Receiving Wide Coverage ...
Christmas gift: Banks are expected to see a big boost in profitability following the enactment of the tax bill, and several immediately announced plans to boost employee pay as a result. Wells Fargo and Fifth Third said they will increase the minimum wage they pay to $15 an hour, while Western Alliance plans to increase the base pay of its lowest-paid employees by 7.5% while also increasing bonuses. Wall Street Journal, Financial Times, American Banker here and here
But some homeowners will get a lump of coal from the tax package, which “wipes out decades-old perks designed to encourage homeownership,” the Wall Street Journal says. “By almost doubling the standard deductions for individual and joint tax filers, the legislation blunts the advantage of the mortgage-interest deduction,” it said. “The legislation also caps the deduction for state and local taxes at $10,000, a hammer blow to homeowners in high-tax states. Taken together, the changes significantly diminish the perks of homeownership built into the tax code.”
No Brexit worries: The Bank of England said it won’t force European investment banks to build heavily capitalized units in the U.K. in order to do business there, “the latest effort by British policy makers to maintain London’s pre-eminence as a financial center” after Brexit, the Journal says. Bank executives had feared regulators would require them to move billions of dollars of capital into new U.K. subsidiaries. Wall Street Journal, Financial Times
Wall Street Journal
Favoring fintech: Joseph Otting, in his first press briefing as the Comptroller of the Currency, said he supports the creation of a federal banking charter for fintech firms. “The question is, what are the requirements on that fintech to get that charter? We are going to study it,” he said.
Otting said online lenders have played an important role in providing loans to consumers, a business that regulators “have forced banks out of.” Online lenders, however, are “prepared to fulfill that need.”
Difference of opinion: Mick Mulvaney’s appointment as acting director of the Consumer Financial Protection Bureau “exposed a divide between a White House faction and the Treasury Department over just what the role of the consumer watchdog should be,” the paper reports. It was also “a setback for some financial companies. While they hoped for a less-aggressive regulator than [former director Richard] Cordray, companies in certain industries still wanted the watchdog to have some regulatory teeth.”
Crypto keepers: Three former Goldman Sachs employees plan to launch a fund tracking 20 cryptocurrencies starting January 1. The fund, Crescent Crypto Asset Management, will be aimed at “accredited investors” with annual salaries above $200,000 or net worth of at least $1 million. “This is as close to an ETF as one could get in the crypto space,” said Ali Hassan, one of three co-founders, who hope to have $50 million to invest at the launch.
Booby prize: Yahoo Finance has given its “company that screwed you the most this year” award to Equifax. “The biggest lesson consumers learned this year is that your data is probably not safe,” it says.
But while “people may (rightly) think Equifax deserves a punishment that would put the company out of business, eliminating it would ultimately do more harm than good for consumers,” warns Beau Brunson, a senior policy adviser at Consumers’ Research, in a BankThink post.
“I don’t know how you guys got to the office this morning, but I take Lyft or Uber every morning. The old way of doing a lot of things are evolving, and I think the financial-services industry has to evolve as well.” — Comptroller of the Currency Joseph Otting about fintech firms.