Citi ready to turn the page; oversight for ICOs?

Receiving Wide Coverage ...
Moving forward: Citigroup said it hoped to return at least $60 billion to shareholders over the next three years while eventually earning more than $20 billion annually. "We're firmly on track to improve the return on, and the return of, capital," CEO Michael Corbat said at the bank's first investor day since 2008.

"The presentation marked an effort to open a new chapter for Citigroup following years of restructuring in the wake of the bank's near-death experience during the financial crisis," the Wall Street Journal commented. "Our restructuring is over," Corbat asserted. Wall Street Journal, Financial Times, American Banker

Sign outside a Citibank branch.
Citigroup Inc. signage is displayed outside a bank branch in San Francisco, California, U.S., on Friday, Jan. 13, 2017. Citibank Inc. is scheduled to release earnings figures on January 18. Photographer: David Paul Morris/Bloomberg

Not so fast: The Securities and Exchange Commission said companies that raise money by selling their own electronic tokens for cryptocurrencies such as bitcoin or (more typically) ether may be subject to federal oversight, including being required to get SEC approval. Initial coin offerings, as they have been dubbed, have become popular of late as a financing tool among startups, with more than $1 billion raised by more than 70 different companies. The prices of several digital currencies fell sharply on the news, with bitcoin falling 10% and ether down 12%.

Meanwhile, a brewing civil war among advocates of the leading digital currency has broken out into the open. A group of investors and entrepreneurs announced plans to create a bitcoin offshoot called Bitcoin Cash. "The plan would seal a divorce between opponents in a long-simmering feud over what bitcoin should be," the New York Times reported. "The bitcoin divide is part of a wider splintering of the world that has sprung up around virtual currencies."

Wall Street Journal
First in line: Varo Money is the first financial technology startup to apply for a national banking charter and deposit insurance after the Trump Administration last week endorsed the idea of granting such charters to fintech companies. Varo, which currently partners with banks to provide services for its mobile banking app, said it wants "to be a full-service bank," according to CEO and founder Colin Walsh, a former executive at Wells Fargo and American Express. The company is backed by private-equity firm Warburg Pincus. (Also: American Banker)

Overrule the rule: The Journal's editorial board supports Congressional efforts to kill the Consumer Financial Protection Bureau's new rule that would bar financial firms from requiring arbitration in customer disputes. The rule, it says, is a sop to trial lawyers and doesn't help consumers.

CFPB Director Richard Cordray "wants to build a nationwide plaintiff-lawyer fund-raising base for his Ohio campaign" to run for governor, it charges. "Republicans can strike a blow for the rule of law and against a major progressive cash source for Democrats with a single vote."

On Tuesday, the House voted 231 to 190 to pass a Congressional Review Act resolution to nullify the rule.

Big decision: President Donald Trump said he is considering renominating Janet Yellen as Federal Reserve chair but is also considering National Economic Council director Gary Cohn for the position. "He doesn't know this, but yes he is [a candidate]," the president said in an interview with the Journal. He said he has "a lot of respect" for Yellen, whose term as chair ends next year. Trump said he was also mulling "two or three" others.

New York Times
HUD scolded: The Department of Housing and Urban Development failed to follow the rules properly when it sold 108,000 distressed mortgages to private equity firms and hedge funds, the Office of Inspector General said. The agency said HUD failed to give the public a chance to comment on the program when it sold the loans over a seven-year period during the Obama administration.

The program "raised concerns that the sale of soured mortgages simply hastened the foreclosure process for tens of thousands of cash-strapped borrowers," the Times said. But the inspector general's report "may present a new legal avenue for some affected homeowners to try to stave off a pending foreclosure."

Quotable
"We haven't yet delivered the level of returns that you, our investors, both expect and deserve. We are now clearly on a path to both growth and stronger returns." — Citigroup CEO Michael Corbat.

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Earnings Digital currencies Fintech regulations Licenses and charters Citigroup SEC
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