Receiving Wide Coverage ...
Bank Payday Loan Update: Regulators officially unveiled on Thursday their expected guidance on the payday-style loans or checking account advances offered by a few financial institutions. The guidance, which calls for more underwriting and stringent cooling-off periods between loans, was issued along with "a scathing assessment of the loans" from the OCC, which "warned banks that the loans could pose 'reputational risk,'" reports Dealbook. But proponents of bank payday-style products have argued they prevent needy customers from seeking out loans from less reputable and decidedly unregulated businesses. And a report, profiled today by the Washington Post, finds there is consumer demand for these short-term loans with nearly one in four Americans having used a payday product. "The rise of this kind of borrowing … reflects the needs of a population struggling to make ends meet," the Post notes. Meanwhile, this op-ed in the FT urges more British banks to challenge the burgeoning payday business by offering alternative short-term credit. "The banks have steered clear of high-interest microloans — they fear reputational damage — but I would welcome a responsible high-street challenger to the payday lending market," the author writes. But are there any suitable alternatives?
Trading Glitch: Computer problems caused trading on the Chicago Board Options Exchange to be delayed several hours on Thursday. The outage is likely to "increase concerns about the stability of the complex computer networks on which financial markets rely," notes the Journal. The glitch "stoked fear again among regulators and reignited concerns about the market's vulnerability to broader shocks," echoes Dealbook. High frequency trading malfunctions have been making news headlines this year. Just this week, a fake tweet from a hacked Twitter account caused the Dow Jones Industrial Average to fall "roughly 145 points" and then there was that time back in August where a rogue computer program forced trading firm Knight Capital to scramble for new financing.
Resigned: U.K. bailout Chief Jim O'Neil resigned on Thursday after, per the FT, having run "out of patience to see the job through." O'Neil plans to return to work for former employer Bank of America Merrill Lynch in the fall. His successor has yet to be named, notes Dealbook. Another FT article calls O'Neil's departure "an unwelcome reminder of the U.K.'s tardiness in returning to private sector hands the banks it bailed out" during the financial crisis.
Wall Street Journal
U.S. companies are pulling back on borrowing. Execs attribute the squeeze to "uncertainty about rising health care costs, fear of another economic downturn and a brutal winter in the Midwest." The lack of demand could be hard on banks and bad for the U.S. economy.
Financial Times
U.S. regulators are pushing for a quick replacement for Libor. "Although other officials are moving in the same direction, there has not been the same need for speed felt across the globe," the article notes.
JPMorgan Chase and other U.S. banks are backing their European counterparts in opposing the Federal Reserve's plan that would require foreign lenders to hold more capital in the U.S.
New York Times
A Dealbook article, weighing the pros and cons of the Brown-Vitter bill, offers this praise to the bill's authors: "Think of the senators as punk rockers reacting against the sophisticated progressive-rock scene of the 1970s. Sick of an ornate status quo, they have come out swinging with an uncluttered approach that many will find invigorating."
Commerzbank must pay out $68 million in bankers' bonuses after failing to win the overturn of a previous court ruling in London.
The New York Attorney General's office won't seek cash damages or contest "a $115 million settlement of a separate class-action lawsuit" in order to expedite a civil fraud case against former AIG chief executive Maurice Greenberg. The office plans to seek punishments against Greenberg that include "a ban from the securities industry and a ban on serving as a director or officer of a publicly traded company."
Elsewhere ...
Employment numbers at firms insured by the FDIC illustrate the fall, rise and recent stagnation of hiring at U.S. banks since the financial crisis. "Some observers wonder if the turnaround in banking jobs that seemed imminent in 2010 and 2011 is now off the table," this AP article notes.
