Receiving Wide Coverage ...
Metal Fraud Concerns Grow: As banks investigate the possibility that a Chinese metal producer used the same materials as collateral for metal-backed loans, China's state-owned company Citic Resources Holdings attempted to secure its warehouse stocks of aluminum and copper. A half-dozen banks are looking into the suspected fraud, including Citigroup and Standard Chartered. Some of the lenders have decided to refrain from commodity financing deals in China "until they get clarity on the situation," according to the Wall Street Journal. The Journal notes that a drop-off in financing for commodities in China could cause turmoil in global markets and reduce credit availability in the country. Chinese companies have turned to commodity-backed loans when they are unable to secure traditional bank loans, according to the Financial Times.
Wall Street Journal
Changes to Small Business Administration lending requirements intended to channel more credit to African-American borrowers and other minorities will be announced Tuesday, according to the paper. "Beginning July 1, lenders will no longer have to perform an analysis of cash flow or debt-service coverage on loans of $350,000 or less, provided business owners meet the agency's credit standards," the Journal reports. SBA administrator Maria Contreras-Sweet said the changes "will simplify and streamline the lending process, which will incentivize banks to do more small-dollar loans in order to get more loans into the hands of traditionally underserved entrepreneurs."
The Securities and Exchange Commission has launched probes into a number of major "dark pools" private electronic trading platforms that allow investors to anonymously buy and sell orders. "Investigators are exploring whether the trading systems are properly disclosing to clients how they operate, treating all investors fairly and protecting confidential client information, among other concerns," according to anonymice.
The housing market will continue to be hobbled by the precarious financial circumstances of Americans in their 20s and early 30s, according to John Carney and Justin Lahart. "Banks will see tepid demand for mortgages" as younger Americans struggle with student loan debt, limited job opportunities and sluggish income growth, the authors write. They predict President Obama's decision to expand student loan debt relief will make only a modest dent in the problem. "Better help would come from a drastic recovery in employment and incomes that would allow them to put their costly educations to work," Carney and Lahart write.
European bank executives continue to bite their knuckles as they await news of an expected settlement between French lender BNP Paribas and U.S. authorities, according to FT banking editor Martin Arnold. BNP could be slapped with a $10 billion penalty for allegedly violating U.S. sanctions. The scale of this potential punishment troubles lenders that have disclosed similar issues, including Deutsche Bank in Germany, Crédit Agricole in France and UniCredit in Italy. Arnold suggests that U.S. and European banks grappling with major litigation issues follow the lead of British banks and create their own Banking Standards Review Council a bank-funded but independent group created to provide annual updates on the industry's behavior.
New York Times
Facebook has hired PayPal president David Marcus to expand and monetize its messaging products. Marcus will leave PayPal and its parent company, eBay, at the end of June.