Receiving Wide Coverage ...
Return to Stability: Gains in wealth management and investment banking helped Morgan Stanley nearly double its profit in the second quarter. The papers played up how the bank has focused on stable businesses while relying less on fixed income. The Wall Street Journal said Morgan Stanley has largely shrugged off" bond trading declines that have hurt other firms. The New York Times said the bank has proved skeptics wrong that it could move away from trading toward "other areas for more stable sources of revenue." The Financial Times said the bank has "bet its future on growing significantly in wealth management." In "Heard on the Street", the Journal's John Carney said Morgan Stanley's outperforming its peers was a "turnaround from recent years when the rule seemed to be that if Wall Street sneezed, Morgan Stanley caught the flu."
BitLicense Plan: Benjamin Lawsky, superintendent of the New York Department of Financial Services, unveiled a proposed regulatory framework for Bitcoin businesses that operate in the state. The plan would require firms to obtain special licenses and hold higher levels of capital. Wall Street Journal, New York Times
Housing Starts Down: The Commerce Department reported that housing starts declined sharply in June, falling 9.3%. The sector's challenges appeared to be concentrated in the South, where housing starts dropped nearly 30%. Wall Street Journal, New York Times
UK Banking Inquiry: As part of a government probe, United Kingdom regulators are looking into whether there is enough competition among the country's biggest retail banks in personal banking and lending to small businesses. Wall Street Journal, Financial Times
Wall Street Journal
Though earnings per share "beat expectations," Bank of New York Mellon reported a 32% drop in quarterly profit, due in part to lower fee revenue. "Revenue fell 7% to $3.75 billion in the period, as total fee and other revenue declined 7% to $2.98 billion."
A review of lending trends in the second quarter at the nation's largest banks showed that "after many fits and starts, consumers and corporations are starting to ramp up borrowing."
A member of the European Central Bank Governing Council will deliver remarks Friday saying that concerns about public finances will not influence the ECB's decision-making about when to raise rates. "The comments reflect concerns that euro-zone countries will use record low interest rates as an excuse to finance new spending, rather than reinforce budget discipline."
The Senate overwhelmingly passed legislation Thursday to extend the Terrorism Risk Insurance Program. "The Senate vote puts pressure on House Republicans, who have been trying to settle on an approach for reauthorizing the program."
Portugal's central bank is moving to "calm fears" about the safety of Banco Espirito Santo. A Bank of Portugal governor said Espirito Santo has enough capital to shield itself from the troubles of its parent company. "Bank of Portugal Governor Carlos Costa, who answered questions from policy makers in Parliament, also said he doesn't expect any material impact from troubles at Banco Espírito Santo's Angola business."
New York Times
In "High & Low Finance", Floyd Norris criticized the Justice Department's $7 billion settlement with Citigroup related to its crisis-era mortgage securitizations. Norris said even though the action "damaged investors," the settlement does "nothing to benefit most of those affected. "Instead, there is a lot of money for the government and some benefits for homeowners and even prospective renters who had nothing to do with Citigroup."
According to analysis by Neil Irwin, Federal Reserve Chair Janet Yellen has been significantly more direct than past Chairman Alan Greenspan in expressing concerns about the stock market's bubble potential. Unlike Greenspan's tendency to be "vague and subject to varying interpretation," Yellen on Tuesday "deployed the bully pulpit of the Federal Reserve leadership to send a message on market prices." "Ms. Yellen specifically called out the valuations of leveraged loans (which fund corporate buyouts) and high-yield "junk" bonds (which fund companies viewed as having risky finances) as potentially excessive."
In "DealBook", Wharton professor David Zaring focused on steps by international regulators to create a team or a "college" of home and host country regulators to cooperate on supervising globally connected banks.
"Wonkblog" reported how Wells Fargo has decided to stop a practice popular among other banks to order customers' transactions in a manner meant to maximize overdraft fees. "Half of the country's big banks play this game, but one has decided to stop: Wells Fargo. Starting in August, the bank will process customers' checks in the order in which they are received, as it already does with debit card purchases and ATM withdrawals."
A story reported on hearings this week held by House Republicans to pressure the Justice Department into ending "Operation Choke Point.