Receiving Wide Coverage ...
Earnings Season Beckons: Earnings season is approaching, with JPMorgan Chase, Wells Fargo, Bank of America and Citigroup set to report quarterly results this week, starting with JPMorgan on Wednesday. While the expectations are grim (the financial sector is predicted to post a 9.2% decline in earnings and 0.2% rise in sales, analysts say), investors will be digging into the fine print, looking for low prices and questioning whether they’re buying opportunities or just the reality of the poor earnings. Banks in the S&P financial sector are selling at 12.8 times estimated earnings over the next 12 months, compared with 16.7 times forward earnings for the broader S&P 500. Meanwhile, banks including JPMorgan, Comerica and BB&T are expecting to take hits in first quarter earnings from energy portfolios, despite the price of oil climbing 50% since hitting its low in February. Banks are set to disclose buffers against losses and the effects of customers' lines of credit, which are reassessed every six months, are typically based on the value of oil reserves.
Wall Street Journal
Online lenders are getting a reality check from investors who have grown concerned about fast-souring loans and the potentially negative effect regulation could have on the industry. Until recently, these fintech companies have grown rapidly; the biggest challenge was finding borrowers to match with investors, who would fund their loans. That has changed: marketplace lenders reported a significant decline in loan offers between December and February and are rethinking their approaches to new loan volume. Avant recently hired Raj Vora, a former UBS executive director, to oversee its "rollout of new in-house funds that will hold Avant loans" the paper said. Prosper is working on launching a passively managed fund for investors interested in baskets of its loans; SoFi has launched a similar fund. Others, like Marlette Funding, are just pulling back on their business.
Efforts by the Federal Reserve Bank of New York to chase red flags on fraudulent payment orders are in the spotlight, two months after cyberthieves siphoned $101 million out of Bangladesh’s account, the paper says. The thieves used Bangladesh Bank’s codes on a secure interbank messaging system to tell the Fed to transfer the funds in 35 separate orders to banks in Sri Lanka and the Philippines. The Fed ostensibly flagged 12 of them as suspicious hours later, but waited at least through the weekend to put a stop on five other payments it had authorized the previous Thursday. The Fed previously said Swift authenticated the payment instructions it approved and that there was nothing to suggest the Fed’s systems were compromised. Swift said there was no indication its network was breached and that it was working with Bangladesh Bank to resolve an internal operational issue. “What is especially thought-provoking here is that stops and recalls on these transfers weren’t issued for days after initial doubts were raised,” said Rep. Carolyn B. Maloney, D-N.Y.
Before MetLife claimed its victory against the Financial Stability Oversight Council, in its case to end its too-big-to-fail designation, chairman and chief executive Steven Kandarian had to quiet the concerns of skeptical boardmembers in his own series of internal battles, chronicled by the Journal. Of the four nonbanks designated as a threat to the financial system, MetLife is the only one that challenged it in court. To many, the case was a losing battle. But Kandarian, who has legal training, is quieter and more low-key than his predecessors and is known for caution and reserve, navigated the firm to victory in “a legally sophisticated way.” “Steve kept saying repeatedly, ‘If we believe that the decision is wrong as a matter of law, then it was important that we as a company take advantage of our rights to due process and correct what we believe is an irrational decision, as long as we did it in a respectful way,’” said William Kennard, a MetLife independent director and former Federal Communications Commission chairman.
New York Times
Credit Suisse chief executive Tidjane Thiam is facing tough questions about the bank’s risk controls and oversight in its markets business, after he claimed last month that he was unaware of the size of the bank’s positions in risky, illiquid segments. In January Thiam asked for details about the fourth-quarter results at the trading division, but two-and-a-half months and $1 billion in write-downs later, it is unclear to investors, analysts and former board members why he and CFO David Mathers were so blindsided by the scale of the trades. "If the CFO didn't know about it, then sure as hell the chief risk officer would have done, which means everybody would have done," said one former board member of a Credit Suisse investment banking subsidiary. "It's hard to imagine that nobody knew about this stuff."
The Atlantic: Many have touted the idea of a cashless society as one that would reduce crime by taking cash off the streets and bring a new world of digital financial services to the “unbanked” population that relies on check cashing and payday loan services. But the Atlantic argues it would give more power to Big Brother, inspiring financial censorship and overregulation of the poor – as evidenced by Operation Choke Point, an initiative by the Department of Justice to investigate banks and the business they do with payment processors payday lenders, and other companies at high risk for fraud and money laundering. But “when money becomes information, it can inform on you,” the Atlantic says. When “high risk” includes perfectly legal activities, such as dating services, travel clubs and lottery and tobacco sales, it’s likely a cashless society would offers new forms of surveillance and censorship.
Bloomberg: Wall Street wages for investment bankers and securities-industry employees have doubled in the last 25 years. The U.S. Bureau of Labor Statistics shows salaries increased 117% from 1990 to 2014, including bonuses. Wages for all other industries rose only 21% over the same period.