Finance Brief: Vantiv to Buy WorldPay for $10.4 Billion

Government Brief

  • Just a sliver of the business and finance sector has faith in Trump’s goal of a 15 percent corporate tax rate. In a survey conducted by Deloitte Tax LLP, only 5.3 percent of 3,100 finance and business professionals said 15 percent was achievable, and almost 40 percent predicted the rate would end up at 25 percent due to a difficult political environment. (Reuters)
  • Democrats on the House Oversight Committee requested reports from federal government departments about their spending at President Donald Trump’s private businesses. The request is part of a new effort to determine how much taxpayer money is going to businesses Trump owns. (The Associated Press)
  • Nine conservative groups are standing behind Trump’s choice to head the Export-Import Bank, former Rep. Scott Garrett’s (R-N.J.), who opposed the agency when he was in office. The groups, including FreedomWorks and Heritage Action for America, said in a letter to the Senate Banking Committee that they will oppose any Ex-Im board nominees if Garrett’s nomination is not considered. (The Hill)

Business Brief

  • Vantiv Inc., the largest U.S. merchant acquirer, will buy e-commerce payments company Worldpay Group for about $10.4 billion. The payments industry is seeing a wave of consolidation as consumers increasingly turn to online shopping and electronic payments. (Bloomberg)
  • Uber is closing its subprime auto leasing division two years after its initiation due to losses that clocked in 18 times higher than expected. Executives agreed to wind down the unit by the year’s end, a move that could impact as many as 500 jobs. (The Wall Street Journal)
  • California Insurance Commissioner Dave Jones said the state will investigate whether or not Wells Fargo harmed hundreds of thousands of customers by selling them car insurance they didn’t need. The probe follows subpoenas issued by New York state’s banking and insurance regulator to two Wells Fargo units last week. (Los Angeles Times)

Chart Review

Events Calendar (All Times Local)

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EPI event on Regulatory Accountability Act 10 a.m.
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This Is the Future of Brand Reputation Tracking

See how Morning Consult Brand Intelligence is changing the way media, marketing and communications executives are managing brand reputation.


Dems seek federal payments to Trump business
Julie Bykowicz, The Associated Press

As President Donald Trump spends much of August at his New Jersey golf club, Democratic lawmakers are making a new push for information about how much money the federal government is spending at his for-profit properties. Democrats on the House Oversight Committee on Tuesday asked departments to hand over information about their Trump-related spending by Aug. 25.

Havens Jump on North Korea Tension; Stocks Slide: Markets Wrap
Adam Haigh and Samuel Potter, Bloomberg

A risk-off tone gripped markets on Wednesday, with gold, the Japanese yen and bonds rising as tension grew between the U.S. and North Korea. Futures on the S&P 500 Index sank 0.4 percent, the largest decrease in almost five weeks.

Uber Plans to Wind Down U.S. Car-Leasing Business
Greg Bensinger, The Wall Street Journal

Uber Technologies Inc. plans to wind down its U.S. subprime car-leasing division to stem unsustainably high losses, according to people familiar with the matter, a major retreat just two years after starting the business. The ride-hailing company is aiming to close out or sell most of the business by year-end, these people said.

It Was A Great Year for America’s Pensions, But Many Are Still in Crisis
Heather Gillers, The Wall Street Journal

A run-up in U.S. stocks following the presidential election produced double-digit returns for many public pensions. But even a banner year doesn’t come close to solving their problems.


California investigating Wells Fargo over unneeded auto insurance policies
James Rufus Koren, Los Angeles Times

California will investigate whether Wells Fargo and an insurance company harmed hundreds of thousands of residents by selling them insurance they did not need, the state’s insurance regulator said on Tuesday. California Insurance Commissioner Dave Jones said in a statement his department will look into so-called “force-placed” or “lender-placed” auto insurance underwritten by National General Insurance Co NGIN.DU for customers with auto loans from Wells Fargo.

CEO Loses Bonus as Commonwealth Bank Fights Laundering Suit
Emily Cadman, Bloomberg

Commonwealth Bank of Australia Chief Executive Officer Ian Narev has been stripped of his short-term bonus as the lender battles to contain the fallout from allegations it breached money-laundering and terrorist-financing laws more than 50,000 times. The board decided to scrap short-term bonuses for Narev and other senior executives after “consideration to risk and reputation matters impacting the group,” Chairman Catherine Livingstone said in a statement Tuesday.

Deutsche Bank tumbles down private bank rankings
Joshua Franklin, Reuters

Deutsche Bank dropped out of the world’s top 15 private banks in 2016, a year marked by negative headlines for Germany’s biggest lender, rankings by wealth management researcher Scorpio Partnership showed on Monday. Private banking assets at Deutsche Bank fell 28 percent in dollar terms to $227 billion at the end of 2016, sending it tumbling five places to 16th in Scorpio’s rankings of the 25 biggest private banks in the world.

Financial Products and Investments

SEC risk alert calls on advisory industry to do more to shore up cybersecurity

Liz Skinner, Investment News

Financial advisory firms are getting more advice from federal regulators on steps they should be taking to protect their information systems from hackers. Advisory firms need to do a better job of following their stated cybersecurity policies and they should correct all the vulnerabilities that periodic tests reveal, according to results from a new round of cybersecurity examinations by staff at the Securities and Exchange Commission.

