U.S. Bancorp hit with AML fine; bitcoin rallies

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Editor's note: Morning Scan will not publish on Monday, Feb. 19, in observance of Presidents Day. We'll be back on Tuesday, Feb. 20.

Receiving Wide Coverage ...

Et tu?: U.S. Bancorp was fined $613 million by the U.S. Justice Department for “shoddy” anti-money-laundering controls. At the same time, the bank reached an agreement with the U.S. attorney’s office in New York in which the government agreed to defer prosecution if the bank improves its monitoring of customer transactions.

The fine was the biggest regulatory fine ever against U.S. Bancorp, which “has long cultivated a reputation for a cautious, plain-vanilla approach to banking, which has produced years of steady profits,” the Wall Street Journal notes. The government said the bank’s lax controls allowed a former customer, race-car driver Scott Tucker, to launder money from an illegal payday-lending scheme. Tucker was convicted of fraud last October. Wall Street Journal, Financial Times, New York Times, American Banker

Wall Street Journal

Roller coaster ride: While most investors have been focused on the volatile stock and bond markets, bitcoin prices have quietly climbed back above $10,000 for the first time in two weeks. The digital currency is now trading about 72% above its recent low, which it hit on February 6, but about 50% below last December’s all-time high of over $20,000.

Financial Times

Showing some love: Moves by Goldman Sachs and other banks to court consumer borrowers suggest the era of de-risking is over, U.S. banking editor Ben McLannahan writes. “Things are now changing. The banks’ balance sheets are in better shape, they’ve stopped paying huge fines for crisis-era misdeeds, and they have a generally less antagonistic relationship with the main regulatory agencies.” This “is not necessarily bad news for consumers,” he adds. “It might even be good.”

Buddy, can you spare a dime?: Freddie Mac reported a net loss of $3.3 billion for 2017’s fourth quarter, largely due to a $4.5 billion write-down of deferred tax assets from tax reform. As a result, the agency said it will seek a $312 million taxpayer-funded infusion. A day earlier its sister mortgage finance agency, Fannie Mae, reported a $6.5 billion hit and said it would seek $3.7 billion in government funds. On a more positive note, Freddie said its loan portfolio exceeded $2 trillion for the first time.

Not the Lone Ranger: Don’t expect the Federal Reserve under chair Jerome Powell “to ride to the rescue” if stock prices tank, writes the U.S. managing editor Gillian Tett in an opinion piece. “Powell does not seem a natural dove: he has previously said that he is concerned that loose monetary policy has created bubbles in fixed income, and last year stressed that it is ‘not the Fed’s job to stop people from losing money.’ His colleagues do not seem dovish right now either. It is also important to note that the staff of the mighty Fed — who appear to be rising in power now, since Mr. Powell is not an economist — are determined to keep the institution immune from political pressure. This means that it will be hard for the Fed to sit on its hands if inflation keeps rising — even if equity markets tumble.”


“Any proposed federal regulation of virtual currency platforms should be carefully tailored to the risks posed by relevant trading activity and enhancing efforts to prosecute fraud and manipulation.” — J. Christopher Giancarlo, chairman of the U.S. Commodity Futures Trading Commission, at a Senate hearing Thursday.

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