News from Last Night ...
American Banker's Ian McKendry cranked out a couple of nice scoops late Thursday: one detailing the Senate's efforts to go its own way on housing finance reform with a "bill that would place Fannie Mae and Freddie Mac into receivership, repeal their charters, and replace them with multiple mortgage guarantors"; and another indentifying a new name in the running for leadership of the Consumer Financial Protection Bureau: Ohio state representative Johnathan Dever.
Receiving Wide Coverage ...
Following all the tax-related noise in their fourth-quarter results, big banks can expect to pay "a lot less" in taxes going forward. A number of big banks said they expect their effective tax rates to fall to around 19% or 20% this year, which will boost earnings.
Morgan Stanley, for example, raised its earnings targets for the year and said it is on the hunt for acquisitions as its market capitalization broke through the $100 billion mark, climbing ahead of rival Goldman Sachs for the first time in more than a decade.
Some of that money will also find its way into the pockets of top bank executives. JPMChase said Thursday that CEO Jamie Dimon received a compensation package of $29.5 million in 2017, up 5.4% from 2016. Other senior executives at the bank also got big raises. Wall Street Journal, Financial Times
Thanks, we're good: Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, said he is asking the Federal Reserve "zero" funding for the agency's activities this quarter. Instead, the CFPB plans to fund its estimated expenses of $145 million from a reserve fund it keeps with the Fed that totaled $177 million at the beginning of the fiscal year. Wall Street Journal, New York Times, American Banker
(You know, the CFPB's been a busy place these last few days. Why not just go read American Banker's overview today on what it all means: "Is CFPB's Mulvaney waging war on the agency he runs?")
MetLife no longer important: Well, systemically speaking, anyway. The Financial Stability Oversight Council joined with MetLife in a motion to dismiss a case seeking to keep the "systemically important financial institution" label on the insurance giant. Wall Street Journal, American Banker
Amex bruised: American Express reported a fourth-quarter loss of $1.22 billion, its first quarterly loss in over 25 years, and said it would suspend its share-buyback program in the first half in order to rebuild capital after a $2.6 billion tax-related charge reduced its capital ratios. But the company said it would maintain its quarterly dividend at the current rate. On a positive note, the credit card company said revenue rose 10% to $8.84 billion on higher customer spending and borrowing. Wall Street Journal, Financial Times
Glass half full ...: Intercontinental Exchange, the owner of the New York Stock Exchange, is launching a new service to provide high-speed price data on bitcoin. The service, which is expected to go live in March, is "the latest sign that the once-fringe market for cryptocurrencies is being taken seriously by Wall Street," the Wall Street Journal said.
... and half empty: Meanwhile, XRP, a rival cryptocurrency created by the fintech company Ripple, is raising some concerns in the electronic payments industry, the Financial Times reports. XRP "is supposed to grease creaking banking infrastructure," the paper said, but the "golden goose cryptocurrency, whose price has now sagged, raises awkward questions. While its separate technology solutions for fast payment settlement impresses some financiers, XRP's volatility, and Ripple's ownership of more than half the 100 billion XRP ever created, has unnerved banks that evangelists hoped would adopt the asset as a bridge currency."
Settled: HSBC has agreed to pay a $101.5 million penalty after settling U.S. Justice Department charges that it tried to manipulate foreign exchange markets. The British bank is one of the last big banks to reach a settlement for FX fixing. Wall Street Journal, Financial Times
Financial Times ...
Probed: Royal Bank of Scotland is being investigated by the U.K.'s Department of Business, Energy and Industrial Strategy to see if it tried to profit by manipulating a government program intended to help small businesses during the financial crisis. Local police in Wales are also investigating the claims.
New York Times ...
Moving out: It turns out that "Government Sachs" didn't take over the Trump White House, as some people feared a year ago. "Now, the verdict would appear to be in," the Times reports. "Mr. Trump remains the impulsive, freewheeling provocateur-in-chief, and much of the Goldman contingent has been banished or is leaving the White House."
"Everyone was wondering who would dominate the White House: Steve Bannon or the Manhattan mafia," former House speaker Newt Gingrich said. "It turns out Donald Trump dominated the White House. Surprise! That should have been obvious to anyone who knows anything about Trump."
Double dipping: Some Wells Fargo customers found their bank accounts empty or with a negative balance following a computer error that double-charged them for online bill payments. A similar problem happened at Capital One a few weeks ago. Wells said it was correcting the problem and that customers would not be charged any overdraft fees as a result. Austin American-Statesman, NJ.com
"I never really thought the Goldman crowd would tame Trump. They didn't share a common agenda or a common bond." — Roy C. Smith, a former Goldman partner and professor of management practice at New York University's Stern School of Business.