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Amex depressed: American Express’s second quarter profit plunged 33% compared to the year-ago period, largely due to increased competition from big banks and the loss of its 16-year exclusive relationship with Costco. Revenue was basically flat but expenses jumped 20%, mostly due to higher rewards expenses. Wall Street Journal, Financial Times, American Banker

On further review...: A federal appeals court in New York overturned the convictions of two former Rabobank traders found guilty of attempting to manipulate the London interbank offered rate. The three-judge panel said the convictions of Anthony Allen and Anthony Conti were tainted by testimony of a key prosecution witness and that their Fifth Amendment rights against self-incrimination had been violated. The two were convicted on conspiracy and wire-fraud charges in November 2015. Wall Street Journal, Financial Times, New York Times

Willkommen: Frankfurt has taken an early lead in attracting financial firms away from London in anticipation of Britain’s exit from the European Union. “Stability is the one thing all banks are looking for, and in this regard Germany, with its stable economy and politics, is a winner,” said an official at a bank that is moving some of its business to Frankfurt.

Citigroup appears to be following the trend, with plans to open a second trading hub in Frankfurt, where it has had a presence for decades.

Wall Street Journal
Fintech banks: Acting Comptroller of the Currency Keith Noreika said the Trump administration supports giving national banking licenses to financial technology firms and would defend its authority to do so in court against possible push-back by state regulators, some of whom argue the OCC doesn’t have the authority to grant national licenses to such companies. “Suffice it to say, the agency is developing its litigation response and plans to defend this authority vigorously,” Noreika said.

Pro arbitration: Congressional Republicans hope to block implementation of the Consumer Financial Protection Bureau’s new rule that bans financial services companies from requiring arbitration to settle customer disputes. The effort is being led by Sen. Tom Cotton, R-Ark., who said he is “pretty hopeful” the Senate will pass the resolution before its summer recess. The House is expected to pass its version next week. The rule is scheduled to become effective in 60 days and binding next March.

Sen. Tom Cotton, R-Ark.
Sen. Tom Cotton, R-Ark. Bloomberg News

Earnings scorecard: Now that the six biggest American banks have reported second quarter results, here’s a table that shows how they stacked up against each other.

Going for cute: In an effort to “bring humanity to the banking experience,” Capital One hired a character development expert from Pixar to help build its new digital assistant, Eno. The company’s text-based chatbot debuts later this year with “a witty, endearing personality.”

New York Times
Freddie joins the fray: Freddie Mac is planning to offer financing to "midsize landlords" that buy residential homes to be used as "affordable-housing rentals." Up to $1 billion in financing or loan guarantees will be available. Earlier this year Freddie’s sister agency, Fannie Mae, guaranteed a $1 billion financing deal for Invitation Homes, which is controlled by the giant Blackstone Group.

Student loan probe: New York State Attorney General Eric Schneiderman has opened an investigation into the collection practices of National Collegiate Student Loan Trusts, one of the largest owners of private student loan debt. According to the paper, the company has aggressively pursued borrowers who have defaulted on their loans but has not been able to substantiate its ownership claims in court. The AG’s office sent subpoenas to the company demanding information on every collection lawsuit filed against New York residents.

“We all need the federal banking system to be more inclusive, to accommodate new banks, and to adapt to the changing needs of the marketplace, customers, and communities.” — Acting Comptroller of the Currency Keith Noreika.

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