Receiving Wide Coverage ...
Barclays' Dark Pool Dries Up: New York Attorney General Eric Schneiderman's civil lawsuit against Barclays is proving bad for the British lender's business. Big banks including Credit Suisse, Deutsche Bank and Royal Bank of Canada ditched the lender's dark pool on Thursday in the wake of allegations that Barclays mislead investors about its dealings with high-frequency traders. Meanwhile, Barclay's dark pool trading venue "was overloaded by a high volume of inquiries from clients on Thursday," according to the New York Times, and was shut down between 11 am and 1 pm. Unsurprisingly, Barclays' shares took a hit from these developments, falling 7.4% to $14.55 on the New York Stock Exchange Thursday afternoon. The Wall Street Journal predicts that the lawsuit will have repercussions for other banks with dark pools, including Goldman Sachs and Credit Suisse, both of which are currently under Schneiderman's microscope. The Financial Times notes that the lawsuit spells more trouble for Barclays chief executive Antony Jenkins, who has been under pressure to clean up the bank's culture since taking over in 2012.
Wall Street Journal
The hunt for higher profits has lenders taking on more risk in multiple areas. Coming off of reports this week that banks are ratcheting up indirect auto loans and leveraged loans, the Journal reports that they're alsoissuing more credit cards to subprime borrowers. "Banks and other lenders issued 3.7 million credit cards to so-called subprime borrowers during the first quarter, a 39% jump from a year earlier and the most since 2008," according to the paper. Among this group of borrowers are what Capital One chief executive Richard Fairbank calls "fallen angels" and "the accidental subprime": people who were hit hard by the recession but are now in a better position to repay their debts on time.
Inflation rose 1.8% from May 2013 to this May not a cause for alarm, according to the paper, but "a development that could weigh on Federal Reserve officials as they debate when to raise interest rates."
The head of fallen Bitcoin exchange Mt. Gox, Mark Karpelès, spoke with the Journal in his first public interview since he announced the company was filing for bankruptcy in February. "The weakest point of my company was management," Karpelès says in reflecting on the mistakes that led Mt. Gox to lose 850,000 Bitcoins to hackers. "I failed to lay out appropriate corporate structures."
Higher prices drove a slight increase in consumer spending in May compared to the previous month; adjusted for inflation, spending actually fell. But there is one bright spot in the Commerce Department's Thursday report: "Personal incomereflecting Americans' incomes from wages, investment and government aidrose 0.4% in May. That marked the fourth consecutive month of income growth, suggesting progress in the labor market is boosting Americans' paychecks."
Speaking of wage increases, Wall Street bankers are optimistic they'll get a pay bump this year even as higher-ups in the industry trumpet the importance of restraint and cost-cutting.
New York Times
U.S. authorities plan to announce on Monday an $8.9 billion settlement deal with BNP Paribas over charges that the French lender broke U.S. sanctions, according to the usual anonymice. BNP is expected to plead guilty to criminal charges as part of the deal and to accept a punishment that would "prevent certain units within the bank's headquarters in Paris, as well as in its offices in Geneva and Singapore, from clearing dollar transactions for at least six months," according to the Times. "BNP's business of processing transactions on behalf of other banks would also face restrictions."
The Obama administration plans to extend its Making Home Affordable program, which includes the HAMP loan modification program as well as several others aimed at helping struggling homeowners, through at least 2016. Treasury secretary Jacob Lew defended the program against critics who argue that it hasn't done enough to help homeowners on the occasion of its fifth anniversary. "HAMP and our other programs cannot be judged only on what they have done directly for homeowners," Lew said. "Treasury's housing assistance programs have become a model for the broader housing sector."
The federal government will auction roughly 30,000 bitcoins its seized when it shut down the Bitcoin marketplace Silk Road in October. "Bidders will have a 12-hour window on Friday to submit one sealed bid for the coins, which have been broken up into lots of 3,000," the paper reports. "The winners will be notified on Monday."
The Times reported on Wednesday that Lorin L. Reisner, the head of the criminal division at the U.S. attorney's office and former SEC enforcement heavyweight, had accepted a new job at a private law firm. Now we know where he's heading: he'll be a partner at law firm Paul Weiss.
"High costs and hidden fees" characterize the financial services available to prison inmates. "Friends and families say they have little choice but to shoulder the financial burden," according to the paper.