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More trouble: Wells Fargo fired four bankers in its foreign exchange department, according to the Wall Street Journal. This latest problem, unrelated to last year’s disclosure of massive problems involved sales practices in its retail banking, mortgage and auto lending businesses, “now shows there is also trouble in Wells Fargo’s investment banking arm,” the paper says.
Separately, the Office of the Comptroller of the Currency criticized Wells for engaging in unfair and deceptive practices in its auto lending business and said the bank needs to set aside more than $80 million to refund money to customers it charged for car insurance they didn’t need. The OCC report, which is preliminary, “represents the latest blow to the reputation of Wells Fargo,” the New York Times says, and “could have a significant impact on the bank. It could force the bank to curb, or at least more closely monitor, its practices across the entire company.”
Wall Street Journal
You want more?: United Continental said it is in talks with JPMorgan Chase to get more money out of its co-branded credit card. CEO Oscar Munoz said the company is “in a hole from a competitive perspective” and that it was working on getting out of it. J. Scott Kirby, the airlines’ president, called the current deal “a great partnership, but it is a disadvantage for us as we sit here today compared with our competitors,” adding that the company believes it “will get to, ultimately, a much better result.” Should that happen, “some analysts fear [it] could suppress revenue at the bank,” the paper says.
A piece of the action: Yield-hungry investors are piling into collateralized loan obligations, which “slice and dice risky, leveraged loans,” the paper reports. Volume hit a record $247 billion in the first nine months of the year, according to JPMorgan. “The CLO boom is the latest sign of the ferocious hunt for yield permeating markets,” the Journal said. “Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds.”
Take that, Jamie: J. Robert Collins Jr., a former commodities trader, has joined the “small but growing group of traditional financiers who have become vocal proponents” of bitcoin and other cryptocurrencies, a market that “makes commodity trading look almost tame,” according to the paper. Since starting to invest in digital currencies last March, Collins says the value of his holdings has risen more than fivefold. Indeed, bitcoin broke the $6,000 barrier Friday. Despite this, bitcoin and digital currencies have their critics.
Too late: Social Finance held talks with several interested parties, including Charles Schwab and an overseas bank, to sell itself earlier this year before the company was rocked by a sexual harassment scandal, the paper reports. The online lender received an “indicative offer” of $6 billion from the foreign bank, which set off interest among other interest parties that raised the bidding to $8 billion to $10 billion. SoFi then decided to wait for an initial public offering, tentatively scheduled for 2019.
Expensive calls: American investment banks charge as much as seven times more than the global average for their analysts’ research, according to a report. A single phone call with a bank analyst ranges from $800 to $10,000, averaging $2,000, the report from Third Bridge said, but some U.S. banks charge as much $15,000 to speak to a star analyst.
The study “has highlighted the upheaval in the way research is priced by investment banks and boutique sell-side companies ahead of European rules that come into force in January” which seek to end “the opaque system of receiving research for free in return for placing trades with banks and brokers,” the FT says. “The shake-up has already begun, with asset managers scrambling to figure out what they are willing to pay their external research providers.”
“Most people are saying it’s down to two: Mr. [John] Taylor, Mr. [Jerome] Powell. I also met with Janet Yellen, who I like a lot. I really like her a lot. So, I have three people that I’m looking at, and there are a couple of others.” — President Trump, on who he might pick as Federal Reserve chair.