Receiving Wide Coverage ...
Bluebird Alights: The Bluebird debit card Walmart rolled out Monday marks another phase in the retailing giant's aggressive push into financial services, the Journal reports. The Bluebird card doesn't have a monthly maintenance fee, annual fee or activation fee, whereas other prepaid cards carry fees of $5 or more a month, as well as a nest of other charges, notes the Journal, which adds that Bluebird arrives as checking account fees reach record highs. The Journal also reminds readers that Wal-Mart has pushed aggressively into financial services despite failed attempts to obtain a U.S. bank charter. The Post notes that Walmart officials predict the card will have appeal beyond the unbanked. Anyone wondering how Walmart and American Express, Bluebird's other backer, plan to make money on the card may have to wait. On a call Monday with reporters, the companies declined to detail the financial relationship, although both said they would profit from the card, Times reports. Bluebird also may represent a realization by Walmart that consumers aren't connecting with its MoneyCard, run by Green Dot. "This market is growing, and it's moving beyond just that chunk of people that we consider to be underbanked," David Robertson, publisher of The Nilson Report, told the Times. "It includes people who might be wanting to buy a prepaid card for other reasons, like budgeting purposes." Green Dot's stock declined roughly 20% on Monday, though Walmart executives said the retailer would continue to offer Green Dot's MoneyCard. Though Bluebird represents "a direct challenge" to U.S. banks, according to the FT, some bankers may not regret losing Walmart customers to Bluebird, as many have weak credit scores and average household incomes from $30,000 to $60,000 a year, according to the report. JPMorgan Chase said this year that four out of five customers who hold assets of less than $5,000 with it were unprofitable, the FT notes. Still, there are 10 million unbanked households in the U.S., according to the FDIC, the FT's "Lex" column reminds readers. Prepaid debit cards also have come under scrutiny from regulators, who are said to be tightening controls on them, the article recounts.
Wall Street Journal
Bankers and the Federal Reserve are clashing over stress tests even before the annual exams get going this fall, the Journal reports. Though bankers want more information about how the calculations are made, the Fed has resisted disclosing more than it has already. The article recounts reports that Fed supervisor Timothy Clark rankled some bankers last month when he told them at a conference in Boston they would not get additional information about the Fed's methodology. Bankers reportedly applauded Well Fargo treasurer Paul Ackerman after he told the same gathering he still doesn't understand why the Fed's estimates differ so significantly from Wells Fargo's, according to the Journal, which also notes that small banks will soon have to tussle with stress testing as well. One irritation for big banks is that the information requested by the Fed is changing. Banks now must submit data on a monthly and quarterly basis to the Fed, in addition to annually, the articles notes, along with more detail about individual loans.
If President Obama wins re-election, he will have done it without the help of some former friends on Wall Street. The Journal reports that executives and employees of Goldman Sachs have abandoned the president financially this year after being among his biggest contributors in 2008. More than a dozen past and former Goldman executives told the Journal they feel betrayed by the White House and Democratic lawmakers, although several Goldman executives declined to speak out publicly. Goldman employees are now the top sources of money to Republican presidential nominee Mitt Romney and the GOP.
New York Times
September's agreement by Bank of America to pay $2.43 billion to settle claims that the bank misled shareholders about its acquisition of Merrill Lunch marked the sixth time Max Berger has settled a securities class-action of more than $1 billion on behalf of investors. Berger's firm, Berstein Litowitz Berger & Grossman, has recovered more than $4.5 billion in cases connected to the mortgage meltdown. In the Bank of America settlement, Berger's firm and two others are expected to ask the court for an award of about $150 million, or 6% of the settlement, the article notes. "I can't predict the next scandal," Berger told the Times. "But I know that fraud is a growth industry, and so is greed."
Elsewhere ...
StarTribune (Minneapolis): The paper covers a local angle on the long-running force-placed insurance controversy. Thousands of Minnesota homeowners are being saddled financially with insurance imposed on them up mortgage lenders when property lacks coverage against floods, tornadoes and other hazards. The problem: Coverage, which lenders add to monthly mortgage payments, can cost ten times as much as typical homeowners insurance despite offering less protection - pushing homeowners close to default. "It's ridiculous," Jane Keeney, a St. Paul homeowner she was pushed into a forced-placed policy at an annual cost of $4,185, well above the $1,655 she used to pay State Farm after her homeowners policy lapsed, told the Strib. Mike Rothman, Minnesota's commerce commissioner, says he is alarmed by the findings and pledges to make forced-place insurance "a top priority." He'll be in good company among state officials across the country.
Correction
The email version of Friday's Scan gave the wrong former title for Ina Drew at JPMorgan. She was the chief investment officer, not the chief risk officer. The writer responsible for the error has been banished to a whaling vessel for the week.
