JPMorgan to offer banking to crypto exchanges; news services sue SBA

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Wrapped knuckles

Morgan Stanley’s brokerage unit agreed to pay $5 million to settle Securities and Exchange Commission allegations “that it provided misleading information to some clients in the so-called retail wrap fee programs regarding trade-execution services and transaction costs.” Wall Street Journal, New York Times

Wall Street Journal

Crypto tiptoe

JPMorgan Chase will provide cash management and other banking services to Coinbase and Gemini Trust, “the first time the bank has accepted clients from the cryptocurrency industry. The move is the latest in a string of positive developments for bitcoin and another sign that Wall Street is becoming more comfortable with the business of cryptocurrencies,” the Journal said.

“JPMorgan’s services don’t extend to any bitcoin or cryptocurrency-based transactions,” which the firms handle themselves. “What is notable is that JPMorgan was willing to extend services to businesses built around bitcoin. Such businesses have for years been blocked by banks from opening up accounts. Bankers were concerned with exposing themselves to bitcoin’s shadier uses, like money laundering, and the added glare from regulators. Coinbase and Gemini had to go through a long vetting process to get JPMorgan’s approval.”

Swamped

“Borrowers seeking debt relief are encountering jammed phone lines, overflowing inboxes and stretched-thin customer-service departments” as “lenders are having a hard time keeping up” with the requests. “Multiple calls to the same lender can yield different answers on the relief programs borrowers qualify for,” the Journal reports. “Sometimes it is taking lenders weeks to reflect the changes on borrowers’ accounts.”

“And there is no set menu of relief options for many consumer debts; lenders vary widely in how much relief they are offering and for how long. Lenders are declining to defer payments for some borrowers who were behind on their payments before the coronavirus laid waste to the U.S. economy. Some who have been given deferments are getting alerts that their payments are past due anyway.”

Financial Times

Profit neutral

The European Central Bank is defending its policy of negative interest rates, claiming that they have been “broadly neutral” in bank profitability at eurozone banks over the past six years, a stance “that is likely to raise eyebrows among financiers. The findings may be contested by some bank executives, who complain that their sector has paid €25 billion in negative rates to the central bank since its deposit rate went below zero in June 2014, eating into their already weak profits.”

Going green

Deutsche Bank “is pledging to roughly double its green financing activities over the coming five years, to a total of €200 billion by 2025, committing itself for the first time to a quantitative sustainability target as pressure mounts on banks to play a more active role in fighting climate change.”

“[Sustainability] is an area where we as Deutsche Bank have a social responsibility, but also see opportunities,” CEO Christian Sewing is expected to say next week at the German bank’s annal meeting, where he will outline the plan.

Slip slidin' away

“Top European banks’ share of global trading revenues has fallen to its lowest level in more than five years, accelerating a long-running trend in which the markets businesses of the Wall Street giants have grown in dominance,” the Times reported. “BNP Paribas, Barclays, HSBC, Société Générale, Deutsche Bank, UBS and Credit Suisse shared just 34% of big banks’ $33.9 billion in trading revenues in the first quarter of 2020, according to new data from industry monitor Coalition.”

Turnaround time

“Banco Santander has hired HSBC executive António Simões as its new regional head of Europe, as the Spanish lender looks to cut €1 billion of costs and improve flagging performance in the U.K and across the continent.” He is scheduled to start September 1 and succeed Gerry Byrne, who is retiring next year.

Simões “will be charged with implementing a big cost-cutting program in Britain and Spain, which have failed to keep up with a surge in profits across Latin America.”

Washington Post

Details demanded

“The Washington Post and four other news organizations are suing the Small Business Administration for access to government records showing who received more than $700 billion in taxpayer-backed small-business loans. The news organizations are seeking access to records showing who received subsidized loans under both programs, the size of each loan and which bank processed the loan, as well as other loan-specific information.”

“Separate requests submitted in April by all five media organizations under the Freedom of Information Act failed to produce a loan-specific database, even though the SBA has published that information in the past as part of its loan program,” the Post said.

Elsewhere

Rush to judgement

“More than four million homeowners are now delaying their monthly mortgage payments as part of both government and private lender relief programs – but some have been put into forbearance by mistake and are having a hard time getting out,” CNBC reports. “While the programs cannot, by law, hurt their credit scores, they can keep borrowers from refinancing their loans or procuring new mortgages.”

Under the CARES Act, “borrowers can simply call their servicers or go online and be granted an immediate 90-day payment delay. It specifically states that servicers should not ask any questions of their borrowers, nor can they require any documentation of hardship in order to accommodate them. That rush to relief resulted in quick help for borrowers but also in a lot of mistakes. Some borrowers' inquiries were misunderstood, and some servicers, swamped with hundreds of thousands of calls, just put the borrowers into the program.”

Second look

A federal circuit court ruled Tuesday that the U.S. Justice Department and Securities and Exchange Commission “must review whether an ex-Royal Bank of Scotland employee is owed a whistleblower payout and provide documents relating to his case,” Reuters reports. “The U.S. Second Circuit Appeals Court decision could set an important precedent for other whistleblowers who say they have been unjustly denied bounties under the SEC’s program to reward tipsters.”

“Former RBS risk manager Victor Hong sued the agencies in February alleging they flouted the law ‘in bad faith’ when assessing whether he was due a payout for helping federal probes into the British bank’s mis-selling of mortgage bonds in the run-up to the 2007-08 financial crisis. In August 2018, RBS agreed to pay $4.9 billion to end the probes, [but] no portion of that fine has ever been deemed eligible for a reward under the whistleblower program, public records show. Hong had asked the court to compel the SEC and the Justice Department to produce all records relating to the RBS settlement and to deem it eligible for a potential tipster reward.”

Quotable

“The Small Business Administration has disbursed hundreds of billions of dollars through [the Paycheck Protection Program] and the Economic Injury Disaster Loan program during the COVID-19 crisis, but it has refused to disclose who is receiving the funds and in what amounts. Our lawsuit seeks to enforce federal law and enable the public to see how their tax dollars are being spent on these massive loan programs.” — Washington Post vice president Kris Coratti Kelly, in a statement announcing its Freedom of Information Act lawsuit against the SBA.

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Cryptocurrencies JPMorgan Chase Interest rates Paycheck Protection Program SBA Small business lending SEC Servicing
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