Deal on TBTF rules; Warning on coin offerings

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Reg relief: The systemically important financial institution label would be lifted from more than two dozen banks under a bipartisan Senate agreement reached Monday. The plan put together by Sen. Michael Crapo, R-Idaho, chairman of the Senate Banking Committee, would raise to $250 billion in assets from $50 billion the regulatory threshold for banks to be considered too big to fail. The proposal would cut to 12 from 38 the number of banks subject to the “most onerous rules put in place after the financial crisis,” the Wall Street Journal says, including extra oversight by federal regulators, including annual stress tests by the Federal Reserve.

The Senate plan “is the most significant step taken by the Senate so far to help fulfill President Trump’s agenda of loosening financial industry regulations that the White House has said are holding back the economy,” the Washington Post comments.

The Journal provides a list of all 38 banks with more than $50 billion in assets. Wall Street Journal, Washington Post, American Banker

Instant money: The Clearing House, a consortium owned by some of the largest international banks, is set to launch real-time payments in the U.S., allowing consumers and businesses to send and receive money instantly between bank accounts. “The development is transformative for the U.S. payments sector,” the Financial Times reports, “and represents the first new payments system in the U.S. for over 40 years.”

Cash is unlikely to go away soon, the New York Times says, “but longer term, cash appears to be in a losing battle with electronic payment methods.”

On a slightly different topic, the Wall Street Journal reports that despite numerous attempts, JPMorgan Chase has yet to make a big splash in mobile payments. After spending about $100 million on it, Chase Pay ranked ninth among U.S. mobile wallets, well behind PayPal.

Buyer beware: The European Securities and Markets Authority warned investors about buying into initial coin offerings, calling them “very risky and highly speculative.” It also issued new guidance for companies using ICOs as a fundraising tool.

As if to prove the agency’s point, the price of bitcoin has dropped more than 25% in the past few days, falling below $6,000 after hitting a record high of nearly $8,000 last week before recovering slightly to about $6,500 on Monday. “A canceled software upgrade, concerns about the coming launch of bitcoin futures and fears of an asset bubble weighed on the cryptocurrency,” the Wall Street Journal said.

Wall Street Journal
C-suite changes: Bank of New York Mellon announced a reshuffling of its management, “the first step in new Chief Executive Charles Scharf’s bid to put his stamp on the custody bank.” Michael Santomassimo will take over as the bank’s CFO, replacing Thomas "Todd" Gibbons. The restructuring “will trigger the exit of Brian Shea, a 34-year company veteran who had overseen some 75% of the firm’s operations,” the paper says.

Expanding gender diversity: State Street Global Advisors, the custody bank’s index fund division, said it will exert more pressure on companies in Japan and Canada next year to get them to put more women on their boards. State Street said it will vote against the re-election of directors in companies in which it owns stock if they don’t make strides at adding women. The company started a similar campaign this year in the U.S., the U.K. and Australia.

New York Times
Flawed filings: Suing student loan borrowers in default has turned into “a lucrative business, with companies collecting tens of millions of dollars through settlements, wage garnishments and other compelled payments,” the paper reports. One of them, Transworld Systems, has filed more than 38,000 such lawsuits on behalf of the National Collegiate Student Loan Trusts, one of the largest holders of student loans. “But many of the cases were flawed, as the debt collector churned out mass-produced documentation based on scant verification,” the paper reports.

“The bipartisan proposals on which we have agreed will significantly improve our financial regulatory framework and foster economic growth by right-sizing regulation, particularly for smaller financial institutions and community banks.” — Sen. Michael Crapo, R-Idaho, chairman of the Senate Banking Committee.

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