The European Commission has hit a half dozen big banks, including Deutsche Bank and JPMorgan Chase, with a $2.3 billion fine for colluding to rig two benchmark lending rates that set the price of money between banks -- something on which they were supposed to competing. It's the largest antitrust fine that the European Commission has ever imposed in a case of this kind.
The European Commission ruled that this group of banks -- some of the biggest and best known in the world -- essentially colluded to form an illegal cartel to profit from derivatives linked to rigged interest rates. The Competition Commission in Brussels said the most shocking aspect was not just the illegal activity, but that banks that were supposed to be competing with each other were actively colluding to the disadvantage of companies that rely on these interest rates every day.
"The indirect impact is if you're dealing with a company that relied on those interest rates to do their business, then those companies are getting rates which are not as good as they could have been, then presumably those companies are going to put up prices of some of the products and services which you want to buy," says the BBC's Europe correspondent Chris Morris. "So these things do trickle down through the economy."
How have post-recession regulations affected small banks? The House committee on small business just met to discuss that and found some small banks took a big hit. Dodd-Frank, the Consumer Protection Act, and other regulation has meant banks have to have a certain amount of cash on hand, have to investigate certain kinds of deposits and many other rules. Many banks have had to bring in people to make sure they comply.
"Before Dodd Frank, an institution below $500 million had half of a person dealing with compliance," says Michael Moebs, an economist who advises banks. "Today it’s almost 4."
That additional labor brings additional cost. Moebs estimates it can be around $250,000. That kind of money isn’t a big deal for banks like Wells Fargo or Chase, but it is a big deal for smaller institutions.
"It could be the difference between a profitable year and a non-profitable year for a bank," says banking consultant Ken Thomas.
In order to deal with this, many banks have started cutting costs and raising fees. And, Thomas says, many small banks are putting themselves up for sale and being snapped up by larger competitors.
Mexican authorities have issued a public alert and are conducting a wide search for the white Volkswagen truck, which had been heading to a disposal facility.
Diners who grit their teeth when a neighboring customer spends way too much time tapping and talking on a smart phone may be surprised to hear that some restaurants want diners to use their phones more. Mobile apps that allow customers to order and pay are growing. At their best, they offer speed and convenience. But they can also be impersonal, a big problem in the hospitality business. At a recent lunch at City Winery -- a New York live music venue and restaurant that’s a fan of mobile payments -- I found the experience initially frustrating, occasionally weird, but overall, pretty convenient.
City Winery has a carefully crafted environment, with design emphasizing wooden wine barrels and cozy seating. So get the Jetsons imagery out of your mind. You still get a paper menu and order with a human server.
Mine sells me on the day’s soup with his elaborate description of the winter squash, maple cream and pistachios in it. I also order a kale Caesar. He puts my order into the house computer system and returns with a printed slip of paper. It has a code that will allow me to pull up my order on my phone.
Not right away, though. Since this is my first time trying mobile dining, it doesn’t happen instantly. To make it work, I need a PayPal account, which I had, and a PayPal app, which I didn’t. This is by far the most frustrating part of the process and I can see many diners giving up at this stage, not wanting to invest the initial effort.
After I’m finally logged in and set up, it gets a lot easier. The app is simple and user-friendly. I can see my order and realize I made a mistake: kale salad. The overexposed green is such a public radio cliché, so I hit the “alert server” button on the app. Soon he ambles over and I make the switch to a Greek salad. The app is proving useful.
Being able to summon the server with my phone feels a bit creepy, but it’s inarguably convenient. And it could help a business like City Winery, which wants to sell more food and drink during live shows, but doesn’t want servers to ruin a concert by bugging customers.
“It’s a little bit awkward to have one of our servers standing in front of Steve Earle as he’s hitting a great note and ask if somebody wants another cheeseburger,” says general manager David Richter.
It’s also about speed and efficiency, a key part of the pitch from NCR, which sells the technology to restaurants. Both diners and restaurateurs like the idea of paying the check instantly, without having to wait for a server to print it.
“If I’m in rush and maybe I just have 30 minutes for lunch, this really puts the control in my hands as the guest to be able to drive the experience that I want,” says Sherry Shirah, an NCR marketing director.
Restaurants pay NCR a monthly fee it declines to reveal to use the Mobile Pay system. (As an early adopter, City Winery doesn’t have to pay it right now.) If the technology leads to more sales and faster table turns, it can pay its way at restaurants.
Richter and the City Winery staff think carefully about server efficiency. He says it takes 25 footsteps for a server to provide service in the large concert space. If arming customers with smartphones helps ensure that more of those journeys lead to satisfaction and sales, the technology is worth a lot. What’s harder to quantify is the risk of losing human connection.
“There are a number of ways that technology can’t replace the personal touch,” says Mary Chapman, director of product innovation at the food consultancy Technomic. “A computer can’t smile at you or ask you how your day’s going.”
Or describe a dish, which my waiter did so convincingly, scoring the restaurant additional revenue. At City Winery, smartphone payments are growing, but they’re still small, around 3 percent. That’s not even a dozen people on a typical night, though servers still worry about their jobs a little.
“If you’re gonna order your food through a computer, you may as well have a robot take the food to you,” says my server Will Gorin. “There’s no reason for me to be around.”
His boss laughed at this notion and swiftly promised that no robot servers will roll through the dining room. Richter adds that those who pay by mobile tend to tip better. I did the same, even if my server didn’t have to bring a paper check.