Receiving Wide Coverage ...
Democratic Candidates Debate: Wall Street took top billing amongst the topics of Thursday's Democratic presidential debate between remaining contenders Sen. Bernie Sanders, of Vermont, and former Secretary of State Hillary Clinton. Throughout the evening, Sanders repeatedly criticized Clinton for her connections to the financial services industry – and the way in which those connections appear to have benefited her campaign's bank account. "What being part of the establishment is, is in the last quarter, having a super PAC that raised $15 million from Wall Street," Sanders charged at one point. But it wasn't just Sanders digging into Clinton's financial ties to the banking industry – debate moderator Anderson Cooper took the opportunity to ask the former New York senator and first lady about the six-figure speaking fees paid to her by Goldman Sachs. Her response? "That's what they offered." But Clinton wasn't just a punching back for Sanders' – and viewers' – frustrations regarding the financial services industry. Clinton, throughout the evening, maintained she would go after the industry to rein in its excesses and attempt to prevent future problems. She also pushed back against the idea that campaign contributions from the industry have ever influenced her policy positions, calling the insinuation an "artful smear." She even managed to land a topical jab toward Sanders, Slate points out, criticizing the Vermont senator for supporting legislation to deregulate swaps and derivatives, when he was a member of the House of Representatives. The move allowed creation of the credit default swaps that helped bring about the financial crisis.
Europe's Earnings Struggle Continues: Credit Suisse Group AG felt the pain, as investors knocked down the bank's stock a few notches after a disappointing earnings report. BNP Paribas' fourth-quarter results were not all roses either, showing a 50% decline in net income. Overall, the reports served to reiterate how bad of a quarter European – and global – banks had. Credit Suisse reported Thursday a $5.8 billion net loss, reflecting the adverse effects of its choice to exit investment banking. Much of the loss came courtesy of a goodwill impairment charge related to an acquired brokerage, Donaldson, Lufkin & Jenrette. Credit Suisse bought the firm roughly 16 years ago – a move that now looks all the more bleak thanks to the write-down, showing the downturn in the banks' investment arm's fortunes. And with the first quarter already looking to be a bust in terms of revenue, some observers have begun to worry that the next earnings report from the Swiss bank will be similarly painful, according to the Financial Times. And that's likely to be a source of frustration to Credit Suisse chief Tidjane Thiam, who has been successful in trimming costs at the company – just not enough to outweigh its revenue slump or major one-time charges. Meanwhile, Credit Suisse's French colleagues at BNP Paribas are also still seeing drops in income, despite plans to rejigger their investment banking division. And, again like their colleagues, the staggering drop in net income occurred because of a writedown, FT reported, in this case a roughly $1.03 billion charge regarding BNP's Italian unit BNL.
Wall Street Journal
Twenty major companies have formed an alliance aimed at lowering health-care costs. The group of companies buying into the Health Transformation Alliance spans a range of industries and includes financial services firms, such as American Express, Hartford Financial Services Group and Lincoln Financial Group. The group said it is still committed to providing health benefits, but there could be major changes in the way ther are provided. The alliance will pool data regarding provider costs and patient outcomes. While most participants believe it's premature to say where they'll identify potential cost-savings, one plan already in place would involve reducing the cost of prescription medication starting in 2017.
While the Federal Reserve could ease market concerns by outright saying it won't raise rates again in March, the central bank's hands may be tied. If the Fed were to raise rates then – which most agree is highly unlikely, but technically still a possibility – the result could be quite problematic, even if it might help boost banks' interest income. And not hiking rates has clear benefits, too. For starters, it would put the U.S. central bank back in line with the rest of the world, and that could help improve the sinking dollar. But that's just the problem. If the Fed says it won't hike rates, markets could respond in a way that would create the optimal conditions for a rate increase. So rather than find itself in a Catch-22, the Fed is almost certainly going to keep us waiting.
Financial Times
Two employees of a Swiss bank pleaded guilty to charges they helped Americans avoid paying taxes. The defendants, Daniela Casadei and Fabio Frazzetto, were client advisers at the Swiss private bank Julius Baer, and their actions were uncovered as part of a U.S. Justice Department probe into foreign banks serving as tax havens. Both individuals face up to five years in prison. The company admitted to conspiring with clients to high $4.7 billion in assets. The bank, which stands as the third-largest wealth manager in Switzerland, will pay $547 million to end the probe as part of a deferred prosecution agreement.
Say goodbye to the paper bills in your wallet – because they may soon become mere relics of time past, according to Deutsche Bank's John Cryan. The co-head of Deutsche Bank said during a panel at Davos that cash "is terribly inefficient and expensive." While that may be true, people sure still use it. In fact, in Japan, Switzerland and across the Eurozone, the ratio of cash to GDP has risen. So why hasn't technology replaced cash? Well, plenty of people use cash, particularly those with lower incomes. And you can't discount criminals, including drug dealers and terrorists, who aren't exactly the biggest fans of banks. Low interest rates have also meant that people don't feel the need to store their cash in a bank. Still, as technology advances, the use of cash could dwindle.
New York Times
If you don't like emojis, then it's a good thing that you're not a customer of Russia's RocketBank, according to an op-ed from author Masha Gessen. The mobile banking start-up last week sent an e-letter to customers featuring a "shruggie emoji" (i.e., ¯\_(ツ)_/¯ ). The e-letter said customers may have issues with cards issued by the company's partner, Commercial Bank Intercommerz. In less than two hours came another e-letter, apologizing to Intercommerz for the first e-letter and negating its contents. After that, RocketBank cards issued by Intercommerz stopped working – and Russia's central bank essentially began the bankruptcy process for the issuer. Gessen writes the saga points to the strange way in which information is communicated in the post-Soviet country, where its economic woes thanks to the downturn in oil have been downplayed by the media. While banks and other financial companies fall into bankruptcy each day, the media largely ignores the issue. As a result, the fall of Russia's economy is happening in "eerie silence."
