Receiving Wide Coverage ...
Marketplace Lenders in Treasury's Sights: Greater regulation may be coming to the buzz-filled world of marketplace lending. The Treasury Department has begun a study of the industry's risks and advantages, which could lay the groundwork for rules down the line. The New York Times says Treasury's announcement of the study strikes a "largely supportive tone," expressing interest in the industry's potential to expand credit access for underserved demographics. But the Treasury's desire to explore possible "skin in the game" rules for marketplace lenders could spell trouble for companies that fund loans with investors' money rather than their own, according to an analyst interviewed by the Wall Street Journal.
Support for $50B Bright Line Gets Murkier: Regional banks may have reason to be cheered by Federal Reserve Chair Janet Yellen's testimony before the Senate banking committee. Yellen said she is open to a "modest increase" in the $50 billion threshold that determines systemically important banks, as long as the Fed could impose additional supervisory requirements on companies on an as-needed basis. Her remarks put her in line with Fed Governor Daniel Tarullo, while changes to the threshold still face opposition from influential figures including Sen. Elizabeth Warren and Treasury Secretary Jacob Lew. Financial Times, Wall Street Journal
Citi's Makeover Moment: Citigroup is on the upswing after managing a second consecutive quarter of better-than-expected profits. Earning rose to $4.85 billion, up from just $181 million a year ago, as legal costs plummeted. The always-colorful analyst Mike Mayo tells the FT Citi is like "the Creature from the Black Lagoon, when you wipe off some of the muck and you find they're good-looking underneath." Sounds like someone has a blockbuster screenplay on his hands! An analyst interviewed by the Journal takes a more cautious tone, noting that while earnings were generally strong "there could be some nitpicks on [their] quality." (Namely, Citi's numbers were pumped up by factors like lower tax rates and a release of loan-loss reserves.) Still, John Carney of "Heard on the Street" is impressed by the bank's ability to deliver solid returns while maintaining the highest capital ratio among its big-bank peers.
Wall Street Journal
German regulators blasted Deustche Bank executives for their complacency in the bank's Libor rate-rigging scandal in a confidential report reviewed by the paper. The report, which takes a particularly harsh view of the bank's former co-chief executive Anshu Jain, was published less than a month before Jain and his co-leader Jrgen Fitschen announced plans to step down.
HSBC's Saudi Arabia unit is in hot water with the country's regulators over an investigation into "whether it inflated the valuation of a construction firm's listing in 2008."
Paul J. Davies of "Heard on the Street" thinks Greece may need to hand control of its banks over to Europe if it wants to recapitalize them. As he admits, that's an idea unlikely to find favor among Greeks already worried about giving up sovereignty.
Retail banking is making a comeback this earning season, according to the paper. Citigroup and Bank of America reported solid numbers in their consumer business lines, while trading revenue was less impressive.
U.S. authorities have requested the extradition of a British man accused of hacking into the networks of the Federal Reserve and other government agencies.
Wall Street is throwing its support behind Republican presidential candidate Jeb Bush, according to the paper's review of contenders' campaign finance filings. Bush raised more than $140,000 from Goldman Sachs employees during the first 15 days of his campaign, according to the paper roughly three times the amount Democratic candidate Hillary Clinton managed to wring out from Goldman over three months.
The "audit the Fed" proposal is a bad idea, says Glenn Hutchins, co-founder of private equity firm Silver Lake. "It would compromise the Fed's independence by adding a layer of oversight into monetary policy deliberations, even though the weight of academic and real-life evidence suggests that independent central banks make better policy," he writes.
New York Times
An article by Gretchen Morgenson suggests Manhattan District Attorney Cyrus R. Vance Jr.unfairly prosecuted a small minority bank and its top officials for a mortgage-fraud scheme in which the admitted mastermind had already been discovered, fired and reported to regulators. A Manhattan jury exonerated Abacus Federal Savings Bank and its two top officials in June, dismissing "every one of the 80 counts charged at trial," but Morgenson writes that mounting a costly defense has hobbled the bank and seven former loan office employees still face criminal prosecution.
Did "London Whale" Bruce Iksil deserve to be the face of JPMorgan's trading scandal? The paper suggests while Iksil is hardly blameless, he emerges "as a sympathetic figure caught up in something 'monstrous' beyond his control" in recorded conversations and instant messages. The implication is greater blame may lie with higher-ups at the bank whose involvement was never discovered. "We want the right people to be held accountable, not some expendable minions," says law professor Brandon L. Garrett.
Citigroup banker Hans H. Angermueller, who helped achieve the release of the U.S. hostages from Iran with a financial deal, died on Saturday at age 90. "Mr. Angermueller helped draw up a secret plan that would involve using Iran's frozen bank deposits in European banks to pay off the country's creditors," the paper reports. "In exchange, the hostages would be freed."