Chase check fraud, Truist woes: Top banking news September 2024

September 30, 2024 2:51 PM

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In September's roundup of top banking news: Check fraud goes viral at JPMorgan Chase, Truist Financial resets its tangible common equity target, Wells Fargo faces new AML woes and more.

Click here to read last month's roundup of banking news.

TikTok users react to a trend that spun up on the platform earlier this month, with users claiming they got free money from Chase by depositing bad checks and withdrawing the money before the check bounced.

Check fraud against Chase goes viral on TikTok

Article by Carter Pape

A form of check fraud known as check-kiting went viral on TikTok this month, with JPMorgan Chase customers recording themselves writing a bad check, depositing it at an ATM, then withdrawing cash before the bank could bounce the check.

The scheme was portrayed as a glitch rather than a crime, creating the misunderstanding through seconds-long video clips that customers engaging in the practice would get to keep the money. Other videos showed lines at Chase ATMs of people supposedly looking to try the viral trend themselves.

"Let's go to the ATM, let's go to the ATM, let's go to the ATM," one person said to his friend in a TikTok video reacting to the trend.

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ABC News Hosts Second Presidential Debate

Hannah Beier/Bloomberg

What bankers need to know about Trump's World Liberty Financial

Article by Carter Pape

In a video posted on X on Sept. 12, former President Donald Trump previewed a new crypto company he's launching with his sons, Eric Trump and Donald Trump Jr. Eighteen-year-old Barron Trump is reportedly the project's "DeFi visionary."

"We're embracing the future with crypto and leaving the slow and outdated big banks behind," Trump said in the short video about the company, World Liberty Financial.

Trump has pledged during his presidential campaign to turn the U.S. into the "crypto capital of the planet," as he put it in an August video about World Liberty Financial. In combination with the imminent launch of his own crypto venture, the comments raise concerns that, if elected, he might use the federal government to help support a business tied to himself and his family.

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First Republic Bank - Silicon Valley Bank - Signature Bank

Bloomberg

Banks most at risk of failing share these three red flags

Article by Allissa Kline

Bank failures are remarkably predictable, and the banks that have collapsed historically — including those that failed during the latter part of the 19th century — typically show the same warning signs, according to a new academic paper.

Failures are overwhelmingly the result of three factors: deteriorating solvency over several years, increasing reliance on costly noncore funding and rapid growth during the decade before the failure, co-authors Sergio Correia, Stephan Luck and Emil Verner state in the study, published by the National Bureau of Economic Research.

Correia and Luck are economists at the Federal Reserve Board and the Federal Reserve Bank of New York, respectively. Verner is an associate professor of finance at the Massachusetts Institute of Technology's Sloan School of Management and a faculty research fellow at NBER.

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A non-alarmist guide to the risks in commercial real estate

Article by Catherine Leffert and Polo Rocha

Roll the dice. Buy a property. Collect rent. Pass Go.

The rules of Monopoly are much like the rules of commercial real estate — which will either fatally wound dozens of banks across the country or merely muddle their balance sheets for years, depending on who you believe.

After three large regional banks collapsed last spring, the industry has been moving around and around the board.

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NBT Bancorp in New York said earlier this month that it struck an all-stock deal to acquire Evans Bancorp. The deal would help it expand in Buffalo.

NBT to keep Evans branch offices after $236 million merger

Article by Jim Dobbs

NBT Bancorp in Norwich, New York, said its all-stock deal to acquire Evans Bancorp in Williamsville, New York, would give it toeholds in key markets.

The $236 million transaction, slated to close in the second quarter of 2025, would deepen the $13.5 billion-asset NBT's presence in upstate New York and help fill in a footprint that spans the Empire State to the northern reaches of New England.

The $2.3 billion-asset Evans has 18 branches and serves consumer, business and municipal customers in a region that ranges from Buffalo to Rochester.

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Inside the chamber of a quantum computer from Quantinuum.

