Receiving Wide Coverage ... More bad news: Wells Fargo said there may be a “significant increase” in the number of fake bank accounts its employees opened, up from the 2.1 million accounts it has already acknowledged. In a regulatory filing, the bank said it reviewing accounts that were opened as far back as 2009, earlier than its original investigation, which covered 2011 to mid-2015. Financial Times, New York Times, American Banker
Wells Fargo also said it expects further regulatory sanctions from its latest scandal, in which it improperly forced some 570,000 auto loan customers to take out car insurance they didn't need, some of whom later defaulted on their loans. The bank said it is issuing refunds totaling around $80 million to affected customers.
“We want our stakeholders to know about issues that we are committed to fixing,” Wells CEO Timothy Sloan said in the filing.
Tim Sloan, president and chief executive officer of Wells Fargo & Co., speaks during a Bloomberg Television interview in San Francisco, California, U.S., on Tuesday, May 23, 2017. Sloan, who has been working to contain the fallout from a fake-accounts scandal since taking over as chief executive officer in October, said he was impressed with how Moynihan dealt with a raft of legal issues arising from the financial crisis during his first years as head of Bank of America. Photographer: David Paul Morris/Bloomberg
David Paul Morris/Bloomberg
Happy anniversary – not: On what it says is the official 10th anniversary of the global financial crisis, the Financial Times says financial institutions have paid more than $150 billion in penalties to American authorities as a result of "banks' alleged misdeeds from the era." Bank of America accounts for more than a third of the total, having paid out $56 billion to state and federal regulators, most of which covered the actions of two companies it acquired, Countrywide and Merrill Lynch. JPMorgan Chase, which acquired Bear Stearns and Washington Mutual, has paid the second most, $27 billion.
But things may be getting better, at least on Wall Street, where regulators have imposed “far lower penalties” in the first six months of the Trump administration than they did during the comparable period in 2016, when Barack Obama was president. Penalties levied by the three main Wall Street regulators were down 65% compared to the year-earlier period, $489 million versus $1.4 billion, according to the Wall Street Journal. That puts the industry on track for the lowest annual level of fines in at least seven years, it said.
“Lawyers who defend financial cases said a shift to a business-friendly stance at regulatory agencies in the Trump administration is one of several reasons for the decrease,” the Journal says.
Wall Street Journal Support uncertain: A Republican effort in Congress to block a rule that would prohibit banks from requiring arbitration of customer disputes may not have enough votes in the Senate to gain passage. The House voted last month to overturn the Consumer Financial Protection Bureau’s rule that prohibits mandatory arbitration, making it easier for customers to file class-action suits against banks. But “support in the Senate is uncertain,” the paper reports. “Several Republican senators have expressed reservations about voting to overturn the regulation, worried they may be portrayed as siding with banks and against consumers.”
Bank crisis: The number of African-American-owned banks operating in the U.S. has fallen to 23 this year, the lowest level in recent history, according to the Federal Deposit Insurance Corp. “That has left many African-American communities short of access to capital and traditional financial services,” the paper says.
“We have a crisis among black banks,” said Doyle Mitchell, CEO of Washington-based Industrial Bank. The number of black-owned banks has been falling for 15 years.
The number of such banks peaked more than 100 years ago, when there were 57 black-owned chartered banks, according to a study by a Howard University professor.
Financial Times High praise?: The American banking system is “notably less weak than its European counterpart,” writes John Plender, a senior editorial writer and columnist at the FT, looking back at the financial crisis. “That is because American policymakers learnt from the earlier Japanese experience of boom and bust. In the eurozone, by contrast, policymakers were reluctant to confront the challenge of the sovereign debt crisis head on. Stress tests have been un-stressful and banks remain undercapitalized relative to the U.S.”
Quotable “In a fairly short amount of time, no one is going to know how to compute what the next payment is going to be. And that’s why it’s important.” — Lou Barnes, capital markets analyst with Premier Mortgage Group, on the challenge mortgage lenders face in computing interest payments on adjustable-rate mortgages after Libor is phased out.
The Jackson, Mississippi, company will use proceeds from the sale of its Fisher Brown Bottrell Insurance unit to restructure its investment portfolio, moving $1.6 billion of low-yield securities off the balance sheet.
The store-branded card issuer is raising annual percentage rates and adding fees for paper statements to compensate for lost revenue. The Consumer Financial Protection Bureau's new regulation is scheduled to take effect on May 14.
At the banks' annual meetings, shareholders at both companies struck down proposals that would have split the board chair and CEO roles. Two other proposals also failed to win shareholder support, one concerning energy financing and another on pay gap analysis.
Congressional Review Act resolutions are ramping up ahead of the 2024 election cycle. Experts say that, although none are likely to become law, the resolutions are still powerful messaging and political tools.
The ABA is testing an information-exchange network to allow banks to share their fraud data with each other. Companies including Baselayer are also building solutions.
Republicans on the House and Senate Small Business committees are accusing the SBA of being irresponsible in granting Funding Circle permission to participate in its flagship loan-guarantee program.
