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morning scan

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…

Morning Scan: Goldman’s Good Deal; U.S. Banks Fear Brexit

Receiving Wide Coverage ... Devil's in the Details: Goldman Sachs has agreed to a $5.1 billion settlement to end the investigation into its role in the mortgage bubble and financial crisis. The FT says the deal failed to satisfy critics, citing one that called it “more of the same non-punishment, non-accountability ritual” and said the bank should publicly disclose its profits and total investor losses from its misconduct. A look at the fine print of the…

Morning Scan: Let the Red Ink Flow; Online Lenders' Wake Up Call

Receiving Wide Coverage ...

Morning Scan: MetLife Ruling Explained

Receiving Wide Coverage ...   MetLife Aftermath: The government failed to show how MetLife would cause significant damage to the economy if it failed, according to a U.S. District judge’s ruling last week that was unsealed Thursday. In explaining her ruling, Judge Rosemary Collyer said the government didn’t consider the cost of the designation to MetLife, which was required to build a larger financial cushion and implement other safeguards to protect taxpayers in the event of another…

Morning Scan: Citi's Bonus Plan Criticized; FOMC Minutes Suggest Caution

Receiving Wide Coverage ... Just Compensation?: Despite announcing planned changes to its executive pay scale, including capping incentive compensation, some corporate advisory firms say Citigroup isn't changing enough. Under Citi’s prior plan on performance-based awards, executive could earn more if Citi outperformed its peers, even if absolute shareholder returns were negative. Citi on Wednesday announced an update on that essentially says executives can’t earn bonuses if shareholders returns are negative, regardless of how well the bank…

Morning Scan: Fed Minutes Primer; How Will Sanders Slash Banks?

Wall Street Journal The paper suggests five things to watch for in the minutes from the Federal Open Market Committee’s March 15-16 policy meeting, due out Wednesday. Investors and analysts will attemot to parse the minutes for clues about future action. At the meeting, the central bank opted to maintain the current short-term interest rate. “The minutes could shed light on the Fed’s internal debate over the inflation outlook, which will be a key factor in…

Morning Scan: B of A's Stress Test Team; Hedge Funds Sue Puerto Rico GDB

Wall Street Journal The paper profiles Andrea Smith, a human resources executive at Bank of America, who was tapped to lead its stress test submission, which is due Tuesday. B of A has fallen short on the test three of the past five years, and the bank has opted this year to employ a manager, not a numbers cruncher, to lead the team working to satisfy the complicated and controversial post-crisis regulation. The Charlotte, N.C., firm was the…

Morning Scan: Panama Papers; Tour de Kashkari; Citi Active Overseas

Receiving Wide Coverage … Panama Papers: The Australian Tax Office will investigate some 800 wealthy clients of a Panama-based law firm, Mossack Fonseca, after a leak of 11.5 million records that reveal detailed information about hundreds of thousands of clients — including former world leaders, businessmen, celebrities, sports stars and criminals — spanning from 1977 to last December. The German newspaper Suddeutsche Zeitung, Washington-based International Consortium of Investigative Journalists, and more than 100 global news organizations…

Morning Scan: GE Wants to Drop SIFI Label; Bitcoin Founder Reveal?

Receiving Wide Coverage ... MetLife’s Floodgates: The day after a federal judge sided with MetLife in its case against federal regulators regarding their designating the insurer as systemically important, another non-bank has filed to end regulatory oversight. General Electric wants to do away with Federal Reserve oversight, arguing it has scaled down its financial-services arm to the point where it no longer could pose a threat to the overall financial system. If GE’s request is approved,…

Morning Scan: MetLife Wins SIFI Case; Fintech Means Job Cuts

Receiving Wide Coverage ... Not ‘Important’: MetLife, the country’s largest life insurer, has scored a significant victory in court, winning its battle with regulators over its designation as a systemically important financial institution (SIFI). U.S. District Judge Rosemary Collyer said in her decision that she sided fully with MetLife on two counts and partially on a third. MetLife argued federal regulators assigned the label in an “arbitrary and capricious” manner using a problematic process. In the…

Morning Scan: BofA Won’t Say 'Brexit'; HSBC Dinged for AML Lapses

Receiving Wide Coverage ... Some Don’t Like It Hot: The Bank of England has a real estate problem it is trying – sort of. In the U.K., so-called buy-to-let mortgages have become a hit commodity. The loans are used to buy homes that the owner intends to rent, and recently buy-to-let mortgages have come to account for a majority of post-crisis net new mortgage lending. While a hot real estate market alone isn’t cause for concern,…

Morning Scan: Deutsche's IT Overhaul; Lenders Push Parent Loans

Wall Street Journal The source of the so-called “bombshell that blew up Bear Stearns” has finally come to light. Emails obtained by the Financial Crisis Inquiry Commission have answered the question of who tipped off CNBC reporter David Faber as to the ill health of Bear Stearns. On March 12, 2008, Faber famously asked Bear Stearns chief Alan Schwartz in an interview broadcast by the network to respond regarding reports that Goldman Sachs had refused to…

Morning Scan: Banks Target Home Equity; Bitcoin Rival Emerges

Wall Street Journal Banks have turned to home equity lines of credit as a means of counteracting a slowdown in refinancing and the continued depression of mortgage originations. In 2015, lenders loaned $156 billion to consumers through HELOCs, the highest amount since 2007 when the housing bubble burst and nearly a quarter higher than in 2014. And the average line of credit is also hitting new highs at $119,790, according to CoreLogic. The push for these…

Morning Scan: Credit Suisse CEO Blindsided; A CIT Comeback?

Editor's note: Morning Scan will not publish on Friday, March 25 in observance of Good Friday. We’ll be back on Monday, March 28. Receiving Wide Coverage ... Blindsided: Credit Suisse chief executive Tidjane Thiam has said neither he nor his CFO were aware of the size of the bank’s “positions in risky, illiquid segments,” following a bad first quarter for trading that saw revenues fall 40%-45% (analysts’ expectations were revenues would decline 37%). Apparently staff had concealed…

Morning Scan: Ex-Goldman Banker Sentenced; JPM Backs 'Flash Boys' Heroes

Receiving Wide Coverage ... Sentenced: Rohit Bansal, an ex-Goldman Sachs banker, has been sentenced to probation for taking confidential documents from a source inside the New York Fed. Bansal has dodged the year in prison he faced and will instead serve two years’ probation, do 300 community service hours and pay a $5,000 fine. Under a settlement with the New York State Department of Financial Services, Goldman reached a settlement in the case. It paid $50…