Bitcoin trade group launched; FDIC unveils program for unbanked

Receiving Wide Coverage ...

Just right

In his annual letter to shareholders, the Financial Times reports, JPMorgan Chase CEO Jamie Dimon says “It is possible that we will have a Goldilocks moment — fast growth, inflation that moves up gently (but not too much) and interest rates that rise (but not too much).”

“Mr. Dimon’s outlook is decidedly rosier than it was a year ago, when he warned shareholders to brace for a ‘bad recession’ in which U.S. gross domestic product could fall by up to 35%,” The Wall Street Journal reports.

Wall Street Journal

Cryptocurrencies get own trade group

Fidelity, Square “and several other financial firms are forming a new trade group that aims to shape the way bitcoin and other cryptocurrencies are regulated.” The Crypto Council for Innovation “will lobby policy makers, take up research projects and serve as the burgeoning industry’s voice in championing the economic benefits of digital currencies and related technologies.”

“The council’s launch comes as prices of many digital assets have surged, drawing in new mainstream investors and the banks and brokers that serve them. Earlier this year, the total market value of bitcoin, the most popular digital currency, touched $1 trillion for the first time.”

Bitcoin bump

One member of that group, the cryptocurrency exchange operator Coinbase Global, “released estimated results for the first quarter ahead of next week’s highly anticipated direct listing. It expects to report net income between $730 million and $800 million on revenue of $1.8 billion. By contrast, for all of 2020, the company earned $322 million on revenue of $1.3 billion.”

“Coinbase, which plans to list its shares publicly on Nasdaq beginning April 14, would be the first major crypto company to go public. Its fortunes are tied closely to the swings of the crypto market; it lists for trading about 50 cryptocurrencies besides bitcoin.”

More pain before gain

Anyone waiting for a quick turnaround in the shares of Credit Suisse, which Monday said it expects to lose $4.7 billion in the collapse of Archegos Capital Management, had better be patient, the Journal advises. The bank said it will cut its dividend and suspend share buybacks and replaced two top executives.

“Growth prospects are likely to be lower as the bank’s risk management tightens. Any big overhaul also will distract from the day-to-day operation of the group in the increasingly competitive business of banking the world’s wealthy. Overall, this feels more like the beginning than the end of a process of corporate renewal. Those who see the Swiss wealth manager’s shares as a bargain after a tough year need to be prepared for further pain.”

Financial Times

Don't do it

“The worldwide fall in interest rates over the past two decades has caused a runaway boom in house prices. Therefore, it makes sense to raise interest rates so houses become affordable again. But that would be a disastrous mistake,” an FT op-ed says. “Hiking interest rates would cause a lot of collateral damage to the economy. But it would not in fact do much to help younger people struggling to get on the housing ladder.”

“Fundamentally, all of these policy ideas — higher interest rates, taxes, or restrictions of various kinds — are about reducing demand for housing. But how does suppressing demand for something people want make us better off? When demand for something rises, the only sane, logical, sustainable, free market response is to make more of it.”

Washington Post

Banks for the unbanked

Millions of people still haven’t received their federal stimulus checks, and for one simple reason: they don’t have a bank account. “To make it easier for these households to get their stimulus funds, the FDIC has launched a public awareness campaign — #GetBanked — to persuade unbanked individuals of the benefits of having a bank account. The campaign will run in Atlanta and Houston, where the FDIC says its research finds a disproportionately higher percentage of unbanked Black and Hispanic households.”

“As part of the media campaign starting this week, the FDIC pointed to efforts to create no-cost or low-cost (as little as $5 a month) banking accounts for people afraid that fees and other charges would create a financial burden. The accounts, offered at 75 banks and credit unions under a national initiative called ‘Bank On,’ are designed especially for the unbanked. People can open an account for $25 or less. Most importantly, with this type of account, overdraft or non-sufficient funds fees are not allowed. Transactions are declined if the funds are not in the account.”