Acting comptroller warns on masks; stimulus debit cards cause confusion
Wall Street Journal
Positive on negative?
"The economic fallout from the coronavirus pandemic is whittling away the Bank of England’s long-held aversion to subzero rates, in the latest example of how the scale of the Covid-19 crisis is pushing central banks and governments deep into new policy territory."
Join the crowd
Credit Suisse “has taken a majority stake in its Chinese securities joint venture, [joining] a handful of other financial institutions taking advantage of an expedited opening of China’s financial markets, after years of slow, frustrating developments.” The Swiss bank said Monday “that it had increased its shareholding in Credit Suisse Founder Securities from 33.3% to 51% after receiving regulatory approval in April. The bank is injecting capital into CSFS, diluting Founder Securities’ stake.”
“Under pressure from the U.S. to allow more foreign participation in domestic investment banking, asset management and insurance, China’s regulators have sped up reforms over the past two and a half years. Since then, UBS, Nomura, JPMorgan Chase, Goldman Sachs and Morgan Stanley have secured majority stakes in Chinese securities joint ventures, or the regulatory permission to do so.”
Turn them over
A British High Court judge ordered Barclays “to disclose more than 1,000 documents to Amanda Staveley’s PCP Capital Partners ahead of a high-profile £1.5 billion civil trial next week over the bank’s 2008 emergency fundraising. The documents include transcripts of interviews of ex-Barclays staff conducted by the Serious Fraud Office as well as legal advice given by the bank’s external and internal lawyers on the advisory services agreements (ASAs) it struck with Qatar in 2008.”
“The lawsuit revolves around the bank’s October 2008 fundraising where Barclays raised money from Qatar and Abu Dhabi as an alternative to seeking a U.K. government bailout. Ms. Staveley arranged the Abu Dhabi investment in October 2008 but claims she would not have done so had she known about the ASAs struck with Qatar, plus a $3 billion loan to Qatar’s ministry of economy and finance made as the fundraising was closing. Barclays denies wrongdoing.”
New York Times
Acting comptroller of the currency Brian P. Brooks “is not letting his first full week on the job pass quietly, warning that measures meant to contain the spread of the coronavirus — including mandates for the use of masks in public — could endanger the financial system. Mr. Brooks, a former banker, sent letters to the country’s mayors and governors about the negative effects of restrictions on public activity. Among them, he said: Face masks could lead to more bank robberies.”
“Citing reports that some places would consider shutting off utility services to businesses that violate lockdown orders, the letter warned that cutting off water and electricity could hurt the value of the properties those businesses occupied. That, in turn, could hurt the banks that held mortgages on them. Mr. Brooks also warned that forcing small businesses to stay closed could harm them financially — perhaps making them unable to pay back their loans. That, too, could harm the banks.”
“Finally,” Mr. Brooks wrote, “lengthy and potentially permanent requirements that individuals wear face masks in many or even all public spaces create the very real risk of increases in bank robberies. Broadly applicable face mask requirements are not safe or sustainable on a permanent basis.”
“Brooks was the first federal bank regulator to wade into the debate over the pace of reopening that has largely pitted business advocates against public health experts,” American Banker’s Brendan Pedersen reports.
Many Americans are receiving prepaid debit cards instead of a U.S. Treasury stimulus check, but some recipients “thought the cards were junk mail or scams,” the Post says. “The cards, issued by the Treasury’s financial agent, MetaBank, were sent to four million Americans in an effort to speed up the process of getting out the payments. The delivery caught a lot of people by surprise, resulting in skepticism about the legitimacy of the payment.”
“The prepaid debit cards can be used to make purchases online and at any retail location where Visa is accepted. Recipients can also receive cash from ATMs and transfer funds to their personal bank accounts. But many people are discovering that there are limits on how much money they can access at one time. Many seniors reached out concerned that they would have to make multiple trips to an ATM to get the cash from the card.”