Wall Street Journal
Rules for payment apps: Mobile payment apps like PayPal's Venmo and Alphabet's Google Wallet will be covered by the Consumer Financial Protection Bureau's new rules covering prepaid debit cards. While prepaid cards and mobile payment apps serve mostly different demographics and do different things, "the CFPB views the products as requiring similar types of oversight to ensure customers' money is safe," the Wall Street Journal reported. The payment app providers had objected to their inclusion after the rule was first proposed two years ago. Under the rules, which take effect in a year, prepaid card and mobile app providers would be required to more fully disclose their fees and provide the same liability protection as credit card issuers. The rule won't cover digital wallets that simply store payment credentials, such as Apple Pay. The CFPB has already received more than 500,000 comments on the proposal so far.
Citi's Brazil exit: Brazilian banking giant Itau Unibanco is in advanced, exclusive talks to acquire Citigroup's consumer banking operations in that country. Brazil's banking industry is highly concentrated among five banks, including Itau; Citi has just a 1% market share. The U.S. bank is also looking to sell its consumer operations in Argentina and Colombia.
Calling all bonds: Goldman Sachs, JPMorgan Chase and Citigroup are adding call features to their bonds, "giving them room to retire debt and cut their interest costs" while meeting total loss-absorbing capital, or TLAC, requirements mandated by the Federal Reserve, the FT reports. The call features, which allow the banks to redeem the bonds one year before they mature, "are expected to become an industry standard as these institutions increase their reliance on longer-term funding." Bonds do not count toward a bank's loss-absorbing capacity once they fall within one year of maturity, but lose half of their TLAC value within two years of maturity, the paper said.
Up and Atom: Atom, the U.K.'s first mobile-only bank, according to the FT, is now opened for all customers. Previously, one had to be invited to deposit in the bank, which enabled Atom to learn from customer feedback and refine the app before rolling it out more widely. "Unlike traditional banks, mobile lenders are free of legacy problems and are not saddled with old technology," the paper said. Customers can sign up for an account within minutes without the need for paperwork or branches. It also offers face and voice verification to circumvent the need for passwords and PINs.
New York Times
It's not capital...: The International Monetary Fund warns in its latest financial stability report that European banks with outdated business models pose the biggest threat to the financial system, not those are undercapitalized. "The focus of investors has shifted from the level of capital to the business model, and that is why banks are under pressure," said Peter Dattels, deputy director in the IMF's capital markets division. The fund said the problems with European banks "were deeply structural: a toxic brew of low levels of capital, troubled loans and business models that no longer delivered profits in an era of low growth and negative interest rates." The paper said Dattels "singled out" Deutsche Bank.
Wells troubles grow: Joining California and Illinois, Chicago said it won't be doing business with Wells Fargo in the wake of the bank's phony accounts scandal. A measure approved by the City Council and supported by Mayor Rahm Emanuel will freeze the bank out of any work with the city, including underwriting its bonds, for a year. "We do need to send the message that the city does business with those people who perform with integrity, transparency, and who hold themselves accountable for best practices," the city's CFO Carole Brown said.
Separately, a group of Democrats in the U.S. Senate requested U.S. Attorney General Loretta E. Lynch investigate Wells' senior executives to find out if they knowingly allowed illegal conduct to continue after learning bank employees were opening accounts without customers' permission. "Every time the Department of Justice settles a case of corporate fraud without holding individuals accountable, it reinforces the notion that the wealthy and powerful have purchased a higher class of justice for themselves," the senators wrote. "That's why the Wells Fargo investigation is so important."