Wall Street Journal
Considering JPMorgan Chase's experience with failing to tell its wealthy clients where it was investing their money, perhaps this item is not a surprise. Mutual fund giant Vanguard Group set a record in 2015, reeling in $236 billion from investors. It's the largest annual flow of money to a mutual fund company in history, according to Morningstar.
Although Vanguard's stable of funds includes some that are managed by individuals, Vanguard is probably best known for its index funds, which are managed based on pre-determined formulas. It's a popular strategy, as it's far cheaper than paying a person to run the numbers; the Valley Forge, Pa., company now holds about $3.1 trillion in assets under management.
JPMorgan last month agreed to pay $307 million to settle charges from the Securities and Exchange Commission and Commodity Futures Trading Commission that it failed to tell wealth-management clients about conflicts of interest. JPMorgan put their money in more-expensive funds that JPMorgan itself managed.
New York Times
Democratic presidential candidate Hillary Clinton criticized rival Bernie Sanders' plan to break up the biggest banks and reinstate the Glass-Steagall Act. In a speech in Iowa on Tuesday, Clinton said her plan for "taking on Wall Street" was "tougher and more comprehensive" than Sanders' platform. Sanders on Tuesday, in a speech at Town Hall on West 43rd Street in Manhattan, also vowed to remove the Fed's ability to pay interest to banks for their excess reserves, American Banker reported. He also wants to turn the credit rating agencies into nonprofits, let the U.S. Post Office sell banking products and cap fees on ATM transactions and interest rates for loans. Perhaps Sanders is trying to live up to his past as a socialist.
Prolix analyst Mike Mayo praised the Financial Accounting Standards Board for purging an accounting rule that's long plagued banks. FASB on Tuesday eliminated debt-valuation or credit-valuation adjustments. Bankers have complained for years about the rule, which had required companies to value bonds and other obligations not on their original cost, but on their current market price. "Good riddance," CLSA's Mayo said. "It gets rid of the noise that didn't add value."
Washington Post
It's a good time to be in the car-loan business. About 17.5 million cars and trucks were sold in 2015, a record number, according to automakers. That was up from 17.3 million sales in 2000. Analysts predict 2016 could set another record, if low gas prices persist and the job market continues to improve.
Elsewhere ...
Charlotte Observer: As banks get ready for the Consumer Financial Protection Bureau's likely release some time this year of rules for bank overdrafts, many consumers remain befuddled about how overdrafts are assessed, according to a new report. One reason for the confusion is rules vary widely among banks and credit unions, according to Reinvestment Partners in Durham, N.C. For example, some banks don't charge overdraft fees if an overage falls under a certain amount. Other banks do charge an overdraft in that instance.
Reinvestment Partners, which was founded in 1986 by North Carolina Legal Services, also compiled a ranking of institutions by the amount of overdraft fees collected per $1,000 in consumer deposits. Woodforest National Bank in Houston led the way at $463 in overdraft fees per $1,000. It was followed by TD Bank in Toronto; Trustmark in Jackson, Miss.; Regions Financial in Birmingham, Ala.; and U.S. Bank in Minneapolis.
Denver Post: A federal district court judge dismissed a lawsuit filed by Fourth Corner Credit Union in Denver, seeking approval to provide banking services to marijuana businesses. Allowing the credit union to provide those services "would facilitate criminal activity," the judge wrote in an order on Tuesday. The judge came to his decision, in spite of the Justice Department's guidelines that stipulated that it wouldn't pursue investigations if certain conditions were met. "These guidance documents simply suggest that prosecutors and bank regulators might 'look the other way' if financial institutions don't mind violating the law," Judge R. Brooke Jackson wrote. "A federal court cannot look the other way."
