Wall Street Journal
A new wrinkle
Intercontinental Exchange, the owner of the New York Stock Exchange, plans to launch a futures contract that will pay out in cryptocurrency rather than cash. The contract, which is expected to receive regulatory approval soon, “is aimed at institutional players who have stayed out of cryptocurrency markets out of concerns that they are unregulated and susceptible to manipulation.” Existing bitcoin futures contracts pay out in dollars.
Let's try this again
Square, the financial technology company that applied for a banking license last year but later withdrew it, is trying again. The company, best known for its mobile phone credit card readers, will refile paperwork to open a wholly owned bank in Utah, which would mainly offer loans, deposit accounts and prepaid cards to small businesses. “Acquiring a banking license would allow Square to plug into the pipes of the financial system without having to go through banks and other intermediaries,” the paper says. “It would also send a signal that regulators are open to giving Silicon Valley firms access to privileges previously unavailable to them, such as deposit insurance.”
Danger
Cybersecurity and a “no deal” Brexit are the top potential risks to the global financial system, according to the Financial Stability Oversight Council’s annual assessment. They also cited “potential risks tied to nonfinancial corporate borrowing, including weak underwriting standards in markets such as leveraged loans.” Companies may not be able to avoid a “wave of defaults in the event of a recession or a similarly large shock to business earnings,” the FSOC said.
Safe at Home
Berkshire Hathaway, which last year agreed to buy a 38% stake in Canadian home loan lender Home Capital Group, is reducing its stake to less than 10% following a buyback offer. Berkshire agreed to a rescue package in June 2017 following allegations of mortgage application fraud, which sparked a deposit run at the lender. "We are delighted to see Home Capital back on its feet with healthy liquidity and a solid capital position," said Berkshire Chairman Warren Buffett. "Although we have decided to substantially exit from our investment, we will continue to cheer from the sidelines for our friends at Home."
Financial Times
The arrests begin
In the first arrests in the Danske Bank money laundering scandal, Estonian prosecutors detained 10 former employees of the Danish bank on Wednesday while threatening more arrests are likely. “There is reason to suspect that the detainees knowingly enabled bank clients to move funds suspected of being laundered,” the prosecutors said. The 10 people, all Estonians, were former client managers at the bank “whose job had been to prevent money laundering at the Danish lender’s local operations,” where most of the alleged money laundering is believed to have taken place.
A timeline of the Danske scandal is available here.
Washington Post
By any other name ...
In one of her first acts as the director of the Consumer Financial Protection Bureau, Kathy Kraninger has abandoned her predecessor’s effort to rename the agency the Bureau of Consumer Financial Protection. “After being fully briefed on the costs, operational challenges and the effect on stakeholders,” the bureau is keeping the CFPB moniker, she said in an email to bureau staffers. The proposed name change, the brainchild of former acting Director Mick Mulvaney proposal, was never popular, especially after it came to light that it would cost the agency, and the lenders it oversees, hundreds of millions of dollars.
“Abandoning the name change is actually a savvy move by Kraninger, one that quickly asserts her independence from Mulvaney and bodes well for her tenure overall,” American Banker editor-in-chief Rob Blackwell writes.
Quotable
“To be clear, I care much more about what we do than what we are called.” — CFPB director Kathy Kraninger in an email to bureau staff announcing her decision to drop the effort to change the agency’s name.
