Wells Fargo Eyes GE Business Loans; Chip-and-Pin Mayhem
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Bank Tax Backfire? British banks HSBC and Standard Chartered are considering fleeing the land of tea and crumpets for Asia in order to avoid the U.K.'s steep bank taxes. The discussion comes at the behest of shareholders rattled by Britain's decision last month to increase the bank tax by a third. (The tax has been hiked eight times since it was implemented in 2010, according to a Reuters pick-up in the New York Times.) Banks seem to think they're being forced to fork over more and more money so British lawmakers can score political points, and an analyst tells Bloomberg he agrees: "Banks and pay are still easy cannon fodder for politicians." HSBC chairman Douglas Flint put a poetic spin on the situation, telling investors Monday the "financial shape of regulation" is now emerging and "as soon as the mist lifts sufficiently, we will once against start to look at where the best place for HSBC is." Analysts predict HSBC and Standard Chartered are unlikely to make such a big move anytime soon, since they have their hands full trying to bolster profits, reduce costs and deal with pesky regulatory concerns like Swiss tax evasion scandals and investigations into possible sanctions violations. But in 10 or 15 years, they may well be telling England, "cheerio."
Wall Street Journal
Wells Fargo may be about to get bigger. The company is looking to purchase "all or part of" General Electric's $74 billion commercial lending business, according to anonymice. The paper suggests this makes sense for Wells, which already specializes in midsize lending and is looking for ways to boost profits. If the deal goes through, the paper notes, Wells could wind up subjecting itself to higher capital requirements closer to those of its big-bank peers like JPMorgan Chase. All of this is still in the hypothetical realm, as other bidders are still in the running.
The rollout of chip-and-pin cards in the U.S. has been a little bit rocky, the paper reports. Merchants are worried about whether they'll be able to upgrade payment terminals in time for an October deadline. (They asked the major card issuers to extend the deadline to 2016, but Visa, Mastercard and other credit card card firms are staying silent on the issue, which the paper suggests means "no dice.") Meanwhile, smaller banks are overwhelmed by the cost of replacing old cards at a potential "added expense of tens of millions of dollars." Bank customers have their own hurdles ahead: as chip-and-pin card readers become ubiquitous, we'll all have to give up the familiar swiping gesture for the exotic card dip.
Navy Federal Credit Union is getting into the student loan business. The country's biggest credit union will offer private student loans and refinance both federal and private loans, according to the paper.
More chief executives are getting paid in cash instead of with stock shares, according to the paper's survey of early proxy filings. That's a reversal of the trend immediately after the financial crisis, suggesting investors may believe the stock market is topping out.
The Justice Department is gunning for a foreign-exchange settlement with five banks by mid-May, the paper reports. The five banks involved in settlement talks are the international smorgasbord of JPMorgan Chase, Barclays, Citigroup, Royal Bank of Scotland and UBS, each of which would pay a penalty of roughly $1 billion.
Former Federal Reserve chairman Paul Volcker says a consolidated U.S. financial regulatory structure would do a better job of supervising banks and reducing risk to the financial system. Volcker wants to get rid of the Office of the Comptroller of the Currency and merge the Securities and Exchange Commission and the Commodity Futures Trading Commission. The paper's commenters are on board with the plan but simultaneously suggest it's a pipe dream.
"Financial regulators still know next to nothing about the true level of risk that big banks are exposed to," opines financial journalist Robert Lenzner in an op-ed. He argues banks tend to present their risk exposure "in a way that is essentially inscrutable" and therefore confounding to regulators as well as investors. Even Warren Buffett doesn't know what's going on with JPMorgan's derivatives reporting. More transparency is the solution, Lenzner says, although how to achieve this remains an open question.
New York Times
Hillary Clinton is attempting to position herself as "the original Elizabeth Warren" in her presidential campaign, according to the paper, although it remains to be seen whether her policy proposals will be as heavily focused on financial reform.
Paul Krugman calls out "permahawk" John Taylor for continuously warning that a fearsome spike in inflation is just around the corner thanks to easy-money policies. "You might expect some rethinking, given this absence of inflationary trouble to materialize" in the last two decades, he writes. "But the only rethinking that seems to happen is a search for new reasons to make the same complaints about loose money."
Have you ever noticed how much financial commentators like quoting Yogi Berra? Peter J. Henning is the latest columnist to call upon the quotable Yankees catcher ("It ain't over till it's over") in an article that criticizes the government for failing to hold individuals accountable for actions that contributed to the financial crisis. But Henning seems to hold out hope the Justice Department has been sufficiently shamed for failing to prosecute individuals and will change its tune going forward.