Wall Street Journal
Federal prosecutors and New York's top banking cop have contacted at least 10 banks for questioning on whether they should have alerted authorities about suspicious money transfers involving FIFA, soccer's world governing body. The U.S. Attorney's office in Brooklyn and has contacted Delta National Bank & Trust in New York, HSBC and Standard Chartered, unnamed sources said. At least three other "major" international banks have also been contacted by the U.S. Attorney but their identities have not yet been revealed.
The New York Department of Financial Services has sent initial inquiries to Standard Chartered, Barclays, Deutsche Bank, Credit Suisse and Israel's Bank Hapolim. The New York banking regulator is looking at whether individual bank employees had a role in the lapses. The Brooklyn U.S. Attorney in May indicted 14 individuals associated with FIFA on charges they got more than $150 million in bribes and kickbacks. American FIFA official Chuck Blazer has admitted accepting bribes.
Visa CEO Charles Scharf blasted FIFA for not doing enough to investigate alleged corruption. FIFA's responses to the scandal are "wholly inadequate and continue to show its lack of awareness of the seriousness of the changes which are needed," Scharf said during Visa's earnings conference call. Visa is a major sponsor of FIFA's World Cup. Scharf called for the creation of an independent commission to probe the alleged misdeeds at FIFA, saying FIFA itself can't do the job.
Bank of America CEO Brian Moynihan asked Bruce Thompson to consider staying, after the chief financial officer told Moynihan he was ready to leave that role, unnamed sources said. But Moynihan "agreed that there wasn't a path to a role he would be interested in." One such role was running the investment bank, but that job belongs to Tom Montag, who's now considered the top candidate to succeed Moynihan after the CEO purged nine peoplefrom management's top ranks this week. In other bits of gossip from unnamed sources, Thompson felt he shouldered more of the blame than he deserved in B of A's repeated flubs of the Fed's stress tests. Thompson also didn't like Moynihan's moving Paul Donofrio from the corporate bank to be finance chief of the consumer bank and of wealth management. Thompson preferred someone else for that job. As it turns out Donofrio will have Thompson's job as CFO.
Thompson's departure and the other personnel moves at B of A raise a spotlight on the company's financial performance. "By almost any measure, it has been disappointing," John Carney wrote for "Heard on the Street." B of A's return on equity, during Moynihan's leadership, has fallen far short of exceeding its 10% theoretical cost of capital. That's meant B of A's investors have suffered. Its stock has risen only 20% since Moynihan became CEO, less than the 89% gain in the S&P 500 during the same period.
Regional banks' shares are rising after earnings reports showed they're doing a good job of cutting costs and raising fee income. Huntington Bancshares, PNC Financial Services Group, SunTrust Banks and Fifth Third Bancorp are among the companies that have shown they can achieve some success by controlling the things they can control, rather than waiting on the Fed to raise interest rates.
Dodd-Frank is not only killing the banking industry, it's also inflicting a mortal wound on the concept of rule of law, former Senate Banking Committee Chairman Phil Gramm, R-Texas, wrote in an op-ed. The law has empowered regulators to set rules on their own, rather than implement requirements that Congress directs. The system of checks and balances promoted "general consistency and predictability in federal regulatory policy." It also required the debate on major decisions to be conducted in the light of day. No longer is that the case and the Consumer Financial Protection Bureau is the prime example, along with the Financial Stability Oversight Council. It also manifests itself in the Federal Reserve and the Federal Deposit Insurance Corp. having "almost total discretion" in whether to approve banks' living wills.
Financial Times
Of the 64 banks that had reported second-quarter earnings through Tuesday, 52 reported an increase in fee income, according to KBW research. The improvement in noninterest income is one reason why more than half of banks have beaten analysts' estimates this quarter. The paper said the growth in fee income probably isn't sustainable as much of it came from a surge in mortgage applications, which is tailing off. Banks can also expect the CFPB to crack down on any fees it sees as excessive or abusive. Online lenders that charge less for financial services will also eat into bank fees. Other factors in banks' second-quarter performance include the lack of large financial settlements for lawsuits and investigation.
New York Times
The paper takes a look at the suspects in ruses related to the data breach at JPMorgan Chase. One suspect, Anthony Murgio, attended a friend's wedding in Atlanta a few days before he was arrested at his home in Florida, accused of running an illegal Bitcoin exchange. Gery Shalon and Ziv Orenstein were arrested in Israel and another suspect, who was believed to have been in Israel, Joshua Samuel Aaron, instead is thought to be in Russia.
Elsewhere ...
New York Post: There's nothing dangerous about investment banks being in the business of retail banking, Paul Hastings lawyer Richard Farley wrote in an op-ed. Big banks are the least likely to be the cause of a financial crisis. Instead, small banks are most likely to cause a crisis; see the Savings & Loan crisis of the 1980s.
Charlotte Observer: At an event for Girl Scouts in Charlotte, N.C., a Girl Scout asked Bank of America's Cathy Bessant, "Are some bankers good?" Banking is a "very good and noble" profession, Bessant replied.
