The new top cop at the U.S. Federal Reserve hardly fits the presidential mold. Michelle Bowman, Donald Trump’s pick to be the central bank’s vice chair of supervision, has indicated that she believes in aligning federal rules with Europe and the rest of the world. If so, it would mean largely conforming to Basel 3, the sort of international accord the White House is trashing most everywhere else. Bowman should be a welcome choice to the eight systemically important U.S. banks, which include Bank of America and Goldman Sachs. JPMorgan boss Jamie Dimon led the charge against her predecessor, Michael Barr, who initially proposed

How fast should an Asia-focused bank grow? There’s no right answer, but the long-term number probably ought to be higher than the 3% compound annual revenue increase that analysts are pencilling in for $200 billion HSBC between 2025 and 2027. New CEO Georges Elhedery announced a broadly sensible strategy for the lender on Wednesday, while implicitly acknowledging that the growth question is partly out of his hands. It makes a further valuation boost unlikely. The centrepiece of Elhedery’s announcement was a $1.5 billion annual cost-cut target by 2027, helped by closing bits of its U.S. and European investment bank. The move makes sense, but

Wall Street’s investment banking titans closed 2024 on a high. Goldman Sachs and Morgan Stanley will most likely announce strong revenue growth in full-year results due Tuesday and Wednesday respectively, as an M&A uptick kept their dealmakers busy. But there’s a hitch: bond-market chaos could slow everything down. Wracked by rising interest rates, a bleak 2022 sliced Goldman’s net earnings roughly in half year-over-year. The slide continued in 2023, and the recovery is only now showing. Analysts expect both Goldman CEO David Solomon and Morgan Stanley boss Ted Pick to turn in a roughly 12% year-over-year bump in net revenue for all of 2024,

Martin Gruenberg just gave big U.S. banks a gift. The head of the Federal Deposit Insurance Corporation, and an architect of new, yet-to-be-implemented capital buffer rules, said he would step down from his post. Democrats hope to squeeze through a proposal while the FDIC’s chair remains on the job. A speedier resignation would put Republicans in charge; they want the rules to die. Either way, the likes of JPMorgan and Bank of America win. It’s not clear how long Gruenberg, who didn’t give a firm date for his final day, can last. His planned resignation follows a Wall Street Journal investigation,

Big banks benefit from higher interest rates. So the market’s assumption that stubbornly high consumer prices will delay rate cuts from the Federal Reserve is no bad thing for investors in JPMorgan, Wells Fargo and Citigroup. All three report first-quarter earnings on Friday, and are likely to say that shifting monetary policy is working in their favor. Smaller rivals, though, will struggle to turn inflationary lemons into lemonade. The bulk of mega-banks’ business is simple. They make money from interest on loans and securities, and they lose money on interest paid to depositors and other funding providers. The pocketed difference, dubbed net

Death came for Silicon Valley Bank the way it almost always does for doomed banks: by depositors fearful of losing their money rushing for the door. But that mortal moment, which unfolded a year ago this week, was the culmination of a process that started long before. The killer – a disjointed system that is supposed to oversee, save or wind up U.S. banks but in practice struggles to do any of the three – is still at large. With the benefit of hindsight, California-based SVB Financial was a compendium of problems in the making. It had grown extremely quickly by

Big U.S. banks claim overzealous regulation puts them in handcuffs. So in response, they’re embracing a hot new trade that turns them into balance-sheet Houdinis. It’s called the synthetic risk transfer and is a riff on pre-crisis financial engineering wheezes. The danger to banks themselves is minimal, though as lenders get more creative with their use, investors will need to read the fine print. These acts of financial escapology, already used by firms including Morgan Stanley, JPMorgan and Banco Santander, are gaining popularity because banks are caught in an ever-tighter bind. Lending fundamentally involves accepting risks, and regulators want banks

The appeal of credit cards is making a purchase now and settling up the bill later. Capital One Financial’s $80 billion merger with rival Discover Financial Services offers a similar benefit. The deal perks will be huge, if and when they can be redeemed. Combined, the two companies would be the biggest U.S. plastic purveyor, with $250 billion of the country’s $1.3 trillion credit-card debts, overtaking JPMorgan’s $211 billion at the end of 2023. Yet customers of the bank led by Jamie Dimon spend more, giving Capital One CEO Rich Fairbank a plausible argument that the deal increases competition rather than squashing

Now is a good time to take a spin in a new convertible. Refinancing needs and higher interest rates will refuel the crossbred bonds that once helped springboard Citadel founder Ken Griffin from Harvard student to billionaire hedge fund manager. And new features should tempt investors to ride off with them again. Convertible notes that provide steady income, but which can turn into shares at pre-agreed prices, sputtered after a $370 billion pandemic-era boom in 2020 and 2021. Roaring stocks ultimately made the equity piece more alluring, even enabling dozens to be sold bearing zero interest. Emblematic of the crop

The hallowed Goldman Sachs partnership is an undeniable part of the Wall Street firm’s cachet. For more than 150 years, the elite club has helped attract top-notch financiers. It is also too much of a good thing. Goldman partners stopped being partners in the strictest, firm-owning sense when the U.S. investment bank went public in 1999. Their collective shareholding has fallen from about 60% to roughly 5%. Instead, the designation now describes about 420 senior employees who benefit from higher pay, exclusive investment opportunities and the expectation of being heard by top executives. Partners answer to David Solomon, Goldman’s CEO. But he

There is a spirited argument to be had about whether upcoming rules governing bank capital are fair or necessary. Yet the eight Wall Street chief executives who faced a U.S. Senate banking panel on Wednesday instead chose an ultimatum reminiscent of mobsters in 1920s movies: “Nice economy – it would be a shame if anything were to happen to it.” It’s an unhelpful way to get what they want. The bosses of JPMorgan, Goldman Sachs, Morgan Stanley, Bank of America and peers are united in their dislike of the global rules known as Basel 3. They argue that forcing big banks to hold

Alternative asset managers and U.S. insurers have come together to create a highly profitable version of pass-the-parcel. Regulators, bank executives and investors warn that this fast-growing alliance could be the source of the next financial crisis. Are they right? Insurers have plentiful safeguards to stop them going off the rails. The problem comes when the market evolves rapidly but rules that keep it in check do not. Apollo Global Management and KKR are among the buyout firms that have wedged themselves into the stodgy world of writing policies by buying control of insurers. KKR said on Wednesday it would buy