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morning scan

Morning Scan: Smoking-Gun Memo Leads to Big Fines; Mobile Banking Study

Wall Street Journal Fresno, Calif.: home of raisin farms, a college football team called the Bulldogs, and (who knew?) a federal prosecutor's office that dug up the memo that led to $37 billion in bank fines stemming from the subprime mortgage crisis. The Journal reports on Richard Elias, an assistant U.S. Attorney who discovered JPMorgan Chase documents while working in the Justice Department's Fresno office that led to successful prosecutions of big banks. The JPMorgan memos…

Morning Scan: A Patient Fed; Whistle While You Work

Receiving Wide Coverage ... Fed Stays Patient: As expected, the Fed said on Wednesday that it would remain patient when it comes to raising interest rates, and the Journal, New York Times, Financial Times and Washington Post all produced reports on the Fed's meeting. Fed Chair Janet Yellen said the Fed will likely raise interest rates next year, but no sooner than late April, as the central bank exercises patience in waiting for the precise moment…

Morning Scan: Is the Fed 'Patient'?; B of A, Citi Stumble on Mortgage Settlement

Receiving Wide Coverage ... Fed's New Patience?: Looking ahead to the Federal Reserve's monetary policy statement this afternoon and Fed Chair Janet Yellen's briefing, the Wall Street Journal and the New York Times offer contrasting views on the million-dollar question of when rates could rise. The Journal says the Fed and Yellen may very well drop from the official statement that the Federal Open Market Committee expects to keep short-term rates near zero for "a considerable…

Morning Scan: British Banks, Except Co-Op, Pass Stress Test; Ocwen's Troubles

Receiving Wide Coverage ... British Stress-Testing: One bank, Co-operative Bank, failed the Bank of England's stress test, while Royal Bank of Scotland and Lloyds Banking Group passed...but barely . The tests were "demanding," but the results show British banks are "significantly more resilient" than last year, Bank of England Governor Mark Carney said. RBS and Lloyds' results were made more palatable by the fact that both have already installed programs to boost their capital levels (although…

Morning Scan: Leveraged Lending on PetSmart Deal; Deal on Derivatives

Receiving Wide Coverage ... PetSmart's Debt Financing: That whole thing about regulators cracking down on big banks for providing too much debt-financing in takeover deals? Eh, who cares? Citigroup is one of five banks that's underwriting billions of dollars in in debt to help finance the $8.7 billion private-equity acquisition of retailer PetSmart led by BC Partners. The debt in the PetSmart deal, in the most recent negotiations, equates to more than six times cash flow.…

Morning Scan: Banks Fined for Fighting Over 'Toys'; Medical Bill Woes

Receiving Wide Coverage ... Conflict of Interest Strikes Again: Toys tend to make children get greedy, and they appear to produce a similar effect on investment banks. Ten firms were fined $43.5 million Thursday over charges they offered up flattering research analysis in an effort to score a piece of the Toys "R" Us initial public offering. Citigroup, JPMorgan, Wells Fargo and Goldman Sachs are among the banks cited by the Financial Industry Regulatory Authority. Wall…

Morning Scan: Clashes Over Dodd-Frank Change in Budget Bill; Lending Club IPO

Receiving Wide Coverage ... Through the Back Door: Democrats are pushing back against the GOP's effort to repeal a Dodd-Frank derivatives rule by slipping the change into the government spending bill slated for a vote today. Analysis in the New York Times and Wall Street Journal suggests that getting rid of the rule would be a bad idea — but not for the obvious reasons. The provision obliges banks to move a small percentage of derivatives…

Morning Scan: Banks' Stake in Budget Bill; Capital Surcharges' Ripple Effect

Receiving Wide Coverage ... Break Up or Buckle Up: JPMorgan Chase will be the bank hardest hit by the Federal Reserve's proposed capital surcharges on the country's biggest banks. Fed vice chairman Stanley Fischer let slip that JPMorgan faces a $22 billion shortfall to meet the forthcoming capital rule during a question and answer session, as American Banker reported last night. Other banks are apparently at or near the minimum levels, and JPMorgan has until 2019…

Morning Scan: Deutsche Bank Sued for Tax Fraud; 3% Downpayments Make Comeback

Receiving Wide Coverage ... Shell Shock: Deutsche Bank is accused of owing the U.S. government more than $190 million in taxes, penalties and interest in a lawsuit filed Monday by federal prosecutors in Manhattan. The allegations against the German lender are pretty complicated, as the New York Times warns its readers. The basic charge is that back in 2000, Deutsche wanted to avoid paying capital gains taxes on the appreciated value of Bristol-Myers Squibb stock it…

Morning Scan: Banks Don't Want Big Corporate Deposits; New York DFS's Secret Weapon

Wall Street Journal It's not often you hear about banks turning away deposits, but the paper reports that a number of banks are suggesting corporate clients take their money elsewhere in light of impending liquidity rules that make holding their cash less profitable. JPMorgan Chase, Bank of America, Citigroup, HSBC and Deutsche Bank are among the lenders that have held this unusual conversation over the past few months, according to the paper. "The change upends one…

