Nothing to see here: The Government Accountability Office said the 2015 law that transferred dividends from banks that own stock in the Federal Reserve's regional banks to pay for new highway spending had "little effect" on Fed operations and "no immediate effect" on bank membership in the Fed system. "Some member banks affected by the rate change told GAO they had a few concerns with it and some said they might try to recoup the lost revenue, but none indicated they would drop membership," the report said. Earlier this month, the American Bankers Association and Washington Federal Bank filed a lawsuit claiming the law violates the contract between the Fed and its member banks.
Warren Buffett, chairman of Berkshire Hathaway Inc., left, speaks to David Rubenstein, co-founder and managing director of the Carlyle Group, during the Economic Club of Washington dinner event in Washington, D.C., U.S., on Tuesday, June 5, 2012. Buffett said he doesn't expect another U.S. recession unless Europe's crisis spreads. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Warren Buffett; David Rubenstein
Andrew Harrer/Bloomberg
Bravo, B of A: Warren Buffett went "out of his way" in his annual letter to Berkshire Hathaway shareholders "to say that Bank of America has been undervalued. And he applauds the bank – and other companies in the Berkshire equity portfolio – for buying back its shares." The paper says Buffett B of A shares have gained $5 billion since the election.
Financial Times
Wait and see?: The financial markets may think President Trump is good for the banking business, but the banks aren't acting like it, at least not yet. According to the Federal Reserve, bank lending continued to decline in February after falling in both December and January, which was the first time in five years total outstanding bank loans fell for two consecutive months. David Rosenberg, the chief economist at Gluskin Sheff, said the data "sent a shiver up my spine."
Never retreat: Sam Woods, the head of the Bank of England's Prudential Regulation Authority, is warning against rolling back the financial reforms made in the wake of the financial crisis, calling the deregulatory moves "misguided." "While he did not mention Mr. Trump or Brexit by name," the FT comments in a side story to Wood's op-ed piece, "his comments run contrary to the anti-regulation stance adopted by the new U.S. president, and to lobbying by parts of the City [of London] that want to do away with what they see as overly burdensome rules from Brussels after the U.K.'s departure from the EU."
Cyber oath: Banks and insurance companies supervised by the New York State Department of Financial Services will now have to create and maintain a cyber-security program to protect their customers' private data and "ensure the safety and soundness" of the state's financial services industry against cyber-attacks. The new regulation, which takes effect March 1, also requires senior executives at these firms to certify annually that their company is complying with the directives and to notify the department of any serious breaches within 72 hours of their discovery. "This has gone further than any other regulation I've seen, and is the most prescriptive," Joe Nocera, head of PwC's cyber security practice, commented.
Moving offshore: President Trump's policies appear to be friendly to banks, but he's probably not going to like this: large American banks are moving more of their jobs, particularly those in compliance, outside the U.S. to lower-cost Asian countries, "creating potential tensions with the new administration," the FT reports. The six largest banks employed 12% of their total global workforce in Asia in 2015, compared to 10% in 2013, according to figures compiled for the FT by McLagan, a pay benchmarking company. And that trend is likely to continue, said David Warfield, associate partner at McLagan's performance practice.
"Fifteen years ago, compliance roles would have been seen as essential to locate in the same building as the front office," Warfield said. "Today, these activities have been separated into business support roles and more specialized roles. The specialist roles are being supported from alternative offshore locations."
New York Times
Big win: A recent decision by the U.S. Supreme Court "handed whistle-blowers one of their bigger wins in a long time," columnist Gretchen Morgenson says. In a February 21 decision involving a bank whistle-blower, the high court "essentially confirmed that some courts have been using too narrow a legal standard when weighing whistle-blower suits under the False Claims Act," she writes. "By highlighting a more expansive standard for what constitutes a false claim under the act, the court's ruling is likely to open the door to more whistle-blower cases. Because whistle-blowers help make the world a better place, that is a good thing."
Everybody into the pool: The Your Money Adviser column discusses the Consumer Financial Protection Bureau's examination into whether lenders should use alternative credit scoring models to bring more consumers into the financial mainstream.
Quotable ...
"Regulators around the world have spent years transforming prudential standards in order to repair the financial system. This is no time for a retreat. Jeopardizing the benefits of a more stable financial system, which supports the real economy to grow and create jobs, would be misguided." – Sam Woods, the head of the Bank of England's Prudential Regulation Authority
The Arkansas Republican is currently the vice chairman of the House Financial Services Committee and has a deep background in the banking industry and policy.
The Buffalo, New York-based bank set a goal four years ago to limit its commercial real estate loan portfolio to 160% of its capital and reserves, and it's closing in on that target, says Chief Financial Officer Daryl Bible.
Democratic Sens. Elizabeth Warren, Mass., and Sheldon Whitehouse, R.I., decried the U.S. Chamber of Commerce's suit against the Consumer Financial Protection Bureau's credit card late fee rule, saying the suit is an example of the kinds of frivolous litigation it opposes elsewhere.
The New York megabank is working to deploy artificial intelligence as it seeks to make its own operations more efficient. Solomon also sees an "unprecedented" opportunity in financing clients' needs as they invest in AI.
In an ongoing case, Citi and the New York attorney general are disputing who is responsible for wire transfer fraud that drained a customer's retirement savings.
