Receiving Wide Coverage ... Tough going: Barclays and Deutsche Bank each reported a 30% drop in trading revenue in the third quarter. That was far worse than their American counterparts, which reported an average decline of about half that. As a result, investors at the two European banks, who two years ago were promised “sharper strategies and clearer paths for the embattled lenders,” are “still foggy on their CEOs’ visions.” Wall Street Journal, Financial Times here and here, American Banker
Wall Street Journal On target: The banking industry’s successful effort to kill the Consumer Financial Protection Bureau’s mandatory arbitration rule was led by a group of small banks that targeted a few Senate Republicans to persuade them to vote their way. “Industry lobbyists and congressional aides had always expected the difference in the vote count to be razor thin, so swaying just a couple of GOP senators determined the fate of the independent agency’s rule,” the paper says.
Darren McKinney, director of communications for the American Tort Reform Association, writes in an op-ed piece that CFPB Director Richard Cordray admitted in a letter to Sen. Sherrod Brown, D-Ohio, the ranking Democrat on the Senate Banking Committee, “that roughly half of big banks that issue credit cards, and nearly all smaller banks that provide checking accounts, do not require their customers to sign contracts with mandatory arbitration clauses.”
“So how in the world,” McKinney asks, “did the CFPB ever conclude it needed to impose itself on a sound and functioning market — a market in which consumers have plenty of choices and banks that don’t require arbitration are free to advertise themselves as such?”
Under water: Wells Fargo took a much bigger hit from the recent hurricanes than other large banks. The bank took a $450 million charge in the third quarter for hurricane-related losses, and it continues to assess the damage, with further losses possible. Most affected was Wells’ Reliable Financial Services unit, the largest auto finance company in Puerto Rico.
Easing up: Slowing economic growth and rising mortgage rates will cool Canada’s booming housing market over the next two years, the Canada Mortgage and Housing Corp. said in an outlook report.
Libor love: Despite several high-profile scandals involving some of the largest banks in the world, the overwhelming majority of investors and bankers surveyed said they still want to keep Libor as a financial benchmark. Nearly 80% of asset managers and others polled by Bank of America Merrill Lynch said Libor should continue to be used as a benchmark if the way it’s calculated changes, while more than 70% said it should continue to exist even if an alternative standard is created.
Hidden risks: While new financial technologies will help banks improve service, save money and operate more efficiently, they may also create new risks or amplify existing ones, according to a report from the Depository Trust & Clearing Corp. “While many of these technologies are at a nascent stage at this time, there is little doubt that fintech will likely alter the risk landscape in the future, produce unintended consequences and lead to new types of risks,” the report says.
Financial Times Don’t stress it: The U.S. Treasury Department said it won’t subject asset managers to stress tests as mandated by Dodd-Frank and called on Congress to change the law. The financial reform law mandated stress testing of large fund managers but it has never been implemented. “While Treasury endorses the principle of appropriate risk management in the asset management industry, it does not support prudential stress testing of investment advisers and investment companies as required by Dodd-Frank,” the department said in a report.
Quotable “Just about every adult in my state had his or her data stolen. I am not going to tell my people they cannot have their day in court.” — Sen. John Kennedy, R-La., on why he voted against killing the CFPB rule on mandatory arbitration.
Senator John Kennedy, a Republican from Louisiana, questions Christopher Wray, director of the Federal Bureau of Investigation (FBI) nominee for U.S. President Donald Trump, not pictured, during a Senate Judiciary Committee nomination hearing in Washington, D.C., U.S., on Wednesday, July 12, 2017. Wray pledged strict independence if confirmed to head the FBI, as senators focused on his ability to pursue investigations independently amid revelations about a meeting the president's son held with a Russian lawyer during last years campaign. Photographer: Andrew Harrer/Bloomberg
The Office of the Attorney General in New York says the bank violated the state's Exempt Income Protection Act, illegally transferring customers' money to debt collectors.
The Providence, Rhode Island, company is having discussions with private wealth management teams elsewhere as it seeks to expand its fledgling private bank. In just three months, private banking deposits doubled to $2.4 billion.
After the Minneapolis-based company reported stubbornly high commercial deposit costs, it reduced its full-year forecast for net interest income by $200 million-$500 million.
The CFPB has dissolved the Office of Supervision, Enforcement and Fair Lending and eliminated the job of associate director in a move that impacts how it designates nonbanks for supervision.
Rising deposit costs have plagued banks in general, and the Tennessee bank had to pay up to bolster liquidity after its failed merger with TD. But First Horizon retained customers in the first quarter while not paying them the special rates they got last year.
U.S. customers who have previously used Sweden-based Klarna's buy now/pay later financing — and paid off their loans in full — will be prequalified for interest-bearing loans through a new version of the Klarna Visa card rolling out later this year.
