BankThink

Receiving Wide Coverage ...All Shutdown All the Time: The ongoing government shutdown dominated news coverage this weekend. The Wall Street Journal highlighted how government officials and economists are facing forecasting quandaries as the budget impasse delays the release of key data, including the Labor Department's monthly jobs report. A separate article notes that Fed officials are monitoring the shutdown to see if the prolonged stalemate creates any drag on the private sector. Speaking of the Fed, the Financial Times assessed how a prolonged shutdown, and a lockdown of critical data, could influence the Fed's decision to taper its quantitative easing. The New York Times focused on the months leading up to the shutdown and how issues in Washington have provided a lift to the derivatives market, observing that insurance for credit-default swaps have started to rise.

A recap of the informed opinions (and the discussions they generated) on BankThink this week.

The Consumer Financial Protection Bureau charged one of the nation's largest payment processors, Meracord LLC, with a $1.4 million fine.

The Debit Interchange Fee Study Act called for a six-month regulatory study on the cost of the rules and their impact on consumers. There are good reasons to revisit that approach now.

Receiving Wide Coverage ...Citi Fined: Citigroup has agreed to pay a Massachusetts regulator $30 million for allowing an analyst to share unpublished research about Apple with a handful of hedge funds, including SAC Capital. The Journal calls the case "a vivid example of a problem many critics say isn't going away: sloppy controls over the market-sensitive information flowing between analysts and investors." Dealbook suggests the incident says something about SAC Capital, which was indicted on insider trading charges back in July. "The latest details … illuminate the hedge fund's relentless pursuit of an edge in stock trading," the article notes. Charges have yet to be filed against any of the hedge funds that received the heads up, but enforcement actions are apparently under consideration. Anonymice tell the Journal that the Financial Industry Regulatory Authority is also investigating Citi over the matter. The bank, which did not admit or deny breaking the law as part of the consent order, tells the FT it is "pleased to have this matter resolved" and that it takes "regulatory compliance requirements very seriously."

We should instead preserve the right of consumers to choose the products and features that best provide for their family’s daily financial needs, not force them into limited and costly alternatives.

Under the 2010 Dodd-Frank Act, the Federal Reserve requires midsize banks, those with consolidated assets between $10 billion and $50 billion, to conduct annual company-run stress tests.

Receiving Wide Coverage ...Black Market Bust and Bitcoin: Federal agents yesterday arrested Ross William Ulbricht, the alleged ringleader of "Silk Road," an online drug market that accepted Bitcoin, confiscating about $3.6 million of the digital currency. The bust could have serious implications for Bitcoin, which has grown in popularity over the last few years, at least in part, to the expectation of anonymity. "The federal investigation that led to Ulbricht's arrest shows that even purchases made with anonymous profiles on an anonymous site are still trackable," one source tells the Washington Post. Bitcoin prices plummeted yesterday, following news of the raid. But some pundits think the bust could wind up being good for the crypto-currency. "Proponents see Bitcoin primarily as a way to lower the transaction costs associated with legitimate online commerce," writes Bloomberg's Joshua Brustein. "If the market quickly recovers, it bolsters their argument by showing that demand won't drop off once the best way to buy cocaine with Bitcoin disappears." New York magazine's Kevin Roose echoes: "Silk Road's closure … means that the people fighting to legitimize Bitcoin can credibly claim that the old days of the crypto-currency as a tool for vice are over. And after Bitcoin prices stabilize, these people can make a push for a new beginning."

According to a report released Wednesday by the Consumer Financial Protection Bureau, banks and other credit card issuers are charging less in penalties and are doing better at disclosing previously hidden fees.

U.S. regulators and law enforcement officials expect risk-based anti-laundering and sanctions programs — no small feat for digital-currency firms, which generally do not know their customers' counterparties.