Wall Street Journal
Tap the brakes on those hopes for a rebound in bank stocks in the near future. The same old worries bank investors know so well are expected to continue this year, analysts and investors told the Wall Street Journal. Low interest rates will continue to compress profit margins. Excessive U.S. regulations continue to drive up costs. Legal bills will also remain elevated. These reasons are cited by analysts and money managers quoted in the story for persistent dark clouds over the banking industry. Although both money managers mentioned in the story said the silver lining is that many bank stocks appear cheap, especially in comparison to banks' book value.
Banks complained about the opacity of the Fed's stress tests after results were issued last week. But the stress-test process needs to be inscrutable, or else the banks will try to game the system, the "Heard on the Street" column said. "[The Fed] has to consider the interests of taxpayers as well as the strength of the financial system. On that score, it is better if the Fed keeps banks guessing on the tests, and so insures firms remain more resilient," the columnist wrote.
The Federal Reserve needs two additional banks in the Western U.S., to improve geographic diversity and to better reflect the country's population centers, John Dearie, an executive vice president at Financial Services Forum, writes in an editorial column. The Fed should also expand its Federal Open Market Committee. Both proposals would help spread out the influence of the Fed, lessening the Washington tilt.
The paper profiles John McFarlane, the former Citigroup executive who takes over next month as chairman of Barclays. McFarlane is expected to accelerate Barclays' shift to consumer banking from investment banking.
The Financial Times pumps up the theory that it's community banks vs. "Wall Street" in discussions in Congress on possible pullbacks of the Dodd-Frank Act. In an article that partially serves as a preview of the Thursday hearing scheduled by Sen. Richard Shelby, R-Ala., the paper reports the White House has sent its minions to Capitol Hill to urge Democratic lawmakers "to be ready to stop stealth attempts to slip revisions into unrelated legislation." The article presents dueling quotes from both sides: a lobbyist for the Independent Community Bankers of America says "There is concern that Wall Street will attach to or take part in [any] opening up of Dodd-Frank and push things too far." A Wall Street lobbyist, however, said "The narrative that Wall Street is trying to roll back or gut Dodd-Frank is simply false."
The Clearing House Association trade group wants U.S. banks to be able to share suspicious activity reports with overseas branches, in order to avoid being tripped up by anti-money laundering regulations. The Clearing House sent a letter to Fincen asking for the changes; the article did not indicate whether Fincen has received the letter or responded.
New York Times
Authorities are increasingly optimistic they will file criminal charges in the investigation into the August cyberattack on JPMorgan Chase that affected 76 million households, unnamed sources tell the New York Times. The JPMorgan breach was not as sophisticated as initially thought. The article notes criminal charges have not yet been brought in the breaches that involved Target, Home Depot and eBay.
Santander Consumer USA the subprime auto lender that's part of the Banco Santander family of companies last week successfully completed its first public sale of auto loan-backed securities since the financial crisis. A Sandler O'Neill analyst noted that the $712 million securities deal got done, despite increasing default rates on subprime auto loans and stepped-up regulatory inquiries into the sector, because of investor demand for higher yields.
Chicago Tribune: Get out your scissors. It's time to cut up your plastic, at least if you're a BMO Harris customer. The Canadian-owned BMO Harris Bank in Chicago has rolled out a smartphone-activated ATM machine, which the bank said will speed up transactions and reduce fraud. (For the record, this ATM will still accept cards.) Consumers can prep the transaction via smartphone before they arrive at the machine, reducing the time a user has to stand at the ATM. BMO Harris is rolling out the technology in about 750 of its ATMs. BMO Harris isn't the first bank to do this, as Wintrust Financial last year introduced a cardless ATM.