Wall Street Journal
"One Firm Getting What It Wants in Washington: BlackRock." That's the head on a piece in the Journal that looks at how the largest asset manager (by far) has worked the system to avoid the SIFI designation (for now).
Venture funding for lending startups has dried up during the first quarter of 2016 ($298 million vs. $832 in the last quarter of 2015), and Silicon Valley is now putting its money behind firms that show an ability to target niche borrowing segments. These up-and-coming lenders operate across a spectrum, from relatively large niches like loans for real-estate projects or people with bad credit to highly specific audiences such as loans for weddings. Part of why new lenders are taking this niche approach is that earlier lending startups have become so well financed and entrenched that they're far more difficult to compete with. That, coupled with poor IPOs that have caused a slow-down in venture capital in the lending space overall, means new entrants need to stand out if they want a chance at success at all.
Deutsche Bank has turned to big data as it develops a model for detecting fraud and accounting issues. The bank has created an approach the relies on the Securities and Exchange Commission's database of companies with known accounting problems, using a law developed in 1938 by physicist Frank Benford to comb through the data. Deutsche bank isn't alone though – regulators are also trying to use data to spot fraud in financial markets or company reports.
The private fund designed to protect the Italian banking industry is already drawing scrutiny just a week after being announced. The Atlante bank fund, which received enthusiastic backing from the country's government, was created to buy non-performing loans and shares from struggling banks. No one questions the ability of the Atlante fund to buy shares in struggling banks to stabilize their stock value. But it's somewhat unclear, as of now, how the fund will has success since it only has $5.7 billion in equity while the banking industry in Italy holds $22.8 billion in non-performing loans.
Meanwhile, as that fund draws scorn, Italy's neighbors are growing increasingly worried of the contagion effect from its banks. As the paper writes: "The country's banking woes could easily become the rest of Europe's Italy may have temporarily staved off a blow to confidence in its banks. But the lack of any long-term solution means the problem has not gone away."
New York Times
Bankers are now facing the following question: "What does it mean to look like a banker in the age of Bernie?" While criticizing banking is nothing new – that definitely happened a lot during the financial crisis – the new fervor with which people oppose banking is reaching a fever pitch. And that has implications for every aspect of bankers' lives and careers – including their wardrobes. Indeed, the image of a banker lobbed about by Sens. Bernie Sanders and Ted Cruz is less tied to today's reality, as more people on Wall Street have ditched the suit for jeans.
Younger adults take the hardest hit from bank overdraft fees, according to a new report from the Pew Charitable Trusts. Of "heavy" overdraft users who pay $100 or more each year in overdraft fees, more than a third are in their late teens through early 30s. Part of the reason behind that is that this age group relies on debit cards for most transactions, which can lead to such fees. Also many young adults are handling their own finances for the first time, meaning that overdrafts can come as part of the learning curve. But because of the frequency with which people go so far as to rely on overdrafts almost as a form of credit, some are calling for these overages to carry similar protections as loans.