FHFA oversight questioned; Bitcoin miner roller coaster

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Agency under fire
Simone Grimes, an employee at the Federal Housing Finance Agency, testified before the House Financial Services Committee Thursday, accusing agency director Mel Watt of “multiple unwanted advances” that made her feel “extraordinarily uncomfortable and unsafe.” She "described a toxic workplace culture at the FHFA." Watt denies the allegations and says he did nothing illegal. Wall Street Journal, Washington Post, American Banker

Whistleblower wants protection
Attorneys for the whistleblower in the Danske Bank scandal are blaming the bank for disclosing his identity. “We are extremely concerned that Danske Bank, which knew the whistleblower’s identity, has violated his human rights protected under law,” the lawyer for Howard Wilkinson, a former bank employee, said in a letter to authorities in Estonia and Denmark demanding that they take immediate action to protect him from retaliation.

The Financial Times’ editorial board is calling on British authorities to do more to stop money laundering. “Denmark and Estonia are in the spotlight” over the Danske Bank scandal, “but a country with just as many questions to answer — in the Danske case as in many others — is the U.K.,” the editorial says. The paper notes that many of the entities that laundered billions of dollars through the bank’s Estonian branch “were often shell companies registered in the U.K. or its overseas territories. For the sake both of its reputation and — given the vulnerabilities that stem from being a haven for Russian or other dirty money — its national security, London should launch a concerted clampdown.”

Fasten your seatbelts
Prospective investors in the first publicly traded bitcoin mining company better be prepared for a potentially “stomach-churning” ride, the Wall Street Journal warns. Bitmain, which announced Wednesday that it plans to go public in Hong Kong, is the world’s largest seller of so-called “mining rigs — specially-designed machines that can solve the mathematical equations needed to generate new crypto coins.” While that business “might look like a more stable business than crypto trading, in reality, Bitmain’s business could be just as volatile. When the gold rushes come to an end, even those selling shovels aren’t immune.”

Bitmain’s IPO is “a big test of whether stock investors want to jump aboard the crypto bandwagon, despite the volatility of digital currencies,” the New York Times says. “The air of legitimacy from Bitmain going public could buoy the value of Bitcoin and its competing digital currencies.” But “if it stumbles, expect its peers to hold off.”

Wall Street Journal

Skeletons in the closet
Eric Blankenstein, a Consumer Financial Protection Bureau official who is responsible for policing fair lending at financial companies, has acknowledged writing blog posts more than 10 years ago “that questioned the legitimacy of hate crimes and whether use of the N-word constituted racism.”

“The need to dig up statements I wrote as a 24-year-old, show that in the eyes of my critics I am not guilty of a legal infraction or neglect of my duties, but rather just governing while conservative,” Blankenstein said.

Financial Times

Warning signal
Goldman Sachs’ move into consumer banking — with plan to expand into the U.K. — means “there is no longer any excuse for investment bankers not to see the writing on the wall,” the paper notes. “There is no mystery. Tougher capital rules, designed to reduce risk taking, have been extremely effective. If big balance sheets cannot be brought to bear on M&A, then the investment banking divisions of large institutions lose their advantage. Boutiques take share. Banks invest instead in steadier businesses, such as wealth management and even retail. The choice for investment bankers is clear: find a niche where risk taking still exists, learn a new business, or become toast.”

Elsewhere

Breaking the glass ceiling
JPMorgan Chase said it will hire a full-time director and provide additional resources to a program to help promote women inside the bank and help female clients, including setting aside $10 billion for loans to women-owned businesses. “We are going to continue to focus on employees to make sure we have more women in senior positions, but the extension is around clients and providing access to capital,” said Samantha Saperstein, managing director of the group, Women on the Move.

Fake news?
Deutsche Bank dismissed as “fictions of the press” media reports suggesting it could merge with UBS or Commerzbank. Handelsblatt, the German business daily, reported bank managers had discussed the idea at a strategy meeting earlier this month.

Quotable

“I am confident that the resolution will confirm, as I have previously stated, that I did not take any actions or engage in any conduct involving Ms. Grimes that is contrary to law. We have never been intimate in any fashion. We have never held hands, kissed or engaged in any sexual activity.” — Federal Housing Finance Agency Director Mel Watt about Simone Grimes, an FHFA employee who has accused him of sexual harassment.

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