Breaking News This Morning ...

Deutsche losses: Deutsche Bank reported a bigger-than-expected net loss in the fourth quarter and its second annual loss in a row. Wall Street Journal, Financial Times

Receiving Wide Coverage ...

Sofi expands: Continuing its expansion into more financial services sectors, Social Finance said it is acquiring Zenbanx, a four-year-old digital banking startup. Originally a student loan refinance company founded in 2011, SoFi has since expanded into personal loans, mortgages, wealth management and life insurance. CEO Michael Cagney told the Wall Street Journal that customers will be able to open SoFi bank accounts by the end of the first quarter. The company eventually expects to offer SoFi-branded credit cards that let borrowers earn rewards they can use to pay down their student loan. The deal is reported to be an all-stock deal worth nearly $100 million. Wall Street Journal, Financial Times, New York Times, American Banker

CFPB Director Richard Cordray
"Companies will face the consequences if consumers are denied access to their money," CFPB director Richard Cordray said. Bloomberg News

Fined: The Consumer Financial Protection Bureau ordered UniRush, the parent company of RushCard, and its payment processor, Mastercard, to pay $13 million in fines and restitution for an October 2015 breakdown in RushCard's prepaid debit card system that denied thousands of customers access to their money. "Companies will face the consequences if consumers are denied access to their money," CFPB director Richard Cordray said. Last May UniRush agreed to pay $19 million to settle a lawsuit from cardholders. On Monday UniRush agreed to be acquired by Green Dot, one of its prepaid card competitors, for $147 million. New York Times, Washington Post, American Banker

Wall Street Journal

Fraud rises: Despite greater security measures, such as the vast rollout of chip-enabled cards and more secure payment terminals, more consumers became victims of identity fraud last year than at any time in the past 10 years, according to a report released Wednesday by Javelin Strategy & Research and LifeLock. The report said 15.4 million Americans were victims of identity fraud in 2016, up 18% from 2015 and the most since 2003, when Javelin starting tracking it. Losses totaled $16 billion. The increase was driven by a 15% rise in fraudulent online purchases and a 40% jump in new account fraud, in which new accounts are opened in consumers' names without their knowledge.

Settled … finally: JPMorgan Chase and representatives of the failed Lehman Brothers reached a final agreement to resolve their remaining disputes over Lehman's 2008 collapse. Under the terms of the agreement, Lehman's creditors will recover nearly $800 million from JPM. "In return, ... Lehman agreed to drop its objection to J.P. Morgan's $30 billion in so-called Tassimo claims related to losses the bank says it suffered when it was forced to liquidate Lehman's securities following the investment bank's bankruptcy," the paper reports.

Questions: Six Democrat members of the Senate Banking Committee sent a letter to Wells Fargo CEO Timothy Sloan asking him to answer questions raised by a recent Journal article that said the bank gave advance warning to branch employees about internal inspections, which allegedly helped the bank cover up its phony accounts scandal. "These latest allegations by Wells Fargo employees raise yet another red flag indicating that top management and the board of directors of Wells Fargo knew or should have known about the extensive fraud occurring throughout the bank," the letter said. "We are troubled by the possibility that Wells Fargo's retail bank branch managers engaged in activities that made it easier to conceal fraudulent practices that hurt both customers and employees."

Financial Times

AML focus: President Donald Trump may be eager to roll back bank regulations, but not when it comes to anti-money laundering measures. Gene Ludwig, chief executive of Promontory Financial Group and former Comptroller of the Currency, told the FT that AML is likely to remain "a serious area of focus" for the new administration, noting its tough stance on terrorism. "With more countries under the gun, and no prospect of easing sanctions on countries like Iran — quite the contrary — you'd have to assume this area will stay the same or get tougher," he said.

New York Times

Watson does taxes: IBM and H&R Block announced a partnership Wednesday in which the tax preparer's 70,000 professionals will use the computer giant's Watson technology to help them complete customers' tax returns. The program will be announced during a 60-second television commercial during the Super Bowl on Sunday. The deal is Watson's biggest commercial application to date.

Elsewhere ...

Netflix bank?: The Wells Fargo scandal, while hardly the only example of wrongdoing among banks, "should be a moment of reckoning, an impetus to move away from a model of exploitation, and toward one of advocacy," writes Kalpesh Kapadia, co-founder and CEO of SelfScore, on the Recode website. "Consumers demand more transparent, responsive and honest treatment. It's time for a 'Netflix model' of banking to disrupt the status quo."

Quotable ...

"Fraud is kind of like squeezing Jell-O. Stop it one place, and it migrates to somewhere else." — Stephen Coggeshall, chief analytics and science officer at LifeLock, discussing credit card fraud

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