Fed officials defend Dodd-Frank; OneWest executive for comptroller?

Receiving Wide Coverage ...

Defending Dodd-Frank: Federal Reserve Board Chair Janet Yellen defended several parts of Dodd-Frank in her testimony before the House Financial Services Committee on Wednesday. Regarding the Volcker Rule's ban on banks' proprietary trading, Yellen dismissed concerns presented by Rep. Jeb Hensarling, R-Texas, the committee chairman, who cited a recent Fed study that the rule had had a "deleterious" impact on liquidity in the corporate bond market. Yellen said the study did not represent the views of the whole board, adding, "It is difficult to come to a conclusion because by most metrics, liquidity in corporate bond markets still remains very healthy."

Aaron P. Bernstein/Bloomberg

Regarding the Consumer Financial Protection Bureau, Yellen declined to assess the agency's overall effectiveness, but said: "We know consumer abuses in mortgage lending were an important contributor to the financial crisis and could be a source of financial instability in the future, if we're not attentive to the potential abuses." The CFPB is currently funded by the Fed, but a bill sponsored Wednesday by a group of Republican senators would bring the CFPB's funding under the congressional budget process. Wall Street Journal, Financial Times, New York Times

Separately, Federal Reserve Board Governor Daniel Tarullo, who last week announced he will step down in early April, defended the strict banking regulatory regime that followed the global financial crisis, arguing it has made the financial system safer. He also blamed weak loan growth not on tougher bank lending rules but on weak demand from small businesses and consumers. While Tarullo said he expects the stricter rules imposed on the largest U.S. banks will remain, he also called for easing rules on smaller institutions. "When you get to banks that are medium-size, smaller, and certainly community banks, I think that they have a point that the postcrisis regime, both supervisory and regulatory, that has been put in place in many instances cast the net perhaps too broadly and deeply," he said.

Wall Street Journal

New comptroller?: The Trump administration is considering naming a former lieutenant of Treasury Secretary Steven Mnuchin as the next Comptroller of the Currency, the Journal reported. Joseph Otting was previously CEO at OneWest Bank, the bank formerly owned by Mnuchin. If named and confirmed, Otting "could represent a shift from [Thomas Curry, the current comptroller, whose term expires in April] who adopted strict standards for large banks and pushed them to curtail lending the agency viewed as too risky."

Reducing power: The acting head of the Securities and Exchange Commission has quietly revoked subpoena authority from about 20 senior enforcement officials at the agency. Going forward, only the agency's enforcement director can authorize subpoenas. The move by Michael Piwowar, who was named acting head of the agency in late January, "narrows actions launched during the Obama administration designed to make it easier for the Wall Street regulator to launch probes," the Journal said.

A mighty Fortress: SoftBank's bold move to buy asset manager Fortress Investment Group for $3.3 billion hinges on whether Softbank founder Masayoshi Son "and his team of investment professionals can use Fortress's collection of private-equity and other investment businesses to build a broad financial-services pillar in the U.S.," the Journal reports. Son "is a fast-moving billionaire who has aspirations of turning the firm into a global behemoth with arms in finance, technology and communications."

What are the odds?: The online gambling site BetMoose allows you to bet on any number of things, including this one: Will Donald Trump ban Bitcoin?

Where's the beef?: Despite criticism from some vegans and religious groups, the Bank of England said it is sticking with its plan to issue new currency that contains a small amount of animal fat in it. The U.K.'s central bank said it would "cost too much to withdraw the five-pound notes already printed and undermine efforts to stamp out counterfeiting," the Journal reported. The notes, which contain "trivial" amounts of tallow, which is made from animal fat, began circulating last September, with 10-pound notes due out later this year.

Quotable ...

"I think financial regulation has resulted in a stronger financial system and less risk than we had before the crisis. It's allowed us to have stronger growth and a faster recovery." — Federal Reserve Board Chair Janet Yellen