Kraninger nomination advances; banks line up to lend to Saudi Arabia

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Wall Street Journal

The ayes have it: By a 13-12 vote along party lines, the Senate Banking Committee approved President Trump’s nomination of Kathy Kraninger to head the Consumer Financial Protection Bureau. The final vote before the full Senate is expected in the next few weeks. Kraninger is a close associate of Mick Mulvaney, whom she would replace.

Recruiting: Banks and fintech lenders “alike are plunging with new vigor” into offering personal unsecured loans to consumers, “reflecting both the solid growth of the U.S. economy and the perception that growth opportunities remain scarce for lenders.” Many of the loans are to people with poor credit histories, “a group of borrowers they all but ignored in the years after the financial crisis.”

The price of competition: Ant Financial’s second quarter profit dropped by half versus a year ago. The steep decline “was partly due to a long-running battle with Tencent Holdings Ltd. for market share and dominance in China’s swelling mobile-payments industry. Both companies have been offering heavy subsidies to users, bricks-and-mortar retailers and other merchants to get them to use their payment systems, essentially funding discounts and providing cash rebates to customers.”

Financial Times

Loan bonanza: The stock market’s loss is the banking industry’s gain. Saudi Arabia’s sovereign wealth fund is looking to borrow $11 billion from the world’s banks, “filling the hole left by the delayed listing of Saudi Aramco and providing financing for crown prince Mohammed bin Salman’s ambitious economic reforms.” A who’s who of banking giants “have been actively pitching for the deal,” including JPMorgan Chase’s Jamie Dimon, Franck Petitgas, global head of investment banking at Morgan Stanley, and Goldman Sachs investment banking partner Dina Powell.

Buying in: Deutsche Bank has acquired a minority stake in ModoPayments, which develops payments solutions for smartphones. “Payments are the bloodline of banking. More and more global payments are executed electronically via fintech and online platforms,” said John Gibbons, Deutsche’s head of global transaction banking.

A long time: Credit Suisse fired two London male employees after uncovering evidence about an alleged sexual assault that took place 2010. A senior banker who allegedly assaulted a female employee at a bar after work was fired as well as a manager “who was found to have hampered the original probe.”

The party’s over: “The stream of asinine crypto promotions is waning,” and not a minute too soon for FT editor Katie Martin. “It will probably soon dry up altogether, given the asset class’s dreadful recent run,” she says, noting the plunge in the price of bitcoin so far this year. “The market, even according to its supporters, relies on drawing in new blood. It cannot thrive and has no fundamental driver for further gains without it.”

Elsewhere

Record quarter: U.S. banks earned a collective $60.2 billion in the second quarter, up 25.1% compared to the same period a year ago and $4 billion more than the previous record, which was set in the first quarter. The Federal Deposit Insurance Corp. said a little more than half of the increase was due to a lower tax rate, while the other half came from higher net interest income.

Super premium checking: JPMorgan Chase is extending its Sapphire credit card brand name to a premium checking account. Starting Monday, the bank is converting its Premier Platinum accounts into Sapphire Banking accounts, which require $75,000 in total balances or a $25 monthly fee. The new accounts will have additional perks, including no ATM fees and no foreign exchange fees at overseas ATMs, plus unlimited free trades through the bank’s You Invest service, which was announced earlier this week.

Quotable

"While results this quarter were positive, an extended period of low interest rates and an increasingly competitive lending environment have led some institutions to reach for yield. This has led to heightened exposure to interest-rate risk, liquidity risk, and credit risk.” — FDIC Chair Jelena McWilliams commenting on second quarter banking industry profits.

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