Receiving Wide Coverage ...
High Cost of College: Student loans and their myriad associated problems are examined by the Wall Street Journal, New York Times and Washington Post. Some lawmakers want to rein in new programs that forgive student loan debt after a set period of time, as they're becoming far too popular and thus too expensive, the Journal reports.The debt-forgiveness plans have a worthy goal, the WSJ article says: no one should have to "[pay] down student debt their entire working life." They're also becoming outrageously expensive: the Pay As You Earn plan will probably cost about $14 billion per year. There are also worries colleges are using the debt-forgiveness programs to jack up tuition costs. Meanwhile, the NYT and WaPo both look at a report issued today by the Consumer Financial Protection Bureau that says having a co-signer on student loans issued by private lenders can cause big problems later on. The main problem is if the co-signer dies or files for bankruptcy, the private lender may demand complete repayment and place the borrower in default. Citigroup, JPMorgan Chase, Wells Fargo and Discover Financial Services dominate the market for private student loans, but the CFPB said that the consumer complaints it received were about the servicers, Sallie Mae and AES.
Wall Street Journal
Stock trading has become more desirable for JPMorgan Chase, Citigroup, Bank of America and other big investment banks. That's because new capital rules have made it more risky and more expensive to trade fixed-income securities, currencies and commodities.
An in-house scholar at the conservative think tank American Enterprise Institute points out in an op-ed that federal banking regulators are paid more, on average, than bank employees. The author does include the caveat that there are thousands of small banks, and thus a much larger number of private bank employees than there are federal regulators.
The Heard on the Street column posits that bank stocks are overpriced. The run-up in bank stock prices last year exceeded banks' earnings growth. Disappointing first-quarter earnings results from Chase and B of A suggest bank stock values will soon decline.
Banks aren't rushing to make loans to weed businesses, even though marijuana is now legal in Colorado and Washington state. Both large banks and community banks are avoiding pot purveyors, worried that they'll face legal repercussions, even though laws say they won't. American Banker readers are already very familiar with this issue, thanks to the paper's extensive coverage.
UniCredit and Intesa Sanpaolo, the two largest banks in Italy, are working with private equity titan KKR to pool their bad loans into a new securities "vehicle." The European Central Bank's upcoming stress tests are driving the two banks' moves.
The U.K.'s central bank will run a series of simulated hacker attacks on banks' computer systems. The test runs come amid heightened awareness of the Heartbleed security flaw. Royal Bank of Scotland is among the banks expected to participate.
New York Times
It's not easy to make money the payments space, the Times reports, citing an industry consultant. The revelation comes a day after a WSJ report that Square is having trouble making money and may be looking to bail out.