How banks are thwarting rogue traders; CFTC relaxes bank hedging rules

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Preparing for launch
Apple unveiled its” highly anticipated” credit card Monday, “positioning it as a more user-friendly and secure alternative in a crowded market.” The Apple Card, which will launch this summer with partner Goldman Sachs, “will charge no fees, pay daily cash rewards and sync with consumers’ iPhones to analyze their spending.” Apple announced the launch of the card at an event in which it unveiled a news subscription service and TV apps. Goldman Sachs’ role was “somewhat overshadowed” by “all the glitz” surrounding the Apple Card’s launch, American Banker reports. American Banker also provides seven takeaways from the Apple Card announcement. Wall Street Journal, Financial Times, American Banker

Harsh
Stephen Moore, President Trump’s nominee for a Federal Reserve Board seat, regrets that he was “harsh” in calling Fed Chair Jerome Powell “totally incompetent” last December after the Fed raised interest rates but feels vindicated by the central bank’s pivot since then toward a more dovish monetary policy.

The Trump White House may have “crossed a line” with the Moore nomination, which is being criticized as a “blatant attempt by Mr. Trump to place a political ally within the Fed,” the Financial Times reports. Moore “is accused of having limited qualifications, patchy judgment and an unbending loyalty to conservative political imperatives.” Some prominent Republicans even spoke out against Moore.

Wall Street Journal

More flexible
New hedging rules approved by the Commodity Futures Trading Commission will “allow banks more flexibility in how they count interest-rate swaps that are intended to hedge the credit risk of loans. Midsize banks will benefit the most from the revisions because they will be exempt from expensive margin and capital requirements that come with large swap portfolios.”

Turning the screws
Venmo, PayPal’s digital money transfer service, is trying to reduce losses by “threatening to sic debt collectors on some users who carry negative balances in their accounts.” It also plans to “recover money its customers owe by seizing it from their other accounts at PayPal. PayPal’s difficulties in trying to turn Venmo into a moneymaker show how banks and financial-technology companies are having a hard time making finance faster and more convenient for customers while also earning a profit.”

Behind the numbers
“A look at the numbers shows both the urgency and the difficulty of the task of merging” Deutsche Bank and Commerzbank, “two of Europe’s weakest financial institutions.”

Financial Times

AI police
“The world’s biggest banks are closing in on advances that will allow them” to anticipate rogue behavior by their employees using communication monitoring tools powered by artificial intelligence.

Oh, behave
Bank regulators and enforcement agencies are shifting focus from capital rules more toward how banks conduct themselves.

Ready for the worst
Large international banks are “powering ahead with final preparations” in anticipation of a hard Brexit. For example, JPMorgan Chase, “has sent new European Union employment contracts to more than 200 London-based staff in recent days while Royal Bank of Scotland is gearing up to begin serving clients at its new Dutch entity.”

Not much progress
Goldman Sachs’ 2018 gender pay gap figures show little improvement from the previous year. The bank’s London operation pays women 35.5% less than its male employees, down slightly from the 36.4% differential in 2017, while the median bonus gap held steady at 68.9%.

Dreaming of America
ABN Amro is preparing to apply for a U.S. banking license “in a move that will take the Dutch bank deeper into a market where its European peers have long struggled with poor profits and intrusive regulation.” The move “is intended to give ABN better access to dollar funding, which would improve its dollar liquidity by making it easier for the Dutch lender to raise dollar funding and lend that to clients.”

Working together
Mastercard is taking a $300 million stake as part of a “strategic partnership” with Network International, which is planning an IPO in London. The two companies are “working together to encourage more adoption of digital payments in the Middle East and Africa.”

New York Times

Turkey shoot
Turkey’s banking regulator has accused JPMorgan Chase of providing “misleading and manipulative” investment advice that it says caused a run on the Turkish currency last week. The agency said a JPM research report “caused volatility in the financial markets and loss of reputation and value especially for the banks of our country.”

Quotable

“Frankly, I’m underwhelmed. People will sign up for it, but that will be mostly because they love Apple, not because this card is better than anything that already exists.” — Ted Rossman, an analyst at CreditCards.com, about the technology company’s new rewards credit card

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