Receiving Wide Coverage ...
Que Sera, QE: The Federal Reserve's bond-purchasing program is officially over, but that's no reason to stop the fun of debating the legacy of quantitative easing. The major papers all give the program mixed reviews. "While it clearly didn't cause the inflation outbreak some predicted, it also didn't clearly lead to a surge of economic output or hiring," the Wall Street Journal reports. The New York Times says QE definitely helped the financial markets, but its impact on job growth is harder to calculate. Now the big question is what the end of the program and eventual interest rate hikes will mean for the economy. A "Heard on the Street" column points out the Fed faces a sticky wicket: its mandate is "to promote maximum employment and keep prices stable," but "what is happening with employment isn't in keeping with what is happening to prices." This makes it harder for the central bank to know what to do if both unemployment and inflation fall in the coming months. The Financial Times' Lex team says that banks are generally looking forward to the prospect of higher interest rates, but notes the payoff may not be as big as they expect. Other economic factors, such as loan demand and gross domestic product growth, "also affect the way rate changes affect bank earnings," according to the FT. Meanwhile, the Guardian's Heidi Moore points out the end of QE will directly benefit banks because unwinding the program "involves paying banks high interest rates to behave the way the Fed wants them to behave" and keeps excess reserves from swamping the market.
Wall Street Journal
This can't be the kind of publicity retailers were hoping for: CurrentC, the mobile payment system that a number of major merchants are hoping to position as a competitor to Apple Pay, has been hacked during its trial run. Hackers nabbed the email addresses of some people participating in the mobile wallet's pilot program, according to the paper. The CurrentC app itself wasn't impacted by the breach. But the paper notes that news of the security lapse may lead to unfavorable comparisons with Apple Pay, "which promises to be harder to hack than existing systems because it doesn't share users' account data."
Fannie Mae and Freddie Mac investors who accuse the U.S. Treasury of unfairly seizing profits from the government-sponsored entities got some more bad news Tuesday. The government has asked the judge in one case before the Court of Federal Claims to stay litigation until an appeals court weighs in on a similar lawsuit that was dismissed by the U.S. District Court last month.
Deutsche Bank is working hard to bolster capital and improve returns, but it needs to put some more muscle into the effort, according to a "Heard on the Street Column." "With a constantly shifting regulatory environment and the unpredictable nature of investigations, it isn't yet clear whether Deutsche is moving rapidly enough," according to Thao Hua.
"Cyber attacks are a growing threat to businesses but board-level executives do not have a grip on the problem," the paper reports. Part of the problem is that boards tend to have older members who are less familiar with the digital age, according to some interviewees. Another issue is that too few companies have chief technology officers on their boards who might be able to explain cybersecurity issues to other members, according to the paper.
New York Times
How do you get a big bank to behave? U.S. authorities suspect some Wall Street firms may already be violating the terms of settlements over alleged sanctions violations, including Standard Chartered and Bank of Tokyo-Mitsubishi UFJ. Prosecutors believe the banks may have minimized the extent of their misconduct, according to the paper. Authorities are also considering revisiting rate-rigging settlements with UBS and Barclays over allegations the banks also manipulated foreign currencies, the paper reports. This may suggest "prosecutors are coming to terms with the limitations of how they punish bank misdeeds," the paper argues. "Typically, when banks have repeatedly run afoul of the law, they have returned to business as usual with little or no additional penalty."
Conversations about how to help people who lack access to banking services need some redirection, according to urban policy professor Lisa Servon. "The problem is not that people are unbanked, but that banks are becoming too prohibitively expensive for people to use them," she writes in an op-ed.
A new startup called Lendoor plans to use crowdfunding to offer small business loans, according to the paper. "Terms of the Lendoor loans are up to the market," the paper reports. "Companies will be able to ask for a particular amount of money at an interest rate that they think will give the proposal a good chance of being funded."
What would you do if a bank accidentally wired you $1.5 million? This ethical dilemma is playing out in real life for hedge fund manager Joseph Galbraith, who appears to have decided the answer is "no take-backs."