Is The GOP Tax Cut Finally Priced In? Here’s What Wall Street Thinks

Having passed the Senate, and – moments ago, for the second time – the House, the Republican Tax Cuts and Jobs Act, aka the Trump Tax Cuts is officially a done deal, just waiting for the President’s signature, at which point the longest “rumor” of 2017 will become the news. But does that mean that after “pricing it in” in some part virtually every day of the past year, the market can now sell the news? Or, as exasperated traders would put it, “is it finally fully priced in?”
Indeed, analysts, economics and investors are starting to look beyond the soon-to-be-completed tax overhaul, and judging by today’s reaction, the answer may well be yes as stocks, including tax-sensitive banks, are little-changed amid expectations tax cuts may not boost growth that much, and as likely benefits may already be priced-in to stock prices.
In fact, as Bloomberg adds, the S&P 500 and KBW bank indexes are both little changed, with top bank gainer PNC paring gains of as much as 1.1%; other rising banks include Huntington, Wells Fargo, Northern Trust, and BofA

This post was published at Zero Hedge on Dec 20, 2017.

Is it Tuesday? Time for another banking scandal

Another day, another major banking scandal. It’s getting to the point where you can practically set your watch to these things.
The latest involves our old friend Wells Fargo. The Wall Street Journal reported last night that Wells has been screwing its customers on foreign currency exchange rates.
According to the Journal, Wells Fargo conducted an internal review of its fee arrangements and found that they had massively overcharged 88% of the sampled customers.
For example, the bank might have signed a contract with a customer to charge 0.15% on foreign currency transactions, but instead charged as much as 4%… about 26x higher than agreed.

This post was published at Sovereign Man on November 28, 2017.

Here We Go Again: Wells Fargo Is Under Investigation For Gouging Clients

After reporting last month that Wells Fargo’s foreign-exchange unit was being investigated by regulators and that the bank had fired four employees – and demoted another – after discovering certain unspecified improprieties in its FX shop, more details about the exact nature of the bank’s latest scandal – which follows revelations that the bank’s retail division created millions of fake customer accounts, and its auto lending unit overcharged borrows – have finally been unearthed by the Wall Street Journal.
WSJ reports that the bank’s FX sales desk routinely gouged customers by charging them up to eight times as much as the industrywide standard. Furthermore, when confronted by clients about the high fees, traders and salespeople were encouraged to lie about the reasoning for them.
And once again, it appears Wells Fargo’s idiosyncratic incentives encouraged traders and salespeople on the bank’s foreign-exchange desk to take advantage of their clients’ ignorance and gouge them with exorbitant fees. Those who remember the cross-selling scandal that precipitated the resignation of CEO John Stumpf last year will recall that the 5,000 or so branch employees who were fired by the bank reportedly blamed management’s unrealistic quotas for their behavior.
Foreign-exchange employees got bonuses based solely on how much revenue they brought in, say more than a dozen current or former Wells Fargo employees. No other big bank in the U. S. calculated bonuses of currency traders in such a defined and individual way. Wells Fargo said Monday that it began making changes to those compensation plans earlier this year.
The bank also charged some of the highest trading fees around, according to current and former employees. For more than a decade, customers were sometimes charged anywhere from 1% to 4% on basic transactions such as converting euros to dollars and complicated trades like hedging.
Those percentages can be at least two to eight times higher than the industrywide average of 0.15% to 0.5%, depending on the trade, customer and volume, according to foreign-exchange bankers throughout the industry.

This post was published at Zero Hedge on Nov 27, 2017.

Record Surge in Riskiest Loans Fattens Wall Street Banks

Crackdown efforts by bank regulators are put on hold.
The volume of leveraged loans – the riskiest loans Wall Street banks provide – has surged 38% year-over-year and has already beaten the full-year record set in 2013, according to Dealogic. Total of leveraged loans outstanding has reached $1.25 trillion.
Nine of the 10 largest banks in the leveraged-loan business have already surpassed their respective 2016 full-year totals, according to Bloomberg data, cited by the Financial Times, including Bank of America (about $120 billion in leveraged loans so far this year); JP Morgan (about $110 billion), Goldman Sachs ($79 billion); and Barclays ($72 billion). Of the top ten, only Wells Fargo ($69 billion) is still lagging behind last year.
The fees that the banks are raking for putting these loans together are also record-breaking: $8.3 billion so far this year, just 6% below the full-year total of 2016.

This post was published at Wolf Street on Oct 30, 2017.

