Receiving Wide Coverage ...
Barclays’ New Boss: Barclays has tapped former J.P. Morgan Chase senior investment banker and hedge fund executive James Staley as its new chief executive. Staley fills the void left by Antony Jenkins, who was sacked by the British bank’s board after it lost confidence in how he would improve returns to shareholders, the New York Times writes. Jenkins himself replaced Robert Diamond, Jr., who was fired in the wake of Barclays’ admission to manipulating Libor.
Better known as “Jes,” Staley’s career blossomed at J.P. Morgan, where he rose through the ranks to ultimately become head of the company’s investment banking arm. He was touted as a potential successor to Jamie Dimon, but left for the hedge fund BlueMountain Capital. Interestingly, the Wall Street Journal notes Staley applied for the CEO post at Barclays in 2012, but was rebuffed at the time because the British company would have had to buy out his shares in J.P. Morgan.
As Barclays’ head honcho, Staley is set to earn £8.25 million, or roughly $12.6 million annually, plus a handsome bonus to start, the Financial Times reports. Staley is likely to lead an accelerated restructuring at the bank in light of the underperformance of its investment division, the paper adds. In a memo to staff, Staley said, “We must therefore complete the cultural transformation of the Group… My ambition is to restore Barclays to its rightful standing — successful, admired and well regarded by all.”
The Fed’s Rate Riddle: As the Fed wraps up its two-day meeting, all signs are pointing to rates staying the same. But the central bank remains poised to raise rates in December, the Times writes, in part because officials see an advantage in moving earlier than necessary. Analysts and investors, however, have begun to expect rates won’t be lifted until next year. Again, it’s not surprising that the Fed is holding off. As CNBC points out, even the most staunch supporters of a rate hike at the Fed have seen support dwindle in the face of global economic woes and slower growth at home. But waiting is not without risks either: the Journal reports cash is burgeoning in U.S. money markets, which could complicate the Fed’s ability to control short-term interest rates. "The central bank can’t just make the fed-funds rate go up by fiat; among factors counteracting its efforts will be the wall of money it flooded into the banking system—more than $2.5 trillion—that is still pinning short-term rates down," the paper notes.
The Ex-Im Bank May Rise Again: A bill to reauthorize the Export-Import Bank cleared the House of Representatives with major support on both sides of the aisle. The vote showed the small band of conservative critics who derailed the Ex-Im Bank’s reauthorization four months ago did little to sway the overall opinion of the Republican Party, according to the Times. The federal agency’s fate is not official yet, though, the Journal contends. The House bill now goes to the Senate, where its reauthorization had previously received support as part of an unrelated transportation bill. There’s a chance the Senate will not approve the reauthorization without the House’s approval of a transportation bill. But there’s a chance the bank could get full reauthorization via an amendment on an upcoming highways bill. And either way, the vote is a major win for the banking industry and other big businesses that lobbied for its existence. To learn more about the differing opinions on the agency, be sure to head over to the American Banker's BankThink section.
Wall Street Journal
Goldman Sachs will spin out a collection of mobile-phone software as the bank joins the ranks of many companies in the financial industry that are redefining themselves as tech companies, too. The venture will be majority-owned by software firm Synchronoss Technologies and Goldman will receive a minority stake in exchange for its Lagoon product, the paper notes. Lagoon provides employees with secure access to business apps on mobile devices. Goldman also provided access to the Orbit apps, which allow for remote access to email and other services.
Provisions in the Trans-Pacific Partnership aimed at banks are receiving flak from some critics. In a break with previous free trade agreements, the provisions allow banks to sue foreign governments via special arbitration in certain cases. The text is meant to protect banks and ensure they are treated fairly in the face of potentially arbitrary or discriminatory regulations in other TPP countries. But the paper reports that critics, led by Sen. Elizabeth Warren, D-Mass., think the safeguards could create loopholes for banks and undermine existing financial regulations in the U.S. Warren warned the provision could potentially lead to another financial crisis.
The Federal Deposit Insurance Corp. rolled out new rules that will require banks to post and collect collateral as protection against losses on bilaterally traded derivatives. Banks will also have to receive collateral on trades with their own affiliates. The paper writes the new rules have created concerns within the fixed income arms of banks, which are already struggling with tougher regulations on capital and a shift in products sold. The increased cost due to these rules could dissuade future deals, critics say, which would ultimately make the banks suffer.
New York Times
The Education Department has unveiled new rules to help college students avoid excess fees when using school-promoted debit cards. The rules ban overdraft and other fees on campus debit cards; it also requires schools to present students with different options for receiving financial aid balances. The cards are often used by students to receive financial aid refunds they then use to pay for other educational costs, such as textbooks. The paper notes the new rules will not apply to campus accounts marketed by banks or financial companies without ties to the financial aid process.
In an op-ed, University of Pennsylvania professor David Zaring argues courts should have paid more attention to a whistle-blower case involving the New York Fed and Goldman Sachs. The whistleblower, former bank examiner Carmen Segarra, recorded meetings between the two parties, which she said showed the regulator had gone soft on the bank. She was fired from the Fed after raising concerns about a deal between Goldman Sachs and Banco Santander, subsequently filing a lawsuit claiming protection under the bank whistle-blower statute. That suit was thrown out by a district court and an appeals court upheld the decision. Zaring argues the statute is meant to be broadly construed and said her arguments should have been given a more careful hearing.