Feds probe PNC; Credit card problems ahead?

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Wall Street Journal

Under investigation: PNC Financial Services said it received subpoenas from federal prosecutors looking into how the bank bought tax credits to fund low-income housing projects.

Rainy day funds: Recent revisions by the Bureau of Economic Analysis indicate Americans are saving a lot more than previously believed. The agency “more than doubled its estimate of the personal saving rate” in the first quarter to 7.2% from the original estimate of 3.3%. “The new number exceeds the 6.4% average rate recorded since 1990, and is almost three times the most recent low of 2.5% in 2005.”

Long, hard road: In the nearly nine years since Brian Moynihan was named CEO of Bank of America in 2010, when “the bank’s very existence seemed uncertain, he has lifted its stock price and earned the praise of Warren Buffett.” But “the process took years” and required solutions to “major financial problems following acquisitions of Countrywide Financial and Merrill Lynch.”

Fueling the boom: Freddie Mac, which “already is the country’s largest backer of apartment loans,” is becoming a major player in “one of Wall Street’s post-crisis success stories: the booming business of investing in single-family rental houses.” The government agency recently guaranteed two loans to companies that buy single-family homes to rent out. The deals “are part of its push to finance more rental-home purchases as investors are eager to put money to work in rental markets and as growth in the firm’s traditional single-family home-mortgage business has slowed. Investors said the move could help fuel the rental boom by keeping a lid on costs.”

Financial Times

Proceed with caution: The U.S. credit card industry may be getting warning signals even as the overall economy is signaling bright green. Quarterly write-offs of bad credit card debt rose to more than $8 billion from less than $5 billion in 2015, but still falls below its peak of almost $19 billion 2010, the paper says. “As consumers have gotten their mojo back, the competition for their business has become very competitive indeed. But trees do not grow to the sky. The competitive heat and the length of the cycle are making themselves felt in industry-wide data. Measures of credit quality, while not flashing amber, are unmistakably headed in the wrong direction.”

Glass ceiling breaking?: Women may soon hold two of the top positions at Royal Bank of Scotland. Deputy CFO Katie Murray will become interim CFO in October following the departure of Ewen Stevenson, who is leaving to become finance chief at HSBC. She would be the first female CFO of a major UK bank, according to the paper. And the “internal favorite” to be the next CEO lis Alison Rose, the current head of commercial and private banking. She would be “the first female chief executive of a FTSE 100 bank if she got the job.”

Protection bureau: The U.K.’s Financial Conduct Authority is looking into Royal Bank of Canada’s whistleblower protections following the dismissal of at least six bank employees in its London operation. One RBC trader won his case for unfair dismissal without due process while at least five more similar cases are pending. “The FCA scrutiny comes at a time when the regulator is keen to demonstrate it takes the treatment of whistleblowers seriously.”

Elsewhere

Listen to this: People who make the most money are more inclined to listen to classical music than other genres, while those who make the least gravitate to country music, according to a survey of millennials by TDAmeritrade, which said it believes the findings hold true for all ages. Classical lovers earn an average $114,000 per year, compared to $58,000 for country fans. In case you wondering, rap/hip-hop fans came in third at $69,000, while hard rock fans make an average $65,000.

Quotable

“It wasn’t a lot of money. But it made me realize why it is important for front-line bank employees to identify red flags early.” — Judith M. Shaw, the administrator of the Maine Office of Securities, about her own mother’s experience that led to the agency’s creation of a program to train bank employees to recognize suspicious activity that might indicate fraud against seniors. The program led to passage of the federal Senior Safe Act, which gives banks protection against disclosing account information to authorities in order to stop fraud and financial exploitation.

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