Receiving Wide Coverage ...
Good times: Barclays swung back into the black last year, recording a net profit of £1.6 billion versus a £394 million loss in 2015, ending a two-year streak of red ink. The British bank was helped by a sharp drop in conduct and litigation charges and higher investment banking revenues. CEO Jes Staley said the bank was close to completing a big restructuring, including shutting down the unit that holds its unwanted assets, and will soon end a hiring freeze. It now plans to focus on overhauling its technology operations to reduced expenses and improve customer service. Wall Street Journal, Financial Times
Wall Street Journal
AML woes: Capital One disclosed Thursday (or, perhaps, reiterated) that it is under investigation by the New York District Attorney's Office, the U.S. Justice Department and the Treasury Department's Financial Crimes Enforcement Network over deficiencies in its anti-money-laundering program. The disclosure was included in the bank's annual securities filing. The bank has been the subject of an open consent order since July 2015 with the Office of the Comptroller of the Currency over its AML program, and last November it said it had received subpoenas and requests for testimony from the New York District Attorney's Office. The Journal notes that the Thursday filing introduced the word "investigation," but a bank spokesman told the paper (and, after this Morning Scan was published, us) that it simply used "different words to describe the same situation."
Blockchain in the wings: Corporate loan traders reduced the average time it takes to settle trades by more than 20% over the past six months without a major technological disruption to the business. The reason? Apparently the impending use of blockchain technology, which promises to speed up the manual process of settling trades, persuaded traders to speed up the process or risk losing money.
But "the victory may be pyrrhic," the paper said. "The improvement hasn't gotten settlement times as low as they theoretically could be. Instead, it was just enough of a gain to beat back the promise of an emerging technology," meaning blockchain.
Go long, but not yet: Treasury Secretary Steven Mnuchin said the government would investigate selling ultra-long bonds, although the bond market greeted the comment with a big yawn. In an interview with CNBC Thursday Mnuchin said that "whether we can raise 50-year or 100-year money at a very slight premium, that's something that makes sense for Treasury to look at." The yield on the 30-year Treasury bond, currently the longest maturity, rose slightly after the remark but then settled down after that. "The subdued reaction to the comments suggests many investors don't expect ultra-long-bond issuance any time soon," the Journal said.
Backlash: Readers take former Federal Reserve Vice Chairman Alan Blinder to task over his recent WSJ op-ed, in which he criticized Gary Cohn, director of the National Economic Council, for being too soft on bank regulation. "Mr. Blinder's specific claims about modestly increased bank compliance costs are absurd on their face," writes Roger Larson of Greenville, S.C., adding, Blinder "knows full well that total bank costs related to regulatory compliance far exceed the compliance line item on bank income statements." Chelsea Prim of Shawnee, Kan., accuses Blinder of having "unwarranted confidence in Dodd-Frank," noting that "all 2,300 regulatory pages of Dodd-Frank [were] directed solely at [banks] and zero pages at the other perpetrators" of the subprime crisis.
Well recuse me: Speaking of Gary Cohn, the White House told the FT the former Goldman Sachs executive will recuse himself from any matters involving his former employer. The FT said it learned that as recently as a year ago Cohn, then Goldman's president, was leading the bank's lobbying at the Commodity Futures Trading Commission. In response, the White House told the paper: "Consistent with the stringent ethics rules established by the Trump administration, Mr. Cohn will recuse himself from participating in any matter directly involving his former employer, Goldman Sachs. He will also recuse himself from any matter or potential rulemaking before the CFTC in which Goldman Sachs has participated."
Seeking relief: The Independent Community Bankers of America is pushing for what it calls a "plan for prosperity" that would help small banks that are "crying out for relief" from federal banking rules they say unfairly apply to them even though they had little to do with the financial crisis.
Risky business: Former Barclays CEO Bob Diamond is buying the Greek consumer finance unit of France's Crédit Agricole. "The deal gives Diamond a relatively small vehicle with a banking license in Greece that will allow him to acquire some of the vast pile of bad debts that the country's banks are expected to sell in the next few years," the paper reported.
"We are now just months away from completing the restructuring of Barclays, and I am more optimistic than ever for our prospects in 2017 and beyond." — Jes Staley, Barclays CEO
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Updated February 24, 2017 at 12:31PM: Updated to incorporate a comment from Capital One.
Corrected February 24, 2017 at 1:46PM: An earlier version of this post misidentified the government agency that subpoenaed Capital One. It was the New York District Attorney's Office, not the SEC.