The beat goes on President Trump has intensified his “drumbeat of unprompted” criticism of the Federal Reserve and Chair Jerome Powell, “blasting the Fed at three meetings in the past week alone,” the Wall Street Journal reports. “The critical drumbeat is complicating Mr. Powell’s job by fueling speculation among some market participants that the Fed is caving to political pressure, even though Mr. Powell and Fed officials uniformly say this won’t occur. At worst, it could be a prelude to a potentially historic court battle should Mr. Trump ever attempt to remove Mr. Powell.”
Separately, Stephen Moore, who Trump said he would nominate for a Fed seat, said he “had no plans to withdraw from contention for the job despite ethical and financial problems that have surfaced in recent days,” the New York Times reports. “His potential nomination to the Fed has been clouded by revelations of a current tax lien and child-support issues stemming from a previous marriage.”
Major revamp BlackRock announced “its most sweeping organizational overhaul in a decade” on Tuesday as it “wrestles with how to keep its empire growing.” The firm “is installing new leaders at a key investment division, reorganizing sales staff, shifting some two dozen directors into different roles and handing expanded responsibilities to two contenders in the race to succeed Chief Executive Laurence Fink,” the Wall Street Journal reports. The firm “has regularly made tweaks to business over time but hasn’t undergone a change at this scale in years.”
“The moves highlight how even the world’s biggest asset manager is trying to figure out the best way forward in an industry that is seeing its historically phenomenal profitability come under sustained pressure,” the Financial Times says. “We need to be able to adapt quickly as the world changes around us,” Fink and president Rob Kapito said.
Separately, Bank of New York Mellon plans to deliver “real-time information on trades, asset prices and cash positions” to the clients it shares with BlackRock, “a new alliance both companies hope will jump-start growth.” The cooperation will enable “those overlapping clients to access information faster and cut down on phone calls and emails.”
Wall Street Journal
Spilling the beans Goldman Sachs plans to release later this month “some of the code that its own traders and engineers use to price securities and analyze and manage risk.” It will also start to take applications for $100,000-a-year grants “for engineers to build new applications using the bank’s code.” In return, the bank “will get an early look at promising technology.”
“It is Goldman’s latest move to shed some of its trademark secrecy and share its once closely guarded technology. By letting outsiders tinker with its code, Goldman hopes to crowdsource new uses for it and earn the loyalty of computer-driven ‘quant’ traders who have taken the investing world by storm.”
Limiting the domino effect U.S. bank regulators want to make it less attractive for large banks to buy some "debt issued by other large financial institutions." Large banks would be required to hold additional capital against so-called total loss-absorbing capacity, or TLAC, debt issued by other firms that can be converted into equity in a crisis. “Under the proposal, large banks would no longer be able to count certain types of TLAC investments — specifically, unsecured long-term debt held by another large bank — toward their capital requirements," the paper says. "The proposed rule aims to limit risks to the financial system by discouraging large banks from taking on each other’s TLAC debt, which could also increase banks’ cost of raising capital.”
Out of balance Swedbank’s poor handling of the growing scandal over possible money laundering, which culminated in last week’s firing of CEO Birgitte Bonnesen, “provides a case study in one of the riskiest balancing acts executives attempt when faced with a corporate crisis: trying to apply the right amount of weight to reassuring investors on one side and enough weight to publicly addressing the problem on the other.”
Financial Times
Digital identity Mastercard hopes to roll out a digital identity system globally that would “liberate merchants and service providers from the manual process of validating prospective clients' identity.” The digital identity could be put on a device and used anywhere. “As well as cutting out hassle and giving credentials to people who are currently locked out of the financial system, the scheme could also reduce fraud by making it harder to assume someone else's identity.”
Mastercard Inc. credit cards are arranged for a photograph in Washington, D.C., U.S., on Monday, Oct. 24, 2016. Mastercard Inc. is scheduled to release earnings figures on October 28. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg
New York Times
One man's junk ... Archivists and bank historians are hoping to save documents dating back to the early 1900s from the old Bowery Savings Bank in Brooklyn. The bank, which was founded in 1834, is now part of Capital One, which was in the process of shredding “through centuries’ worth of paper.” But archivists in New York City are “keen to make sure that the trove is not destroyed” and “are hoping the material can be permanently preserved.” A Capital One spokesperson "characterized the papers disposed of so far as 'old newspapers and trash,'” according to the paper. The archivists say some pre-1930 records "show what kind of work men and women did, where they lived, how much money they saved or borrowed, the names of their parents, spouses and places of birth. Such archives make social archaeology possible."
Washington Post
Not enough Tim Sloan’s resignation from Wells Fargo is “not nearly enough accountability,” Sen. Elizabeth Warren, D-Mass., writes in an op-ed. “It’s time to reform our laws to make sure that corporate executives face jail time for overseeing massive scams.” On Wednesday she’ll propose a law “that expands criminal liability to any corporate executive who negligently oversees a giant company causing severe harm to U.S. families.”
Elsewhere
Stronger Federal Deposit Insurance Corp. Chair Jelena McWilliams said banks are better prepared for a potential downturn, in an interview on CNBC.
Quotable
“I guess I’m stuck with you.” — President Trump in a March 8 phone conversation with Federal Reserve Chair Jerome Powell
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.
