Receiving Wide Coverage ...
HSBC Woes: Legal matters pounded HSBC, as the British bank reported quarterly earnings. HSBC set aside $1.6 billion, according to the Financial Times, or $1.7 billlion, according to the Wall Street Journal, to cover legal settlements, including resolving a probe into rigging foreign-exchange markets, and the cost of reimbursing customers. The set-aside also included $550 million to cover a settlement with the U.S. Federal Housing Finance Authority to resolve a probe into mortgage-backed securities it sold to Fannie Mae and Freddie Mac, the Journal said. HSBC also said French magistrates ordered it to appear over charges its Swiss private bank helped French nationals avoid taxes.
Murder Charge: A British national who worked for Bank of America has been arrested on murder charges in Hong Kong. Rurik Jutting was charged with murder after two women were found dead in his Hong Kong apartment. The victims were "said to be sex workers of Indonesian origin," the FT reported. Jutting had been a B of A employee as recently as Friday. Jutting had apparently worked in structured equity finance and trading for Bank of America Merrill Lynch. Previously he worked for Barclays.
Wall Street Journal
Don't get too excited about new low rates and the possibility of a surge in mortgage applications helping banks, the "Heard on the Street" column cautions. Yes, the 18-month low in the 30-year fixed-rate mortgage has led to a spike in refi applications. And, yes, Fannie Mae and Freddie Mac are going to buy mortgages with downpayments as low as 3%. But this isn't a precursor to rally in mortgage refis, nor will it help banks improve profits to any meaningful extent because there aren't that many high-rate mortgages available to refinance. "Heard on the Street" is skeptical that Fannie and Freddie's new policy on downpayments will loosen lending standards, citing recent comments by U.S. Bancorp CEO Richard Davis that his bank will "continue to do what we are doing now."
The "Heard on the Street" column also speculates on what type of smart phone Visa CEO Charles Scharf carries and concludes that Apple may have muscled Samsung out of the credit-card network's good graces, or perhaps has been relegated to a secondary role in Visa's mobile-payments strategy. On the one hand, Visa last year anounced a partnership with Samsung to use Visa's payWave software, which ostensibly competes with Apple Pay. But in a recent conference call with analysts, Scharf didn't mention Samsung, nor did he mention payWave. Furthermore, Scharf talked about his personal experience signing up for Apple Pay, which suggests he owns an iPhone 6. The Journal suggests Scharf may be hedging his bets and could carry both an iPhone 6 and a Samsung phone. Visa didn't respond to the paper's requests for comment.
New York Times
The Times examines a book club that meets in a "Republican social parlor" neat the Capitol. The attraction for members "an A-list of lobbyists from banks and insurance companies," is the opportunity to get to know members of the Financial Services Committee. The paper views the club, which charges admission that is turned over to the House committee hosting the event, not as a sinister way to evade campaign-finance laws, but instead a quaint throwback to old ways of interactions between lobbyists and lawmakers.
Results of recent stress tests of European banks comforted many investors. But the results discomfited Times columnist Gretchen Morgenson, who writes that half the banks involved in the stress tests had inadequate policies for how they calculated risk associated with their derivatives holdings. Furthermore, weaknesses were found in how some banks valued nonperforming assets on their books.
