Attacks continue President Trump launched another broadside against Federal Reserve monetary policy, this time blaming the Fed for giving China a competitive advantage over the U.S. “We should be entitled to have a fair playing field, but even without a fair playing field — because our Fed is very, very destructive to us — even without a fair playing field we are winning,” the president said in an interview on CNBC Monday morning. “They [China] devalue their currency, they have for years: It’s put them at a tremendous competitive advantage. And we don’t have that advantage because we have a Fed that doesn’t lower interest rates,” he added. Wall Street Journal, Financial Times, New York Times
U.S. President Donald Trump, right, shakes hands with Jerome Powell, governor of the U.S. Federal Reserve and Trump's nominee as chairman of the Federal Reserve, during a nomination announcement in the Rose Garden of the White House in Washington, D.C., U.S., on Thursday, Nov. 2, 2017. If approved by the Senate, the 64-year-old former Carlyle Group LP managing director and ex-Treasury undersecretary would succeed Fed Chair Janet Yellen. Photographer: Olivier Douliery/Bloomberg
Olivier Douliery/Bloomberg
Trump’s constant harassing of the Fed makes it that much harder for Fed Chair Jerome Powell to do his job, the Wall Street Journal says. “The Fed chairman is navigating three discrete challenges: setting a policy to extend what is already a 10-year-old expansion, explaining clearly why the Fed does what it does, and ignoring the loudest public Fed badgering from a president in recent memory. Mr. Trump’s hectoring of the Fed — over and over through the past year, in tweets, interviews and extemporaneous remarks — has persuaded some investors that the Fed’s decision to shelve plans to raise rates this year came in response to the White House. Investors also haven’t understood what Mr. Powell is saying at times, fueling more confusion.”
Good day for banks Bank stocks led the U.S. stock market higher Monday after the Trump administration chose not to impose tariffs on imported goods from Mexico, “removing a threat that had hampered bank stocks and the broader market.” The KBW Nasdaq Bank Index of large banks rose 1.1% on the day. Citigroup, which gets about 7% of its total revenue from its Mexican unit, rose 2.2%. Banks also got a boost from the U.S. Treasury bond market, where the yield on the benchmark 10-year jumped six basis points, its biggest one-day rise since April 1.
Not enough The head of the European Banking Authority said the agency’s recently added powers to fight money laundering “are not enough to stem the tide of dirty money sweeping through the bloc that has been revealed by recent scandals.”
Meanwhile, Deutsche Bank acknowledged that an internal audit found deficiencies in its money laundering controls, “underlining the bank’s continuing struggle to move beyond a series of scandals that have helped push its stock price to a record low. However, the audit, “which examined the bank’s operations in Britain, did not find any cases of money laundering or breaches of international sanctions that occurred because of the lapses. Deutsche Bank issued the statement after The Financial Times reported that checks processed on behalf of three large corporate clients were supposed to be screened by two employees but instead received only a cursory review by one worker.”
Wall Street Journal
Face the future Ant Financial Services and Tencent Holdings, which operate China’s two largest mobile-payments networks, are each “racing to install its own branded facial-recognition screens at retail points-of-sale all over the country, marketing the screens as a way to speed up sales and improve efficiency.” The two companies, which “have leapfrogged U.S. companies in popularizing mobile payments,” are now “trying to get people to bypass their smartphones and make payments by simply looking into screens.”
Meanwhile, Ping An Insurance Group, China’s largest insurance company and one of the largest in the world, “is using facial-recognition technology on potential customers as part of its efforts to assess risk when it sells them financial products. Since 2016, the company has used its proprietary technology to screen individuals applying for loans at its consumer-finance arm.”
Freedom Eastdil Secured LLC, the real estate unit Wells Fargo is partially spinning off later this year, “felt hamstrung by banking regulations” and is now “looking to expand at home and abroad and develop more technology.” The firm, in which the bank will continue to own a minority share, is “betting it can prosper as an independent boutique operation even as its competitors are growing bigger and going public.”
Financial Times
Partners Marcus, Goldman Sachs’ consumer finance unit, and Saga, a U.K. company that specializes in products and services for “over-50s,” are planning a joint venture in which Marcus “will become Saga’s long-term savings partner.” They plan to launch products together starting in the fall.
Separately, the U.S. head of Marcus said the bank “is not planning to follow JPMorgan Chase's lead and wind down its digital-only bank.”
Ready or not? U.S. regulators are not prepared for the next financial downturn, Eugene Ludwig, the former Comptroller of the Currency and now CEO of Promontory Financial Group, writes in an op-ed. "Dodd-Frank took away the ability of the Federal Deposit Insurance Corporation to guarantee liabilities of banks and bank holding companies other than insured deposits. It significantly curtailed the U.S. Federal Reserve's ability to use its emergency lending authority to provide the kinds of short-term wholesale funding that are critical to meeting the economy's credit needs," he writes. "This was a serious mistake."
Elsewhere
Secured Synchrony Financial and Amazon are launching a co-branded secured credit card. The “Amazon Credit Builder,” which is good only for purchases on the internet retailer’s website, has the same perks, such as 5% cash back on purchases, as Amazon’s regular store card, which Synchrony also issues.
“It’s more than just Jay Powell — we have people on the Fed that really weren’t — they’re not my people. They certainly didn’t listen to me because they made a big mistake. They raised interest rates far too fast.” — President Trump, in his latest criticism of Federal Reserve monetary policy
Hedge fund manager Scott Bessent had been the betting favorite to take the reins at Treasury. Scott Turner, a former congressman and NFL player, will lead the housing agency.
While the risks, benefits and magnitude of artificial intelligence's impact on financial services remain unclear, agencies should keep an open mind toward the technology and avoid reflexive risk aversion in bank supervision, Federal Reserve Gov. Michelle Bowman said.
The Dallas bank's new CEO, Thomas Shafer, served in top roles at a number of banks that were subsequently acquired before he stepped away from the industry in 2022.
In its latest financial stability report, the Federal Reserve warned high equity valuations and low levels of liquidity could leave the financial system vulnerable to shocks.
The Columbus, Ohio-based regional launched Lift Local Business in October 2020 with a $25 million ceiling. Four years and $133 million later, the program is still going strong.
The bank and payment company are using the technology that underpins digital assets to improve interoperability for international transactions, a major point of friction in trade finance.
