Amazon checks it out; Fed takes aim at Volcker rule
Receiving Wide Coverage ...
Bouncing an idea: Amazon is in talks with big banks including JPMorgan Chase about creating a “checking-account-like product” the online retailer could offer its customers. “The talks with financial firms are focused on creating a product that would appeal to younger customers and those without bank accounts,” the Wall Street Journal says.
“Whatever its final form, the initiative wouldn’t involve Amazon becoming a bank,” it notes. “Amazon’s collaborative approach supports what bank executives have long said: that new regulations put in place after the financial crisis, while bad for profitability, are a protective moat against challengers.”
Still, “if Amazon succeeds in offering users access to some kind of bank account, it would mark another move in its steady incursion into territory historically dominated by the big brick-and-mortar lenders,” the Financial Times comments. American Banker looks at how regulators would view a deal and offers five takeaways.
Let’s vote: A bipartisan bill the Senate is scheduled to vote on as early as Tuesday includes a provision that would “directly benefit the nation’s megabanks: a section aimed at making it easier for them to buy state and local bonds,” the Journal reports. “The provision, championed by Citigroup and other large banks, would ease a new rule aimed at ensuring banks can raise enough cash during a financial-market meltdown to fund their operations for 30 days, requiring them to hold more cash or securities that are easily salable.”
The bill, which would increase the threshold to $250 billion for a bank to be deemed systemically important, would also “increase the odds of government funding going to bail out failed banks,” the Washington Post says, citing a report from the Congressional Budget Office.
Senate progressives led by Sen. Elizabeth Warren, D-Mass., opposed to the bill don’t see the irony that the Dodd-Frank financial reform law “has been a boon for the biggest banks,” the Journal says in an editorial. “Bankers wish they partied as much as Ms. Warren says they do, but her claims bear little relation to the actual bill,” which has 12 Democrat co-sponsors. Washington Post, American Banker
Fix it: The Federal Reserve is considering “broad revisions” to the Volcker rule, Fed Vice Chairman for Supervision Randal Quarles said in prepared remarks Monday at an international bankers’ conference.
“I believe the regulation implementing the Volcker rule is an example of a complex regulation that is not working well,” he said. “We would like Volcker rule compliance to be similar to compliance in other areas of our supervisory regime.” Wall Street Journal, New York Times, American Banker
Strength in numbers: Citigroup, online lender Kabbage, Zurich Insurance Group and Depository Trust & Clearing Corp. have formed a consortium to address fintech firms’ cybersecurity risks, “a sign of the industry’s growing links to traditional banks and insurers.”
Separately, Kabbage, which is one of the biggest online lenders to small businesses, said it will no longer make loans to companies that make assault-style weapons or sell guns and ammunition to people under 21. Less than 1% of Kabbage’s clients would be affected by the move, but the company said this is still “a meaningful number.”
“We’re not saying this is the best or the only solution, but if you’re in favor of fewer tragedies like these, then it is incumbent on you to do something,” CEO Rob Frohwein told the FT. “This is one where we’re actually a participant in an ecosystem that is connected to this, in some way, shape or form. We feel strongly that this is something we could do.” Financial Times, American Banker
“Amazon is one example of a big tech company ... thinking about finance as not just a feature to help drive the purchase of goods on their retail platform, but perhaps ... as a core business.” — David Klein, chief executive of CommonBond, a New York-based online lending platform.