Breaking News This Morning ...
The Whale speaks: Bruno Iksil, the infamous "London Whale" that cost JPMorgan Chase more than $6 billion in trading losses in 2012, says CEO Jamie Dimon and other top executives deserve more of the blame for the fiasco than was previously believed. Two weeks ago, federal prosecutors dropped charges against two lower level traders because Iksil had changed his story.
"I mostly inferred that Dimon and his close lieutenants were responsible much, much more than my two colleagues could ever be," Iksil told the Wall Street Journal, his first comments since the case was dropped.
Receiving Wide Coverage ...
Step one: As expected, the Office of the Comptroller of the Currency Wednesday formally asked for public comment on how the Volcker rule is working, the first step toward changing the "much-criticized" regulation that restricts proprietary trading by banks. The OCC asked a series of questions, including whether banks should be allowed to conduct "additional activities" and whether the rule creates an "unnecessary burden." Wall Street Journal, Financial Times
Wall Street Journal
Fined: JPMorgan Chase agreed to pay a $4.6 million to settle allegations from the Consumer Financial Protection Bureau that it didn't properly tell consumers why their checking account applications were denied. The agency said the bank kept customers "in the dark" about the screening process it uses to approve or deny applications. The alleged misdeeds took place between 2010 and 2014. (Also American Banker)
Bitcoin futures: The CBOE has entered into an agreement with Gemini Trust Co., a virtual-currency exchange founded by the Winklevoss brothers, to use bitcoin market data, potentially paving the way for the CBOE to list bitcoin derivatives. Pending regulatory approval, the CBOE plans to start trading bitcoin futures by the end of this year and to create indexes based on bitcoin.
"It will bring more participants into the market who will now be able to express a viewpoint on bitcoin," Cameron Winklevoss, president of Gemini, told the Journal.
Aussie bank charged: Commonwealth Bank of Australia, the country's biggest bank, has been accused by the nation's financial intelligence agency of failing to adequately monitor potential money laundering activities. The Australian Transaction Reports and Analysis Centre filed a civil suit against the bank for violating the Anti-Money Laundering and Counter-Terrorism Financing Act more than 53,700 times, mostly for failing to make timely reports of cash transactions of A$10,000 or more. Each incident carries a maximum penalty of A$18 million (US$14.3 million).
Good show: Three big American insurance companies posted solid second quarter earnings on Wednesday. American International Group and MetLife both posted better-than-expected operating results. Prudential Financial reported higher operating income but missed analyst expectations.
Remain vigilant: U.S. regulators warned banks they are being too "aggressive" in their financial projections in lending to companies that are already highly leveraged. "Their message came even though the regulators said they had seen a drop in the number of especially concerning deals, and underscores how they are determined to remain vigilant on lending standards even as bank investors anticipate a lighter touch under the Trump administration," the FT said.
"A bipartisan consensus has emerged that the Volcker rule needs clarification and recalibration to eliminate burden on banks that do not engage in covered activities and do not present systemic risks." — Acting Comptroller of the Currency Keith Noreika.