Facebook defiant at House hearing; BNY Mellon beats despite lower profits

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Morgan Stanley earnings
Morgan Stanley's profit dropped 10% in the quarter to $2.2 billion, or $1.23 a share.

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Trouble with the curve
Bank of New York Mellon’s earnings fell 8% in the second quarter compared to a year earlier while revenue fell 5%. Earnings per share fell to $1.01 versus $1.03 a share a year ago but beat analysts’ expectations of 95 cents. “For the second consecutive quarter, bond markets and interest rates played a big role in the company’s results,” the Wall Street Journal says.

“The impact of the level and shape of the yield curve, as well as continued low levels of volatility and muted market activity, negatively impacted our results,” said CEO Charles Scharf said in prepared remarks. “Our results this quarter also reflect our ongoing increased level of technology and product development investments, but these increases were more than offset by improved efficiency across the company.” Wall Street Journal, Financial Times

Not taking the pledge
Facebook executive David Marcus faced a second day of grilling about the company’s planned cryptocurrency on Capitol Hill on Wednesday, this time before the House Financial Services Committee. “As was the case on Tuesday, Mr. Marcus was dogged by his company’s controversial reputation as well as skepticism of the legal uses of cryptocurrencies,” the New York Times reports.

Andrew Harrer/Bloomberg

Marcus said Facebook “would not launch the project until it had sign-off from the necessary regulators," the Financial Times says. "But he would not agree to stop working on the plans, as demanded by several senior members of Congress, or to launch it in a limited pilot project first.”

“The commitment is that we will not launch until we have addressed all concerns fully and I think that is enough,” he said.

Some members of the panel “said they were baffled at Facebook’s suggestion that Libra, its planned global cryptocurrency targeting average consumers, could launch without the close federal supervision that Wall Street and even local banks have lived under for decades,” the Journal says.

“We would like for Libra to be a digital, global currency, and to be one unit of digital currency for the whole world,” Marcus said during more than four hours of testimony. New York Times, Washington Post, American Banker

Separately, Coinbase, the cryptocurrency exchange, “has launched a tool offering customers insights based on the trading activity of its top users,” according to the FT.

“This will be really useful for those who are new to the world of crypto. It will help them get up to speed and get to know the market better,” said Max Branzburg, the company’s head of consumer product. “We think trading signals, backed by verified transactional data, are an important step towards raising the level of trust in the crypto-economy.”

Wall Street Journal

Bribery case plea
Former vice chairwoman of JPMorgan Chase’s Asia-Pacific investment banking business Catherine Leung Kar-cheung pleaded not guilty in Hong Kong to charges that she persuaded her colleagues to hire the son of a potential bank client in 2009. She is scheduled to go on trial next February. The former executive is “one of two former senior executives connected to a long-running investigation into JPMorgan’s hiring practices in Asia.”

CECL delay
The Financial Accounting Standards Board proposed delaying adoption of its current expected credit losses standard, or CECL, for small public lenders, private lenders and nonprofits, including credit unions. The rule, which would require lenders to record expected future losses as soon as the loans are made, would still take effect after next year for large public banks.

But banks are pressing FASB to delay implementation for most lenders.

Financial Times

Bulking up
N26, “the most prominent of a cluster of millennial-targeting European online banks,” has raised an additional $170 million from investors, boosting its value to $3.5 billion.

New York Times

Good times
The five largest banks “reaped tens of billions of dollars in profits in the first half of the year, thanks in part to a strong economy and to the lingering effects of President Trump’s tax cuts.” The five — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo — “have all seen their tax rates decline to 22% or less as a result of the cuts, compared with rates of around 30% three years ago, one of the most consistent sources of strength apparent in quarterly earnings reports issued this week.”

Quotable

“We think you’re a bank, but you’re not quite like a bank. If you’re bank, we regulate the heck out of you. That is the resistance you’re feeling.” — Rep. Ed Perlmutter, D-Colorado, speaking to Facebook executive David Marcus at Wednesday’s House Financial Services Committee hearing