Receiving Wide Coverage ...
Line forms to the right: More than 100 lawsuits have been filed against Equifax since it disclosed its massive data breach last Friday. The company “could face a tougher challenge in court than other corporate giants that have dealt with the legal fallout of data breaches,” legal experts told the Wall Street Journal.
So far, though, the cost of the hack has been borne mostly by consumers, whose personal credit information has been exposed to criminals, and investors, who have seen their holdings drop more than 20% in value since the breach was announced, observes New York Times financial columnist Gretchen Morgenson. “It remains unclear, though, whether the company’s executives will take a financial hit,” she writes, “Indeed, Equifax’s top managers may not feel any financial ill effects, given the company’s past compensation practices.”
To protect themselves, many worried consumers have chosen to have their credit frozen, which means lenders can’t access a potential borrower’s credit report. “That could have a host of implications for both consumers and the financial industry,” the Journal reports, including changing consumer behavior, “the flow of consumer credit and, in extreme cases, the long-term rate of growth for consumer financing.”
Meanwhile, Congress wants to know what’s going on at other credit bureaus.
Equifax said hackers got into the company’s computers by exploiting a vulnerability with a website application called Apache Struts CVE-2017-5638.
What goes up…: The price of bitcoin fell for a sixth straight day Wednesday following China’s ban on domestic trading of the digital currency and is now down 25% since hitting a record high on September 2. A day after JPMorgan Chase CEO Jamie Dimon called bitcoin “stupid” and “a fraud,” economist Mohamed El-Erian said, “I think the price is going to blow up.”
Meanwhile, Japan is examining how to regulate the trading of virtual currencies, the Nikkei Asian Review reports. But rather than imposing an outright ban, as in China, Japanese authorities are “mindful of the need to implement tighter regulation while leaving enough breathing room for continued growth of the rapidly evolving market.”
Wall Street Journal
Zero-sum game: Goldman Sachs announced big plans on Tuesday to boost revenue by $5 billion over the next three years, including by increasing its trading activities. Unfortunately for the bank, “rivals like JPMorgan Chase, Citigroup and Bank of America are hardly eager to give this business up,” the paper says. European banks are also jumping back in the game. At the same time, “the pie of available trading business isn’t growing, making this a true zero-sum game among banks.”
Booming market: The “stars are aligning” for the Chinese credit card industry, the paper reports. “Banks want to hand more of them out, while consumer confidence is off the charts. Beijing, meanwhile, is eager to shift more of China’s monumental debt pile onto households — which traditionally have high savings — and away from the highly indebted corporate sector.” Credit card loans jumped 31% at the end of the second quarter to 4.69 trillion yuan ($718 billion).
Quotable
“I couldn’t take out the garbage without someone asking me to represent them in this case.” — Marc Dann, an Ohio class action lawyer whose firm has filed lawsuits against Equifax in at least seven states.
