Joe Adler

WASHINGTON — The Consumer Financial Protection Bureau named new senior staff in four different divisions Monday.

WASHINGTON — Regulators have officially gone back to the drawing board in trying to implement Dodd-Frank Act restrictions on securitized mortgages.

The Federal Reserve Board said it will appeal a judge's decision invalidating the central bank's interchange fee cap, while both the Fed and merchant groups asked for more time before the lower court ruling takes effect.

Doreen Eberley, the director of the Federal Deposit Insurance Corp.'s Division of Risk Management Supervision, says examiners are more sensitive today to risks that are not obvious on a bank's balance sheet and that banks need to scrutinize an ever-changing landscape of new products.

Tim Pawlenty, the head of the Financial Services Roundtable, has named Eric Hoplin as the trade group's next executive director.

Receiving Wide Coverage ...China's Banking Woes: Multiple stories this morning touch on concerns about China's banks, and not just about credit quality. Finishing up a two-part series about China's banking sector, the Journal reported the growing risk from banks selling bonds to raise cash. China had tried to limit its currency supply in June to constrain funding for "shadow banks", but that created the "unintended consequence" of banks "scrambling for cash. The bond market was drawn into the turmoil when some lenders rushed to sell bond holdings, especially short-term bonds, which tend to be more liquid." The Times explored the fears about China's shadow banking more broadly, as several cities face a "painful credit crisis" and an overall hit to their business sectors. The FT had two stories about the county's flood of non-performing loans. One looked at the more prominent role played by asset-management companies — funded by the state and established over a decade ago to assume the bad debts of the nation's largest banks. "This role in buying a broader set of non-performing loans and receivables from across the financial sector is what many bankers and analysts see as the market-based future of how China will deal with bad debts." The paper also reported talks that Goldman Sachs, Morgan Stanley and Deutsche Bank have held with Huarong, one of China's largest troubled banks, about making a big capital infusion in the institution. "The move is one sign that the Chinese government will not entirely bail out the next round of problem loans emerging from China's credit boom, but will instead rely more on market driven remedies."

Most policymakers agree that Fannie Mae and Freddie Mac should be unwound and replaced with a system more dependent on the private market, but cleaning up the failed government-sponsored enterprises will be a challenge unlike anything attempted before.

Receiving Wide Coverage ...It's Official: In a widely expected announcement, prosecutors formally charged Javier Martin-Artajo and Julien Grout for their actions to allegedly try to hide JPMorgan Chase losses stemming from the disastrous "London Whale" trades last year. But in addition to the straight news reporting by the Journal, Times, FT and Washington Post, three of the papers also dug into the details around how Bruno Iksil — the London Whale himself — avoided prosecution by cooperating with authorities building a case against his colleagues. The Journal pointed out that Iksil's name was left out of the criminal complaints, but he is identified under the handle "CW-1." "Prosecutors chose to give Mr. Iksil a relatively rare 'nonprosecution agreement,' partly because he pushed back against his colleagues' alleged efforts to conceal losses." The Times said the decision to make Iksil a potential "top witness" in any future trial "is a step the Justice Department rarely takes, more commonly having an individual plead guilty in exchange for an agreement to cooperate." The FT also observed how Iksil allegedly tried to convince his colleagues that the bank "should take a one-time hit to get the values in line with market prices but was rebuffed." The Times included analysis on how the case reflects the risks banks face trying to value derivatives. "On Wall Street, bets worth hundreds of billions of dollars are valued using a considerable amount of guesswork. The dangers of that approach were revealed on Wednesday in the government's criminal complaints against two former JPMorgan Chase traders."

Receiving Wide Coverage ...Yellen v. Summers: The growing controversy over who will succeed Fed Chairman Ben Bernanke garnered more attention in the major papers. The Journal focused on behind-the-scenes efforts by the White House to "quash the campaign" by Senate Democrats, who have been pressuring President Obama to nominate Fed Vice Chairman Janet Yellen. Apparently, the "message" has been received. "In recent days, top Democratic senators have vowed to support whomever he picks." Not getting the message, though, was Times columnist Maureen Dowd, who listed her reasons why nominating Larry Summers — the other leading candidate, who is said to have support in the White House — would be a bad idea. "The idea that it is somehow historically inevitable that the chairmanship of the Federal Reserve should go to Summers, that it belongs to him, that he would be an enthusiastic enforcer of bank regulation to protect the little guy? I have my doubts." A story on the front of the Times business section said it is difficult to predict exactly how either candidate would chart the Fed's regulatory course. "For supporters of stronger regulation, it comes down to a choice between someone they do not know and someone they do not trust."

Receiving Wide Coverage ...Probe of Banks' Commodities Role: It is apparently not enough that banks are winding down some of their commodities operations to evade scrutiny over alleged price manipulation. It was widely reported Monday that the Commodity Futures Trading Commission issued subpoenas to institutions with subsidiaries that store and deliver aluminum, seeking documents as part of an investigation. "The subpoenas come," according to the Wall Street Journal, "amid heightened scrutiny of Wall Street's involvement in commodity and energy markets." The paper also reported another move by a big firm, this time Morgan Stanley, to reorganize its commodities business. The Times, citing two sources, said the CFTC requests "seek all internal documents, e-mails, correspondence, voice recordings and other records concerning the warehouse operations dating back to January 2010." The FT reported that the CFTC inquiry corresponds with a potential ruling by the Federal Reserve on whether firms "should be allowed to continue owning physical commodity assets."

A search committee has been assigned to find a successor for Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, who plans to retire next year.

The Hill newspaper named 18 insiders likely to influence efforts in the coming weeks related to the implementation of the Dodd-Frank Act, including JPMorgan Chase CEO Jamie Dimon, CFPB Director Richard Cordray and CBA President Richard Hunt.

Receiving Wide Coverage ...London Whale Investigations: Federal probes into JPMorgan Chase's disastrous 'London Whale' trades may finally be coming to a close. The Journal reported that Whale trader Bruno Iksil is "unlikely to face charges" from the fiasco, but that "Mr. Iksil is no longer a focus of investigators, people familiar with the situation said." The FT said the bank is set "to admit wrongdoing in a civil settlement with" U.S. and U.K. officials. The admission "would be a departure from the controversial practice of banks neither admitting nor denying culpability." The Times said such a concession to the Securities and Exchange Commission "would set an important precedent" for the agency. Up to this point, the Post said, "the agency has routinely used boilerplate language that allows defendants to pay fines without acknowledging liability, a policy that has been criticized by some judges."

Government debt and other "safe" assets are still plentiful, but the huge demand for Treasuries and other risk-free securities in light of new capital and liquidity rules has sparked concern about their long-term availability.

The Federal Deposit Insurance Corp.'s online training for community bankers now includes an eight-video module on how institutions can manage their exposure to fluctuating rates.

WASHINGTON — Regulators seized a $265 million-asset bank based in Fort Myers, Fla., late Friday and sold its operations in a deal protecting all of the failed bank's depositors.

Economist Jason Furman received congressional approval Thursday to be the new chairman of the White House Council of Economic Advisers.

WASHINGTON — Federal regulators released proposed guidance on Tuesday designed to help medium-sized banks comply with company-run stress test requirements that kick in this fall.

A relief package proposed by three senators last week has reinforced hope that Capitol Hill will ease community banks' regulatory burden by yearend.

Sen. Bob Corker, R-Tenn., a co-author of housing finance legislation, urged the House and Senate to pass their bills that offer different replacements for Fannie and Freddie. The bills can be reconciled in negotiations later, he said.