Wall Street Journal

Through the side door: Hackers who have broken into the Swift bank messaging service have done so by penetrating "along Swift's less-defended perimeter," the paper reports. "While Swift diligently locked down that network's core, customers were left mostly responsible for their own security, creating an opportunity for hackers." In the most well-known incident, thieves stole $90 million from Bangladesh's central bank by "using malware to steal bank codes and place fake transfer orders."

"The attacks also have threatened the trust that banks have had for decades in Swift," the Journal commented, which it calls "the lifeblood of the global banking system."

The Journal includes a video: How safe is the Swift network?

Forget the past: American banks are hoping that the bill to replace the Dodd-Frank Act will include language that changes the way "operational risk" is measured. Banks argue operational risk forces them to hold more capital due to their "previous missteps" rather than unfavorable economic or market changes. Barclays estimates that the four biggest American banks alone hold $236 billion in capital due to operational risk. By freeing that up, banks could return more money to investors or make more loans.


JPMorgan Chase CEO Jamie Dimon. Bloomberg News

"If you are going to have operational risk capital, it should be forward looking, fairly calculated, coordinated with other capital rules and consistent with reality," JPMorgan Chase CEO Jamie Dimon argues.

Bypassing cards: India's crackdown on cash has pushed millions of its citizens, many of whom have never used a credit card, directly into using mobile payments, leapfrogging plastic. Although mobile payments still make up only a small percentage of overall transactions in India, the value of transactions has more than doubled since November, and their surging popularity could make cards and ATMs "redundant" by 2020, a government economic official predicts. "There are only 2.5 million card-scanning machines in the country, while 5 million merchants accept Paytm through their smartphones," the paper reports.

Fewer penalties: Regulatory technology firm Continuity's Banking Compliance Index says there were fewer regulatory changes and enforcement actions against American banks and credit unions in the first quarter than in any quarter since it began tracking this benchmark in 2013.

Financial Times

Growing card concerns: U.S. credit card bank analysts said recent earnings from Synchrony, Capital One and Discover have made clear that the "boom in consumer credit quality has come to an end," yet issuers are continuing to expand "despite the rising levels of soured loans." The three banks combined set aside $1 billion for bad loans in the first quarter, 36% more than in the same period last year.

Meanwhile, in the U.K., credit card issuers are facing a potential "ticking time bomb" over interest-free cards. "Lenders that offer zero per cent balance transfer cards book upfront some of the revenue that they expect to gain once a customer ends the interest-free period and starts paying a high rate," the paper explained. "But several bank chief executives and analysts have told the Financial Times that the practice is extremely risky as it is based on the assumption that customers will still have the debt on the card when the deal ends and start to pay a high interest rate." That could lead banks to overstate earnings that they will only have to restate later on.

New York Times

Whistle ignored: Michael J. Lutz, a former accounting specialist at Radian Group, the big mortgage insurance company, wonders why the Securities and Exchange Commission never pursued his whistleblower complaint against the company, and what he claims is its retaliation against him. "A big reason why people don't report these things is what happened to me," says Lutz, who believed the company was underestimating the amount it might have to pay in claims on subprime mortgages. "That's a big deterrent to people."

Quotable ...

"Every time issues like mine are not enforced, it reinforces the notion that these pieces of legislation are paper tigers and nothing is going to come of it anyway." – Former Radian Group accountant Michael J. Lutz on his experience with the whistleblower law

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