Wall Street Journal
The Journal takes a look at the Consumer Financial Protection Bureau's upcoming rules for payday lenders, set to be released today, as did American Banker in today's edition. The Journal's piece includes a quote from Lauren Saunders at the National Consumer Law Center, who said the CFPB's proposal doesn't go far enough. "The CFPB has taken an either/or approach: prevention or protection. But borrowers need both," Saunders said. The Journal also quoted Dennis Shaul of the payday lenders' trade group, Community Financial Services Association of America, who said the industry has already been working on many of the reforms the CFPB will unveil today. "We are already pretty deep into this and constantly looking for better measurements of ability to repay," Shaul said.
American Express said little, if anything, about how it plans to replace lost revenue from its cancelled deal with Costco. Amex CEO Kenneth Chenault, during a four-hour meeting with investors, declined to provide specifics on how the card issuer will try to persuade its card holders to keep using their Amex plastic after the dissolution of the Costco partnership. A significant number of Amex customers are affected, as about 10% of of Amex cards in circulation were tied to the Costco partnership. Also on Wednesday, Amex reiterated that it plans to appeal a judge's ruling on merchant steering.
Regulators' crackdown on leveraged lending has taken a bite out of private equity firms' returns. Leveraged loans for private-equity buyouts and refinancings in the U.S. has fallen to $26.5 billion so far this year. That's an 82% decline from a year ago and the lowest level since 2009, according to Dealogic. Because banks have fallen in line with regulators' guidance on leveraged loans, private equity firms have not been able to turbo-charge their acquisitions with mounds of cheap debt. Private equity firms also don't want to disappoint their own investors with lower rates, so they are taking a pass at deals that would offer lower returns. At the same time, the scrutiny of leveraged lending has given an assist to the companies that bid against private-equity firms in auctions. Corporate buyers can borrow at cheaper rates and use their stock price as currency. That lets them make higher bids on companies they would like to acquire.
Bank of America announced several personnel changes involving the leadership of its technology and operations team.
New York Times
Both conservatives and liberals are likely to oppose terms of the Trans-Pacific Partnership, a trade accord being pushed by President Obama, the Times reported, based on its reading of a classified document obtained by WikiLeaks in partnership with the Times. Sen. Elizabeth Warren, D-Mass., and other liberals will likely believe that the accord gives priority to protecting corporate interests over government regulation of banking and other industries. Conservatives are likely to be "incensed" that the accord will send local policy changes to a United Nations tribunal or to the World Bank.
Wall Street wasn't invited to Warren Buffett's snack-food party. The largest investment banks were shut out of Berkshire Hathaway's latest dealthe merger of its H.J. Heinz with Kraft foods. Berkshire and its Brazilian private-equity partner, 3G Capital, instead tapped Lazard for advice, and Kraft was advised by Centerview Partners. Berkshire has plenty of ties to Wall Street, through its investment stakes in Goldman Sachs and Bank of America, which makes their omission more interesting.
Royal Bank of Scotland sold a larger-than-expected amount in its Citizens Financial Group share offering. RBS sold about $3.2 billion shares of the Providence, R.I., banking company. That equals about a 24.7% stake. The amount could rise to $3.7 billion in stock, if an additional over-allotment of shares is fully exercised.
Financial Times
Just because you can save money by getting a lower rate on your college loan doesn't mean you should. The Consumer Financial Protection Bureau is warning holders of student loan debt to watch out for private marketplace lenders like SoFi, CommonBond and Earnest. Those start-ups don't offer the same protections as U.S. government backed loans. Their rates are often variable instead of fixed; and they typically don't offer other protections, like caps on repayments in the event of a decline in the borrower's income.
The disruptors have caught the attention of investors. Total investments in financial technology companies rose to $12 billion in 2014 from $4 billion in 2013, according to an Accenture report. The huge spike highlights the challenge that traditional banks face from those pesky disruptors, Accenture said.
A Winston-Salem, N.C., credit union is invading Charlotte. Truliant FCU plans to open 10 branches in Charlotte by the end of the next year. That's in addition to the four branches it's already opened in Charlotte since October. Before the fall, Truliant did not operate any branches in Charlotte.
Elsewhere...
Charlotte Observer: Bank of America is expanding its video push into mortgages and other loan products. The Charlotte bank is adding more video monitors in branches to allow customers to speak to call center representatives across the U.S. Bank of America plans to increase number of branches with video screens to 300 from about 180. Customers will be able to speak to call center reps about mortgages, business loans or investment products. B of A is also replacing some of its teller lines with video ATMs.
Denver Post: A former executive of Front Range Bank in Lakewood, Colo., has been indicted by a federal grand jury for embezzling from than $92,000 from the bank. Candice L. White has been charged with 37 felony counts of embezzlement and other violations. White is accused of stealing money from client account to cover up her theft from other business accounts.
