Receiving Wide Coverage ...
Goodbye Dodd-Frank: President-elect Trump's transition team said it would dismantle the Obama administration's signature post-crisis financial reform law. Republicans are "salivating over a wish list of Dodd-Frank changes that until recently stood little chance of avoiding President Barack Obama's veto pen," the Wall Street Journal said. "The lineup includes everything from regulatory exemptions for community banks and regional banks to a new regime for insurers and asset managers to curbs on the federal government's influence over consumer-finance products such as mortgages and payday loans." A note on Trump's transition website said the incoming administration would replace the law "with new policies to encourage economic growth and job creation," without providing specifics.
Trump is also looking to scrap the "fiduciary" standard for retirement accounts scheduled to go into effect next April. "Scrapping the reforms would be welcomed by many asset managers, brokers, life insurers and other financial service providers," the Financial Times noted. While the Obama administration claims the reform will protect consumers and save them money, Anthony Scaramucci, a hedge fund manager and a member of Trump's economic advisory council, said it is "unnecessary" and merely promotes class-action suits against retirement fund providers.
Trump's point man on regulation is Paul Atkins, who served on the SEC from 2002 to 2008, "where he spoke out against big fines for companies, arguing they punish shareholders," according to the Wall Street Journal. "Atkins repeatedly criticized the scope of financial regulation, which he warned often came at the expense of market competition and could lead to unforeseen consequences."
Bank stocks and bond yields continued to move higher on Thursday following Trump's election. Indeed, the sharp rise in bond yields "could give bank investors what they have long wanted: bigger profits," the Wall Street Journal said. While bank stocks have been moving higher on the belief that loosening bank regulation will spur business, the rise in interest rates may also widen their lending margins. Analysts at Morgan Stanley analysts said a one percentage point increase in rates would boost big bank earnings by more than 5%. Bank stocks are up nearly 9% since Tuesday's election.
But higher rates may have a negative bearing on at least one important bank product: Residential mortgages. Interest rates on the long-term loans are poised to move higher following the move upward in bond yields.
Wall Street Journal
Out of line: Wells Fargo CEO Timothy Sloan told an employee town meeting the bank found "some instances" where calls to an employee ethics line to report bad behavior weren't handled appropriately and the bank is investigating the matter. Sloan was apparently responding to reports that some employees were retaliated against for reporting improper sales practices. "If we find complaints were mishandled, then we will take action to make it right," he said.
Quotable ...
"Retaliation is unacceptable [and] it will not be tolerated at Wells Fargo" — Wells Fargo CEO Timothy Sloan commenting on reports that employee calls to the company's ethics line were not handled properly.
