culture of NYC OTB, Nassau OTB, and Suffolk OTB while NY Politicians hope that it is an aberration that handling in Macau has purportedly declined with a decline in corruption.Chinese flee Macau and bring money to buy Manhattan.
Markets
Yellen Says Effective Supervision of Big Banks One of Fed’s Top Priorities
Fed Chief Says Big Banks Have Too Often Flouted Law, Ethics in Recent Years
Federal Reserve Board Chairwoman Janet Yellen ENLARGE
Federal Reserve Board Chairwoman Janet Yellen Photo: Associated Press
By
Victoria McGrane
March 3, 2015 8:15 p.m. ET
27 COMMENTS
Federal Reserve Chairwoman Janet Yellen raised concerns about the state of Wall Street’s culture and ethics on Tuesday, echoing similar comments from other regulatory officials and increasing pressure on the biggest U.S. banks to improve.
“It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner,” Ms. Yellen said in remarks prepared for delivery to the Citizens Budget Commission in New York on Tuesday night. “Too often in recent years, bankers at large institutions have not done so, sometimes brazenly.”
She didn’t mention specific incidents, but other regulatory officials have pointed to continuing probes of banks for currency-market and interest-rate manipulation, tax evasion and efforts to skirt international sanctions among the reasons to be concerned about Wall Street’s culture. Big banks, including J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp., have paid record-setting fines to settle civil probes into precrisis mortgage-related conduct.
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“These incidents, both individually and in their totality, raise legitimate questions of whether there may be pervasive shortcomings in the values of large financial firms that might undermine their safety and soundness,” Ms. Yellen said.
Her remarks follow those of Federal Reserve Bank of New York President William Dudley , who last year mounted a public and private campaign urging Wall Street to clean up its behavior. He warned big banks they risked being broken apart by policy makers if they didn’t comply with federal law, during a closed-door conference hosted by the New York Fed.
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Ms. Yellen didn’t go nearly that far but said repeat incidents carry potential implications for the broader stability of the financial system, since the problems “undermine confidence in large firms’ risk management and controls.”
Her remarks come just days before the Fed will determine whether the biggest U.S. banks have adequate capital and risk controls in place as part of its annual stress-test exercise. As banks have boosted their capital cushions, the Fed has shifted its focus to more “qualitative” issues, such as a bank’s ability to monitor and model potential losses and other risks.
The focus on bank “culture” is spurring worry on Wall Street, as bankers fret about what they say is a poorly defined set of problems the Fed is zeroing in on. BB&T Corp. Chief Executive Kelly King recently called culture “the new rabbit” Washington is chasing.
Ms. Yellen also mounted a defense of the Fed as a tough, independent regulator that has learned lessons from its stumbles before the 2008 financial crisis. She addressed accusations the Fed has been too cozy with some of the biggest institutions it is in charge of supervising.
“Whatever the source, the risk of regulatory capture is something the Federal Reserve takes very seriously and works very hard to prevent,” Ms. Yellen said. She pointed to the 2010 creation of a new committee, the Large Institution Supervision Coordinating Committee, as one innovation in the Fed’s approach to overseeing the largest, riskiest firms that helps reduce capture, which she defined as occurring when a regulator advances the interests of the firm it oversees rather than the public interest it should be defending.
The committee is in charge of a portfolio of the biggest banks and other financial firms that have been designated “systemically important.” It comprises Fed officials from different departments and areas of expertise across the financial system, including economists and market experts, in addition to bank examiners. It is led by Fed officials based in Washington, D.C., as opposed to officials at regional Fed branches, who had much more autonomy over individual bank supervision before the crisis.
Ms. Yellen said both these features of the new committee are “another check to the risk of regulatory capture in the oversight of large firms.”
The Fed in November launched a sweeping review of how it supervises big financial firms in response to criticism that its system wasn’t effective and stifled internal dissent. Some of that criticism flared up in response to charges made by a former New York Fed examiner, Carmen Segarra, who said her efforts to crack down on Goldman Sachs Group Inc. were suppressed by her supervisors.
Ms. Yellen, in her speech, said the Fed believes it is important that any employee “feel safe speaking up when they have concerns about bias toward industry, and that those concerns be addressed.”
