More problems Deutsche Bank, which already has its hands full with scandals in multiple countries, now finds itself in the cross-hairs in the U.S., where two Democrat senators want the Senate Banking Committee to launch a “thorough, detailed bipartisan committee investigation” into the German bank. “The compliance history of this institution raises serious questions about the national security and criminal risks posed by its U.S. operations,” senators Elizabeth Warren of Massachusetts and Chris Van Hollen of Maryland wrote in a letter to Mike Crapo, R-Idaho, the committee’s chairman.
Deutsche Bank AG signage sits on the side of a branch in Hamburg, Germany, on Saturday, Feb. 13, 2016. Deutsche Bank plans to buy back about $5.4 billion of bonds in euros and dollars as it seeks to allay investor concerns about its finances. Photographer: Krisztian Bocsi/Bloomberg
Krisztian Bocsi/Bloomberg
Tax relief for foreign banks The Treasury Department has proposed rules that would provide relief to foreign banks in dealing with last year’s tax law. “Treasury offered banks relief from the tax on interest payments made to comply with a regulation requiring them to hold long-term debt in reserve. In addition, the tax won’t apply to certain payments foreign banks make from their U.S. subsidiaries to U.S. branches that are technically part of the foreign corporation.”
Giant partnership BlackRock and Microsoft plan to work together to build technology tools to help workers plan and invest for retirement. The proposed technology platform would “provide digital financial-planning tools and new BlackRock funds offering guaranteed retirement income to employees through their workplace saving plans.” BlackRock, the world’s largest money manager with $6.4 trillion under management, currently has no marketing channel to sell funds directly to retail investors.
Financial Times
No more ‘window dressing’ The Basel Committee wants to make it harder for some international banks to “window-dress” their earnings by “flattering their accounts just before quarterly reporting periods. Supervisors have been concerned for some time that banks can make their balance sheets look better by reporting an overly optimistic leverage ratio … just before quarterly reporting dates,” making them look less risky. The problem is not an issue for American banks, which are required to report daily averages.
Bailing out Some Wall Street banks are bailing on the leveraged loan market, selling loans “at discounted prices and demanding that borrowers accept less advantageous terms, as they move to protect themselves from rapidly weakening demand in a previously hot corner of the credit market. The development reflects mounting concern from investors about the quality of loans used to finance private equity buyouts, following a series of warnings from central bankers this year.”
New York Times
End of the line? Does the growing government crackdown on the cybercurrency market “spell the demise of digital currencies and the end of initial coin offerings?” the Times’ White Collar Watch column asks. “For the naysayers of cryptocurrencies and initial coin offerings, this is the anticipated end of a speculative bubble. That does not necessarily mean that this type of investment will disappear, but greater government scrutiny will raise the costs for trading platforms and could effectively eliminate initial coin offerings if they must be registered with the S.E.C.”
Elsewhere
Error reduction A group of banks, including Goldman Sachs, JPMorgan Chase and Citigroup, have invested $17.5 million in AccessFintech, an Israel-based startup that helps financial firms better deal with business errors. The company’s technology “will help reduce the time and resources needed to resolve these issues by helping financial institutions communicate with each other. It will also reduce the risks associated with the errors.”
The Federal Reserve withdrew expectations on crypto activity and dollar tokenization, while the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency also withdrew their versions of the guidance.
The Washington, D.C.-area bank reported a significant boost in provisions to cover emerging vulnerabilities in its $1 billion portfolio of office loans.
Tacoma, Washington-based Columbia Banking System said it will buy Pacific Premier Bancorp, accelerating its growth in Southern California by about a decade. The deal is Columbia's second major acquisition in three years.
A cohort of Democratic senators on the banking committee expressed concern over the Department of Government Efficiency's ongoing efforts to cut Federal Deposit Insurance Corp. staff and contracts, saying they worried the efforts could weaken the nation's deposit insurer and expose sensitive bank data if improperly handled.
At a New York Fintech Week event, speakers urged fintechs to better understand the criminal mindset and to use artificial intelligence to detect and thwart fraud.
Federal Reserve Bank of Cleveland President Beth Hammack said the central bank should not let fears of money-market shakiness cause it to stop balance sheet runoff too soon.