Receiving Wide Coverage ...
MetLife and the Dreaded S-Word: Much to MetLife's dismay, the Financial Stability Oversight Council voted Thursday to propose that the firm be designated as a systemically important financial institution. The life insurer's chief executive Steven A. Kandarian indicated that MetLife may contest being lumped into the group that includes nonbanks American International Group, Prudential Financial and General Electric Capital. The company is "not ruling out any of the available remedies under Dodd-Frank to contest a SIFI designation," Kandarian said in a statement. Prudential has been the only firm to challenge the designation, though its attempt was unsuccessful. Wall Street Journal, New York Times.
Guess Who's Back: As Michael Bloomberg comes home to roost at the news and financial data company he founded at the end of the year, he will face "increasingly strained relations with the financial institutions that make up the company's core customer base," according to the Journal. Among the sources of tension are big banks' concern that Bloomberg is "encroaching on their turf by gathering vast amounts of data about the trading and pricing of securities," according to the Journal. Some Wall Street banks are also looking into alternatives to Bloomberg's chat room service after growing worried that Bloomberg reporters had access to their data. The Financial Times focuses more on Bloomberg's personal journey from mogul to New York mayor and back again, while the Times is primarily concerned with the challenges the company will face in a crowded media landscape.
Apple on Safety and Payments: Apple has a lot going on at the moment. The Journal reports that Apple is stepping up its security game after hackers gained access to nude photos of celebrities stored on the iCloud. Apple chief Tim Cook says hackers stole the photos by correctly answering celebrities' security questions and using phishing scams. Now Apple will "alert users via email and push notifications when someone tries to change an account password, restore iCloud data to a new device, or when a device logs into an account for the first time." The company also plans to better emphasize the importance of creating secure passwords to its customers and to promote two-step authentication, Cook says. Meanwhile, the Financial Times casts a skeptical eye at Apple's expected move into payments. Offering a mobile wallet is unlikely to pay off in the short term, according to Richard Waters, particularly since consumers generally seem happy enough with plastic cards. He points out that Apple faces a number of other practical challenges. "True, the credit card details it holds for some 800 [million] iTunes and App Store customers give it a formidable foot in the door," the paper reports. "But it will have to join a complex ecology of payments companies, merchants and mobile carriers, all of which have reasons to look nervously over their shoulders about encroachment from a voracious tech giant such as Apple."
Wall Street Journal
"Visa and Mastercard are rolling out technology that replaces cardholder information such as account numbers and expiration dates with a unique series of numbers that validates the customer's identity," the paper reports. The tokenization technology will be available on Apple's latest iPhone, which debuts next week.
New York Times
Floyd Norris examines the new liquidity rules that aim to ward off failures like the collapse of Lehman Brothers in 2008. He's noncommittal about the effectiveness of the new requirements but appears to be eagerly awaiting the rules on big banks' capital surcharges. "If those surcharges are high enough, some of themparticularly the investment banks that were never regulated like banks until the crisis forced them into the Fed's embracemight wonder about changing their business models, perhaps reducing their size or complexity," he writes. In that case, "change could come."
For big banks, "the price and volume of legal and compliance services are skyrocketing just as the reliability of those services is deteriorating," write business adviser Geoffrey Moore and Mark Harris of legal services firm Axiom. The solution is cut down on legal costs by using technology, streamlined processes and "competent but far less expensive people" to more effectively handle high-volume, repetitive work like contracts, they write.
Bitcoin pioneer Charles Shrem pleaded guilty on Thursday to "to one count of aiding and abetting the operation of an unlicensed money transmitting business." He was accused of using his company BitInstant to exchange dollars for Bitcoins so that users could buy drugs on black-market website Silk Road.
Lending Club is riding high as it prepares for an initial public offering, but Reuters Breakingviews' Antony Currie and Daniel Indiviglio say there are "reasons to be cautious" about its growth potential. Community banks have an edge over peer-to-peer lenders like Lending Club because their personal relationships with customers may allow them to make better underwriting decisions, they write. "Lending Club has yet to deal with a slump, too," the authors add. "If loan investors lose lots of money, they'll lend less, and regulators may impose limits on peer-to-peer lenders. Either would kill growth."