Receiving Wide Coverage ...
Conflict of Interest Strikes Again: Toys tend to make children get greedy, and they appear to produce a similar effect on investment banks. Ten firms were fined $43.5 million Thursday over charges they offered up flattering research analysis in an effort to score a piece of the Toys "R" Us initial public offering. Citigroup, JPMorgan, Wells Fargo and Goldman Sachs are among the banks cited by the Financial Industry Regulatory Authority. Wall Street Journal, Financial Times, New York Times
Two in One: Commerzbank could pay more than $1 billion to U.S. authorities to settle investigations into whether it violated economic sanctions and money laundering rules, according to anonymice. The deal would put at an end to two separate probes into the German lender: one by the Department of Justice, New York's Department of Financial Services and the Manhattan district attorney, and one by the U.S. attorney's office in Manhattan. The settlement is also likely to include a deferred prosecution agreement, which the FT notes "represents a return to more familiar legal territory" after a push to force big banks to plead guilty to criminal charges. Wall Street Journal, Financial Times
Join the Club: Lending Club's stock market debut got off to a roaring start Thursday, with shares closing 56% higher than the company's IPO price at $23.43. Pundits have been treating the company's IPO as a referendum on the future of alternative lending. The papers sound a few warning notes about the challenges Lending Club and its peers may confront going forward, including higher interest rates, pressure to ease lending standards and regulatory uncertainty. But overall, the coverage casts online lenders in a pretty flattering light. Wall Street Journal, Financial Times, New York Times
That Q-Tip Will Be $100, Please: In the age of surprise $117,000 medical bills, it makes sense that medical debt is at the root of many Americans' credit score problems. "One in five American consumers 43 million people have blemishes on their credit reports because of overdue medical bills, while medical debts make up more than half of collection items on credit reports," the Times reports citing a study from the Consumer Financial Protection Bureau. The Washington Post also takes on the issue. If you're looking for a less depressing perspective on debt, the Journal has a relatively sunny update. Americans' debt levels are at their lowest in 10 years, the paper reports, and with their finances under control they're more likely to start borrowing and spending, albeit cautiously.
Wall Street Journal
Former Fed chair Paul Volcker has a side gig as a global bank investor, according to the paper. "Most recently, he joined a group of western private-equity investors that is buying 75% of Latvia's Citadele Bank for 74 million ($91 million), a deal that has generated some backlash. His earlier investments include Japan's Shinsei Bank and Commercial International Bank in Cairo."
"New York's top banking regulator is investigating whether Barclays and Deutsche Bank used algorithms to manipulate foreign exchange rates, which could increase the penalties they face," the paper reports. If the banks did use algorithms, it would suggest their part in the forex scandal could be attributed to a broader pattern of misconduct rather than a couple of bad seeds.
"Banks that simplify the bundles of asset-backed loans they sell to investors could be rewarded with lower capital requirements" thanks to new proposed frameworks from the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.
New York Times
The Times' Floyd Norris is soon to bid the paper adieu, and so he uses one of his last columns as an opportunity to reminisce on crises past, starting with the Great Inflation of the 1970s. He says we tend to take away the wrong lessons from financial disasters, including the idea that Wall Street can count on the government to get it out of jams.
Goldman Sachs chief Lloyd Blankfein expressed feelings of kinship toward Hillary Clinton and ruminated on what Uber's success reveals about tensions between capital and labor at the paper's DealBook conference, while American Express CEO Kenneth Chenault claimed to be uncowed by Bitcoin (though appreciative of its promise).
If the derivatives change attached to the spending bill goes through, it won't have a devastating effect on the financial system, according to a Wonkblog post but Sen. Elizabeth Warren and others who oppose the rider are right to go to the mat over it. "If they don't fight this battle, then they'll have to get ready for the next one over even more important parts of Dodd-Frank and so on, and so on."
Remembe the study that found bankers who are reminded of their profession are more likely to behave dishonestly? The "Statistical Ideas" blog parses the articleand argues that reports of bankers' penchant for lying are somewhat exaggerated.
Where is the financial industry heading in 2015? Share your predictions by Monday 12/15 with Sarah Todd at email@example.com.