Receiving Wide Coverage ...

Missing you: American Express reported lower first quarter earnings and revenue, mainly due to the loss of its business with Costco, but still beat Wall Street expectations as card member spending rose. The company's stock was higher in after-hours trading. Amex said global billed business, adjusted for currency fluctuations, was flat from a year ago, after two down quarters, but would have been up by 8% if not for the lost Costco volume. Wall Street Journal, Financial Times

Mea culpa: The Office of the Comptroller of the Currency said its supervisors missed or failed to address warning signs about Wells Fargo's sales incentive program, which incented thousands of the bank's employees to create millions of phony accounts without customers' permission. The report by the agency's ombudsman said bank examiners knew about potential improprieties as far back as 2010, when it met with a senior Wells executive, but "did not take timely and effective supervisory actions." the report said.

"The OCC report amounts to a detailed critique of failures at the agency, the primary regulator of Wells Fargo," the Wall Street Journal commented. Wall Street Journal, New York Times, American Banker

Sunny skies: Morgan Stanley's strong first quarter results, coming on the heels of similar results at most other banks with big trading operations, are "a timely reminder that capital returns matter most these days for bank stocks, and investors can probably look forward to seeing more," the Journal's Heard on the Street column says. "The bigger picture is that the largest banks in the U.S. now have safer business profiles than at any time in recent memory. That makes their big and growing piles of excess capital very trimmable. Returning more of this cash to shareholders would help boost returns on equity by shrinking dormant equity capital." Wall Street Journal, Financial Times

Wall Street Journal

For sale: Specialty lender Fifth Street Asset Management, which manages $4.7 billion in corporate loans and other investments, is exploring a sale "amid a deterioration in its loan portfolio and management turnover," the paper reports. The Greenwich, Conn., company explored a sale last year but failed to reach a deal.

Financial Times


Treasury Secretary Steve Mnuchin
Despite its "apparent edge" – i.e., having several former members, including Steve Mnuchin, in high positions in the Trump administration – Goldman Sachs reported disappointing first-quarter earnings. Bloomberg News

Snookered: Despite its "apparent edge" – i.e., having several former members in high positions in the Trump administration – Goldman Sachs was alone among America's top six banks to report disappointing first-quarter earnings. "Analysts and traders say the bank may well have made a big bet that went wrong during the first quarter: the assumption that Mr. Trump's talk of boosting growth would push up interest rates, and thus push down the price of trillions of dollars of corporate bonds."

Explosive: Atom, a branchless U.K. "challenger" bank backed by Spanish lender BBVA, pulled its 1.29% five-year fixed-rate mortgage after just a week due to "huge demand." The loan required a 40% down payment. "Borrowers may feel like they blinked and missed the lowest mortgage deal that the market has seen, but it shows that this type of offer will only have a very short shelf life," commented Charlotte Nelson of the Moneyfacts website.

New York Times

Unaddressed: After hearing arguments about a loophole in a federal debt collection law "that consumer groups say allows some debt collectors to engage in abusive tactics," the U.S. Supreme Court "did not seem inclined to fill the gap," the paper reports. The case dealt with the Fair Debt Collection Practices Act, which imposed strict rules on firms that collect on other companies' debts but didn't address lenders that collect their own debts. "The industry has evolved in a way that has raised these sorts of questions," Chief Justice John G. Roberts Jr. said. "This is not something that Congress was addressing."

Quotable ...

"The American economy is less productive and dynamic, Americans challenge fundamental ideas less, we move around less and change our lives less, and we are all the more determined to hold on to what we have, dig in, and hope (in vain) that, in this growing stagnation, nothing possibly can disturb our sense of calm." – Economist Tyler Cowen

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