Morning Scan: New York Fed's Ties to Banks Examined; Insurance Deal

Financial Times The paper takes a somewhat lengthy look at the New York Fed as the institution struggles with the fallout from secretly recorded internal conversations that show it might be too cozy with the banks it regulates. The article uses as its launching point a Nov. 18 event at the New York Fed's headquarters, which was held to celebrate the Fed's 100th anniversary, and which came a few days before Fed officials were excoriated in…

Morning Scan: CFPB Clashes with Banks on Student Loans; Chicago Fed Prez Leans to 2016

Wall Street Journal The Consumer Financial Protection Bureau's ombudsman for student loans, Rohit Chopra, is being taken to task by some lenders for how he has used public forums to encourage banks to improve their dealings with consumers on student loans. The problem lenders have is the 32-year-old Chopra favors delivering his message in public forums like blogs and letters, compared to other regulators who use more discreet formats. The paper looks at some of the…

Morning Scan: BNY Mellon Gives In to Activist; Credit Suisse Appraisal Lawsuit

Receiving Wide Coverage ... BNY Mellon Yields to Trian: If Bank of New York Mellon, which has been around for more than two centuries and safeguards more than $28 trillion in assets, can't stare down an activist investor, who can? The trustee bank BNY Mellon has decided to avoid a proxy fight with activist investor Trian Partners and give the firm a seat on its board. The decision means BNY Mellon won't get bogged down in…

Morning Scan: Hackers Master Wall St. Jargon; Revolving Door Apologia

Receiving Wide Coverage ... Wall St. Posers: Hackers have been masquerading as investment bankers and senior executives at pharmaceutical and health care companies as part of a plot to gain access to market-moving information, according to a report from cybersecurity firm FireEye. For more than a year, the cybercriminals have sent phishing emails "written in flawless English and carefully worded to sound as if they were sent by someone with an extensive background in investment banking…

Morning Scan: Banks Use Big Data to Uncover Bad Seeds; Homeownership vs. Renting

Wall Street Journal There's no roasting marshmallows 'round the bonfire at Boost, a Bitcoin boot camp in Silicon Valley, but entrepreneurs do share bunk beds and board a bus for day-long field trips. Founded by 28-year-old Adam Draper, the son of venture capitalist and Bitcoin enthusiast Tim Draper, Boost invests between $10,000 and $20,000 in Bitcoin startups in exchange for a 6% ownership stake. …

Morning Scan: HSBC in Hot Water; How CEOs Tangle with Activist Investors

Receiving Wide Coverage ... HSBC in Regulators' Crosshairs: Loose lips sink ships, as American propaganda posters during World War II once proclaimed, but it seems some bank employees are unaware of the idiom. The Wall Street Journal reports the Justice Department has launched a probe into allegations that an HSBC trader alerted a major hedge fund to confidential details about an imminent currency exchange deal in 2010. The probe "suggests that the U.S. is eyeing a…

Morning Scan: Santander to Replace CEO; Citi's Stock Tip Specials

Receiving Wide Coverage ... Shakeup at Santander: Santander's recently elected chairman Ana Botín made some big changes to the bank's leadership in a move to make her mark on the family-run Spanish lender, according to the papers. The bank's longtime chief financial officer Jose Antonio Álvarez has been named chief executive. He replaces Javier Marín, who had served in the role for less than two years. Santander also named three new independent board directors and appointed…

Morning Scan: Fed Oversight Under Fire; BofA Investors Protest CEO's Dual Role

Receiving Wide Coverage ... Fed on the Hot Seat: The Federal Reserve's public image took a few hits last week as the Senate held hearings questioning whether the regulator is too lenient on the banks it oversees. The New York Times' Gretchen Morgenson writes these inquiries are "absolutely justified" and suggests policymakers seize the moment to push for more transparency around bank examinations. A Yale professor tells Morgenson that if the Fed made public the mathematical…

Morning Scan: Fed Wonders if It's 'Captured'; Commodity Holdings Questioned

Receiving Wide Coverage ... Too Cozy?: The Fed established a team in Washington to review whether it's too cozy with the banks it regulates. The New York Times described the review as a "surprise announcement." The Fed's inspector general will simultaneously conduct a similar review, looking specifically at whether "top officials were hearing all the opinions of Fed bank examiners." The moves were announced Thursday, ahead of Fed Governor Daniel Tarullo's and New York Fed President…

Morning Scan: Fed-Goldman Sachs Revolving Door?; Commodities Update

Receiving Wide Coverage ... Revolving Door?: More evidence has emerged of conflicts of interest involving the New York Fed and Goldman Sachs. This time it's an indication of a revolving door between the two institutions, in which an employee leaves one and quickly joins the other, bringing sensitive market information along for the ride. Goldman fired two workers after the bank learned that one had shared confidential information with his colleagues about the New York Fed's…

Morning Scan: More Fallout from Sanctions Violations

Receiving Wide Coverage ... French Twist: Thought the story about BNP Paribas violating U.S. sanctions against Sudan, Iran and China was over? Not so much. Five months after the French bank agreed to plead guilty and fork over almost $9 billion, home-country prosecutors are investigating whether senior officials at the bank violated insider trading laws by selling stock while the U.S. sanctions probe was under way. The story was broken Tuesday by a French news outlet,…

Morning Scan: FHA Returns to the Black; Civil Case Against Mozilo?

