Lawsky Backs Payroll Card Bill; SEC's Stein Wants Faster Reform

Wall Street Journal

Lenders are making it rain for companies with junk ratings, according to the Journal. "Lending to weaker companies on easy terms is becoming more and more common as investors' appetite for higher-yielding debt grows stronger and the Federal Reserve keeps money flowing at ultralow rates," the paper reports. Banks are also forgoing loan requirements, such as periodic debt testing, which are meant to keep companies' financial health in check. What could go wrong?

Low stock market volatility is putting a damper on Wall Street's profits during the second quarter. Equities trading is taking a hit along with the fixed-income business.

Those who are in the market for Bitcoin may want to check out the U.S. government's upcoming auction of the crytpocurrency. The U.S. Marshals Service plans to sell $17 million worth of Bitcoins — roughly 30,000 of them — seized by the Federal Bureau of Investigation during its Silk Road investigation. The Marshals Service is also holding onto about 144,000 bitcoins to sell at a later date.

Financial Times

The Financial Times' Jonathan Guthrie argues that New York Department of Financial Services head Benjamin Lawsky may be overstepping his bounds in settlement negotiations with BNP Paribas. Guthrie acknowledges that BNP is "no butterfly broken on a wheel" but says the French lender's alleged violations of U.S. sanctions were probably not "five times worse than HSBC's actions in laundering money for customers that, according to the U.S. Senate, included Mexican drugs cartels, for which HSBC was fined $1.9bn." The possibility that HSBC may have received a relatively light penalty — as opposed to BNP facing the prospect of an unduly harsh one — goes unmentioned.

SEC Commissioner Kara Stein took U.S. regulators to task for being slow to implement financial reforms. In a Thursday speech, Stein prominently featured the argument that regulators must "rein in the financial industry's reliance on short-term funding through securities lending and repurchase agreements," according to the FT.

New York Times

New York Attorney General Eric Schneiderman is backing a bill that aims to protect workers' wages from the fees associated with payroll cards. "The new proposal would require employers to offer other payment options and consumer protections," according to the New York Times.

The predicament of graduates who have fallen behind on their student loans has a lot in common with that of troubled borrowers during the mortgage crisis, according to Susan Dynarski, a professor of education, public policy and economics at the University of Michigan. "In both cases, the companies managing the loans have been slow to devise loan forgiveness plans for borrowers who run into trouble" because they lack a financial incentive to avoid defaults, she says. Robo-signing has also crept into the secondary credit market for student loans, according to Dynarski, causing problems for troubled borrowers who are trying to come up with new repayment plans.