Receiving Wide Coverage ...
HSBC Earnings Fall: HSBC's first-half profit dipped 5% from the same period a year ago because of sluggish performance in its investment banking, wealth management and retail businesses. Its net profit was $9.46 billion, compared to $10 billion. HSBC chairman Douglas Finch cited employees' fear of regulatory punishment as a mounting concern. "There is an observable and growing danger of disproportionate risk aversion creeping into decision-making in our businesses as individuals, facing uncertainty as to what may be criticized with hindsight and perceiving a zero tolerance of error, seek to protect themselves and the firm from future censure," he said in a statement. Of course, curbing excessive-risk taking is exactly what regulators say they aim to do; what's bad news to one party may be glad tidings to another. Wall Street Journal, Financial Times, New York Times
Banks Seek New Way to Chat: A group of financial heavyweights including Goldman Sachs, Bank of America, JPMorgan Chase and HSBC are looking to create an instant-messaging alternative to Bloomberg's ubiquitous chat service. Talks to buy instant-messaging software developer Perzo are being led by Goldman. "Big banks and their investor clients have become uncomfortable with the grip Bloomberg has on the instant-messaging service traders use to communicate with one another, and the closed nature of the data company's system," the Journal reports. The Financial Times says the alternative service would also be a lot cheaper than Bloomberg's $20,000 a year terminals. Goldman and other banks accused Bloomberg reporters last year of using terminal data to hunt down information on employee activity. Bloomberg's external investigation of the accusation "found no evidence that reporters had used the information," according to the Journal.
Wall Street Journal
The Consumer Financial Protection Bureau may be gearing up to target debt-collection firms that churn out heaps of nearly identical lawsuits against people behind on their bills. The CFPB filed a lawsuit against one such firm, Frederick J. Hanna & Associates, last month. Analysts told the Journal the suit "could signal the regulator's intent to target similar high-volume law firmsand potentially banks and debt buyersover allegations that debt collection claims can be out of date, incorrect in their amounts, lacking in documentary support or overlapping with claims filed against the same debtors."
The European Central Bank's decision to slim down its balance sheet has observers feeling anxious. "The decline in the ECB's holdings means less money chasing investment and spending opportunities at time when worry of a potential deflationary cycle is bubbling in Europe."
Nearly a dozen financial regulators have gone away to summer camp at Yale. "Over the past two weeks, rising stars from U.S. and international regulatory agencies have spent six hours each day in a classroom analyzing the government's response to various crises, including the collapse of Lehman Brothers, the botched 'London whale' trade by JPMorgan Chase and recent financial crises in Ireland and Iceland," the paper reports. The "Systemic Risk Institute" was organized by Yale professor and Dodd-Frank contributor Andrew Metrick. Regulators haven't figured out how to stop future financial crises yet. "What surprised me is just how difficult these problems are," Metrick told the Journal. "You get kind of depressed pretty quickly."
New York City Mayor Bill de Blasio rubbed shoulders last week with Goldman Sachs head Lloyd Blankfein and Citigroup chief Michael Corbat. De Blasio and Blankfein reportedly met to discuss "job creation and spurring business creation," while he and Corbat spoke at a press conference on affordable housing.
France will be backed by Germany, England and Italy when it confronts the U.S. over the need for "proportionality" in foreign bank fines at a G20 meeting in November. It's been a particularly touchy subject in the wake of the U.S. government's $8.9 billion settlement with BNP Paribas in July. "It is an issue, but we have to be careful not to go into an area of saying 'it is too much and we have got to lay off these guys,'" a senior European official told the FT.
Shuttering the Export-Import Bank would hurt trade between the U.S. and Africa, according to General Electric chariman Jeff Immelt. Closing the bank would be the equivalent of "making a statement as a country that we do not think that exports are important," Immelt said.
New York Times
Columnist Gretchen Morgenson joins the chorus of critics warning that big banks still have an unfair advantage because of their too-big-to-fail-status. Morgenson argues that a new government report that found the size of big banks' subsidies "may have declined or reversed in recent years" risks misinterpretation by financial firms and lawmakers. Like BankThink contributors Mayra Rodriguez Valladares and Camden Fine, she points out "were we to return to panic mode, the value of the implied taxpayer backing would rocket The threat of high-cost taxpayer bailouts remains very much with us."
New York's union-owned Amalgamated Bank has a new leader. Chief executive Keith Mestrich's goals include "expanding the bank's core constituency beyond unions to include progressive advocacy groups" and fortifying its relationship with the Democratic Party.
Wealth managers are using spy-like technology to gain "clear and reliable information about the increasingly complex assets inside pensions, investment funds and family fortunes," the Times reports. A California-based company called Addepar "filters and weighs the relationships among billions of dollars of holdings to figure out whether a portfolio is about to crash." It's unclear exactly how Addepar's systems work, but if they gave that kind of information away they probably wouldn't be getting compared to the Central Intelligence Agency.