Receiving Wide Coverage ...
Santander Feels the Heat: The Federal Reserve has issued a sweeping enforcement action against Banco Santander's U.S. holding company, ordering it to improvewell, a whole lot of stuff. Regulators identified Santander's capital management, corporate governance, and ability to meet daily funding needs as areas in need of remediation, along with risk management at its consumer lending unit. No fine is attached to the action yet, but the Fed could add one later. The scope of the action is "unusual at a time in which the regulators are focused typically on individual lines of business at individual institutions," analyst Karen Shaw Petrou tells the Journal. Santander's U.S. unit has had a rough go of it in recent years, failing to pass the Fed's Comprehensive Capital Analysis and Review in March for the second consecutive year, as the Financial Times notes.
In with the New: Barclays is ousting chief executive Antony Jenkins in the hope that a new leader will make better progress in the restructuring of its investment bank and in moving past legacy issues. Barclays' recently appointed chairman John McFarlane will take the helm of the bank while it searches for a replacement, according to the New York Times. The papers all note three other European banks have jettisoned their top leaders this year"a reflection of mounting investor and boardroom frustration with banks' stubbornly low stock prices and sluggish progress at overhauling the sprawling institutions," according to the Journal. The FT has an insider-y take that casts Jenkins' removal as a testament to the power of "no-nonsense commercial banker" McFarlane, who reportedly took issue with Jenkins' more bureaucratic style. A separate article names the bank's chief financial officer Tushar Morzaria as a potential successor.
Greece Gets a Hard Deadline: European officials have set a Sunday deadline for Greece to come up with a new proposal for its creditors. But reaching a consensus isn't going to be easy, according to the Journal. European leaders are demanding even bigger budget cuts and policy changes than the ones Greeks already voted down in the referendum. Greece's new plan would have to include "changes to labor laws to make it easier to fire workers, changes to product markets and the privatization of state assets," the Journal reports. And while German chancellor Angela Merkel signaled that creditors might be open to restructuring Greek debt down the line, she's looking for Greece to prove itself first. The Times suggests that Greek prime minister Alexis Tsipras is more optimistic about reaching a compromise than his eurozone counterparts. While Tsipras "stuck an almost sunny tone" in his recap of Tuesday's meetings, European Commission president Jean-Claude Juncker was "sputtering with rage" as he recalled the Greek government's criticisms of creditors and Merkel continued to strike a tough stance. A former Greek finance minister writes in the Times that the solution is for Greece to agree to structural reforms in exchange for concessions like longer loan-maturity deadlines. A separate article in the paper argues that Germany should remember the lesson from its own massive debt forgiveness package so long ago: "Major debt overhangs are only solved after deep write-downs of the debt's face value."
Encryption Wars: The battle over encryption technology is heating up as Silicon Valley behemoths like Apple, Google and Microsoft face off against government agencies that say their access to consumer and corporate data is a matter of national security. Now a group of top technologists have put out a paper arguing that tech firms can't let the government tap into encrypted data without creating major security vulnerabilities. These include putting "confidential data and critical infrastructure like banks and the power grid at risk," the Times reports. The Journal says the conflict with Washington has a lot to do with the government's lack of concrete proposals about a secure way to ensure that law-enforcement officials can be granted exclusive yet limited access to people's information. The FT highlights technologists' concernsabout privacy rights and preserving the open Internet.
Wall Street Journal
Anonymice say that JPMorgan Chase has agreed to pay at least $125 million to the Consumer Financial Protection Bureau and state governments over its credit-card and debt collection practices. (Look for an announcement as early as Wednesday afternoon.)
Financial inclusion efforts in the developing world are confronting a common obstacle: how do you comply with standard risk-management requirements when many people lack formal identification documents and a permanent home address?
Lending is all well and good, but wealth management is the future, according to online lending startup Payoff. The company currently specializes in extending loans to people who will use the money to pay off their credit-card debt.
The London interbank offered rate remains unreliableyears after revelations about traders' attempts to manipulate the benchmark interest rate, the paper reports.
New York Times
The federal government wants to expand an affordable housing program that incentivizes low-income families to move to more expensive neighborhoods.
Trying to curb leveraged lendingis a lot like "a game of Whac-a-Mole, with new unregulated players popping up to fill the risky gaps," writes Steven Davidoff Solomon.