Deutsche Bank settles with states; Banks' fleeting victory

Receiving Wide Coverage ...
Settled: Deutsche Bank agreed to pay $220 million to settle claims with 45 states that it manipulated Libor interest rates before the financial crisis. The settlement brings the German bank’s total of regulatory payouts for Libor-related misdeeds to about $3.7 billion. “This settlement resolves the bank’s final pending U.S. regulatory inquiry related to Libor,” Deutsche said in a statement. Wall Street Journal, Financial Times, American Banker

The bank reported Thursday morning that its third quarter profit more than doubled despite a sharp drop in trading and overall revenue. Wall Street Journal, Financial Times

Wall Street Journal
Ethics questions: The temporary status of acting Comptroller of the Currency Keith Noreika is “raising concerns from lawmakers” because it means he “isn’t subject to the ethics restrictions that would apply to his permanent successor” and “isn’t bound by the usual curbs on lobbying the agency he now leads, if he returns to the private sector,” the paper says.

Andrew Harrer/Bloomberg

Retrenching: LendingClub said it is shutting five of its investment funds and looking to sell off the assets in a sixth fund. One of the funds, totaling $318 million, “had been marked by accounting issues and sagging performance,” according to the paper. The online lender launched the funds in 2011 in order to give investors diverse exposure to the company’s loans but have suffered from “higher than expected defaults” and low returns.

Happy new year: Visa said net income grew 11% in its fiscal fourth quarter while net operating revenue rose 14% as payment volume climbed 10%. The payments company also forecast “robust” growth for its new fiscal year, which began October 1.

What is truth?: The digital currency market is about to get a lot more confusing, the paper reports. Several “imitators” to the original version of bitcoin have recently popped up each with “their own version of the truth.” But “a potentially even bigger disruption” is about to take place: “Bitcoin itself could split next month."

“If that were to happen, one version of bitcoin would be optimized more for payments, the other to be a store of value akin to gold,” the paper says. “Such a split would overshadow the other competitors, most of which have failed to gain much market share from bitcoin itself.”

New York Times
Pyrrhic victory?: The banking industry may have “scored a victory against disgruntled customers” in Tuesday’s Senate vote killing the Consumer Financial Protection Bureau’s rule prohibiting mandatory arbitration, but “their celebration could be short-lived,” the Breakingviews column warns.

“Clauses that keep customers out of the courts have caused reputational problems for Wall Street before, and will again,” the paper says. Equifax, for example, had to drop its arbitration clause following its data breach “after public pressure and threats from state attorneys general. And after Wells Fargo opened 3.5 million unauthorized accounts for customers, a bipartisan group of lawmakers slammed the bank for wanting to settle disputes through arbitration.”

The Senate vote, it adds, has “reignited” anti-bank sentiment among Democrats, while “bashing banks is also still in style among the populist base that elevated Donald J. Trump to the presidency. The shrinking political target on the backs of banks is set to grow again.”

Quotable
“The path of least resistance here is higher, in my opinion, regardless of what the underlying asset may be.” — J.C. Parets, founder of Eagle Bay Capital, on the future price of bitcoin.