Receiving Wide Coverage ...
Wall Street ties: Steven Mnuchin, a former Goldman Sachs executive, is expected to be named Treasury secretary by President-elect Donald Trump. "Mr. Mnuchin's Wall Street pedigree presents a contrast with the populist themes Mr. Trump struck in his campaign, railing against big banks and vowing to close tax loopholes that benefit hedge funds," the Wall Street Journal commented. "Mr. Trump also repeatedly attacked his rivals in the primary and general elections for their Wall Street ties, especially those connected to Goldman Sachs." Mnuchin, who also made millions as a Hollywood movie producer, was Trump's campaign finance chairman. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker
Trump also met Tuesday with Gary Cohn, Goldman's president and chief operating officer, "another sign the President-elect's campaign rhetoric about Wall Street might be toned down as he sets out his administration's priorities," the Journal said. It wasn't clear if Trump is considering Cohn for a job or just picking his brain. "Joining the administration would give Mr. Cohn, who has been heir apparent for most of the past decade, an exit strategy should Chief Executive Lloyd Blankfein remain in his job for the foreseeable future," the Journal noted.
During the presidential campaign, the odds were pretty good that the next Treasury secretary wouldn't come from Goldman Sachs, no matter who won. "That reflected the view that Goldman was so tainted in the public mind by the financial crisis that none of its alumni could be floated, much less confirmed, to top government positions," the Journal notes. But "like so much other conventional wisdom, that has now proved to be wrong." If confirmed as Treasury secretary, Mnuchin would be the third former Goldman banker to hold the position in less than 25 years. Mnuchin and Cohn were both named Goldman partners in 1994.
Trump is making nice with bankers, not just at Goldman. "After largely opposing his 2016 presidential campaign, financial-services executives are making fast friends with President-elect Donald Trump," the Journal reports, and are putting up money for some of his transition and inaugural festivities. The groups contributing include the Independent Community Bankers of America and the Financial Services Roundtable. "The coordinated efforts are the latest sign that Wall Street could wind up being a big winner under Mr. Trump, despite his broadsides against big banks during the presidential campaign."
Wall Street Journal
Not a good idea: A study by Bain & Co. says closing branches, an easy way for banks to cut costs, may actually backfire, leaving them with fewer, disloyal customers. "Many customers who rely on a branch now often use the closing of one as an opportunity to switch banks," the Journal stated, based on the report. "Even customers who do make the move to mobile are less loyal, doing more shopping around for loans, cards, and other services. That leaves banks stuck with the expense of maintaining checking accounts, but fewer of the benefits of other, more profitable products." About 40% of bank customers whose main branch closed in the past year either switched banks or opened accounts at other banks, Bain found.
Healhier: The number of "problem" banks fell to 132 in the third quarter from 147 a year earlier, hitting a seven-year low, according to the FDIC's third quarter banking profile. That compares to a high of 888 in the first quarter of 2011. At the same time, the ratio of banks that were unprofitable fell to 4.6%, the lowest figure since 1997. Only two banks insured by the FDIC failed during the quarter. The FDIC also reported that banks had aggregate net income for the quarter of $45.6 billion, another post-financial crisis high. However, industry aggregate return on equity slipped to 9.29% from 9.33%, largely the result of higher capital requirements and other regulations.
"It's a scary time for banks. They run the risk of being the dumb regulated utility with all of the costs, while all the high-margin juicy stuff is hollowed out." — Gerard du Toit, Bain & Co.'s lead banking consultant.