The squeeze on Chinese banks; Amex suit continues

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Shadow banking: Chinese companies are turning to "murkier forms of financing" outside the banking system as bank lending and bond financing have dried up or become too expensive as the government cracks down on risky lending. Lending from trusts, which raise money from individuals and corporations and lend it out, totaled $129.5 billion in the first four months of this year, nearly five times as much as the same period last year.

"Economists worry that Chinese companies are borrowing too much money outside the scrutiny of regulators and planting too many potential debt bombs in the corners of China's financial system," the New York Times commented.

The movement of money into trusts and out of banks could also leave the banks "gasping for breath," the Journal's Heard on the Street column warns. "The exodus is proving a double whammy for China's banks. Not only are they losing a stable source of funding, they are also bearing the brunt of higher costs to raise cash as financial conditions tighten."

Wall Street Journal
Who's minding the store?: The purchase of $2.8 billion of Venezuela bonds last week may have been a "no-brainer" for Goldman Sachs's asset management unit, but the deal, which caused a public relations headache for the company, wasn't reviewed by top executives at the bank, the Journal reports. "Internally, the purchase didn't receive heightened scrutiny," it said. The two heads of the unit "were informed only after the trade had been completed," it said, and the trade "didn't reach Goldman's firm-wide standards committee, which often vets deals that carry potential blowback."

Not quite done: The Justice Department said Friday it won't ask the Supreme Court to review its antitrust case against American Express, sending "a strong signal that this seven-year litigation should come to an end," according to Amex. But 11 states, led by Ohio, petitioned the high court to review their case against the credit card company. The states are challenging Amex's policy that bans merchants that accept Amex cards from encouraging consumers to use cards that run on competing networks, such as Visa and Mastercard.

Financial Times
Talent hunt: Blockchain has become "one of the hottest areas for technology recruitment," the FT reports, with demand "far outstripping supply." The number of job listings on LinkedIn for blockchain-related positions has more than tripled in the past year, and salaries are soaring. "As thousands of blockchain-based start-ups are being created, established companies in many sectors from financial services to retail are scrambling to get to grips with what the new systems can do."

New York Times
Balancing act: The Trump administration has chosen nominees for at least two of the three open positions on the Federal Reserve's Board of Governors. They are Randal K. Quarles, a Treasury Department official under George W. Bush, and Marvin Goodfriend, an economics professor at Carnegie Mellon University and a former Fed official.

"In picking Mr. Quarles and Mr. Goodfriend, President Trump is seeking to install conservative counterweights to the Fed's chairwoman, Janet L. Yellen," the Times said. "Both men have expressed reservations about the Fed's aggressive efforts to revive economic growth since the 2008 crisis."

Age is no obstacle: "Historically, people would pay off their mortgage in 20 to 30 years and have a mortgage-burning party," said Lori A. Trawinski, a senior strategic policy adviser at the AARP's Public Policy Institute. Not anymore. Even if they have enough money to pay cash for a house, a growing number of older Americans are choosing to take on a mortgage to take advantage of low rates and tax benefits. And banks are willing to lend, the Times reports, "as long as you have regular monthly income, like a pension and Social Security, or retirement assets."

"We see that people are carrying mortgage debt at older ages, and it's both the percentage of families carrying the debt and the amount of debt that has increased." — Lori A. Trawinski, a senior strategic policy adviser at the AARP's Public Policy Institute.

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