Breaking News This Morning ...

Earnings season opens: Analysts are expecting a "downbeat" third quarter from U.S. banks, which began reporting earnings results on Friday. The combined profits for the big six banks are expected to fall about 9% to $20.1 billion compared to the same period last year, the Financial Times says. One reason is a 0.1% decline in business lending. "Although small, the contraction from the prior quarter is the first such drop in six years," says the Wall Street Journal, which nonetheless expects overall results "to be solid if not exciting."

JPMorgan led off, announcing a $6.3 billion profit for the quarter. Citibank, Wells Fargo and PNC also reported this morning.

Receiving Wide Coverage ...

How Wells blew it: Wells Fargo's handling of its phony accounts scandal was a "textbook example of how not to handle a crisis," the Wall Street Journal reports. The problem was exacerbated by an "insular corporate culture, fostered by executives with decades of tenure, which left it ill-prepared for the tumult that followed its regulatory settlement," according to several former Wells executives. "Having passed through the financial crisis mostly unscathed, the bank's brass was largely untested by crisis, these executives said." Richard Breeden, a former chairman of the SEC, noted: "The recurring themes here seem to be complacency, arrogance or being disengaged."

Wells Fargo's new CEO, Timothy J. Sloan, a 29-year veteran of the bank – none of them in its troubled retail unit – has a lot of work to do to move the bank past the scandal. "His tasks include fixing a reputation battered by" the scandal. "He will also have to navigate a raft of federal and state investigations, including from the Justice Department," the Journal notes. Indeed, merely replacing the disgraced John Stumpf doesn't make the bank's problems go away, the Financial Times says. "Unfortunately, Mr. Stumpf's retirement does nothing to answer the many questions that remain," Sen. Sherrod Brown, D-Ohio, the top Democrat member on the Senate Banking Committee, told the paper. "The issues don't go away because Tim Sloan is a different person now leading the company," added bank analyst Marty Mosby. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker

Wells Fargo's crisis is a long way from being over. The Journal provides a (very) long list of hurdles Wells Fargo still faces, from federal and state investigations to its own internal probe. Plenty of shoes could still drop.

The Journal's Heard on the Street column offers some advice on how Wells can revitalize its consumer banking business. One obvious way is to look beyond its existing customers, a strategy it has largely neglected. While the bank is the largest player in the residential mortgage business, it lags far behind its big bank peers in other consumer loan lines, such as credit cards and auto loans.

Marcus arrives: Goldman Sachs' online consumer lending platform, Marcus, went live Thursday, offering loans of up to $30,000 to allow people with good credit to consolidate their credit card debt. While the service puts Goldman in direct competition with marketplace lenders like Lending Club, it has several big advantages over them. The main one is it will be using its own money to make loans, rather than having to worry about selling loans to investors, which has gotten Lending Club and others in trouble. Using its own money will also allow Goldman to offer more customizable loan terms, which the others don't. Goldman doesn't plan to charge upfront fees, early repayment fees or late fees for missed payments. For now, Marcus is by invitation only. Wall Street Journal, Financial Times, New York Times, American Banker

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