Wall Street Journal Leapfrog: Morgan Stanley has moved ahead of its "more freewheeling" rival Goldman Sachs in terms of market value. Following Monday's market close, Morgan Stanley's implied market cap hit $86.40 billion, compared to Goldman's $85.88 billion. Back in 2009, Goldman was worth as much as $53 billion more than Morgan Stanley, according to FactSet.
Piece of the action: Corporate customers are demanding more interest on their bank deposits, and banks are responding — grudgingly. "Companies have greater leverage with banks since in many cases they also bring in lucrative investment banking and trading business," the Journal reports. But "the pressure from corporate depositors is pushing up banks' costs just as they are beginning to benefit" from higher rates.
Sacred cow skewered: Despite the general perception, the mortgage interest deduction doesn't promote homeownership, a newly released academic paper argues. "Over multiple time periods, and considering multiple empirical strategies, we find no effect of the tax policy change on whether households own or rent," said the paper, which was written by Jonathan Gruber of the Massachusetts Institute of Technology and two other academics. While the paper looked at data from Denmark in the 1980s, the authors said their findings confirm what many economists already believe about the U.S. deduction.
"I really view this as putting a nail in the coffin of the idea that this tax break affects homeownership," Gruber told the Journal.
Refuel, remit: Under a new partnership, customers at BP gas stations in Australia will be able to transfer money overseas through Western Union. While customers can already use Western Union's mobile app to send money using a credit card, "customers will now be able to set up a transaction using the app and then pay in cash at the gas stations," the Journal said.
Financial Times Welcome back: Citigroup is holding its first investor day since the financial crisis later this week. Executives are expected to tout the bank's U.S. credit card business and its Mexico operations as reasons for optimism in the face of repeated underperformance against its American peer group.
"For essentially all of the past 10 years Citi has struggled in what we might call the intensive care unit of investor relations," analysts at Oppenheimer said. "We expect the event to help rehabilitate investors' image of Citi."
Citigroup Inc. signage is seen through the window of a bank branch in New York, U.S., on Wednesday, Oct. 12, 2016. Citigroup Inc. is scheduled to release earnings figures on October 14. Photographer: Mark Kauzlarich/Bloomberg
Mark Kauzlarich/Bloomberg
Shrinking spreads: The yield premium American banks pay to borrow has fallen to its lowest level since the financial crisis, the FT reports. Yields on bank debt fell to under 100 basis points over comparable U.S. Treasury securities, the lowest level in a decade, according to Bank of America Merrill Lynch. The lower yield spread illustrates "the appetite for [bank] debt as trillions of dollars of global bonds trade with a yield below zero," the FT said.
Good read: Huw van Steenis, the global head of strategy at Schroders, says U.S. Treasury Secretary Steven Mnuchin's recent review of bank regulation "is essential reading for every European central banker and any policymaker who cares about the competitiveness of Europe."
"Even the toughest bank critics admit privately they have been impressed with the report's thoughtfulness and measured tone," van Steenis writes in an op-ed piece. "The report does not look to roll back the progress made since the financial crisis. Rather, it lays out a range of small, practical steps to help post-crisis rules work in practice without endangering the safety of the system."
New York Times What's the real story?: (We missed this one from Sunday) Senior U.S. Treasury officials knew that Fannie Mae and Freddie Mac were about to become profitable again as early as December 2011, eight months before the government changed the terms of their bailout and began seizing all of their profits, according to newly unsealed documents. That contradicts statements from government officials and Justice Department lawyers, who claimed that the companies were in a "death spiral" and that the move was necessary to protect taxpayers from future losses.
Quotable "Banks have lowered their risk taking and raised the amount of capital they have. They have accumulated a lot of capital at the behest of regulators and the quality of capital is near all-time highs." — Ashish Shah, head of fixed income at AllianceBernstein.
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.
