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Goldman’s Revenue Tumble: It was a tough first quarter for Goldman Sachs, as the company’s net income dropped 56% to $1.2 billion on major declines in investment banking and its bond-trading unit. Perhaps the bank’s only solace may be knowing that it’s not alone. JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo reported total revenues of $98 billion for the quarter. That’s 9% lower than last year, the biggest fall recorded since 2011. Net income also plunged – dropping 24% as cost cuts failed to counter the revenue decline. But why did Goldman in particular fare so poorly? For starters, regulations in place since the financial crisis don’t allow banks to use their own money for trading, so to make a profit they rely on investors. But those investors decided not to play amid the market turmoil in January and February, leading to a major slump in trading income. Also, this quarter was the first to show the impact of low or negative rates overseas. Still the bank’s reliance on investment banking and trading left it far more vulnerable than its peers. And the bank’s lack of transparency regarding its investing and lending portfolios, which represent on average roughly 17% of its annual revenue, is beginning to draw scrutiny because of the wild swings in revenue the division has experienced. Overall, analysts are beginning to seriously question the bank’s strategy, since it’s still treading choppy waters years after the crisis. Signs of hope do exist – particularly in the creation of GS Bank, Goldman’s go at a retail bank, formed from the purchase of GE Capital Bank.

Payday Loans’ Hidden Fees: Payday loans have long drawn scrutiny for high interest rates and fees, but a report from the Consumer Financial Protection Bureau finds bank fees are adding to the cost of these loans. Consumers are charged bank overdraft and insufficient-fund fees when they don’t have enough funds to cover the automatic loan repayments, and the resulting costs can balloon to hundreds of dollars. Of those who had failed payments, more than a third saw their accounts closed by banks. Those fees can also multiply quickly because lenders sometimes submit multiple payment requests for part of the loan on the same day, in the hope of collecting some portion. Every time one of these requests fails, the consumer is hit with bank fees. The CFPB studied 18 months of transaction data from nearly 20,000 accounts. The study focused on accounts with payments to online lenders. The study suggests areas the CFPB may seek to address in expected new regulations on payday lending.

Wall Street Journal

Tuesday’s presidential primary in New York was a source of relief for party front-runners Hillary Clinton and Donald Trump, but provided less comfort to Wall Street. Exit polling indicated voters were overwhelmingly united in their distrust of Wall Street. Roughly 63% of Democrats and 49% of Republicans polled believe that Wall Street hurts the economy more than it helps. As for those who see it as helpful, only 30% of Democrats counted themselves among that group versus 45% of Republicans.

Big banks aren’t without their allies though, as indicated by the support from columnist Holman Jenkins Jr. “Too big to fail is wonkery of surpassing irrelevance,” he writes in his latest column, which serves to describe his view today’s big banks are largely the creation of the government.

An excerpt from journalist John Lanchester’s upcoming book, “When Bitcoin Grows Up,” shows how security-crazy some of bitcoin’s biggest advocates can get. Argentinian investor Wences Casares and his colleagues keep their bitcoin keys on an offline laptop that is held within a safe deposit box, he writes. “If those are the lengths you have to go to in order to defend yourself from crooks, what does that say about the safety of the cryptocurrency?” Lanchester asks.

The recent celebrations that followed the court decision in MetLife’s favor in its case regarding the systemically important designation “ignore the lessons of the financial crisis,” according to Treasury Secretary Jack Lew. In an op-ed for the paper, Lew argues financial reforms measure put in place by Congress, including the creation of the Financial Stability Oversight Council that decides SIFI designations, have restored the safety and resiliency of the financial system. He says FSOC is working to identify the risks on the horizon and, as such, has been reviewing activity in the asset management sector.

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