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Earnings: Regions

Wall Street Journal

The Journal notes the divergent paths down which the U.S. and European central banks appear to be heading. The Federal Reserve, on the one hand, still appears ready to raise short-term rates, sometime, perhaps, around the middle of this year. The European Central Bank, on the other hand, looks set to engage in a round of quantitative easing, in which it will purchase hundreds of billions of euros worth of government bonds, in an attempt to stanch deflation. "The world hasn't seen an economic divergence like this since the mid-1990," the paper said.

A former chief financial officer at JPMorgan Chase is supporting an incongruous concept: an activist hedge fund that has the backing of chief executives. Douglas Braunstein, the ex-JPMorgan CFO, and James Woolery, chairman-elect at the law firm Cadwalader, Wickersham & Taft, have raised about $250 million from 14 current and former CEOs, along with their own money. They don't plan on waging proxy fights or releasing shareholder letters. The thought behind their strategy is that a collaborative approach between activist investors and management may produce better results (though the same Journal story points out the high rate of success that pugilist activist investors, like Bill Ackman, have enjoyed lately). Their fund, Hudson Executive Capital, will launch today. Braunstein was JPMorgan's CFO from 2010 to 2012, stepping down after the London whale fiasco.

New York Times

Tech start-ups are now applying big data to consumer loan applications. The concept of re-examining traditional ways to underwriting consumer loans isn't new. But companies like Affirm, Earnest and ZestFinance are marrying advances in how technology can manipulate data with new approaches to making determinations on loan apps, such as whether a prospective borrower uses all capital letters in filling out a loan application. And things like a single personal bankruptcy doesn't have the deleterious effect in these start-ups' underwriting models as they have in standard banking underwriting criteria. Credit histories, too, are de-emphasized. Regulators, of course, may have a problem, with these envelope-pushing ideas, the Times points out. But former Consumer Financial Protection Bureau deputy director Rajeev Date says the concepts may end up helping consumers save billions of dollars.

The Times takes a closer look at ZestFinance (a company that's also been profiled by American Banker.) ZestFinance has gotten approval to be a direct lender in seven states, although the process of winning over regulators hasn't been easy, the company's founder, Douglas Merrill, said. A recent report from policy consulting firm Robinson & Yu, authored by a former Federal Trade Commission regulator, calls the methods that companies like ZestFinance use, plugging big data into consumer-loan underwriting, "fringe alternative scoring models."

Elsewhere ...

Bloomberg: The Securities Industry and Financial Markets Association said it opposes President Obama's plan to raise $110 billion over the next decade through a new tax on financial companies. The White House unveiled the planned tax on Saturday, as part of a larger plan to expand tax breaks for lower- and middle-income families.

CNN: Bank of Tokyo Mitsubishi UFJ is testing a robot bank teller. The robot speaks 19 languages and can answer basic banking questions. The company, which is the parent of Union Bank in San Francisco, is testing the robot in Japan. The CNN article doesn't say if Union Bank has plans to test robots in its U.S. branches.

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