Quantum leap: JPMorgan Chase, Wells Fargo push past laggard banks

Article by Penny Crosman

Quantum computing may not yet be dinner table conversation at the average American home, and it's not quite ready for prime time — McKinsey analysts have estimated that 5,000 quantum computers will be operational by 2030 — but it's getting faster and closer to practical use.

JPMorgan Chase, Wells Fargo, Citigroup and HSBC are among the banks testing quantum computing's ability to speed up applications, to alleviate bottlenecks, to protect digital assets and to use high-performance computing without ramping up energy consumption. They believe this will give them a competitive advantage when the technology is available for everyday use.

"I think this is a crucial time," said Marco Pistoia, head of global technology applied research at JPMorgan Chase. "It's critical at this point to invest in building a quantum team. Quantum computing is still in the R&D phase, as quantum computers are not yet powerful enough to be usable in production. However, it's important to become quantum-ready now."

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Wells Fargo Bank Branches Ahead Of Earnings Figures

Michael Nagle/Bloomberg

Wells Fargo gets hit with new AML enforcement action

Article by Polo Rocha

For the second time in recent years, Wells Fargo is in hot water over its efforts to prevent money laundering, with its main federal regulator imposing the latest penalty on Sept. 12.

The Office of the Comptroller of the Currency flagged "deficiencies" at the megabank in an enforcement action released this month. The action is a major setback for Wells, which was freed from a separate anti-money-laundering order with the OCC in 2021.

The bank's stock plunged by about 4% on the afternoon of Sept. 12 following the news. Investors have been hoping that Wells CEO Charlie Scharf, who joined the bank in late 2019, will finally be able to rid the San Francisco company of its numerous regulatory troubles.

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Michael Barr, vice chair for supervision of the Federal Reserve.

Al Drago/Bloomberg

Capital One-Discover emerging as key proof point of Fed merger policy

Article by Kyle Campbell

The Federal Reserve appeared to stand alone by opting not to take up merger review reform this year, but just how much daylight exists between the central bank and its regulatory counterparts could soon be made clear.

This month, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Department of Justice updated their policies for evaluating proposed bank combinations, leaving the Fed as the odd agency out in retaining its longstanding framework.

Legal and policy experts say the pending $35 billion combination of Capital One and Discover Financial Services could demonstrate how the Fed is thinking about mergers in light of reforms at the FDIC, OCC and DOJ. Even if the Fed reaches the same conclusion as the other reviewing agencies, how it gets there could be telling.

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Truist Financial Ahead Of Earnings Figures

Logan Cyrus/Bloomberg

Truist hits reset button after falling short on key profit metric

Article by Allissa Kline

Truist Financial has reset its outlook for a key profitability metric, seemingly acknowledging that some of the expected benefits from the merger that formed the company have not materialized.

Nearly two months after signaling that a revision was coming — and a year after launching an organizational overhaul — the superregional bank said it is now aiming to achieve a return on tangible common equity in the mid-teens over approximately the next three years.

The latest guidance compares with a low-20s percentage return on tangible common equity target that Truist had been trying to reach since the 2019 merger of BB&T and Suntrust Banks, which resulted in the $527 billion-asset Truist.

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Adobe Stock

Texas Capital cuts staff, sells securities in push to meet 2025 goals

Article by Allissa Kline and Catherine Leffert

Texas Capital Bancshares has recently laid off some of its workforce and restructured its balance sheet as part of a push to meet profitability targets it set for itself three years ago.

The Dallas company, which has been in transformation mode since the fall of 2021, also plans to acquire a $400 million loan portfolio in the health care sector. The company did not disclose a purchase price, but it said the seller is a large regional bank.

Some of the details were announced on Sept. 6 in a "strategic business update," the firm's first such disclosure since it rolled out a massive overhaul plan three years ago that week. The update also said that Texas Capital has launched an energy-sector research and equity sales team, and stated that the firm expects to be a top-five Small Business Administration lender by 2025.

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