Receiving Wide Coverage ...
BNP Could Face $10B Fine: U.S. authorities want BNP Paribas to pay more than $10 billion to settle allegations the French lender violated U.S. sanctions against countries including Iran and Sudan, according to the Wall Street Journal. "We are used to seeing penalties wipe out a quarter's profits, but $10 billion will wipe out a full year for BNP so market reaction will probably be somewhat greater," Mizuho credit strategist Roger Francis told the Journal. Indeed, investors reacted to the settlement figure with alarm as BNP shares fell by as much as 6% in Paris this morning. BNP's worries extend beyond the potential penalty figure. Benjamin Lawsky, the head of New York's Department of Financial Services, is pushing for the settlement to temporarily suspend the bank's permission to process U.S. dollar transactions, according to the Journal. Prosecutors are also pushing for BNP to plead guilty to criminal charges.
Piketty Fights Back: French economist Thomas Piketty has posted an in-depth response to the Financial Times' criticisms of the data used in his best-selling book Capital in the Twenty-First Century. Piketty "doesn't give an inch" in defending both the integrity of his numbers and his conclusion that wealth inequality is on the rise in the developed world, Neil Irwin writes in the New York Times. The FT devotes limited space to Piketty's response, although the comments section indicates that a number of its readers feel the original article by economics editor Chris Giles unfairly attacked Piketty. The pro-Piketty sentiment was also dominant on Twitter, with economist and Times columnist Justin Wolfers declaring, "The FT asked good questions. Their mistake was to presume there were no good answers. Piketty showed there were. There's no smoke, no gun." Some observers felt the push-and-pull between Piketty and the FT's Giles had been productive. "This kind of back and forth is how science progresses," commenter Bill W. wrote at the Times. Piketty "has had his assumptions and some technical things challenged and his response to me at any rate makes ever clearer the essential truth of his key assertions."
Wall Street Journal
A growing number of homeowners are taking out loans against their properties as home values improvea development that's making some observers nervous. The Journal's report says lenders are attempting to avoid the mistakes of housing bubbles past by extending home equity lines of credit only to borrowers who have solid credit histories and live in areas with rising home prices. "Relative to where they were, lenders are still very conservative," Keith Gumbinger of mortgage-information site HSH.com told the Journal. "Will the excesses of yesterday return? Only time will tell."
Banks are steering clear of Brickman Group's proposed buyout of landscaping company ValleyCrest. Their restraint suggests traditional lenders may be paying attention to regulators' attempts to discourage them from financing risky leveraged buyouts, according to the paper.
JPMorgan Chase has released its annual summer reading list for wealthy clientele. This year's picks include a Middle Eastern cookbook, Ariana Huffington's Thrive and a motivational book on public speaking entitled Talk Like TED. Most of the picks look like they could easily be found at an airport bookstore. No works of fiction made the cut.
Finance professor Charles Calomiris argues that requiring banks to hold certain levels of contingent capital, or "CoCos," could help put an end to too-big-to-fail.
New York Times
Dish Network plans to start accepting Bitcoin payments later this year. "We don't know what the demand will be, exactly," Dish chief operating officer Bernie Han told the Times. "It might be tiny. It might be bigger than tiny. It's probably growing."
Remarks this week by Bank of England governor Mark Carney and IMF head Christine Lagarde are indicative of a shift in regulators' attitudes toward banks, according to two Times columnists. "At the heart of the new regulatory spirit is a belief that banks are not, in and of themselves, necessarily good things," writes Floyd Norris. Roger Cohen says Carney's speech in London came down to the point that "human beings matter." He quotes Carney as saying that "financial capitalism is not an end in itself, but a means to promote investment, innovation, growth and prosperity."