financial…

Morning Scan: Are Banks Really TBTF?; Swift Security Update

Wall Street Journal So what if banks are too big to fail? Deposits at the big four commercial banks grew 2.1% to $.2 trillion in the first quarter – welcome news for banks despite a year-over-year decrease. Though their gains in deposits aren’t quite enough to counter some of the more grim details of their first-quarter earnings, they show that the very least, depositors aren’t fed up with the too-big-to-fail institutions. …

Morning Scan: Feds Limit Bank Pay, CFPB to Curb Arbitration Clauses

Receiving Wide Coverage ... Wall Street's Pay Crackdown: Regulators have put forth a proposal to revamp how bankers are paid, a long awaited response following the 2008 financial crisis. Caught firmly in the crosshairs of the newly proposed rules are bonuses. The highest-paid employees at banks would need to wait at least four years to receive portions of their annual pay, and individuals who make risky choices that lead to losses could be forced to return…

Morning Scan: Deutsche's Big-Data Fraud Approach, BlackRock's SIFI Struggle

Wall Street Journal "One Firm Getting What It Wants in Washington: BlackRock." That's the head on a piece in the Journal that looks at how the largest asset manager (by far) has worked the system to avoid the SIFI designation (for now). Venture funding for lending startups has dried up during the first quarter of 2016 ($298 million vs. $832 in the last quarter of 2015), and Silicon Valley is now putting its money behind firms that…

Morning Scan: Goldman Sachs' Pain; N.Y. Voters Don't Trust Wall Street

Receiving Wide Coverage ... Goldman’s Revenue Tumble: It was a tough first quarter for Goldman Sachs, as the company’s net income dropped 56% to $1.2 billion on major declines in investment banking and its bond-trading unit. Perhaps the bank’s only solace may be knowing that it’s not alone. JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo reported total revenues of $98 billion for the quarter. That’s 9% lower than last year,…

Morning Scan: Wells Fargo Named Primary Dealer; Asia's Malware Woes

Receiving Wide Coverage ... Wells Fargo Becomes Primary Dealer: The Federal Reserve Bank of New York has added Wells Fargo Securities as a primary dealer for the U.S. government bond market. As a primary dealer, Wells Fargo will trade directly with the New York Fed and underwrite U.S. government debt sales. It’s a rare move: There are only 23 primary dealers and the last time the Fed added a primary dealer was in February 2014 when…

Morning Scan: Banks Named in FIFA Probe; Fed Makes Typo

Receiving Wide Coverage ... Earnings Update: Morgan Stanley also had a difficult first quarter, but like its competitors the downturn was less substantial than expected. Net income for the quarter was $1.3 billion, down from $2.39 billion in last year's first three months. Again, like other banks, Morgan Stanley’s woes trace back to a dip in profits from its debt-trading business. Investment banking revenue also fell. Citigroup, which reported its earnings on Friday, looks much different…

Morning Scan: Dems Debate Bank Breakups; Bonus Rules Expected

Breaking News This Morning ... Earnings: Citigroup, Regions Receiving Wide Coverage ... Candidates on Banking: Democratic presidential candidates Hillary Clinton and Bernie Sanders' debate Thursday night in Brooklyn touched on how to best control the banking industry. While Clinton said she would remain faithful to the Dodd-Frank financial overhaul law, which requires banks to develop credible bankruptcy plans for themselves or leave it to regulators to cap the size of the firm, Sanders said fraudulent practices on Wall…

Morning Scan: TBTF Debate Rages; B of A, Wells Report

Breaking News This Morning ... B of A Earnings Fall: Bank of America profits fell 13% in the first quarter on a decline in trading revenue and low interest rates. It reported income this morning of $2.68 billion, or 21 cents per share, beating analysts’ estimates by one cent. That was down from the $3.1 billion, or 25 cents a share, income it brought in the same quarter last year. New York Times …

Morning Scan: Living Wills Rejected; Deutsche’s N.C. Bypass

Breaking News This Morning ... Judgment Day: Regulators have rejected the living wills of JPMorgan, Wells Fargo, Bank of America, BNY Mellon and State Street Bank. The Federal Reserve and Federal Deposit Insurance Corp. said they don't meet the standard outlined by Dodd Frank – that banks come up with a credible plan of action that would spare taxpayers from having to bail them out should they start to fail. The firms have until Oct. 1…

'There Is No One Blockchain to Rule Them All'
Don Tapscott and Alex Tapscott, authors of "Blockchain Revolution," discuss the implications for banks of distributed ledger technology, the pros and cons of private blockchains compared to open networks, how DAOs might eliminate moral hazard, and more.
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