FBI, OCC probe Amex; Former research chief sues New York Fed

Register now

Receiving Wide Coverage ...

Burning down the house: As part of its 10-year lookback at the causes of the global financial crisis, the Financial Times examines how an ordinary American house became “part of the financial machine created on Wall Street that wrecked the American dream for millions of people and nearly brought down the international economy.”

Here’s Warren Buffett’s take on the 2008 crisis and the lessons that should have been learned.

Wall Street Journal

Bait and switch: The FBI and the Office of the Comptroller of the Currency are looking into American Express’ foreign exchange pricing practices. The FBI investigation, which is in its early stages, “is focused on whether [Amex’s] foreign-exchange international payments department misrepresented pricing to clients in order to win their business.” The paper had earlier reported the credit card company “recruited business clients with offers of low currency-conversion rates before raising prices without warning.” The OCC “is looking into how Amex disclosed pricing to customers, including what the customers were told about potential rate increases and who knew about the practice within the company.”

Too clever?: TNB USA, a bank headed by the former head of research at the Federal Reserve Bank of New York, is suing the New York Fed, claiming “it is unfairly preventing the firm from pursuing a novel business strategy.” TNB, which has received a temporary banking license in Connecticut, said it plans to “accept deposits from the most financially secure institutions” and place the money in an interest-bearing Fed account, “permitting depositors to earn higher rates of interest than are currently available to nonfinancial companies and consumers.” But James McAndrews, TNB’s chairman and CEO, says the New York Fed has failed to act on his proposal, which he filed a year ago.

“Some analysts familiar with TNB’s plans say the firm has the potential to revolutionize a banking industry where many depositors see little return on their cash, but its business model raises some policy questions.”

Whew: ING said U.S. regulators have closed their investigation into the bank’s activities without an enforcement action or penalties, one day after the Netherlands’ largest bank paid a record $900 million fine to Dutch prosecutors for failing to stop flagrant money laundering abuses by its clients.

Financial Times

Tall order: Acorn OakNorth Holdings, a U.K.-based digital small business lender that has developed an artificial intelligence loan system that it is licensing to banks outside the country, has raised another $100 million, boosting its valuation to $2.3 billion. “The move is a further sign of how valuations of European fintech companies have soared in recent months as investors have bet that digital disruption will upend the financial sector.”

More to do: Having paid $5.5 billion to American authorities since the financial crisis, Swiss banks have largely cleaned up their act since then, particularly as it involves helping people avoid taxes. “Swiss banks have overhauled compliance systems — Americans living in Switzerland today have a particularly hard time opening a bank account — and thrown out clients who cannot prove they are honest with their taxes.” Still, work needs to be done. “Despite concessions on secrecy, the country continues to offer opportunities to evade tax to citizens of poorer countries.”

Demoted: Just a few days after Deutsche Bank said it was being removed from the Euro Stoxx 50, the European blue chip index, Commerzbank said it is being booted from the prestigious Dax index of Germany’s 30 leading companies. The bank, which has been a charter member of the index since it was created in 1988, will be replaced by Wirecard, a Munich-based payments service provider, which has a market cap double that of Commerzbank. The bank is being demoted to the “second-tier” M-Dax.

New game in town: Lloyds Banking Group said it has become the first bank to price a bond using Sonia, an interest rate benchmark meant to replace the "scandal-tarnished” Libor. The bank sold £750 million three-year bonds priced 43 basis points over the Sonia rate, which tracks prices on unsecured overnight loans between U.K. banks. Last week the European Investment Bank became the first issuer to sell debt securities priced off Sonia.


“Louis Meza orchestrated a 21st-century stickup. Then 21st-century investigators brought him swiftly to justice, securing a landmark conviction in an undeveloped area of the law.” — Manhattan District Attorney Cyrus Vance Jr., commenting on the case of a New Jersey man who pleaded guilty and agreed to a 10-year prison term for kidnapping a friend and then stealing more than $1 million in cybercurrency from him.

For reprint and licensing requests for this article, click here.
Money laundering Artificial intelligence American Express Federal Reserve Bank of New York