Housing and GSEs

Baby Boomers Who Refuse to Sell Are Dominating the Housing Market
Prashant Gopal, Bloomberg

Millennials are finding themselves out in the cold because building has slowed, and longer-living baby boomers are staying put, setting up a simmering conflict between the two biggest generations in U.S. history. To succeed, buyers and real estate brokers must show uncommon persistence and, at times, diplomacy.

2 Senators Question Effects of a Reverse Mortgage Proposal
Matthew Goldstein, New York Times

Advocates for the elderly persuaded federal housing officials two years ago to offer more rights and protections to the spouse of a borrower who takes out a reverse mortgage and later dies. Now there is concern that a small wording change in the Trump administration’s proposed budget request for the Department of Housing and Urban Development could undo some of those protections — potentially increasing the chances that a surviving spouse who did not sign the mortgage documents could lose a home in a foreclosure.


Few expect Trumps 15-percent corporate tax rate: Deloitte survey
David Morgan, Reuters

Only a small number of U.S. tax, finance and business professionals expect President Donald Trump’s 15-percent corporate tax rate to become reality as part of tax reform, according to a Deloitte Tax LLP survey released on Tuesday. The poll of more than 3,100 people offered a glimpse of private-sector expectations about tax reform that are less optimistic than public statements from Trump administration officials and lawmakers.

Trump White House quietly courts Democrats for tax overhaul
Rachael Bade and Elana Schor, Politico

The Trump White House is quietly courting a few dozen House Democrats on tax reform — eager to avoid the fate of the GOP’s straight party-line attempt to jam through a repeal of Obamacare. Even as congressional GOP leaders largely embrace a partisan path on taxes, White House officials have been wooing 15 to 20 centrist House Democrats since early summer.

GOP group launches TV ad campaign for tax reform
Naomi Jagoda, The Hill

The American Action Network (AAN) on Wednesday is launching a $2.5 million television ad campaign urging lawmakers to pass tax-reform legislation. The effort is the latest part of the group’s Middle-Class Growth Initiative to promote a tax-code rewrite that helps middle-class families and businesses.

Trump Aides Copy Bush ‘Red Team’ Strategy in Tax Fight
Justin Sink et al., Bloomberg

The White House is reaching back to the Bush administration for a strategy to get a tax code overhaul passed, as President Donald Trump’s advisers try to avoid the missteps that doomed the effort to repeal Obamacare. To take on a task that hasn’t been accomplished in Washington in three decades, senior aides are adopting a tightly orchestrated process and walking away from the improvisational approach that’s been the Trump administration’s hallmark.

Financial Technology

Arjun Kharpal, CNBC

The amount of money raised by cryptocurrency and blockchain start-ups via so-called initial coin offerings (ICO) has surpassed early stage venture capital funding for internet companies for the past two months. ICOs are a way for start-ups to raise money from users, similar to crowdfunding, by allowing them to buy a stake.

You Could Buy 100 Boxes of Avocados for the Price of One Bitcoin
Lily Katz, Bloomberg

Even with all the hand-wringing about bubbles in stock and bond markets, it’s hard to ignore what’s going on in the world of cryptocurrencies and bitcoin. The value of the largest digital currency continues to soar to record highs after weathering a split last week.

Fidelity allows clients to see digital currencies on its website
Anna Irrera, Reuters

Fidelity Investments Inc has started allowing clients to use its website to view their holdings of bitcoin and other cryptocurrencies held through digital wallet provider Coinbase, the company said on Wednesday. The initiative, previously tested with the Boston-based money manager’s employees, is a rare example of an established financial services company warming up to cryptocurrencies.

Opinions, Editorials and Perspectives

Puerto Rico financial board creating grounds for own removal
Ojel L. Rodriguez, The Hill

Scanning recent tax revenues, one would think that all is well in Puerto Rico. On Aug. 2, the Puerto Rican Treasury Department announced that tax collection for the first month of fiscal year 2018 was ahead of its forecast. In addition, there was the publication of data showing the government collected more than $150 million above the forecasted revenue figures in fiscal year 2017.

Why Debt Ceiling Worries Are Way Overblown
Jonathan Bernstein, Bloomberg

The debt limit panic being led by Paul Krugman and budget experts Stan Collender and  Edward D. Kleinbard is probably all for nothing. Absolutely every incentive is for Republicans in Congress to bite the bullet and increase it by the fall deadline (by the end of September, or perhaps mid-October), and absolutely every incentive is for the president to sign on the dotted line.

Lower the cap on the mortgage interest tax deduction
Washington Examiner

President Trump has been floating a good idea for tax reform. As part of a strategy to cut tax rates and eliminate loopholes, his administration may lower the cap on deductions for home mortgage interest payments.Homeowners currently are allowed to reduce their tax liability by deducting annual interest on up to $1 million of mortgage debt.

Research Reports

What Happens if the CFPB Arbitration Rule Isn’t Overturned?
– Ten Practical Tips to Think About Now
Davis Polk, Client Memorandum

Set forth below are ten practical tips we think covered providers should consider taking to prepare for compliance. Of course, the Senate may still vote to overturn—and some of our observations below, which inform these practical tips, could provide additional reasons for it to do so—but covered providers would be wise to prepare in case the Senate does not act.

Monetary Policy in the Capitals of Capital
Elena Gerko and Hélène Rey, National Bureau of Economic Research

We analyse the transmission of monetary policy in two important financial centres, the United States and the United Kingdom. Studying the responses of mortgage and corporate spreads we find evidence in favour of an important financial channel in both countries.