Morning Scan Amex challenge to high court; CFPB enforcement chief to leave

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Earnings: Goldman Sachs, Morgan Stanley

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They'll take the case: The Supreme Court agreed to review a “high-stakes” government antitrust challenge to American Express’s rules that prevent merchants from steering customers to credit cards that charge lower fees, which federal and state antitrust attorneys say are an unlawful restraint on trade. Retailers and states commended the high court decision to hear the case. “Retailers have long said AmEx’s rules are an antitrust violation that deny consumers truthful information about their credit cards,” the Retail Litigation Center said. Amex said it would “continue to vigorously defend” its policies. Wall Street Journal, Washington Post, American Banker

We prefer cash: Digital Asset Holdings, a New York-based fintech startup that is building technology products for banks, has “decided to raise money the old-fashioned way,” the Wall Street Journal reports, meaning in cash, not through an initial coin offering, as many other fintechs have been doing. The firm, which is run by former JPMorgan Chase trading executive Blythe Masters, raised $40 million in its most recent financing round, increasing its total capital raised so far to $110 million, “one of the highest totals in the blockchain sector.”

Asked why she didn’t do an ICO, Masters said, “At this stage, we raised everything we wanted to.”

“Barely a day goes by without a fresh announcement about how banks are seeking to use blockchain technology to transform sizeable chunks of their business,” the Financial Times notes. “So which of the areas of banking stand a serious chance of being transformed by blockchain?” The paper offers up five areas most likely to see an impact.

“Regtech” has displaced online lending as the hottest sector in fintech, the paper reports, a sign “the fintech business is maturing into more sophisticated areas.” Indeed, it says, online lending “may even be passé.”

Wall Street Journal
Heading out: Anthony Alexis, the Consumer Financial Protection Bureau’s enforcement chief for most of the six years of its existence, is planning to leave the agency as soon as his replacement can be found. His departure “could herald a significant change in the way the regulator polices financial companies,” the paper comments. “The news comes as the financial industry looks for significant policy changes at the CFPB as a result of a leadership change expected to occur sometime over the next several months,” referring to CFPB Director Richard Cordray’s possible departure in order to run for governor of Ohio.

Search continues: President Trump plans to meet with Janet Yellen on Thursday to discuss the possibility of nominating her for a second term as Federal Reserve Chair. Yellen’s four-year term ends in February. Trump has already met with several others being considered for the post.

Wells ordered to pay: The Financial Industry Regulatory Authority ordered Wells Fargo to pay $3.4 million to compensate customers for recommending they use some exchange-traded products linked to market volatility without fully explaining the risks.

Financial Times
Too cozy: American banks and insurers that do business in Europe will have to abide by rules that require listed companies in Europe to name a new auditor at least every 20 years and to put the contracts out for bid every 10 years. The rules, which seek to end the “cozy relationships between companies and the Big Four accounting firms,” could “potentially put lucrative audit contracts worth hundreds of millions of dollars up for grabs,” the paper reports.

Quotable
“The pace of enforcement matters may go slower as a result of the departure, as staff make adjustments to the internal structure of the Office of Enforcement to process the implications of the change.” — Jennifer Lee, a partner at Dorsey & Whitney and a former CFPB enforcement official, commenting on the departure of CFPB enforcement chief Anthony Alexis.