Knight trading glitch could have been worse, sources say

Welcome to the morning roundup. Here's a look at today's banking and finance headlines. 

Trading glitch. Knight Capital Group Inc. was holding about $7 billion worth of stocks last week as a result of errant trades, far more than previously known, the Wall Street Journal reports, citing sources familiar with the matter. As traders scrambled to minimize losses due to a software problem, the total position fell to $4.6 billion by the end of the day, the sources said. 

Increasing mortgage profits. Banks are making big gains on mortgages by taking profits far higher than the historical norm, the New York Times reports. Analysts say today's low interest rates could be even lower if banks were satisfied with the profit margins of a few years ago. 

Political ties. Employees at Goldman Sachs Group are giving 70 percent of their political donations to Republicans this election season, Bloomberg reports. That's a turnaround from four years ago, when workers at the Wall Street giant gave three-fourths of their donations to Democratic candidates and committees, and represents the biggest switch among 25 major companies, Bloomberg found. 

Man vs. machine. Morgan Stanley is replacing some of its highly paid bond traders with computers as it looks to repair its bond-trading business, the Wall Street Journal reports. The shift has already reduced the ranks of traders on some desks by as much as 20 percent. 

Signs of growth. The number of new U.S. jobless claims fell last week, while the trade deficit in June was the smallest in 1 1/2 years, suggesting modest economic improvement, Reuters reports. Meanwhile, stocks were little changed at the open today.