Banking Industry

When I heard last week that banks want to forgive up to 40% of some customers' credit card debt, my first question was, "What's the catch?" "There's no catch," answered Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group that helped concoct the debt-relief program. "There's no hidden agenda. These are extraordinary times and the industry is aggressively working to help customers." He's half right.

It's a measure of how successful Wall Street has been at eviscerating the so-called Volcker Rule that in its current guise it would not have prevented JPMorgan Chase from making the derivatives trades that produced the stunning $2-billion trading loss disclosed this week. Even in its weakened loophole-ridden state, the rule, which prohibits banks from making risky trades for their own accounts, has been raked with gunfire from Jamie Dimon, the JPMorgan chairman who presided over that loss.

The billionaires' club of private financiers who took over the remains of IndyMac Bank from the Federal Deposit Insurance Corp. turned a profit of $1.57 billion last year on the failed mortgage lender -- more than they invested less than a year ago. Yet under the sale agreement, the federal deposit insurance fund still could lose nearly $11 billion on bad loans that the Pasadena institution made before it was sold last March and renamed OneWest Bank....

Wells Fargo & Co. and JPMorgan Chase & Co. kicked off the bank earnings season by reporting higher than expected profits Friday, with strong mortgage results helping to boost revenue higher than analysts had anticipated at the two largest home lenders. Fourth-quarter profit rose 13% at Wells Fargo while JPMorgan Chase's net income fell by 3% -- a smaller decline than analysts had expected from record earnings in the fourth quarter of 2011. The results bode well for the banking industry, according to Keefe, Bruyette & Woods analyst Fred Cannon, who said in a note to investors that JPMorgan Chase also exceeded expectations in its huge investment banking and trading businesses.

The federal government's efforts to eliminate settlement cost surprises for home mortgage applicants may have opened the door to a new -- and potentially costly -- set of consumer problems. Starting Jan. 1, mortgage lenders nationwide were required to begin issuing new "good faith estimates" to applicants covering loan fees and settlement charges. Under the regulations issued by the Department of Housing and Urban Development, the estimates that lenders provide upfront must be accurate -- the same or nearly the same as the fees that are later charged at closing.

A capital crisis that roiled Wall Street on Thursday and took nearly 400 points off the Dow Jones industrial average has the potential to affect people on Main Street as well. Here are some questions and answers about what a "liquidity crisis" is and how it affects global economies. What is a liquidity squeeze and why should I care if the Wall Street banks are having trouble? Think of what people call "liquidity" in the financial markets as a faucet.

A crew of about 20 investment bankers in the Los Angeles office of Credit Suisse First Boston are leaving to join their former leader at UBS Warburg, sources said. The bankers, including two top-ranking managing directors, are following Ken Moelis, one of Southern California's top investment bankers, who last month said he will depart Credit Suisse for UBS.

Wells Fargo & Co. said it will sell 11 remittance processing sites to Regulus Group, cutting 449 jobs in 10 states, not including California. Terms of the sale weren't disclosed. Philadelphia-based Regulus, which manages all forms of customer payment transactions, will be responsible for facilities, equipment, employees and other assets. Wells Fargo will control other services, such as check clearing. The companies will share revenue and plans for product development.

With consolidation in the banking industry, neighborhood bank branches are becoming as scarce as drive-in movie theaters. Now with more banks encouraging customers to conduct transactions at automated-teller machines or on the Internet, is face-to-face banking all but bound for extinction? Richard Kovacevich, president and chief executive of Wells Fargo & Co.

The U.S. banking industry may suffer a net loss for the quarter ending June 30 because of billions of dollars in foreign debts that are not being repaid, federal bank regulators said Monday. The huge loss reserves being set aside by a handful of big money-center banks may be enough to offset profits in 14,000 other mostly profitable institutions, the regulators said.

