Banks consider spurning Equifax; Jamie hates bitcoin

Receiving Wide Coverage ...
Equifax fallout continues: Banks are considering shifting some of their business away from Equifax to competing credit bureaus in the wake of the company’s massive data breach. “Lenders are unlikely to take any immediate action and are seeking more information from Equifax,” the Wall Street Journal reports. “Still, large banks, in particular, have expressed dismay privately that their customers’ information was compromised, that they received no advance warning of the breach announcement and that they still have little insight into what went wrong.”

Wealthy consumers are particularly at risk for having their personal information used by identity thieves, the Journal says. “Would-be criminals could … target those who may have bigger bank accounts, larger lines of credit and more assets,” or by the zip code where they live.

Sen. Heidi Heitkamp, D-N.D., a member of the Senate Banking Committee, called for a criminal investigation into the sale of Equifax stock by some company executives before the data breach was made public. “If that happened, somebody needs to go to jail,” she said. “How is that not insider trading?”

Andrew Harrer/Bloomberg

Equifax said it would waive all fees for the next 30 days for consumer who want to freeze their credit files, reversing an earlier decision that said customers would be charged for the privilege.

Bad moon rising: Several more big banks said they expect trading revenue to be down sharply again in the third quarter. JPMorgan Chase CEO Jamie Dimon said he expects trading revenue to be down about 20%, while executives at Bank of America and Citigroup expect declines of about 15%. Goldman Sachs didn’t put a number on it but co-COO Harvey Schwartz said “the market environment in the third quarter feels like the first and second quarter,” when the bank had its worst first half on record.

Nevertheless, Schwartz outlined a bold program in which the bank plans to increase revenue by $5 billion over the next three years, bringing it back to where it was before the financial crisis. Most of the additional revenue, about $2 billion, would come from financing and lending, including expanding Marcus, its new consumer lending business. Schwartz said the efforts “aren’t hypothetical; they are already under way,” adding that Goldman is “completely obsessed” with improving its returns.

One example: Goldman is providing £100 million of debt and equity financing to Neyber, a British fintech start-up founded by two former Goldman investment bankers that partners with companies to offer their employees consumer loans at lower rates. It’s Goldman’s first investment in the U.K. consumer lending market. Wall Street Journal here and here, Financial Times

SoFi doubts: Mike Cagney’s decision to resign as CEO and chairman of Social Finance, the company he co-founded, in the wake of sexual harassment and other allegations, “casts uncertainty over the financial-technology upstart’s business prospects, its attempt to open a bank in Utah and plans for an eventual public offering,” the Journal said. Wall Street Journal, Financial Times, American Banker

Wall Street Journal
No thanks, Warren: Shareholders in Home Capital Group, the troubled Canadian mortgage lender, firmly rejected a plan for Berkshire Hathaway to increase its stake in the company. At a special meeting on Tuesday, investors holding nearly 90% of the company’s shares voted against the plan, in which Berkshire would have increased its stake to more than 38%.

“This decision is a clear message that the majority of our shareholders believe that Home Capital’s improved deposit inflows and liquidity position diminish the need for additional capital,” said Brenda Eprile, Home Capital’s board chairman.

Financial Times
You’ve been warned: The U.K.’s Financial Conduct Authority issued a warning about the “high risk, speculative” nature of initial coin offerings, joining a growing chorus of national financial regulators, including in the U.S. and China, to sound the alarm.

Quotable
“If we had a trader who traded bitcoin I’d fire him in a second for two reasons. One, it’s against our rules. Two, it’s stupid. You can’t have a business where people are going to invent a currency out of thin air. It won’t end well. Someone is going to get killed and then the government is going to come down on it. It’s a fraud and honestly I’m just shocked anyone can’t see it for what it is. [It’s] worse than tulip bulbs.” — JPMorgan Chase CEO Jamie Dimon