Monday, October 17

Breaking News This Morning ...

Earnings: Citigroup, Wells Fargo, First Horizon, Charles Schwab

Receiving Wide Coverage ...

Sticky Situation: Companies that strive for "stickiness" usually get glowing coverage in The New York Times' business section, but when big banks achieve it, they get a not-so-flattering story on page one. "The Internet banking services that have been sold to customers as conveniences, like online bill paying, serve as powerful tethers that keep them from jumping to another institution," says the second paragraph in the Sunday front-pager, continuing the captivity motif suggested by the phrase "on [the] hook" in the headline. It isn't necessarily news to bankers and longtime students of the industry that automatic bill payment, not to mention things like direct deposit of paychecks, can promote customer inertia. We remember retail banking executives from Washington Mutual, which was then a relative up-and-comer, making pretty much the same observation to us back in 1999. But, as the Times notes, the "Hotel California" nature of a primary checking account (we're thinking of the last two lines of that old ditty) is coming as an unpleasant surprise to many consumers who've been turned off by the onslaught of post-Durbin fees imposed by the megabanks and want to bolt. Meanwhile, what the New York Post describes as "a Facebook-driven crusade to get people to withdraw their money from regular bank accounts" has designated Nov. 5 Bank Transfer Day. They chose the date because it's Guy Fawkes Day, but instead of lighting bonfires or blowing up buildings, this movement (started by a Los Angeles art gallery owner) is merely encouraging people to move their money to credit unions. The Post also notes the stickiness factor: "For many customers using automatic bill payments or direct deposits, unwinding all their transactions and moving them to a different financial institution can quickly become daunting. … Banks are counting on the inconvenience."

Occupy the World: Speaking of people who like to brandish the Guy Fawkes mask as a symbol, Occupy Wall Street has gone global. The anti-capitalist demonstrations in other countries haven't all been as peaceful as the ones here - riots broke out in Rome over the weekend. Back in New York, according to the FT, "24 people were arrested for trespassing at a Citibank branch when, according to organisers, they went to close their accounts." (Talk about stickiness!) President Obama voiced support for the protestors, but warned them not to "demonize" people who work in finance. The Journal says that despite spreading worldwide, the movement has yet to forge a common goal, and the Times' "Sunday Dialogue" features a debate among readers about the usefulness of this lack of concrete demands. "Vietnam War protesters did just fine with stop the war and get out of Vietnam. Occupy Wall Street is doing just fine with stop the greed and get out of our pockets," writes one Times reader. Another counters: "the agenda of the Vietnam War protesters was to stop the war and remove the troops - clearly defined and obtainable objectives. 'Stop the greed' and 'get out of our pockets' are euphemisms for vague objectives."