Edition:
United Kingdom

David Henry

Global banks, funds call for more capital from derivatives clearing houses

24 Oct 2019

NEW YORK Four global banks and five big fund managers called on international regulators on Thursday to require for-profit derivatives clearinghouses to put up more of their own capital to protect against cascading losses that could rock the world financial system.

Too big to lend? JPMorgan cash hit Fed limits, roiling U.S. repos

02 Oct 2019

NEW YORK JPMorgan Chase & Co has become so big that some rival banks and analysts say changes to its $2.7 trillion balance sheet were a factor in a spike last month in the U.S. "repo" market, which is crucial to many borrowers.

ANALYSIS-Too big to lend? JPMorgan's cash tweaks take toll on U.S. repo

01 Oct 2019

NEW YORK, Oct 1 JPMorgan Chase & Co has become so big that some rival banks and analysts say changes to its $2.7 trillion balance sheet were a factor in a spike last month in the U.S. "repo" market, which is crucial to many borrowers.

U.S. bankers seize on repo-market stress to push for softer liquidity rules

19 Sep 2019

WASHINGTON Big U.S. banks are using the recent chaos in short-term funding markets as an opportunity to pressure the Federal Reserve to ease liquidity requirements they have long despised. On Wednesday, a major industry lobbying group and the chief executive of the largest U.S. bank criticized Fed-imposed standards of how much idle cash banks must keep on hand, blaming a liquidity rule that is hated on Wall Street for causing market jolts in recent days. "Banks have a tremendous amount of liquidity, but they also have a lot of restraints on how they could use that liquidity and how much they have to maintain at the Fed," JPMorgan Chase & Co CEO Jamie Dimon said at an event in Washington hosted by the Business Roundtable, a corporate trade association he chairs. Another group, the Bank Policy Institute, published an essay https://bpi.com/what-just-happened-in-money-markets-and-why-it-matters by its chief economist, Bill Nelson, who said policymakers should rethink liquidity requirements imposed since the 2007-2009 global financial crisis. "The volatility this week should cause everyone to worry about how the financial system will behave the next time a financial shock places strains on market liquidity," Nelson wrote. Their comments came after the Fed injected more than $125 billion into the overnight repurchase agreement market over two days. Banks rely on those contracts to fund short-term obligations, but had trouble finding the money they needed on Tuesday. That sent rates spiking to 10% from a little over 2%. Market participants said a confluence of events caused the cash crunch. Corporations withdrew funds from money-market accounts to cover their tax bills. On the same day, banks and investors used idle dollars to absorb $78 billion in U.S. Treasury notes. Another factor was the Fed's effort to shrink its balance sheet. Bank reserves parked there overnight – which can be made available to other banks if needed – are at their lowest level since 2011. But bankers also pointed to the liquidity coverage ratio, or LCR, as an exacerbator of repo-market stress. The rule requires U.S. lenders with more than $250 billion in assets to hold a large pool of high-quality, easily tradeable assets that can cover cash outflows during times of extreme stress. Ironically, said Nelson, that meant lenders could not use those idle funds to back overnight trades during this week's stress. "Rather than having the Fed lend to banks in stress once every generation or so at some (very minimal) risk to taxpayers, current solutions tend towards the Fed acting as a regular market participant at direct risk to taxpayers," he wrote. The Bank Policy Institute had warned in recent weeks that money markets looked poised to encounter volatility, due in part to the liquidity rule. Its members include JPMorgan, Bank of America Corp , Citigroup Inc and Wells Fargo & Co , the four largest U.S. banks. At a press conference on Wednesday, Federal Reserve Chair Jerome Powell disputed the idea that the LCR needed to change. "It's not impossible that we could come to a view that the LCR is calibrated too high, but that's not something we think right now," he said. The Fed is in the process of reviewing its capital and liquidity rules after Congress passed a bank deregulation bill in 2018. The central bank's vice chairman, Randal Quarles, is leading the effort. Under a "tailoring" proposal it drew up, banks with less than $700 billion in assets could see their liquidity requirements drop by as much as 30%. But standards for globally systemic banks like JPMorgan are not expected to change meaningfully. Bankers have complained often and loudly about the LCR's impact on profits since its implementation in 2015. They have also met frequently with Quarles to push their views on liquidity and capital requirements since President Donald Trump appointed him. His most recently available calendars show meetings and calls with executives or board members from JPMorgan, Citigroup, Goldman Sachs Group Inc , Capital One Financial Corp , Bank of New York Mellon Corp , State Street Corp , as well as representatives of the Bank Policy Institute, the American Bankers Association, the Financial Services Forum and the Institute of International Finance. At the event on Wednesday, Dimon said the Fed did the "right thing" when it intervened in the repo market. But he emphasized that structural issues need to be fixed. "It's not a big deal given that it happened in good times," he said. "If we don't fix the underlying problem, it will hurt the economy in bad times."

U.S. bankers seize on repo-market stress to push for softer liquidity rules

19 Sep 2019

WASHINGTON Big U.S. banks are using the recent chaos in short-term funding markets as an opportunity to pressure the Federal Reserve to ease liquidity requirements they have long despised.

Worldpay charges, disclosed in fine print, anger small U.S. merchants

23 Aug 2019

NEW YORK Mark VenHuizen, the comptroller of a family business which sells parts for boat engines in Florida, says he has complained three times to Worldpay Inc since 2016 for tacking on extra fees to process his customers' credit and debit card payments without clearly telling him about it.

U.S. banks limp away from hopes of interest margin expansion

07 Aug 2019

NEW YORK Big U.S. banks are under pressure again, as policymakers around the globe have dashed any hopes that the industry might finally be able to earn more money on loans, after more than a decade of rock-bottom interest rates.

Capital One customer data breach rattles investors

30 Jul 2019

Capital One Financial Corp's assurances that a major data breach would have a limited impact on customers or profit failed to convince investors on Tuesday, with the bank's shares closing down 5.9%.

JPMorgan beats profit estimates but shows signs of pressure

16 Jul 2019

JPMorgan Chase & Co reported a quarterly profit that beat estimates on Tuesday as higher interest income and consumer lending offset lower activity at its trading desks.

World News