She also warned the biggest banks they need to show progress in detailing how their firms could collapse without taxpayer assistance and without causing economic damage, as required by the 2010 Dodd-Frank law.
The Fed, along with the Federal Deposit Insurance Corp., last summer told 11 of the biggest firms their plans weren’t up to par and ordered them to correct a variety of shortcomings and take steps to make themselves simpler before resubmitting plans in July 2015.
“The Federal Reserve has asked for and expects these institutions to make substantial progress in the coming months which will leave firms and the government better positioned to manage the failure of a large institution in an orderly way,” Ms. Yellen said.
Write to Victoria McGrane at victoria.mcgrane@wsj.com
NASSAU AND SUFFOLK COUNTY SEND CONSULTANTS TO MACAU TO HELP FIX THINGS ALONG WITH ANDREW CUOMO'S BUDGET DIRECTOR
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China Corruption Crackdown Deals Macau a Rough Hand
Gambling revenue in Asia’s casino hub sank 49% in February
Visitors try a machine at the Global Gaming Expo Asia in May. Macau, the world's gambling capital, saw another month of decline in casino revenues in February. ENLARGE
Visitors try a machine at the Global Gaming Expo Asia in May. Macau, the world's gambling capital, saw another month of decline in casino revenues in February. Photo: Agence France-Presse/Getty Images
By
Kate O’Keeffe
Updated March 3, 2015 9:31 p.m. ET
1 COMMENTS
The slump at the world’s biggest casino hub deepened in February as gambling revenue in Macau plunged 49% from a year earlier, rocked by China’s crackdown on corruption.
The drop to 19.54 billion patacas ($2.45 billion) marks the ninth-straight month of shrinking revenue in the Chinese territory. February’s slide eclipsed a previous record drop in December, when it declined 30%.
Just a year ago, in February 2014, Macau gambling revenue shot up 40% to a record high 38 billion patacas, or $4.76 billion—about three quarters of what the Las Vegas Strip made that entire year. For calendar 2014, the Las Vegas Strip had revenue of $6.37 billion, down around 2%.
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Before the losing streak that has gripped Macau since June, the former Portuguese colony had enjoyed five years of uninterrupted growth, prompting the current building boom expected to add around 50% more hotel rooms in the next few years.
Despite Macau’s poor performance last month, shares of the territory’s casino operators rose in Hong Kong trading Tuesday, as some analysts had expected an even-worse result. Shares of MGM China Holdings rose 3.2% and Wynn Macau Ltd. rose 2.4%, compared with the benchmark Hang Seng Index’s 0.7% decline.
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Executives and analysts attribute Macau’s reversal of fortune primarily to a crackdown on corruption led by China’s president, Xi Jinping . In addition to bringing down many top mainland officials, the campaign has scared off highrollers and decimated the city’s junket system, they say. Junket operators are middlemen who use underground banking networks to facilitate high-stakes gambling.
Even though people are still coming to Macau, the majority of that growth in visitation is coming from low-spending tour groups, said Wells Fargo analyst Cameron McKnight in a report last week. He said the “dramatic drop” in gambling revenue during last month’s Lunar New Year festivities—historically a major gambling holiday—highlights “meaningful uncertainty” over Macau’s future even as some investors believed Macau would hit bottom last month.
Deutsche Bank analyst Carlo Santarelli now expects Macau gambling revenue will fall 21% this year versus an earlier estimate for an 8.4% drop according to a Feb. 26 report. Mr. Santarelli said that Macau’s main problem is a lack of demand from rich gamblers rather than a lack of supply of gambling facilities.
Thus he expects the impact from the multibillion resorts scheduled to open this year to be “muted at best.” The projects are likely to attract lower-spending gamblers, which he estimates account for a maximum of 25% of current gambling revenue.
Meanwhile these lower-spending—but higher-margin—customers are also being deterred by a variety of factors including tighter visa policies for mainland Chinese visitors, increased oversight of UnionPay cards that many gamblers use to access funds in Macau, and new smoking restrictions at casinos.
Corrections & Amplifications
Before its recent losing streak, Macau had five years of uninterrupted growth; the casino hub is expected to add around 50% more hotel rooms in the next few years. An earlier version of this article incorrectly referred to five years of interrupted growth and said the number of hotel rooms was expected to double.
Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com
- 832
- 200
China Corruption Crackdown Deals Macau a Rough Hand
Gambling revenue in Asia’s casino hub sank 49% in February
ENLARGE
Visitors try a machine
at the Global Gaming Expo Asia in May. Macau, the world's gambling
capital, saw another month of decline in casino revenues in February.
Photo:
Agence France-Presse/Getty Images
The drop to 19.54 billion patacas ($2.45 billion) marks the ninth-straight month of shrinking revenue in the Chinese territory. February’s slide eclipsed a previous record drop in December, when it declined 30%.
Just a year ago, in February 2014, Macau gambling revenue shot up 40% to a record high 38 billion patacas, or $4.76 billion—about three quarters of what the Las Vegas Strip made that entire year. For calendar 2014, the Las Vegas Strip had revenue of $6.37 billion, down around 2%.
Before the losing streak that has gripped Macau since June, the former Portuguese colony had enjoyed five years of uninterrupted growth, prompting the current building boom expected to add around 50% more hotel rooms in the next few years.
Despite Macau’s poor performance last month, shares of the territory’s casino operators rose in Hong Kong trading Tuesday, as some analysts had expected an even-worse result. Shares of MGM China Holdings rose 3.2% and Wynn Macau Ltd. rose 2.4%, compared with the benchmark Hang Seng Index’s 0.7% decline.
Advertisement
Even though people are still coming to Macau, the majority of that growth in visitation is coming from low-spending tour groups, said Wells Fargo analyst Cameron McKnight in a report last week. He said the “dramatic drop” in gambling revenue during last month’s Lunar New Year festivities—historically a major gambling holiday—highlights “meaningful uncertainty” over Macau’s future even as some investors believed Macau would hit bottom last month.
Deutsche Bank analyst Carlo Santarelli now expects Macau gambling revenue will fall 21% this year versus an earlier estimate for an 8.4% drop according to a Feb. 26 report. Mr. Santarelli said that Macau’s main problem is a lack of demand from rich gamblers rather than a lack of supply of gambling facilities.
Thus he expects the impact from the multibillion resorts scheduled to open this year to be “muted at best.” The projects are likely to attract lower-spending gamblers, which he estimates account for a maximum of 25% of current gambling revenue.
Meanwhile these lower-spending—but higher-margin—customers are also being deterred by a variety of factors including tighter visa policies for mainland Chinese visitors, increased oversight of UnionPay cards that many gamblers use to access funds in Macau, and new smoking restrictions at casinos.
Corrections & Amplifications
Before its recent losing streak, Macau had five years of uninterrupted growth; the casino hub is expected to add around 50% more hotel rooms in the next few years. An earlier version of this article incorrectly referred to five years of interrupted growth and said the number of hotel rooms was expected to double.
Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com
- 832
- 200
China Corruption Crackdown Deals Macau a Rough Hand
Gambling revenue in Asia’s casino hub sank 49% in February
ENLARGE
Visitors try a machine
at the Global Gaming Expo Asia in May. Macau, the world's gambling
capital, saw another month of decline in casino revenues in February.
Photo:
Agence France-Presse/Getty Images
The drop to 19.54 billion patacas ($2.45 billion) marks the ninth-straight month of shrinking revenue in the Chinese territory. February’s slide eclipsed a previous record drop in December, when it declined 30%.
Just a year ago, in February 2014, Macau gambling revenue shot up 40% to a record high 38 billion patacas, or $4.76 billion—about three quarters of what the Las Vegas Strip made that entire year. For calendar 2014, the Las Vegas Strip had revenue of $6.37 billion, down around 2%.
Before the losing streak that has gripped Macau since June, the former Portuguese colony had enjoyed five years of uninterrupted growth, prompting the current building boom expected to add around 50% more hotel rooms in the next few years.
Despite Macau’s poor performance last month, shares of the territory’s casino operators rose in Hong Kong trading Tuesday, as some analysts had expected an even-worse result. Shares of MGM China Holdings rose 3.2% and Wynn Macau Ltd. rose 2.4%, compared with the benchmark Hang Seng Index’s 0.7% decline.
