Breaking News This Morning ...
Earnings: Bank of America, PNC, U.S. Bancorp
Receiving Wide Coverage ...
Custody Bank Fined: Bank of New York Mellon has been fined £126 million, or about $185 million, by a U.K. regulator for failing to keep client money separate from its own proprietary accounts in its London office. The rules are intended to protect client assets if the bank were to became insolvent. BNY Mellon failed to implement sufficient governance measures to prevent the commingling of funds and it failed to spot the errors on review. The governance problems occurred between 2007 and 2013. Because BNY Mellon holds more than £1.5 trillion in combined custody assets in the U.K., Britain considers the bank systemically important. BNY Mellon said in a regulatory filing that the fine will be covered by its existing legal reserves. "We regret in this case that we did not meet our standards or those of the [Financial Conduct Authority]," BNY Mellon said in a statement. The Financial Conduct Authority has fined other banks for the same violation, including Barclays and JPMorgan Chase.
Wall Street Journal
Target is in talks with MasterCard to pay $20 million to reimburse banks and credit unions for the costs associated with the retailer's 2013 data breach, unnamed sources told the paper. The settlement payment likely won't be the last for Target as it's also involved in ongoing talks with Visa over the same issue. MasterCard has been negotiating on behalf of the credit unions and banks, including Citigroup and Capital One Financial, that issue its cards and it would distribute funds from Target to those institutions. One issue that has hung up the talks is Target's insistence it shouldn't be forced to reimburse banks that would have to reissue cards anyway due to breaches at Home Depot and other retailers, which occurred shortly after the Target incident.
Global regulators are discussing changes to the rules for repurchase agreements, to better prepare for handling the wind-down of a large financial-institution failure, unnamed sources said. Regulators, including the Federal Reserve, Federal Deposit Insurance Corp. the Office of the Comptroller of the Currency and the Bank of England, seek to create more time to resolve problems at banks that are near collapse. One proposed rule would require a bank involved in a bilateral repurchase agreement with a failing bank to agree to temporary waivers of their contractual rights, including the right to terminate a contract early. Regulators have previously discussed the need for more and better data to help predict future problems with repurchase agreements.
More grist for opponents of the Export-Import Bank. A former loan officer at the Ex-Im Bank was charged with bribery. Johnny Gutierrez was alleged to have accepted bribes on 19 occasions between 2006 and 2013. The Ex-Im Bank's charter is set to expire on June 30 and a number of Republican lawmakers don't want to renew it.
Raising the guarantee fees for Fannie Mae and Freddie Mac will allow for a revival of a competitive, private secondary-mortgage market, American Enterprise Institute fellow Alex Pollock writes in an op-ed. Congress has already instructed the Federal Housing Finance Agency to raise the "g-fees," and the agency must follow the law, writes Pollock, a former CEO of the Federal Home Loan Bank of Chicago.
New York Times
The paper reveals some additional details of the settlement between the Securities and Exchange Commission and three former members of the top brass at Freddie Mac. One is that nobody won the case. Both sides agreed to endorse the statement "that no party is the prevailing party." Another item is that none of the execs will make payments toward the $310,000 out of their own pockets; instead, "the insurance carriers for Freddie Mac are making a nominal donation to an unrelated fund to benefit investors on my behalf," Donald Bisenius, who worked in Freddie's mortgage-guarantee business, said in a statement.
Treasury Department officials have been meeting more often lately with Puerto Rico officials to discuss the island's debt problems. One issue is Puerto Rico, unlike states and municipalities, cannot access the U.S. bankruptcy courts. Even so, neither a federal bailout of the U.S. territory, nor a takeover of Puerto Rico's finances are being discussed, unnamed sources said.
Elsewhere ...
MarketWatch: A writer takes a look at how banks' fraud-protection alerts help institutions catch thieves. In the instance discussed, a scammer probably used a skimming device. The writer had used a Citigroup card at a First Republic Bank ATM at a Rockefeller Center concourse to withdraw $40. Only a minute later another $303 was withdrawn from the same ATM. The writer received a fraud alert from Citi telling him to immediately contact the bank, as it had suspected fraud, which did in fact take place. The fraud alerts have been around for years with credit cards, but Citigroup introduced the alerts to its debit cards only within the past year, said Daniel Buttafogo, Citibank's head of fraud operations for North America.
Pittsburgh Post-Gazette: Gerald Hassell is not in danger of losing his job as chief executive of Bank of New York Mellon, an activist investor who was recently given a board seat said after the company's annual meeting on Tuesday. Edward Garden, the board appointee of activist investor Trian Fund Management, said the board supports Hassell and his management team. Although Garden reiterated that he plans to hold Hassell to the goal of increasing per-share operating earnings by 7% to 9% annually over the next three years, he believes Hassell is "on the right path."
Cincinnati Enquirer: Kevin Kabat, CEO of Fifth Third Bancorp, declined to offer an estimate during the Cincinnati company's annual meeting on Tuesday, as to when the Fed will raise interest rates. Kabat said he's interested in making acquisitions large enough to provide "meaningful" growth in the bank's 12-state footprint, or to beef up its critical operations.
Fortune: Sheila Bair, former chair of the Federal Deposit Insurance Corp., has written a young-adult novel on the financial crisis, titled "The Bullies of Wall Street." The book is described as explaining what happened and how the crisis affected teens. The novel also includes a section where she recounts a meeting with President Obama in 2009 aboard Air Force One.
Bonnie McGeer contributed to this article
