Receiving Wide Coverage ...
More pain for Wells: Sen. Sherrod Brown, D-Ohio, said he plans to introduce a bill that would prevent Wells Fargo from forcing customers to use arbitration clauses if they challenge the bank for opening bank accounts without their permission, a move that would make it easier for customers to sue the bank for any damages they may have incurred as a result. "Giving customers back their right to take Wells Fargo to court gives them the power to ensure they are made whole and helps prevent cases like this in the future," Brown said in a press release.
Illinois said it will suspend $30 billion in investment activity with Wells Fargo, joining California in refusing to business with the bank. "I hope to send the message that their unscrupulous practices are not welcomed and will not be tolerated," State Treasurer Michael Frerichs said, calling the bank's actions in the phony accounts scandal "downright shameful." The state will stop buying Wells debt securities for one year and stop using the bank as a broker-dealer for investment purchases, which he said will cost the bank "millions of dollars" in lost fee income. The state is also auditing the bank to see if it complies with Illinois law on returning unclaimed property to consumers. Wall Street Journal, Financial Times, American Banker
Morgan Stanley flagged Massachusetts' top securities regulator accused Morgan Stanley of running an "unethical sales contest to cross-sell banking business" to the bank's wealth-management clients. The regulator said Morgan Stanley Smith Barney, the bank's retail brokerage unit, ran an internal "sales contest" that urged customers to borrow against the value of their investment portfolios. "Analysts and consultants say that many other banks around the country will have to review their own sales practices if they want to avoid regulatory scrutiny," the Financial Times commented. Wall Street Journal, Financial Times
Wall Street Journal
Deutsche's troubles aren't unique: If you think Deutsche Bank is the only big bank that needs to worry about a shrinking share price, think again, writes the Journal's James Mackintosh. "There are three basic explanations for what has gone wrong at Germany's biggest bank, and they all apply to its global peers," he writes. The first is that the bank's stock price is being manipulated downward by speculators, as CEO John Cryan asserts. The second is that the markets are correctly pricing risk, "and Deutsche Bank is merely the worst of a bad bunch of global banks that still have far too little capital." The final reason is that banks are worth less for the simple reason that they're less profitable, and are expected to remain so. "In other words, the bank business model is broken, and their shares are justifiably cheap."
RBS settles with Connecticut: Royal Bank of Scotland said it will pay the state of Connecticut $120 million to settle an investigation into the bank's underwriting of residential mortgage-backed securities. The bank and the state had reached a preliminary agreement in June. RBS it had already set aside money to cover the cost of the settlement.
A twist on blockchain: JPMorgan Chase said it is working on a new variation on blockchain technology that would allow the bank to use a publicly available system for confidential transactions. "The move is a break with how some banks have approached" using the technology behind bitcoin, the Journal reports. "Instead of creating a completely new private blockchain, JP Morgan engineers say they have found a way to limit access to transactions shared via a network to people who need to know the details, like parties to the trade or a regulator." The bank plans to share its new code for the system, called Quorum, with outside developers, "something the bank has recently started doing as a way to entice top engineers to work with the bank and take advantage of the latest developments in blockchain."
New York Times
No more bread and butter: Small banks are starting to shy away from making commercial property loans, an area that had previously been their bread and butter, the result of regulatory warnings about lax lending standards, the Times reports. "The lending chill comes as regulators have been warning banks about being overly aggressive in commercial real estate lending," the paper says. Some banks are unwinding or selling off loans that have drawn regulatory scrutiny and are wary of making new loans. Brokers say they are finding fewer lenders for some deals. Private equity and pension funds have stepped into the void left by the banks.