Swiss regulator slams JPM; Fannie, Freddie get a boost

Editor's note: Morning Scan will publish next on Jan. 2, 2018. Season’s Greetings and Happy New Year from all of us at American Banker and SourceMedia.

Receiving Wide Coverage ...
AML violation charge: Switzerland’s Financial Market Supervisory Authority said JPMorgan Chase’s Swiss unit “seriously breached” anti-money-laundering regulations by completing transactions with the Malaysian state investment fund, 1Malaysia Development Bhd, which is the subject of multibillion-dollar fraud investigations in the U.S., Switzerland and four other countries. The Swiss regulator said it will install one of its people inside Chase to monitor and review its money laundering policies, “given the inadequacy of the bank’s controls and the serious breaches which have been identified in this case.” Wall Street Journal, Financial Times, New York Times

Protection money: Fannie Mae and Freddie Mac will be permitted to reserve $3 billion in capital out of their quarterly earnings to allow the two government-sponsored enterprises to build a buffer against future operating losses. The move is designed to protect the two from “fluctuations in income in the normal course of each enterprise’s business,” said Mel Watt, the director of the Federal Housing Finance Agency, which regulates the two companies. Wall Street Journal, Financial Times, American Banker

The Heard on the Street column says the move is a hint that “after years of political stalemate … the ultimate endgame for housing finance is starting to take shape in Congress.… With the White House and lawmakers from both sides of the aisle seemingly on the same page, durable housing finance reform looks possible in 2018.”

Cyber crash: Bitcoin prices dropped a stunning 25% on Friday following a wave of selling in Asia. The price of other cybercurrencies was also down sharply.

Was this the sell signal? Long Island Iced Tea’s share price tripled early Thursday, to $8.42 from $2.44, after it said it will rename itself Long Blockchain Corp. and refocus around blockchain, the technology behind the digital currency. The company, which the Wall Street Journal says hasn’t posted a profit in five years, will continue to sell its ready-to-drink teas under a subsidiary.

“It’s clear that a business idea is hot when companies that have nothing to do with the idea get involved,” the New York Times notes.

Or was this? Charlie Lee, a former Google engineer who created litecoin in 2011, said he sold his stake in the cryptocurrency. The Journal calls the move “a major about-face in a world often characterized by true believers and tech evangelists.” Lee didn’t disclose the size of his stake, but the paper put it at about $17 billion.

Meanwhile, Goldman Sachs plans to open a cryptocurrency trading desk by mid-2018.

Wall Street Journal
It’s in the cards: The number of credit card payments grew by 10.2% last year, more than two percentage points higher than in each of three previous years, according to the Federal Reserve. The Fed attributed the increase to “continued strong growth” in the number of remote payments, including online shopping and bill paying, which represented more than 22% of all credit- and debit-card payments. By value, remote payments accounted for 44% of all card payments.

In-person card payments using chip technology jumped to 19.1% from only 2% in 2015, “reflecting the coordinated effort to place the technology in cards and card-accepting terminals,” the Fed said.

Bon Voya(ge): Voya Financial said it is selling parts of its annuities businesses to a group of investors led by Apollo Global Management and its affiliates, Crestview Partners and Reverence Capital Partners. Voya said the deal would enable it to focus on employee benefits, investment management and its retirement businesses, as well as lower its insurance and market risk.

Quotable
“JPMorgan failed to adequately identify the increased money laundering risks in some of the business relationships related to this case.” — The Swiss Financial Market Supervisory Authority, citing enforcement proceedings it conducted between May 2016 and June 2017.