Receiving Wide Coverage ...
Compromise: Global finance officials agreed on the last piece of the Basel III bank regulatory regime on Thursday. The agreement is a "compromise between opposing European and U.S. views about how to measure the riskiness of lenders," the Wall Street Journal said. "The compromise will likely force banks, in particular in Europe, to increase the amount of capital they hold against loans going sour." The new rules will be phased in between 2022 and 2027. Wall Street Journal, Financial Times, New York Times
Bubbling over?: If you thought Wednesday's trading in bitcoin was crazy, you should have waited until Thursday. The price of the digital currency jumped over five separate $1,000 barriers and briefly soared over $19,000, rising about 40% in 40 hours. Bitcoin is now up about 1,560% so far this year. "For many skeptics, though, that is proof that bitcoin is a massive bubble," the Wall Street Journal intoned. Wall Street Journal, Financial Times, Washington Post here and here
Bitcoin is definitely a bubble, the Financial Times agrees. But even if the cybercurrency crashes to zero, the damage will be limited, it says, although it still bears watching. "Bitcoin is not a bank," the paper reminds us in an editorial. "It is not highly leveraged, and it seems to have been used as collateral in only a limited number of cases. Much of its nominal value is in essence 'found money.' So there is limited cause for worry — until the value gets much higher, or much more leverage seeps into the financial ecosystem surrounding the cryptocurrency. This could happen. Regulators need to follow events closely, and insist on high-margin requirements and tight risk controls for trading in derivatives."
That's what some of the world's biggest banks are doing. JPMorgan Chase, Bank of America and Citigroup won't give their customers access to the bitcoin futures market when they go live next week, while Goldman Sachs and ABN Amro will only handle transactions for a select few of their clients.
Wall Street Journal
Meet the new boss: The Journal profiles Jelena McWilliams, President Trump's nominee to head the Federal Deposit Insurance Corp. "An immigrant born in the former Yugoslavia who moved to the U.S. on her 18th birthday, [she] has been a quiet force for years in shaping Republican policy on the banking industry," it writes.
Opening the black box: Randal Quarles, the Federal Reserve's vice chair for supervision, announced his first major policy move on Thursday, proposing to make the Fed's bank stress tests more transparent. The "bank-friendly" move "marks the most significant step towards deregulation yet by the Trump-era Fed," the FT said. (Also: Here's what we wrote.)
Plunging: Shares in Lending Club dropped more than 20% to a record low of $3.29 on Thursday as it cut its profit guidance. The stock is down about 80% since its initial public offering three years ago. "The sell-off in the biggest listed online lender underscores the challenges facing the sector as a whole, which has so far failed to live up to its early promises of transforming the banking industry by connecting needy borrowers with willing lenders," the FT said.
New York Times
No pain, no gain: Citigroup's announcement Wednesday that it would take a $20 billion accounting loss if tax reform is passed may "actually be pretty helpful" to the bank's investors, the Times says.
"The pain would actually do the bank and its shareholders a favor," it says. "Having Congress dissolve a large chunk of deferred tax assets would have two distinct advantages. It would lop $17 billion or so off Citigroup's common and tangible common equity," which would increase its returns. "Citigroup would also still be able to keep its pledge to return up to $60 billion to shareholders by the end of 2020."
"It's clear that people are putting money in [bitcoin] simply because they think other people are going to put in money. We're seeing the actual illustration of speculation. Somebody should take a snapshot of this and put it in the dictionary." — Tim Swanson, the founder and research director at Post Oak Labs, a San Francisco advisory firm.