The Consumer Financial Protection Bureau has opened investigations into the practices of some large banks, the agency's director said. "We do have open matters we're looking at involving a range of institutions, large banks, smaller banks and non-banks," Richard Cordray said Friday in an interview taped for C-SPAN's "Newsmakers," which is to air Sunday. Cordray would not give details of the investigations, but in the interview with reporters from the Los Angeles Times and Dow Jones Newswires he said the agency was "active on all fronts.

If you want to do business with the biggest bank in the Western world, don't get on a plane to New York or London. The new place to go is sunny California. Wells Fargo & Co., with its headquarters in downtown San Francisco, has shot ahead of the East Coast institutions that have long been the behemoths of the financial industry, including JPMorgan Chase & Co. andCitigroup Inc. Although Wells Fargo still has fewer bank deposits than its closest competitor, its total stock market value is now about $178 billion - that's about $70 billion more than Citigroup and about $9 billion more than JPMorgan.

More than three years after getting lifesaving injections of federal cash, the nation's major banks are generally healthy enough to withstand another economic shock. That's the assessment from the latest round of stress tests on the 19 biggest banks by the Federal Reserve. But there are still some signs the industry hasn't fully healed from Wall Street's huge meltdown. Four banking firms, including giant Citigroup Inc., failed one or more tests on whether they would survive a worst-case scenario.

California-based banks expanded lending much faster over the last year than the national average for the industry, reflecting an economic recovery taking hold in the Golden State, according to a study conducted for the California Bankers Assn . The study, produced by Los Angeles research firm Beacon Economics, said loan volumes overall are up more than 8% at banks headquartered in California since bottoming out in 2010. In the remainder of the United States, lending bottomed out a year later and is now up by just 1%. Commercial and industrial loans, which are non-real-estate loans to businesses for expansion, equipment purchases and the like, led the way. The Beacon analysis said that since hitting bottom early last year, such lending by California-based commercial banks has risen 15%. Commercial and industrial loans at California banks totaled nearly $51 billion at the end of last year, according to the Federal Deposit Insurance Corp.

A member of the founding family of Farmers & Merchants Bank has pleaded guilty to stealing nearly $2 million from a customer's account. Matthew J. Walker, who managed the bank's Laguna Hills branch, entered the guilty plea before U.S. District Judge Andrew J. Guilford in Santa Ana. Walker's attorney said he squandered the stolen money on a failed investment. Walker, 34, admitted to stealing the money by taking advances from a customer's line of credit during a 16-month period during 2009 and 2010.

The Occupy Wall Street movement has led many banks to hire extra security. Manhattan's Amalgamated Bank has rolled out the red carpet. The bank, owned by the Workers United labor union, has emerged as the unofficial financial institution of the anti-Wall Street movement. Even people who hate banks, it seems, need a bank. "It was quite obvious we were not going to open a Bank of America account," said Wylie Stecklow, who serves on Occupy Wall Street's finance committee.

The financial health of the U.S. banking industry improved slightly during the third quarter, with commercial banks and savings and loans posting net income of $2.8 billion. But the sector remains troubled, highlighted by the continued rise in the number of institutions in danger of failing, the Federal Deposit Insurance Corp. said today. The weak gain in earnings from July to Sept. 30 reverses a $4.3-billion loss in the second quarter of the year and more than triples the earnings of $879 million a year ago. But earnings could drop in the fourth quarter of the year as banks undergo their traditional end-of-the-year writedown of bad assets, the FDIC said.

Losses from bad loans and the burgeoning federal budget deficit topped the list of critical concerns of the top officers at the biggest banks in the United States, according to a survey conducted by Egon Zehnder International, a Zurich, Switzerland-based management consulting firm. There were 840 respondents to the survey, which contacted the 2,394 chief executives of all U.S. commercial banks with more than $100 million in assets.

Bank of America abandoned plans to charge customers $5 a month to use their debit cards, marking a high-profile retreat for a fee that became emblematic of the current populist outrage against Wall Street. The nation's second-largest bank was broadsided by customer protests — and even criticism from President Obama — after announcing the charge in September. BofA's position was further weakened as rivals including JPMorgan Chase & Co. and Wells Fargo & Co. declared they would not impose similar fees.