How Visa and MasterCard Make Money | Where the Money Is - 1/27/14 | The Motley Fool

TL;DR

Bank of America is being investigated for improper trading practices, Iceland's economy is thriving after letting banks fail, and Jamie Dimon's pay at JP Morgan has nearly doubled.

Transcript

Bank of America is back in the spotlight Iceland is doing very well thank you and Jamie Dimon gets a big raise you're in the right place folks because this is where the money is welcome to the show it is Monday I'm Matt copenhefer this here is David Hanson David as always our show is brought brought to our listeners today by the motley fool and we'... Read More

Key Insights

• 💁 Bank of America is under investigation for potential improper trading practices on its swaps desk.
• 😘 Iceland's economy has thrived after letting its banks fail, with low unemployment rates and a growing welfare state.
• ⏫ Jamie Dimon's pay at JP Morgan has nearly doubled, with Warren Buffett stating that he believes Dimon is worth more.
• 😒 Visa and Mastercard, as the dominant players in the payment industry, stand to benefit from the increasing use of electronic payments.
• ❓ Mortgage REITs have historically underperformed, with agency mortgage REITs being the exception.
• 🥹 Starbucks sells a significant number of gift cards, which generate interest as they are held by the company until they are redeemed.

Questions & Answers

Q: What is the investigation into Bank of America's trading practices?

The investigation is looking into potential improper trading on the swaps desk, which may have involved front running and unsophisticated tradecraft techniques such as hand signals and special ringtones.

Q: How did Iceland's economy recover after letting its banks fail?

Iceland's government allowed its banks to fail and default on their debt during the financial crisis. The country has since focused on rebuilding its welfare state and has seen low unemployment rates and economic growth as a result.

Q: Why did Jamie Dimon receive a pay raise despite a rough year for JP Morgan?

Warren Buffett has stated that he believes Dimon is worth more than his current pay. Despite a challenging year for the bank, Dimon's leadership is seen as valuable and deserving of the pay raise.

Q: What are the key factors contributing to Iceland's economic success?

Iceland's approach of allowing banks to fail and focusing on rebuilding its welfare state has been key to its economic success. The country's residents also report high levels of happiness, potentially indicating a connection between the banking approach and overall well-being.

Summary & Key Takeaways

• Bank of America is facing an investigation into potential improper trading practices on its swaps desk, which may have involved unsophisticated tradecraft such as hand signals and special ringtones.

• Iceland's economy has rebounded after the country let its banks fail and default on their debt during the financial crisis, resulting in low unemployment rates and a growing welfare state.

• Jamie Dimon, CEO of JP Morgan, received a significant pay raise despite a rough year for the bank, with his pay nearly doubling from the previous year.