Goldman Sachs' tough sell; survey sees rate hike and recession

Wall Street Journal

Bad moon rising
All 58 private economists surveyed by the paper expect the Fed to raise interest rates by a quarter percentage point at its December meeting. The median forecast of respondents calls for three more rate hikes next year, and a recession beginning in 20 months.

Meanwhile, by a vote of 64 to 34, the Senate confirmed Michelle “Miki” Bowman as the newest member of the Federal Reserve’s board of governors. She fills the seat reserved for a community banker or a small-bank regulator, as required by the Dodd-Frank law. Two vacancies remain on the board, with Marvin Goodfriend and Nellie Liang having been nominated to fill those slots.

Crypto probe
The Securities and Exchange Commission is investigating the sale of $50 million in cryptocurrencies by a company affiliated with an entrepreneur — Erik Voorhees — who was banned by the SEC in 2014 from engaging in such sales. The SEC is also looking at whether the digital token sale by Salt Lending Holdings, which lends money using cryptocurrency as collateral, should have been registered as a securities offering.

Financial Times

Crackdown sought
The outgoing head of the European Banking Authority wants the continent’s bank stress tests to be as rigorous as those in the U.S. “The decoupling of stress-test results and supervisory actions and the inconsistency between the transparency of the former and the opaqueness of the latter are, in my view, the main shortcoming of the EU approach compared to the U.S.,” said Andrea Enria, who is moving on to become the European Central Bank’s chief bank supervisor. The EU’s most recent stress tests “saw British lenders among the worst performers while Italian banks largely sailed through.”

Black eye
Estonia’s prime minister and the head of its central bank are calling for a European body to combat money laundering following the Danske Bank scandal, in which €200 billion of mostly Russian money was run through the Danish bank’s tiny Estonian branch. “International co-operation is the key element in being effective when combating money laundering, which is why Estonia is ready to consider the establishment of a new European anti-money laundering authority,” Prime Minister Juri Ratas said.

Where have the branches gone?
The number of bank branches in the U.K. has shrunk by two-thirds over the past 30 years, to about 7,500 today, as more banking activities move online. But the shift raises concerns that some communities are losing access to mainstream financial services.

New York Times

Not buying it
Goldman Sachs “seems unlikely to be able to slough off its role in the looting of a multibillion-dollar Malaysian government investment fund as the work of a few miscreants," the paper’s business law columnist Peter J. Henning says. "The charges in the 1MDB case offer a fairly damning description of how the firm conducted itself. Labeling high-level managers as uncontrolled rogues as a way to avoid criminal charges may not play well with prosecutors, especially when the deals were so lucrative for the company.”

Scott Eells/Bloomberg

Elsewhere

Layoffs at Wells
Wells Fargo said it is laying off about 1,000 employees, 900 of them in its home lending unit, reflecting lower loan application volume and fewer customers in default. The cuts are part of the bank’s announced plan to reduce headcount by up to 10% by 2020.

Quotable

“Lightning may strike me for saying this in the Tower of Basel — but bitcoin was an extremely clever idea. Sadly, not every clever idea is a good idea. I believe that Agustín Carstens [the general manager of the Bank of International Settlements] summed up its manifold problems well when he said that bitcoin is ‘a combination of a bubble, a Ponzi scheme and an environmental disaster.'” — Benoît Cœuré, a member of the executive board of the European Central Bank.