Editor's note: Morning Scan will not publish on Thursday, Nov. 26 or Friday, Nov. 27 in observance of the Thanksgiving holiday. We'll be back on Monday, Nov. 30.
Wall Street Journal
In-house lawyers at the Consumer Financial Protection Bureau had proof the Federal Reserve and the Federal Deposit Insurance Corp. were eagerly awaiting its report on
Ally had asked its banking regulators for permission to convert to a financial holding company; the conversion would be a linchpin in its effort to exit from federal government control by holding an IPO to raise capital. But the ongoing probe by the CFPB into Ally's alleged discrimination against minority borrowers in its indirect auto lending business was the holdup. The Fed and FDIC would not approve Ally's request to form a holding company if the CFPB found Ally had violated lending laws.
The Fed had suggested a finding of a fair-lending violation against Ally would "most likely result in the denial of holding company status." The Fed had also suggested if Ally took "prompt and robust corrective action," it would help Ally's cause. The FDIC also said it would be more likely to award the rating that Ally needed to convert to a holding company if Ally agreed to a settlement.
Knowing this, the CFPB relied on its disparate-impact methodology to extract a $98 million settlement agreement from Ally. It used the methodology, despite internal acknowledgements that it was flawed. CFPB Director Richard Cordray approved the plan by signing his initials to a report. American Banker has previously covered the CFPB's use of the disparate impact theory in a three-part series. Those stories can be seen here:
Fintech disruptors are confused about regulation. The founders of startups in the financial technology realm
Additionally, if banks are struggling to understand and comply with new regulations like Dodd-Frank, the Durbin amendment and the Foreign Account Tax Compliance Act, how do you think thinly staffed (the fintech euphemism is "nimble") startups feel? And regulators themselves have indicated an interest in learning more about developments in the financial technology sector. Alternative lending and marketplace lending are the most likely areas for regulatory pressure, Wallace said.
The Fed plans to raise minimum capital requirements for banks to pass stress tests. That's going to hurt banks' ability to meet
New York Times
The founder of Internet Archive Federal Credit Union is
Regulators continued to hound him, however. In 14 months, IAFCU has been subjected to 11 separate examinations. Kahle estimates his CU has spent 187 hours in August dealing with regulators, versus 61 hours dealing with its own customers. Kahle has decided to throw in the towel; he'll attempt to give his credit union charter to a nonprofit group in New Jersey.
The paper has a
Elsewhere ...
TechCrunch: The tech news site has a lengthy story on
Krebs on Security: Hilton Hotels has acknowledged a