Global Payments Breach Expanded; Stress Tests Parsed

Receiving Wide Coverage ...

Breach Bigger Than Reported: The Global Payments security breach was bigger than initially reported, the processing company announced Sunday night. Hackers gained access to certain account details of up to 1.5 million credit cards, and managed to export account information from the company’s systems.

Global Payments is fully in the doghouse: its name disappeared over the weekend from a list of Visa’s “compliant service providers.” While that move doesn’t stop the company from continuing to process Visa transactions, it’s a sizable black mark. Mastercard said it is waiting to act until after an externally commissioned report.

Meanwhile, the Post reports that Visa’s card processing went down on Sunday afternoon for about 45 minutes. This time the issue was an old fashioned “technical problem” resulting from systems upgrades. Wall Street Journal, Washington Post.

Wall Street Journal

Investors remain baffled by certain aspects of the recent Fed bank stress tests, the paper reports. For example, credit card projected loss rate results. Despite widespread belief that its portfolio of credit cards is high quality, the stress test had JPMorgan Chase's portfolio as more risky than Bank of America's and only slightly better than Citi's despite a track record that would suggest otherwise.

Financial Times

Back when there were CDOs to structure, U.S. banks had little interest in the low-margin world of retirement plan administration. Nowadays, any business is good business. Wells Fargo, Bank of America, and JPMorgan Chase are all bidding for the work, the FT writes, taking on entities like Vanguard and Fidelity. Wells has been pursuing acquisitions, while B of A says it's looking to convince existing corporate banking clients to make a switch.

New York Times

Remember all those banks that didn’t sign on to the national mortgage servicing agreement? Well they had documentation problems, too. The Federal Reserve’s Division of Consumer and Community Affairs is recommending that eight additional mortgage servicers -- HSBC, SunTrust Bank, MetLife, U.S. Bancorp, PNC Financial Services, EverBank, OneWest and Goldman Sachs — all get fined for “unsafe and unsound practices.” The Fed’s suggestion may be part of a strategy to drive the banks into accepting the national settlement along with their five biggest peers.

A set of MF Global customers is hollering about the failed brokerage’s decision to mail them checks in the final days before its collapse. Was going with snail mail a strategy to hold on to the money the trading house needed to stay afloat? “[C]lients of MF Global say that it was unprecedented for the firm to abandon a longstanding business practice to wire money to customers who were closing accounts,” Dealbook writes, though it cautions the switch is not “definitive proof of wrongdoing.”

Private equity, real estate, and hedge funds have become darlings of pension funds scrambling for higher yields. It turns out that funds invested in traditional stocks and bonds have recently been doing better.

The Times’ Gretchen Morgenson endorses “a Wall Street version of the F.D.A” that would “examin[e] new finance instruments and ensur[e] that they were safe and benefited society, not just bankers.” Have a great morning!

Washington Post

It’s not just the kids that are having trouble repaying student loan debt. The New York Federal Reserve Bank says Americans north of 60 owe $36 billion on their educations. More than 10% of those are delinquent.

The story’s lead anecdote is a 58 year-old woman who borrowed $21,000 to finance her quest for a master’s degree in psychology in the 1980s. A high-paying job never materialized, and now she owes $54,000 despite a 2005 bankruptcy.

Such anecdotes reflect increasing doubts about the value of higher education. Many students “haven’t been able to earn a return that justifies the expense,” as Geithner noted to Congress last week.

“This current generation of borrowers is going to be a generation of seniors who are burdened with debt,” a Consumers Union attorney told the Post.