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Banks Take Beating in Stock Market: Wednesday's stock market swings hit banks hard as fears of a sputtering global economy took hold. "U.S. bank stocks suffered their worst one-day fall in almost two years," tumbling 3.4%, according to the Financial Times. Bank shareholders are worried that the sluggish global recovery and potential for deflation in the U.S. and Europe could keep interest rates low even longer than expected, the papers report. "People are realizing that the real question is how much longer the U.S. banks will be in a Japan-lite environment," analyst Mike Mayo told the Wall Street Journal. Meanwhile, bankers told the FT that volatility in U.S. government bond prices Wednesday was fallout from "new bank safety regulations that they say have reduced market liquidity" such as the Volcker Rule, Basel III capital rules and the liquidity coverage ratio. Other analysts argue that the bond price plunges were driven more by computerized trading than by liquidity issues. In any event, the New York Times suggests there's a silver lining to the market turmoil: fear has "finally returned to markets that had become disconcertingly complacent."

The Truth About Earnings: Bank of America's third-quarter results weren't too shabby, according to a "Heard on the Street" column, but it's "difficult to see where future growth will come from absent a rise in interest rates and robust loan growth." The bank benefited from improved credit quality and lower expenses, and there's a limit to how much those factors can continue to lift profits. Matt Levine takes a wittily instrumentalist approach to analyzing Bank of America's earnings over at Bloomberg View: "It is not possible for a human to know whether Bank of America made money or lost money last quarter," he writes. "A bank is a collection of reasonable guesses about valuation. It is a purely statistical process. There is no objective reality."

Wall Street Journal

Citigroup's Banamex unit has been fined $2 million by Mexico's banking regulator for falling prey to alleged accounting fraud by its oil-services client.  The regulator said Banamex "should have had better internal controls in place to prevent [$400 million in] losses" from the alleged scheme.

PayPal did brisk business in the third quarter, with revenue climbing 20% year-over-year. That news may provoke a little twinge of sadness for eBay, which plans to spin off its payments unit: growth at its core marketplace business dipped to 6%, compared to 12% a year ago. 

Financial Times

Silicon Valley doesn't want to eat banks' dinner — it just wants to steal some choice bites off their plate. That's the argument forwarded by columnist John Gapper, who says that most tech start-ups would rather avoid the headaches of entering into the heavily regulated space, particularly since deposit-taking isn't particularly lucrative these days. It's better for start-ups to enter into a sort of benevolent parasitic relationship with banks, Gapper says, so they can "offer services on top of the banking network" or "aggregate financial products provided by others."

New York Times

Before hackers stole millions of JPMorgan Chase customers' account information, they went to the races. The JPMorgan Chase Corporate Challenge website, which hosts information about the bank's charitable races and is run by an outside vendor, "was one of several gateways that hackers tested to delve deeply into JPMorgan's internal systems," according to the paper. The hackers ultimately used a different route to gain access to customer information. But the attempt shows that "every single system and every single vendor... can be chinks in the most heavily fortified institutions," the paper reports.

Regulators should increase transparency about surprise bank fees and other unexpected charges from cable companies, telecommunication firms, airlines and colleges and universities, according to African-American and African studies professor Devin Fergus. He recommends that regulators "apply tougher scrutiny to industries like financial services and higher education to examine whether fees are reasonable and proportional to actual administrative and processing costs."

Washington Post

Housing vouchers can help low-income families move into wealthier neighborhoods, thereby providing children with access to better schools and potentially lifting more people out of poverty, according to Wonkblog reporter Emily Badger. She recommends that the Department of Housing and Urban Development "better incentivize local housing agencies to help families deploy vouchers to move into low-poverty neighborhoods" and that local agencies "discourage families from using their vouchers in high-poverty places, while offering more assistance to help them figure out how to do that."

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