BankThink

A legislative proposal would expand Fannie Mae and Freddie Mac's use of specially-created debt securities to share their risk with private investors, but such risk transfer deals are not a replacement for core capital.

Banks should embrace artificial intelligence so that they can more easily navigate policy shifts that will affect their compliance resources and processes.

Receiving Wide Coverage ...Nixed: U.S. banking regulators rejected Wells Fargo's revised living will as inadequate and imposed new sanctions on the bank: preventing it from setting up overseas entities and buying nonbank companies. Wells was one of five big banks – the others were JPMorgan Chase, Bank of America, Bank of New York Mellon and State Street – whose living will plans were rejected last April; Wells was the only one whose revision did not pass muster. The bank has until March 31 to submit a third plan; if that one is also rejected, the bank could be hit with more sanctions, including higher capital requirements. "This the first time that regulators have imposed penalties since the country's biggest banks were required to submit 'living wills' starting in 2012," the Wall Street Journal notes. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker

President-elect Trump faces legal questions over his idea to hold remittances ransom to fund a wall in Mexico, but the industry should take the threat seriously.

Judicial review of regulators' economic analyses can help validate whether a rule will solve a real problem at a reasonable cost.

Both major brands are accelerating a move away from traditional checkout, and all retailers need to make adjustments for the future.

Receiving Wide Coverage ...Suspended: Prudential Financial said it suspended sales of its MyTerm life insurance policies through Wells Fargo following allegations that Wells employees wrote policies without customers' permission and withdrew money from their bank accounts to pay the premiums. Many of the victims did not speak English, according to a suit filed by three former Prudential employees, who claim the company tried to hush up the scandal. Prudential said Monday it would reimburse any customers who said they were charged for policies they did not ask for. California and New Jersey insurance investigators are looking into the matter. Wall Street Journal, Financial Times, New York Times, American Banker

Merchants should check operating systems, since the PC-based operating systems which run most legacy point of sale software have security flaws and are targets for malware.

American Banker is pleased to bring you Breaking Banks, hosted by Brett King, and featuring the editors of American Banker.

Loretta Mester, the president of the Federal Reserve Bank of Cleveland, discusses how Trump's election will affect financial services, what she thinks of Neel Kashkari's plan to end "too big to fail," and her views on interest rates.