Receiving Wide Coverage ... Housing Rebound?: The Wall Street Journal and Washington Post both have articles noting the significance of the Federal Housing Administration returning to the black for the first time since 2011. The FHA served as a backstop for the housing market during the financial crisis, when other lending sources dried up. But that resulted in a sharp increase in the FHA's default rate. Now the agency has recovered, at least in one sense.…

Morning Scan: Supercharged Spending on Cybersecurity; Robo-Signers Return

Wall Street Journal Banks and other financial-services companies will increase spending on cybersecurity by $2 billion over the next two years, according to a PricewaterhouseCoopers study. Citigroup, for example, now spends about $300 million yearly on cybersecurity, an anonymous source told the Journal. Wells Fargo spends about $250 million per year. JPMorgan Chase now spends about $250 million, but that could double over the next years, CEO Jamie Dimon has said. JPMorgan has about 1,000 workers…

Morning Scan: Ocwen, Wells Fargo Scrap Deal; De-Risking as 'Fig Leaf' for Banks

Receiving Wide Coverage ... The Rate Hike Waiting Game: The Federal Reserve may push its timeline for raising interest rates back from mid-2015 if wage growth fails to improve, according to articles in both the Wall Street Journal and the New York Times. The fact that more people are quitting their jobs suggests the labor market may be tightening, according to the Journal, but there are other signs that strong pay increases may be a ways…

Morning Scan: Banks' Consumer Debt Reporting Probed; Were Forex Deals Too Soft?

Receiving Wide Coverage ... Regulators' Weak Sauce: U.S. and foreign regulators fined six big banks a cumulative $4.3 billion Wednesday in a round of settlements charging them with conspiring to manipulate the foreign exchange market, and the peanut gallery is unimpressed. The Financial Times points out the fines "are less stunning than the scale of the conspiracy against the banks' customers and the catastrophic failure of oversight on the part of bank executives." Bank executives and…

Morning Scan: Five Banks Reach $3.3B Forex Deal; Is Lawsky Eying the Exit?

Receiving Wide Coverage ... First Forex Deal Reached: Five banks have agreed to shell out a total of $3.3 billion to U.S., British and Swiss authorities to settle charges that they tried to manipulated the foreign exchange market. The banks included in the settlement were Citigroup, JPMorgan Chase, HSBC, Royal Bank of Scotland and UBS; Barclays had been in talks with regulators but got cold feet as the announcement neared, the New York Times reports. The…

Morning Scan: Postal Service Hacked; CFTC to Join in Forex Settlements

Receiving Wide Coverage ... Second Takes on FSB Rules: The Financial Stability Board's newly proposed capital requirements for the world's largest banks may make banks safer, but they won't end the debate over too big to fail, according to the Wall Street Journal. Analysts estimate big U.S. banks would have to issue billions of dollars in new long-term debt in order to meet the FSB requirements and predict banks will "face a modest earnings headwind" on…

Morning Scan: FSB Proposes Capital Rules; AG Pick Has History with Big Banks

Receiving Wide Coverage ... Beating Back Bailouts: The Financial Stability Board has taken a fresh stab at ending too big to fail with a newly proposed set of rules for the world's largest banks. Banks would be obliged to hold capital equal to 16-20% of their risk-weighted assets and to meet a capital leverage ratio twice the size of the Basel III requirement under the proposal. The New York Times notes the rules would have a…

Morning Scan: Emails Stolen in Home Depot Attack; JPMorgan Whistleblower Speaks

Receiving Wide Coverage ... Emails Stolen: You thought just your account information was stolen by the Home Depot hackers? Think again. The orange-clad home-improvement retailer said hackers that broke into its computer networks stole not only 56 million credit-card accounts, but also 53 million customer email addresses. While email addresses are already somewhat publicly available, the nefarious-minded can use the email address to trick people into signing up or agreeing to things they probably don't want.…

Morning Scan: Banks' High Hopes After GOP Win; Russian Money Laundering?

Receiving Wide Coverage ... Not So Fast My Friend: Both the Wall Street Journal's "Heard on the Street" column and the Financial Times's "Lex" column caution bank investors to not get their hopes up after the boffo Republican showing in this year's elections. The costs of reeling in some of the bank-reform laws deemed most egregious by GOP leaders are likely too high. The FT notes any gifts to the financial industry will likely go to…

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