Receiving Wide Coverage ...
Positioning: Gary Cohn's likely departure from Goldman Sachs to join the Trump administration as director of the National Economic Council "sets off a new round of C-suite jockeying at Goldman, where the decade-long tenure of Chief Executive Lloyd Blankfein has created a younger generation of executives eager to advance," the Wall Street Journal reports. Cohn's dual roles of president and chief operating officer are likely be split among two executives, possibly investment-banking co-chief David Solomon and CFO Harvey Schwartz.
The nominations of Cohn and Treasury Secretary-designate Steven Mnuchin mean Goldman's influence in the incoming administration will be big, notwithstanding Trump's repeated attacks on the financial elite — Goldman in particular — during the campaign .
Trump's economic policies are likely to benefit Goldman compared to its commercial bank rivals, the WSJ says. "The low-margin, high-volume 'flow monster' model based on a steady flow of business from global corporations that has boosted Citigroup and JPMorgan Chase could be under pressure," the paper says. Rather, a "new, more volatile trading world" would benefit banks like Goldman, which has seen its stock price outperform those of JPM and Citi by more than 10 percentage point since Trump was elected.
More problems for Wells: The Office of the Comptroller of the Currency is likely to cut Wells Fargo's CRA rating as a result of its phony accounts scandal, which could hurt the bank's business activity and growth. The Wall Street Journal said a decision was expected last Thursday but "was delayed by the OCC for unknown reasons;" a ruling could come this week. "The OCC may take advantage of a longstanding rule that if a bank engages in unfair and deceptive practices, then a regulator can lower the bank's rating for purposes of the Community Reinvestment Act," the Journal said.
Wells didn't just create bank accounts for its customers without their permission. According to the New York Times, it also sold them unauthorized low-cost life insurance policies from Prudential, with whom Wells had a joint venture. "According to three former managers in Prudential's corporate investigation division, Wells Fargo employees appeared to have signed up bank customers for Prudential insurance without the customers' knowledge or permission," the Times reports. "In some cases, they even arranged for monthly premium fees to be withdrawn from their customers' accounts."
Wall Street Journal
Locked in: Rising interest rates could have another overlooked adverse effect on the residential home purchase business: People who locked in their mortgages at historic low levels may be reluctant to give them up to buy a new home. "A sustained period of rising rates could freeze homeowners with rock-bottom mortgages who otherwise might want to trade up for bigger or better properties," the Journal reports. "Such situations, which economists call 'rate lock,' could weigh on housing demand in 2017."
Financial Times
Easy as 1-2-3: Tesco Bank, the U.K. bank victimizd by hackers who broke into 9,000 retail customer accounts and stole £2.5 million, made it easy for the robbers: it issued sequential debit card numbers to clients, the FT reports. Most banks avoid doing that, the paper says, "because it lets hackers remain undetected while working quickly through thousands of accounts." Since the "unprecedented" attack, the Financial Conduct Authority has contacted several British banks to make sure they're not issuing consecutive card numbers.
New York Times
It's a small world: "A new generation of smartphone apps and online lending platforms in China and around the world are helping small investors leap legal and language barriers to put their money to work globally," the Times reports. "This informal lending network — which allows Chinese investors to fund overseas projects and buyers — largely bypasses banks and other traditional sources of funds, bringing money to places as varied as a sports center in Illinois and apartment blocks in Tennessee."
Washington Post
Welcome to the machine: MasterCard is using artificial intelligence to avoid cases of mistaken fraud at the point of sale, the "latest financial services company to see the potential for the burgeoning field of machine learning to improve security on its network and enhance the customer experience," the Post reports. "What we're seeing is sort of a gold rush into artificial intelligence," said Todd Marlin, a principal at Ernst & Young.
Quotable ...
"This definitely was the same kind of conduct that Wells was committing, but through Prudential." — Julie Han Broderick, former co-head of Prudential's corporate investigations division