Federal Prosecutors Are Investigating Wells Fargo’s FX Business

Last week, WSJ stoked fears that the Feds might be ramping up another probe into abuse and manipulation in the foreign exchange market when it reported that Wells Fargo had abruptly terminated four bankers from its FX business and transferred another. Now, Wall Street’s paper of record is reporting that Federal prosecutors are investigating Wells for abuses in its FX shop – but the scope of the investigated is limited to one disputed trade.
According to WSJ, prosecutors have subpoenaed information from Wells and from the recently fired bankers as they investigate a trade and ensuing dispute between Wells and one of its clients, Restaurant Brands International Inc.
RBI owns several fast-food franchises, including Burger King, Tim Hortons and Popeyes Louisiana Kitchen. In an amusing twist, both companies count Warren Buffett’s Berkshire Hathaway as one of their largest shareholders.

This post was published at Zero Hedge on Oct 27, 2017.

Wells Fargo Shares Dip As Bank Fires 4 FX Traders Following Investigations

Wells Fargo CEO Tim Sloan received the patented Elizabeth Warren treatment during testimony before the Senate Banking Committee last month when the Massachusetts Senator accused him of sharing in the blame for the bank’s fraudulent sales practices and opined that he ‘should be fired’, echoing comments she made about his predecessor, John Stumpf, a year earlier.
And just as the CEO has been making the media rounds to try to rehabilitate the bank’s battered public image, yet another scandal appears to be breaking – but this time it originated in the bank’s investment banking unit.
WSJ reported that the bank has fired four foreign-exchange bankers amid an investigation into that business by both the bank and regulators.
While the nature of the purported misconduct is unclear judging by the report, in an amusing coincidence, the news of the firings broke as former-HSBC FX trader Mark Johnson awaits the verdict on whether he defrauded a client when he was running part of HSBC’s FX sales business in London. WSJ reports the bankers were fired for cause.

This post was published at Zero Hedge on Oct 20, 2017.

Wells Fargo Gets Clocked in California

Why is Tim Sloan still CEO, asks California Treasurer. In a letter so brutally scathing it’s practically funny, California Treasurer John Chiang skewers Wells Fargo, its Board of Directors, and its new CEO Tim Sloan. And he extended the sanctions on Wells Fargo, first imposed in September last year, by ‘at least’ another year.
The Treasurer’s office oversees ‘nearly $2 trillion in annual banking transactions, manages a $75 billion investment pool, and is the nation’s largest issuer of municipal debt,’ Chiang pointed out last year when he imposed the sanctions on Wells Fargo’s ‘most highly profitable business relationships with the State of California.’ Those sanctions include:
Suspension of investments by the Treasurer’s Office in all Wells Fargo securities. Suspension of the use of Wells Fargo as a broker-dealer for purchasing of investments by his office. Suspension of Wells Fargo as a managing underwriter on negotiated sales of California state bonds where the Treasurer appoints the underwriter.

This post was published at Wolf Street on Oct 17, 2017.

California Treasurer Skewers Wells Fargo, Wonders Why Tim Sloan is Still CEO, Extends Sanctions

‘The cockroaches infiltrated’ the bank, as ‘systemic corruption and venal abuse of customers’ have become ‘part of Wells Fargo’s brand.’
In a letter so brutally scathing it’s practically funny, California Treasurer John Chiang skewers Wells Fargo, its Board of Directors, and its new CEO Tim Sloan. And he extended the sanctions on Wells Fargo, first imposed in September last year, by ‘at least’ another year.
The Treasurer’s office oversees ‘nearly $2 trillion in annual banking transactions, manages a $75 billion investment pool, and is the nation’s largest issuer of municipal debt,’ Chiang pointed out last year when he imposed the sanctions on Wells Fargo’s ‘most highly profitable business relationships with the State of California.’ Those sanctions include:
Suspension of investments by the Treasurer’s Office in all Wells Fargo securities. Suspension of the use of Wells Fargo as a broker-dealer for purchasing of investments by his office. Suspension of Wells Fargo as a managing underwriter on negotiated sales of California state bonds where the Treasurer appoints the underwriter. With these sanctions, Chiang sought ‘real accountability and lasting reforms.’ But it’s a long and complex relationship that dates back to the Gold Rush era:
Wells Fargo has evolved to become the nation’s second largest bank by total assets. California is set to become the world’s fifth largest economy. What we each do, therefore, matters and effects the public interest.

This post was published at Wolf Street on Oct 17, 2017.