The European Central Bank (ECB) cut rates and took other steps to expand the euro money supply.
A G20 working group has agreed on the broad outline of a plan intended to make sure that bondholders take on the financial burden of future large multinational bank failures. As part of the compromise, many types of bonds would be allowed to be counted as capital, and the too-big-to-fail principle would be kept alive for the time being.
A data breach including credit card numbers apparently took place at Home Depot retail stores, probably affecting all U.S. locations, but details have been hard to come by so far. Importantly, it hasn’t been confirmed that the leak came from inside Home Depot or that the credit card numbers come from Home Depot purchase transactions.
Bank regulators in Turkey took partial control of Asya Katilim Bankasi AS under a provision that allows them to remove officers and take various other steps short of liquidation. Trading in the bank’s shares was suspended last month. Also last month, the government canceled all of its contracts with the bank. Asya says its problems are more political than financial, and that it will be able to keep operating without any difficulty. The bank is preparing a lawsuit against what it describes as harassment by regulators.
The overnight lending market that Libor is based on is continuing to decline, and the Fed says it is looking for an alternative, a way to form a base rate that does not depend on frequent loans between banks.
The upcoming closing of the Export-Import Bank is already hurting overseas sales by U.S. manufacturers, and until September 30, there is still a chance of a late action from Congress to reauthorize it. However, any such action would first require House Republican factions to come to an agreement on a strategy, and so far there isn’t any sign of a move to bridge that gap.
Bulgaria’s failed Corpbank is now not expected to reopen until December, putting at risk an estimated 80,000 jobs at businesses whose accounts are frozen. Auditors have found documents for only one third of the bank’s loan portfolio, and it is believed that most of the remaining loans are fraudulent in some way. Delays at Corpbank are partly due to political uncertainty after the banking crisis in June led the government to resign and cut into an already weak national budget. There are regulatory concerns too, including the need for plans to be reviewed by the IMF. The central bank has asked the IMF to send a working group to the country to speed up the review process.
A credit union failed tonight. State regulators in Iowa with court approval closed Louden Depot Community Credit Union. The failed credit union had been operating for 60 years and had 800 members, mostly residents of Jefferson County in Iowa. The NCUA transferred member accounts and most assets to Community 1st Credit Union of Ottumwa.