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Earnings: Morgan Stanley reported net income of $686 million for the fourth quarter, after a $1 billion income tax provision. Excluding that charge, profits were higher than the year earlier period and beat analysts’ estimates. Revenue rose to $9.5 billion from $9.02 billion.
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A tale of two banks: Despite a $2.9 billion tax-related charge, Bank of America reported its highest annual profit since before the financial crisis, and its shareholders “will be the biggest winners,” the Financial Times reports. “We expect most of the benefits from tax reform to flow to the bottom line through dividends and share buybacks,” chairman and CEO Brian Moynihan said. Wall Street Journal, Financial Times, American Banker
It was a different story at Goldman Sachs. Not only did the bank report a $1.93 billion loss, mainly due to a $4.4 billion tax charge, but its future doesn’t look as bright as it used to, the FT says. “Parts of Goldman are in decent shape,” including mergers and acquisitions, securities underwriting and lending. “But the core fixed-income, currency, and commodities (FICC) operation still looks rickety” after revenue dropped 50% compared to the year earlier period and the full-year total fell by 30%. Wall Street Journal here and here, Financial Times, New York Times
Adding insult to injury, federal prosecutors accused Goldman President and co-COO David Solomon's personal assistant of stealing more than $1.2 million of wine from his boss. The pilfered wine included some of the world’s rarest, a Goldman spokesman said. Wall Street Journal, New York Times
But, not all banks took a hit from tax reform. Some of them reported sizeable one-time gains and are debating what to do with the money.
Déjà vu: The Senate Banking Committee voted — for the second time — to approve Jerome Powell’s nomination of to be the next Federal Reserve chair. The committee approved Powell’s nomination last year, but since the full Senate never voted to confirm him, the panel had to do it again this session. The vote both times was 22 to 1, with Sen. Elizabeth Warren, D-Mass., the lone dissenter. No date has been set for the full Senate vote, where Powell is expected to get broad bipartisan support.
But President Trump has been slow to nominate candidates for the four open seats on the seven-member Fed board. “All of this means the balance of power at the Fed will rest heavily on the regional Fed presidents — people Trump did not appoint and has no control over,” the Washington Post says. “Regional Fed presidents have tended to be the more outspoken and contentious members of the Fed interest rate committee. They are the ones who typically vote ‘no’ if there are disagreements, and there will be five of them vs. three Fed governors.”
Look out below: Bitcoin prices plunged again on Wednesday, falling to under $10,000, “marking a stunning round-trip journey in which the cryptocurrency climbed more than 90% and fell more than 50% in less than two months,” the Journal says. “The selloff is one of the steepest in bitcoin’s nine-year history and provides a vivid illustration of the degree to which it remains a highly illiquid and volatile investment.” Wall Street Journal, Financial Times
Wall Street Journal
Leaving: Wells Fargo said its chief risk officer, Michael Loughlin, is retiring “as the bank continues to face heightened regulatory scrutiny, especially over its risk-management practices.” Loughlin has been with Wells or its predecessors for the past 36 years. The bank said it plans to name a successor in “the next few months” and that Loughlin will remain in his role, which he has held for the past 10 years, through the transition.
Charged: The U.S. Department of Justice filed criminal charges against Robert Bogucki, Barclays’ U.S. head of foreign exchange trading, for allegedly defrauding Hewlett-Packard by front-running a £6 billion options order ahead of the computer company’s 2011 takeover of its British rival Autonomy. Bogucki was charged with one count of conspiracy to commit wire fraud and six counts of wire fraud for allegedly trying to depress the value of HP’s options prior to its takeover bid.
“We have very fast-moving weather systems in the crypto world. One moment it’s absolute exuberance, and then it’s pure fear and panic, running for the exits.” — Charles Hayter, CEO of CryptoCompare, a cybercurrency research firm.