Ready for launch Intercontinental Exchange is planning “to launch trading in bitcoin futures next month, in a long-awaited bid to lure more Wall Street investors into the sometimes treacherous world of crypto," the Financial Times reports. "Bakkt, the business set up by the Atlanta-based group a year ago to develop infrastructure for trading digital assets, said it would launch two physically delivered bitcoin futures contracts on September 23, one of them monthly and one daily.”
“Bakkt confirmed it would provide custody for the futures after gaining a trust license from the New York State Department of Financial Services. Safekeeping of crypto assets has been a big concern of institutional investors, because exchanges have repeatedly suffered hacks and outages.”
Meanwhile, “the Internal Revenue Service is on the war path against Americans who haven’t reported income from cryptocurrencies like bitcoin,” the Wall Street Journal says. After sending out warning letters last month “to more than 10,000 people who may not have complied with tax rules on virtual currencies, … criminal tax indictments involving cryptocurrencies are expected soon, and other enforcement letters are going out.”
“Tax specialists are urging crypto users who aren’t in compliance to act quickly. While coming clean involves a maze of tricky decisions, ignoring the agency could cost a crypto holder dearly.”
Wall Street Journal
Broader focus In a “major philosophical shift for the association,” the Business Roundtable, the group of CEOs of large U.S. companies headed by JPMorgan Chase CEO Jamie Dimon, is changing its definition of “the purpose of a corporation” from putting shareholders first to “all stakeholders”— “that is, employees, customers and society writ large.”
“The change formalizes a stance taken by a number of executives in recent years. Mr. Dimon, for example, has challenged the shareholder-profit focus as too narrow and an impediment to executives’ ability to focus on long-term goals.”
Being careful Some American banks have closed accounts and stopped transactions by humanitarian organizations helping people in Venezuela for fear of running afoul of U.S. sanctions against dealing with the country.
Financial Times
Overtime President Trump discussed last week’s financial market turbulence with the CEOs of JPMorgan Chase, Bank of America and Citigroup. “The conversation followed a previously scheduled meeting at which the bankers discussed financial regulation with members of the Trump administration. At the end of the meeting, however, the presence of all three men presented an opportunity for a presidential briefing. Who initiated the call, exactly what was discussed, and who besides the president and the three bankers was on the call could not be ascertained.”
U.S. President Donald Trump speaks during a National Economic Council listening session with small and community bank executives in the Roosevelt Room of the White House in Washington, D.C., U.S., on Thursday, March 9, 2017. Trump assured a group of U.S. community bank executives he will deliver regulatory changes that will make it easier for them to lend money. Photographer: Kevin Dietsch/Pool via Bloomberg
Kevin Dietsch/Bloomberg
Helpful, but not enough U.S. banks are getting a small shot in the arm from mortgage refinancings as interest rates fall to record low levels. “Analysts say, however, that fees earned on refinancing transactions will not be enough to offset the lower lending margins that result from a lower interest-rate environment.”
Where you want to be? HSBC is facing one of its biggest challenges since it was created 154 years ago “as it tries to navigate rising tensions between China and the west. With globalization in retreat, some analysts and investors are asking whether HSBC’s plan to generate billions of dollars of additional revenue in mainland China is compatible with its domicile in London, or its status as one of the world’s largest U.S.-dollar-clearing banks. The recent protests on the streets of Hong Kong, where HSBC makes roughly half its profit, have thrown the question into even sharper relief.”
New York Times
Overdrawn Current and former Wells Fargo employees say the bank keeps “closed” accounts open if they have a balance, “even one below zero. And each time a transaction is processed for an overdrawn account, Wells Fargo tacks on a fee. The problem has gone unaddressed by the bank despite complaints from customers and employees, including one in the bank’s debt-collection department who grew concerned after taking in an estimated $100,000 in overdraft fees over eight months. It is not clear how many people have been affected, but aggrieved customers have brought complaints to the Consumer Financial Protection Bureau, griped on the discussion sites Reddit and Quora and voiced their displeasure through the ‘Community’ section of Wells Fargo’s website — a public comment feature that is now disabled.”
Wait and see “Warren E. Buffett’s Berkshire Hathaway has been building its position in banks over the past year,” but he’s about the only one, as many investors have avoided the sector. But that could change, especially if the economy doesn’t fall into recession, fears of which may be “overblown.”
“If the economy keeps growing, bank stocks could look appealing,” the paper says. “The financial sector’s price-to-earnings ratio is near its lows of the past five years and easily the lowest of any of the S&P 500’s 11 sectors. And banks are much healthier than they were during the financial crisis more than a decade ago. Today, bank capital, the main financial defense against losses, is high, and profit growth continues. Then there’s the factor that Mr. Buffett cites in explaining his interest in banks: They’ve been giving back more money to shareholders.”
Washington Post
Disparate impact The Department of Housing and Urban Development “proposed raising the bar for bringing claims of [housing] discrimination, appeasing the home insurance and mortgage industries. The new rule, to be published Monday in the Federal Register, would amend an Obama-era regulation barring lenders, landlords and others in the housing industry from enacting policies that may appear innocuous but wind up discriminating against minority groups. Unintentional discrimination, known as ‘disparate impact,’ would become harder — if not impossible — to prove under the Trump administration’s proposal.”
Lisa Rice, president and chief executive of the National Fair Housing Alliance, said the proposal “would allow for covert discriminatory practices by financial institutions, insurance companies and housing providers against groups protected by federal housing law.”
HUD says the "disparate impact" standard must be changed as a result of a recent Supreme Court ruling, American Banker reports. "But consumer advocates say the change would make it more difficult for borrowers to allege discrimination under the Fair Housing Act."
Quotable
“Big banks’ mortgage businesses are a lot smaller than they used to be. I’m thinking of [the refi wave] more like a partial offset to [lending margin] pressure, as opposed to a meaningful earnings boost.” — Jeffery Harte of Sandler O’Neill, about the possible effect of mortgage refinancings on bank profits
The Wisconsin banking company forecasted loan growth of 4% to 6% for the full year, driven by an expansion into new commercial and consumer credit lines as well as enduring economic strength in the Midwest.
In the inaugural iteration of American Banker's news quiz, test your knowledge on top articles covering the legal battles of the Consumer Financial Protection Bureau, new technology testing at JPMorgan Chase, earnings season and more.
To build their executive presence in meetings and on video calls, junior employees should embrace flexible schedules — and possibly media training, Michelle Young of Worldpay and Anna Greenwald of MoneyGram International said at American Banker's Payments Forum.
Liberty Bank in Salt Lake City had been "structurally unprofitable" since 2008, according to its regulators. Experts criticized the FDIC for allowing the bank's demise to play out in slow motion.
The New York-based bank says it will push its concentration of commercial real estate loans below 400% of risk-based capital over the next two years and focus more on C&I.
The San Francisco-based firm's Anchorage Digital Trusted Liquidity and Settlement network, better known as Atlas, will allow clients to settle a range of cryptocurrency transactions.
