CRA reform battle heats up; Santander names CEO

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Santander’s new boss
Banco Santander named Andrea Orcel, UBS’s investment banking head, as its CEO, “propelling one of Europe’s highest-profile investment bankers to the helm of a global banking giant.” He will succeed José Antonio Álvarez early next year; Álvarez will become vice chairman of the Santander group and executive chairman of its Spanish bank.

“Mr. Orcel is joining a banking giant he helped to create,” the Wall Street Journal notes.

Orcel’s appointment “will be seen as an indication that the Spanish lender is ready to embark on acquisitions, potentially bulking up in the U.S., as it tries to revive its flagging share price,” the Financial Times comments. But it also “throws into question the future direction and leadership of UBS, where the veteran City dealmaker was seen as a candidate to succeed chief executive Sergio Ermotti. More broadly, Mr. Orcel’s move underscores the waning attraction of investment banking since the 2008 financial crisis.”

Going up
The Federal Reserve is likely to raise interest rates by 25 basis points following its monetary policy meeting Wednesday, the eighth increase since late 2015. Wall Street Journal, New York Times

But increases in consumer lending rates over that time “have generally been modest … restrained by competition among lenders jockeying for market share in a booming economy. Also, new technologies have made it easier for consumers to apply for financing and compare rates quickly.”

Wall Street Journal

Choosing sides
Treasury Secretary Steven Mnuchin and Comptroller of the Currency Joseph Otting’s plan to overhaul the Community Reinvestment Act pits bankers against community activists. “Community groups agree the regulations need to be updated, but worry changes could mean lower-income borrowers would have less access to loans and banking services. Bankers view the CRA as outdated and overly subjective, and support the proposed revamp, which is expected to include changes to many aspects of the rules.”

Meanwhile, Sen. Elizabeth Warren, D-Mass., has come up with her own plan to reform the CRA. She introduced a bill on Tuesday that would require a greater number of institutions, including credit unions, to adhere to CRA requirements and face tougher penalties for violations.

The other hearing on Capitol Hill
The House Financial Services Committee has invited Simone Grimes, who has accused Federal Housing Finance Agency Director Mel Watt of sexual harassment, to testify at a hearing on Thursday, where Watt is also scheduled to speak. “The development could put pressure on Mr. Watt, an Obama appointee whose term is set to expire in January.” Watt has denied the allegations and said he hasn’t broken the law. Wall Street Journal, American Banker

Cookie crumbles
Bankrate’s former chief financial officer Edward DiMaria was sentenced to 10 years in prison for securities and accounting fraud and ordered to pay $21.2 million in restitution to the company’s shareholders. “DiMaria admitted to conspiring and directing a scheme to artificially inflate Bankrate’s earnings through ‘cookie jar’ accounting,” the paper says.

Financial Times

Payrolls on the go
Square announced Tuesday it is introducing a mobile app that enables businesses to manage their payrolls. Dubbed Payroll, appropriately enough, “the suite of services will allow vendors to manage employee wages, and other things such as tax withholdings and filings, while on the go.”

New York Times

Too much temptation
“Danske Bank is certainly not the first major bank to have money laundering or other illegal transactions flourish for years, seemingly beyond the purview of top management," the White Collar Watch column notes. “The larger question is why banks continue to allow these types of violations, and whether there is an effective means to deter them. Large fines pinch the bottom line, but like an expensive speeding ticket, they can be easily put in the past as a one-time transgression. And given that customers are willing to pay almost any cost to move their money secretly, the lure of profits can overcome even the strongest directives to comply with the law.”

Quotable

“The bill extends the law to cover more financial institutions, promotes investment in activities that help poor and middle-class communities, and strengthens sanctions against institutions that fail to follow the rules.” — Sen. Elizabeth Warren’s proposed CRA reform bill.

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