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Devil's in the Details: Goldman Sachs has agreed to a $5.1 billion settlement to end the investigation into its role in the mortgage bubble and financial crisis. The FT says the deal failed to satisfy critics, citing one that called it “more of the same non-punishment, non-accountability ritual” and said the bank should publicly disclose its profits and total investor losses from its misconduct. A look at the fine print of the deal, though, shows how Goldman, much as other banks, receive tax credits and can reduce the fine significantly through government incentives, like paying for affordable housing, the New York Times’ DealBook says. The settlement requires Goldman to spend $240 million on affordable housing, but DealBook notes a chart attached to the settlement shows it will have to pay just 30% of that, maximum. The bank – which will pay about $2.4 billion of the total fine in civil penalties and for consumer relief – can also benefit from $875 million in tax savings from its consumer relief spending if it pays the maximum 35% tax rate. Goldman is the last of the lareg American banks to ink a deal with the government. Earlier settlements include a $17 billion deal with Bank of America, $13 billion with JPMorgan Chase and $7 billion with Citigroup. Wall Street Journal, Financial Times, New York Times, Washington Post

Wall Street Journal

As the marketplace lending business faces a slowdown due to investor concerns over the quality of loans, Prosper president Ron Suber outlined his company’s plans to “re-create” itself and do its part to “control” the industry’s story. That begins with improving access to loan volume – although loan sales have a lot to do with other parties besides itself. Online lenders, like Prosper, match borrowers with investors that fund loans. Suber says buyers “sell our loans in the market, whether the market is ready or not” and there can be issues “when we don’t have alignment” with buyers. Prosper is holding discussions with banks, pension funds and potential international buyers and watching the development of new publicly listed funds. It also plans to launch a passively managed fund in the second quarter for investors interested in baskets of its loans.

U.S. banks may have the most to lose if the U.K. votes to exit the European Union (the vote is set for June). Smaller brokers and hedge funds say the U.K. financial sector would be less heavily regulated and that they would thrive outside the E.U. Other businesses across industries, which are neither British nor European, have enjoyed the U.K.’s role as a springboard into the E.U., which has allowed them to scale their businesses without seeking regulatory approval in 28 different states. That’s why U.S. banks have concentrated large parts of their operations in Britain and are now spending hundreds of thousands in lobbying efforts against a Brexit, with Goldman Sachs leading the charge (Goldman donated around $700,000 to an anti-Brexit group). The firm has invested $500 million in its forthcoming London-based European headquarters, which will open in 2019, despite the potential Brexit.

Financial Times

Fintech companies raised almost $1 billion in investment last year, according to Accenture. More than 90% of the investment went to startups that directly challenge British banks, which stand to lose “the battle for customer relevance” if they do not invest in tech and work with fintech firms, according to the report. By contrast, the U.S. directed 83% of tech investment to fintech development last year. “While markets like the US have tilted toward collaborative ventures in recent years, Europe is earlier in the fintech development cycle and is likely to become more collaborative over time,” said Richard Lumb, head of financial services at Accenture.

New York Times

Last week MetLife won its case to have the government overturn its designation as a systemically important institution. Rosemary M. Collyer, the judge tasked with determining whether or not the insurance giant is too big to fail, said the process of doing so is problematic and did not actually comment on whether or not it is, thusleaving open the possibility of MetLife one day meriting that designation. This was smart, Andrew Ross Sorkin writes in DealBook; her job in the MetLife case was to judge the approach taken by the Financial Stability Oversight Council in its analysis. “How can any judge with anything short of a doctorate in statistics and economic modeling be tasked with effectively overseeing the decisions of a group like the FSOC?” he writes, arguing that some matters should be decided by experts in the given field if they’re too complex for “generalist” judges.

Elsewhere ...

Bloomberg: Citigroup is planning job cuts of 70 traders and salespeople in London and 200 employees in operations and technology groups across Europe. It recorded a $300 million charge in the fourth quarter of 2015 on at least 2,000 job cuts globally. The bank has reduced its headcount by more than 30,000 since CEO Mike Corbat took the reins in 2012; at the end of last year it was down 40% from 2007, at 231,000 workers. CFO John Gerspach said the bank will probably report a 15% decline in first-quarter trading revenue when it announces its quarterly earnings this week.

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