Wall Street Journal
Cutting out banks: Transferwise, the global money transfer startup that has so far worked indirectly with consumers through its bank partners, wants its own independent licenses, eschewing banks. The five-year-old London-based company currently partners with Barclays in the U.K. and Community Federal Savings Bank in New York. It has licenses in 37 states, and can operate independently in three states that don't require licenses. The company's CEO says having its own licenses will enable it to cut costs and offer more features. "This is the latest example of the evolving and complex relationship between aspiring fintech disruptors and traditional banks," the Journal writes.
Blurry lines: Earning extra income by renting out your house through Airbnb may actually make it tougher to get a mortgage, not easier. Bank of America, Wells Fargo and other big banks are "subjecting some refinance customers who rent rooms to additional scrutiny," with some borrowers saying they are being forced to pay higher interest rates. The problem is that these mortgages are "blurring the line between residential and commercial property." Mortgages on rental properties are normally seen as riskier than when the loan is backed by the borrower's principal residence. With these so-called Airbnb loans, "the distinction isn't so clear-cut."
Who needs a bank?: Like their counterparts in Japan and other countries with interest rates at or below zero, German consumers are buying safes to store their money rather than keep it in a bank. "It doesn't pay to keep money in the bank, and on top of that you're being taxed on it," said one 82-year-old pensioner. Germany's largest safe maker said sales of home safes jumped 25% in the first half compared with a year earlier. Institutions are doing likewise. Reinsurer Munich Re is reportedly keeping over €20 million in cash in a safe – albeit a very large one.
Goldman flak: Former European Commission President José Manuel Barroso's appointment as the non-executive chairman of Goldman Sachs' London investment bank is drawing a lot of criticism. A petition by change.org advocating punitive measures against Barroso, including suspending his EU pension, has gotten more than 76,000 signatures. French President François Hollande called Barroso's appointment "morally unacceptable," while EC President Jean-Claude Juncker said, "The fact that Barroso works for a bank doesn't bother me. But the fact that it's that one causes me a problem." The paper says, "Critics have claimed the role is inappropriate given Mr Barroso's central role in forming Europe's response to the financial crisis during his decade at the helm of the EU. The petition also references Goldman Sachs' role in the US subprime crisis and Greece's crisis and the crucial juncture the EU faces as Brexit looms."
Limited patience: When ValueAct announced recently that it had bought a 2% stake in Morgan Stanley, it almost sounded like it was a passive investment. It said it largely approved of what the bank has been doing. But that doesn't mean the activist investor's patience is indefinite. Analysts say relations "could get a little more strained" if the bank fails to hit its return on common equity target of 9%-11% by the end of next year. Then ValueAct could get a lot more activist. "Enough of a free ride for these management teams," said Mike Mayo, an analyst at CLSA. "There's only so long investors can sit around waiting for adequate returns."
New York Times
Volcker rule data sought: U.S. Rep. Carolyn B. Maloney, D-N.Y., sent a letter to five federal banking and securities regulators asking them to provide two years of quantitative trading data they have collected in connection with the Volcker Rule. "I believe that these quantitative trading metrics can provide important information not only about the efficacy of the Volcker Rule, but also about the general trading activities of U.S. banks, and the degree to which these trading activities have changed over the past two years," the letter said. She asked for responses by October 30.