Amex sweetens pot for merchants; Trump, Powell meeting raises questions

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Rare meeting

Federal Reserve Chair Jerome Powell met with President Trump and Treasury Secretary Steven Mnuchin at the White House, in the residence, on Monday for about 30 minutes “to discuss an economy hindered by faltering global growth prospects,” as the Wall Street Journal described it. Although Trump said they discussed “everything … including interest rates, negative interest, low inflation” and other subjects, the Fed said Powell “didn’t discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.”

“Chair Powell's comments were consistent with his remarks at his congressional hearings last week,” the Fed said in a statement, according to the Financial Times.

“The meeting, which the Fed said Mr. Trump had requested, was the first between Mr. Powell and the president since February,” the New York Times reports. “In the intervening months, Mr. Trump has regularly taken to Twitter or television to criticize central bankers for keeping interest rates too high, often comparing United States monetary policy unfavorably to the negative rates that prevail in Europe.”

“The president’s statement appears to contradict the Fed’s, which goes out of its way to say that Powell did not talk about whether the Fed is likely to raise or lower the benchmark interest rate in the future,” the Washington Post comments.

Wall Street Journal

Incentives

American Express is paying sign-on bonuses ranging from “under $10,000 to about $450,000” to get businesses to accept its cards “in a bid to catch up to rivals Visa and Mastercard,” the paper reports. Since 2016, when AmEx said it would close the gap with those companies by the end of this year, “annual dollar targets for its internal salespeople signing up new merchants have increased at a double-digit pace, according to current and former employees. In some cases, the salespeople are dangling hefty payments with few, if any, conditions and discounted swipe fees to even tiny businesses.”

“AmEx Chief Executive Stephen Squeri has said the company is on track to meet its goal, but the payments show it hasn’t been an easy sell. Sign-on bonuses with no strings attached are nearly unheard of in the credit-card business," the paper says.

AmEx’s global merchant and network services chief Anré Williams is quoted as saying the company “made a business decision to provide targeted sign-on incentives to strategic, priority holdout merchants, which comprise a tiny fraction of a percent of the merchants we acquire in a year.”

Upping its game

TD Ameritrade has launched an artificial intelligence-powered tool “that sends investors personalized emails, including tailored educational resources, based on their clicks on the TD Ameritrade website, their customer profile and their investor portfolio. Before, investors would get generic marketing emails that would often be unrelated to their particular investment strategy.”

Financial Times

The cost of saving

Nearly 60% of German banks are passing along negative interest rates to their corporate clients and more than 20% are charging retail customers for deposits, according to a survey by the Bundesbank, Germany’s central bank. The survey results published Monday are “one of the clearest indications of how many lenders are charging customers to deposit money since the European Central Bank cut interest rates deeper into negative territory in mid-September.”

“While most of the lenders are passing on negative rates only to institutions, companies or individuals with large deposits, the practice has proved particularly controversial in Germany, where the ECB has been attacked for penalizing prudent savers.”

What were they thinking?

The board of directors at U.K. bank TSB failed to show “common sense” prior to last year’s “doomed upgrade” of its IT systems, in which two million customers were locked out of their accounts, according to an independent investigation of the incident that will be published Tuesday. “While the TSB board asked a number of pertinent questions, there were certain additional common sense challenges which [they] did not put to the executive,” according to one person who saw a summary of the report.

“The meltdown at TSB, which is owned by Spain’s Banco Sabadell, was one of the worst in U.K. banking history and highlighted the difficulties of implementing IT projects for banks, which tend to be run using a patchwork of arcane computer infrastructure.”

“TSB was attempting to pull off one of the most ambitious IT upgrades in British banking history, moving all its customer data from an old platform managed by Lloyds Bank — the bank from which it was spun out in 2013 — to one created by its new owner. The ensuing disaster prompted a wave of criticism from customers and MPs, and is also being investigated by the Financial Conduct Authority and Bank of England.”

Quotable

“Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.” — President Trump, describing on Twitter his meeting with Fed Chair Jerome Powell on Monday

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