Goldman earnings up; Barclays weighs U.S. expansion

Breaking News

Goldman earnings: Goldman Sachs reported higher second quarter earnings and revenue compared to the year earlier period, beating estimates on both counts. The bank also announced that Lloyd Blankfein will retire as chairman and CEO effective September 30 and will be succeeded, as expected, by President David M. Solomon.

Lloyd Blankfein won’t be measured by how Goldman Sachs grew under his stewardship, which was “unexceptional,” the Financial Times comments. “He will be measured not just against the market but also against the leaders of Lehman Brothers, Bear Stearns, and Merrill Lynch — peers and competitors who were not able to steer their own institutions to safety during the financial crisis.” “Lloyd successfully led Goldman Sachs through a once-in-75-year financial storm and its bitter aftermath, and has repositioned the firm for today’s world,” said Hank Paulson, Blankfein’s predecessor as Goldman CEO who became Treasury secretary during the financial crisis.

Receiving Wide Coverage ...

Moving quickly: Deutsche Bank’s surprise announcement Monday that its second quarter earnings will be way better than analysts’ forecasts shows new CEO Christian Sewing is already “getting to grips with the one thing he really can control: costs.” Most of the improvement is due to cutbacks ordered by Sewing. “The cuts have come from faster restructuring. Staff numbers have fallen by 1,700 — a good chunk of the more than 7,000 jobs Mr. Sewing said would go.” Wall Street Journal, New York Times

Wall Street Journal

Land of opportunity: Barclays, “under pressure from activist shareholder Sherborne Investors to boost its stagnant share price,” is looking to expand its presence in the U.S. The bank is looking at scaling up its online retail bank, “rolling out its dominant U.K. payments platform stateside, and putting more capital behind its U.S. credit card operations.”

To the Hill: Federal Reserve Chair Jerome Powell testifies to Congress this week, starting with the Senate Banking Committee Tuesday followed by the House Financial Services Committee Wednesday. Wall Street Journal, American Banker

Here’s a look at how Powell spends his days.

Not out of the woods: Despite a lot of downsizing and de-risking, General Electric’s GE Capital unit still has about $146 billion in asset and continues to provide “nasty surprises.”

Got ya!: Praise is heaped on California Court of Appeal Judge Andrea Hoch, who last week ordered the state to return $350 million she said it misappropriated from the National Mortgage Settlement Deposit Fund. The money, part of the April 2012 settlement that 49 states and the federal government reached with the five largest mortgage servicers, was supposed to be used to help homeowners in mostly low-income and minority communities but instead was used for “budget triage,” an "overtly political use" of funds designed to assist homeowners.

“The mortgage heist was dubious on the merits, whacking private banks for the blunders of Fannie Mae and Freddie Mac,” the paper says. “Another mistake was pretending that a court-approved bank handout would escape California’s political spending maw. The only surprise is that this time the politicians didn’t get away with it.”

Ideas wanted: TD Ameritrade launched a competition on Monday that will award a total of $100,000 to three people “who develop technology that can improve the experience for the more than 6,000 independent registered investment advisors that use its software, as well as their clients.” The company “is soliciting ideas from investment advisors, college students and technology companies” to help it “come up with new tools, such as those that incorporate artificial intelligence and data analytics, that could be integrated into its software.”

Financial Times

Uncovering crypto: The Basel Committee on Banking Supervision Global is planning to look at banks’ exposure to cybercurrencies and then possibly “introducing capital safeguards, in a move that could deter banks from embracing the nascent market,” the paper reports. “Any move would come at a time when big banks have had to bolster their capital buffers after the financial crisis. Under tougher Basel III rules they will also have to set aside more funds over the next decade.”

Quotable

“As far as meeting with Congress is concerned, I’m going to wear the carpets of Capitol Hill out by walking those halls and meeting with members. I feel like that’s a really important thing that the chair can do.” — Federal Reserve chair Jerome Powell, who is scheduled to testify before the Senate Finance Committee on Tuesday.