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Morning Scan: Turning the Screws on BNP Paribas

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Regulatory Overreach? Some bank regulators are plunging the depths of the financial system to determine whether they can add on to the steep fine facing BNP Paribas, which has been charged with processing payments for companies and countries sanctioned by the United States. The Times points to rumors that Benjamin Lawsky, New York's Department of Financial Services, is considering a temporary suspension on BNP Paribas' dollar clearing. "The fact that regulators are considering restrictions on such an important banking activity has added a significant twist to the debate over how to punish large banks," the Times says.

Concerns about BNP Paribas' amplified investigation has also reached European Central Bank officials, who are reportedly looking into whether expenses tied to U.S. investigations and penalties of continental banks could threaten their financial health, according to the Journal. And France is already warning that the penalties against BNP Paribas could harm transatlantic trade talks with the U.S., the FT reports.

Central Bank Insights: The papers had somewhat different expectations for where the European Central Bank would head with monetary policy Thursday. The Times has more heightened expectations in saying the ECB would take "extraordinary measures" to stimulate the economy by cutting its main interest rate for the first time since last November and possibly charging commercial banks to keep money with the central bank. The Journal was more subtle in reporting that the ECB is likely to keep borrowing rates near zero but could try other ways to boost bank lending to companies.

Wall Street Journal

Federal Reserve officials worry that calm financial markets could cause investors to take bigger risks as they've become "complacent" with during the prolonged low interest-rate environment.

Financial Times

The "frequently asked questions" memo on the Volcker rule that U.S. regulators will soon put out is likely to be a disappointment to foreign banks, the paper says, citing people familiar with the matter. That's because it's unlikely that regulators will offer more clarity on whether foreign banks need to sell covered funds that are prohibited under certain conditions in the Volcker rule, the paper says.

New York Times

The paper reports that Sam's Club is planning to launch a new MasterCard with chip technology as major retailers are also considering the switch in light of Target's customer-data breach last year.

An online video, "Spent: Looking For Change," appears to be a 40-minute documentary about four families who cannot get traditional bank accounts but it's really a long advertisement commissioned by American Express to promote its prepaid cards.

The Times notes that Stephen Scherr, who was recently promoted as Goldman Sachs' chief strategist officer, faces a steep challenge in growing traditional lending and wealth management at a company where trading has been its core business.

Columnist David Zaring argues that two proposed bipartisan bills in Congress to get rid of outdated regulations could create more gridlock than regulatory relief. "The gridlock problem lies in the fact that agencies have already been asked to perform these sorts of reviews by President Obama," he says. "A second process would add to these burdens by requiring agencies to defend their old rules against the inquiry of an outside commission."

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(Image: Bloomberg News)

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