Receiving Wide Coverage ...
Fed stress
“Numerous” Senate Republicans “expressed concerns” about the possible nomination of Stephen Moore to the Federal Reserve Board of Governors, “indicating he would face resistance in the chamber. GOP senators, including some of the president’s strongest allies, cited his writings about women, personal financial issues and views of the Fed among the issues that could make it difficult for him to win confirmation if formally nominated.” Wall Street Journal, Financial Times, Washington Post
While that was going on, President Trump called on the Fed to cut interest rates by a full percentage point and resume its bond-buying program to stimulate economic growth. As the Fed began a two-day monetary policy meeting on Tuesday, the president said on Twitter: “Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening. We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing.”
However, the Fed “is widely expected to hold rates steady on Wednesday when it releases its decision at 2 p.m.”
Wall Street Journal
Password management
Fidelity Investments has launched a software platform that helps consumers better manage the passwords to their online financial accounts. The platform, called Akoya, “lets customers choose which apps can access data from their bank, mutual-fund and brokerage accounts and how much information these apps can grab. When a customer links a new app to their bank or brokerage account, she will be sent to a dashboard connected to their financial firm to allow access. Fidelity executives said they expect financial firms will pay for the platform so they don’t have to build one themselves.”
Financial Times
Sunny April
Financial stocks were the best performing sector in the S&P 500 in April, climbing 8.8%, their biggest one-month gain since November 2016, “when they jumped more than 13% after Donald Trump’s election win that spurred hopes for deregulation, tax reform and expectations stimulus plans would stoke inflation and drive up interest rates. The rally in bank stocks comes after a solid first-quarter earnings season, with retail business outperforming while investment banking and capital markets operations stumbled.”
Storm clouds
Switching away from the scandal-tainted Libor to a new financial benchmark is “the biggest and potentially most destabilizing upheaval in banking and markets that almost nobody is talking about,” Katie Martin, capital markets editor, writes in an opinion piece. "[R]eplacing a number embedded in everything from derivatives prices to households’ monthly mortgage repayments and banks’ internal transfer systems, in the timeframe available, is a mind-bendingly tricky task."
Reversal of fortune
The U.K.’s Competition and Markets Authority has dropped its opposition to PayPal’s $2.2 billion takeover of Swedish start-up iZettle, finding the payments company would still face “significant competition” from rivals, such as Worldpay and Square. The deal was announced last year but the two companies were prohibited from integrating their operations in the U.K. after the CMA said the combined company would have too dominant a position in the market for mobile point-of-sale terminals. However, on Tuesday the agency gave provisional approval to the deal.
New York Times
Between a rock and a hard place
President Trump’s lawsuit to block Deutsche Bank and Capital One from disclosing their relationship with his family and businesses puts the German bank, which has a host of other problems, “in an awkward situation. Lawyers for the bank have spent months cooperating with investigators from two Democratic-controlled congressional committees. The bank could end up sharing decades of his personal and corporate financial records.”
Both banks “are in a lose-lose situation,” American Banker's Neil Haggerty reports. “Congressional subpoena powers are sweeping, so a denial of the lawmakers' request seems unlikely. But obeying the subpoena means disclosing confidential information about perhaps the institutions' most powerful client.”
Washington Post
Making it rain
Financial services companies “dramatically increased their political spending” to nearly $2 billion in the 2018 election cycle, a 36% increase over the previous non-presidential campaign year, the Americans for Financial Reform said. “The surge in Wall Street’s political spending came as commercial banks saw record profits, in part because the Republican tax law of 2017 also lowered their overall tax burden. Wall Street spent more during the 2018 midterm elections than it ever has on a non-presidential campaign cycle, the report found.”
While critics claim the increase in donations paints a picture of "how Wall Street manipulates federal lawmakers to win an unfair advantage over legislation," backers counter reforms were made "to help smaller banks and credit unions and [lawmakers] were not influenced by the campaign donations they received."
Quotable
“The impact of all this money — again and again and again — is that it shapes the playing field. Wall Street and the financial industry get to shape the rules in ways that harm everyday people. It has a fundamental impact on the way our economy works.” — Lisa Donner, the head of Americans for Financial Reform, about the amount of money banks have spent lobbying Congress
