Receiving Wide Coverage ...
Dems Debate in Michigan: Democratic presidential candidates former Secretary of State Hillary Clinton and Vermont Sen. Bernie Sanders held their seventh debate of the season Sunday night. The candidates hit on the usual subjects: criminal justice reform, the environment, gun control, etc. And, as in many of their previous matchups, disagreements flared over each candidate's approach to Wall Street. Clinton attempted a new tactic against Sanders — one that seemed tailor-made for the crowd in Flint, Mich., where the debate took place. She tried to pin Sanders by saying he opposed the auto industry bailout. Not exactly. While he supported an auto industry-specific bill that ultimately died in the Senate, he did oppose the bailout bill that was designed for Wall Street banks and ended up helping the auto companies as well. Sanders defended his position, saying he'd "be damned if it was the working people of this country who had to bail out the crooks on Wall Street." But for Clinton, the attack was useful ammo as part of her offensive to paint Sanders as a "one-issue candidate" and as a distraction from his perspective on her own ties to Wall Street.
Nervous About Negative Rates: Fears are mounting as observers expect the European Central Bank to push one of its key interest rates further into negative territory when it meets Thursday. The ECB is expected to increase its bond-buying program and lower the interest rate it pays on overnight commercial bank deposits to negative 0.4%. The move could help extend a rebound in equity and commodity markets but it is also guaranteed to leave many observers worried. Among those sounding a warning is the Bank for International Settlements in Switzerland, which noted there's still a great deal of uncertainty how individuals and institutions will react to the cut. The negative rates may also be eating away at financial markets' confidence in central banks and their ability to affect change. Obvious losers in a negative rate situation include banks in Southern Europe, which will face even tighter profitability worsening the struggles they faced since the financial crisis began. But negative rates have other unintended consequences: it's horrible for those with large amounts in savings, since they typically end up paying the bank to save rather than earning interest. And though they've yet to signal their concern, Europe's insurers may also face burdens in the continued negative rate environment. But not everyone loses when rates go negative, of course. In Japan, consumers have flocked to join loyalty clubs at the country's largest department stores. Consumers there can score a better return on the money they keep in those stores' savings accounts than they can in a bank due to the negative rate environment.
Wall Street Journal
European banks are turning a poorly defined division for shared costs into a dumping ground for worrisome losses. "Corporate centers," as these divisions are called, are commonplace among large banks. Companies like JPMorgan Chase & Co. and BNP Paribas use them to house shared expenses, such as headquarters staff, that don't belong to any specific division. But now, more and more European banks are using this category as a way to obscure losses from business matters ranging from bad acquisitions to problems with energy loans, the paper writes. For instance, Santander used the classification to record its large losses related to a charge to cover claims regarding the sale of payment-protection insurance in its U.K. unit. In this case, analysts say the charge should have been part of the U.K. unit's results, not the corporate center. Such actions also decrease accountability — there's no chief of the corporate center as it were, so doing this makes it somewhat easier for responsible parties to escape scorn.
Donald Trump has amassed support from an odd assortment of people — a group that now includes three prominent players in the financial services industry. Real estate mogul Thomas Barrack Jr. and investors Andrew Beal and Carl Icahn count themselves among his backers, all three having endorsed him in the past week. Beal supports Trump in part because of his pro-business stances — though he initially supported Rand Paul before the Kentucky senator dropped out of the race for the Republican nomination. Icahn and Beal's support is surprising though — and not only because many on Wall Street, including Goldman Sachs chief Lloyd Blankfein, have openly voiced their concerns and opposition to Trump. No, their support shocks many because in the past they've directly battled Trump in bankruptcy court in a bid to gain control of control of Trump Entertainment Resorts.
Banks' concerns about stringent regulatory standards in Europe may be coming to fruition. When the Basel III standards were unveiled, banks across the globe warned the rules would damage their business, the paper writes in a commentary piece. Regulators dismissed the worries at the time, thinking bankers were exaggerating. Well, it now seems the bankers may have been right all along. Because of the rules, banks in Europe have seen some business lines take major losses, and others have been forced to exit whole markets to meet the standards, as in the case of Barclays' decision to sell its African unit this week. Part of the problem for European banks is the economy across the continent has seen weak growth overall, meaning financial institutions didn't get the same economy-related boost their American counterparts did. Still, it seems regulators aren't all too concerned about the effects on banks just yet — regulators decided Friday to require banks to hold capital against operational risk, the paper notes.
New York Times
The Federal Reserve has proposed a new version of a rule designed to cap the amount of business banks can do with one another. The rule is designed to limit the possibility of contagion in the financial services industry so a struggling company won't cause losses for others in the industry if it fails. It's not the first time the Fed has attempted to make a rule on this matter — it proposed another version in 2011 that was criticized by the banking industry for being too strict. The latest version is less tough, leading many to believe the banking industry will embrace it. While the rule will be tough on banks with large derivatives trading units, smaller banks can expect it to be more accommodating. For more analysis on the proposal and its potential effects, check out American Banker's take.
Charlotte Observer: Bank of America is about to reach a milestone. The Charlotte, N.C.-based bank could soon have fewer workers than it did in 2008. Following rounds of job cuts, the bank now employs 213,000 workers, just 6,000 more than it did in June 2008 before acquiring Countrywide Financial and Merrill Lynch. Overall, during chief Brian Moynihan's tenure, Bank of America has reduced its workforce by a fourth — though some of that stems from run-of-the-mill attrition. With more cuts likely on the horizon though, including in marketing and communications, residents of Charlotte are worried the city's major employer's reductions will have negative effects on its economy.