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Neil Stanley
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Original Message:
Sent: 12-01-2022 18:02
From: Rob Blackwell
Subject: Zelle Refunds, FTX Mysteriously Invests in a Small Bank, Gruenberg on the Hot Seat: Banking Top Ten
McKinsey outlined the most pressing technology trends for business leaders to know, Fleetwood Mac's Christine McVie died, and a woman kidnapped as a baby 51 years ago was reunited with her family thanks to a home DNA test. Stressed about holiday shopping? New York magazine's got you covered. Here's what else you might want to read this week.
"JPMorgan, Other Banks in Talks to Reimburse Scammed Zelle Customers"
Under fire by progressive lawmakers and angry customers, the top banks involved in Zelle are trying to find a way to craft rules that would allow customers tricked into sending payments to get a refund. Until now, the banks have been arguing that a) fraud is very low (less than .01%) and b) there's nothing they can do if customers authorize a payment, even if they do so as a result of a scam. This turn suggests they are feeling more pressure to come up with a better answer on Capitol Hill and to the CFPB, which has been starting to scrutinize Zelle.
"The Crypto Contagion May Not Be that Contained"
Truly fascinating mystery here. Why did FTX, the failed cryptocurrency exchange, invest $11 million earlier this year in a tiny bank in Washington state? The bank, once called Farmington and now called (checks notes) Moonstone, had a net worth of $5.7 million at the time. Its deposits were roughly $10 million for a decade, and then they shot up to $84 million in the third quarter of this year. That's not where the weirdness ends, either. There's a connection to Tether and (checks notes again) Inspector Gadget. No, really.
"Republicans Blast Gruenberg Over FDIC Power Struggle at Hearing"
I had an editor once who banned the use of the word "blast" in a headline-with good reason. His argument was it was usually employed in trying to hype a story up when it wasn't justified. That's the case here, in my opinion. While GOP lawmakers did repeatedly bring up acting FDIC Chair Martin Gruenberg's role in the departure last year of FDIC Chair Jelena McWilliams, they were actually somewhat subdued in their criticism of him. Sen. Richard Shelby, R-Ala., first noted how long he had worked together with Gruenberg before briefly saying he was "concerned" about how the McWilliams saga played out. Sen. Cynthia Lummis, R-Wy., was a bit more excised, saying she was "actually kind of angry," but even that is hardly a full-throated condemnation. Overall, the hearing suggested Gruenberg is unlikely to get many (or any) GOP votes, but senators from both sides of the aisle seemed to take it as a given he would get confirmed.
"Deposit Costs Creep Up Following Rate Increases"
Speaking of the FDIC, it revealed in its Quarterly Banking Profile out today that total deposits fell 1.1% in the third quarter. Excluding time deposits, core deposits fell by 2%. More banks are paying up for time deposits, both to stem possible outflows and to avoid having to sell underwater securities at deep losses to raise liquidity.
"Are Banks too Optimistic About the U.S. Economic Outlook?"
Banks are bolstering reserves in preparation of a potential recession next year. But many Wall Street analysts believe their assumptions of low-single-digit GDP growth and a 4% unemployment rate are too rosy. During a speech Monday to the Economic Club of New York, John Williams, president of the New York Fed, said the odds of a recession are elevated, adding that the unemployment rate peaking at 4.5% would be benign but that "there are scenarios of the economy slowing more sharply." He also predicted that the Fed's fight against inflation may well extend into 2024.
"This Lawsuit Could Upend Banks' Role in Syndicated Loans"
In my view, this story is flying under the radar. In early 2023, a federal appeals court is set to hear arguments for a case that could reclassify syndicated loans as securities. This could undermine banks' businesses in the markets not just for syndicated loans, but also collateralized loan obligations, which only permit some securities in their asset pools.
"OCC May Stiffen Penalties With Revised Guidance"
Another sign of a pending regulatory crackdown. The OCC released a series of policy revisions indicating it will pursue bigger fines against banks for misconduct and restrict business activities "when appropriate." It also changed the factors it uses to determine leniency and created new groupings for larger banks based on asset size.
"Is It Time to Rebrand Your Community Bank?"
The headline says it all. Is it time to ditch a traditional, stodgy-sounding name for a catchier one that may capture more attention? This story delves into why it made sense for some banks to make the switch.
"Austan Goolsbee Named New Chicago Fed President"
Well, this is a surprise. Austan Goolsbee, the former chairman of the Council of Economic Advisers for President Obama, was named as the next president of the Federal Reserve Bank of Chicago. Goolsbee brings considerable chops to the job-and could very well raise the profile of the Chicago Fed, which is often overshadowed by the New York Fed. Click the above for Goolsbee's long resume.
"Best Community Banks to Work For in 2022"
Who made the list?
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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