Advertisement
Even though people are still coming to Macau, the majority of that growth in visitation is coming from low-spending tour groups, said Wells Fargo analyst Cameron McKnight in a report last week. He said the “dramatic drop” in gambling revenue during last month’s Lunar New Year festivities—historically a major gambling holiday—highlights “meaningful uncertainty” over Macau’s future even as some investors believed Macau would hit bottom last month.
Deutsche Bank analyst Carlo Santarelli now expects Macau gambling revenue will fall 21% this year versus an earlier estimate for an 8.4% drop according to a Feb. 26 report. Mr. Santarelli said that Macau’s main problem is a lack of demand from rich gamblers rather than a lack of supply of gambling facilities.
Thus he expects the impact from the multibillion resorts scheduled to open this year to be “muted at best.” The projects are likely to attract lower-spending gamblers, which he estimates account for a maximum of 25% of current gambling revenue.
Meanwhile these lower-spending—but higher-margin—customers are also being deterred by a variety of factors including tighter visa policies for mainland Chinese visitors, increased oversight of UnionPay cards that many gamblers use to access funds in Macau, and new smoking restrictions at casinos.
Corrections & Amplifications
Before its recent losing streak, Macau had five years of uninterrupted growth; the casino hub is expected to add around 50% more hotel rooms in the next few years. An earlier version of this article incorrectly referred to five years of interrupted growth and said the number of hotel rooms was expected to double.
Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com
- 832
- 200
China Corruption Crackdown Deals Macau a Rough Hand
Gambling revenue in Asia’s casino hub sank 49% in February
ENLARGE
Visitors try a machine
at the Global Gaming Expo Asia in May. Macau, the world's gambling
capital, saw another month of decline in casino revenues in February.
Photo:
Agence France-Presse/Getty Images
The drop to 19.54 billion patacas ($2.45 billion) marks the ninth-straight month of shrinking revenue in the Chinese territory. February’s slide eclipsed a previous record drop in December, when it declined 30%.
Just a year ago, in February 2014, Macau gambling revenue shot up 40% to a record high 38 billion patacas, or $4.76 billion—about three quarters of what the Las Vegas Strip made that entire year. For calendar 2014, the Las Vegas Strip had revenue of $6.37 billion, down around 2%.
Before the losing streak that has gripped Macau since June, the former Portuguese colony had enjoyed five years of uninterrupted growth, prompting the current building boom expected to add around 50% more hotel rooms in the next few years.
Despite Macau’s poor performance last month, shares of the territory’s casino operators rose in Hong Kong trading Tuesday, as some analysts had expected an even-worse result. Shares of MGM China Holdings rose 3.2% and Wynn Macau Ltd. rose 2.4%, compared with the benchmark Hang Seng Index’s 0.7% decline.
Advertisement
Even though people are still coming to Macau, the majority of that growth in visitation is coming from low-spending tour groups, said Wells Fargo analyst Cameron McKnight in a report last week. He said the “dramatic drop” in gambling revenue during last month’s Lunar New Year festivities—historically a major gambling holiday—highlights “meaningful uncertainty” over Macau’s future even as some investors believed Macau would hit bottom last month.
Deutsche Bank analyst Carlo Santarelli now expects Macau gambling revenue will fall 21% this year versus an earlier estimate for an 8.4% drop according to a Feb. 26 report. Mr. Santarelli said that Macau’s main problem is a lack of demand from rich gamblers rather than a lack of supply of gambling facilities.
Thus he expects the impact from the multibillion resorts scheduled to open this year to be “muted at best.” The projects are likely to attract lower-spending gamblers, which he estimates account for a maximum of 25% of current gambling revenue.
Meanwhile these lower-spending—but higher-margin—customers are also being deterred by a variety of factors including tighter visa policies for mainland Chinese visitors, increased oversight of UnionPay cards that many gamblers use to access funds in Macau, and new smoking restrictions at casinos.
Corrections & Amplifications
Before its recent losing streak, Macau had five years of uninterrupted growth; the casino hub is expected to add around 50% more hotel rooms in the next few years. An earlier version of this article incorrectly referred to five years of interrupted growth and said the number of hotel rooms was expected to double.
Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com
