Breaking News This Morning ...

Fined: European Union regulators have fined eight financial institutions, including Deutsche Bank, Société Générale, Royal Bank of Scotland, Citigroup and JPMorgan Chase, for colluding in attempts to manipulate key global benchmark interest rates. Penalties total $2.32 billion. Future penalties are possible. Wall Street Journal, Financial Times, New York Times

Receiving Wide Coverage ...

Volcker on Deck: Regulators are set to vote next week on a tougher-than-expected Volcker Rule, Dodd-Frank's ban on proprietary trading. Four out of the five agencies required to approve the rule have scheduled their vote for December 10, with the Securities and Exchange Commission looking to vote "on or about" that time, though Dealbook notes that regulators are putting "finishing touches" on their proposal and "talks could still break down." The news outlet also calls the now close to 950 page rule "something of a barometer for the overall strength of Dodd-Frank." Per the Journal, the proposal has shifted back to earlier, more stringent language favored by the banking regulators and "is likely to require that hedges be designed to reduce specific risks." (More details on exactly how tough the rule will be can be found here.) Analyst Michael Mayo tells the paper: "This is the new era of Big Brother banking … Now banks' fortunes are more closely tied to the government."

Does U.S. Need More/Fewer Banks? Coverage of the Bank of Bird-in-Hand, the U.S.'s first de novo bank in three years, coupled with reports that the number of the nation's banking institutions has fallen to its lowest level since at least the Great Depression, has inspired debate over whether the industry needs to expand. Slate blogger Matt Yglesias suggests, in fact, that it actually should downsize since the U.S. has too many banks already. "We should want the U.S. Bankcorps [sic] and PNCs and Fifth Thirds and BancWests of America to swallow up local franchises and expand their geographical footprints," he writes. "The ideal would be effective competition in which dozens rather than thousands of banks exist, and they all actually compete with each other on a national or regional basis rather than carving up turf." American Banker's Washington Bureau Chief Rob Blackwell took to BankThink to refute Yglesias' thesis. "Forming an oligopoly of regional banks is bound to leave fairly big coverage gaps," he writes. "There's a reason most Americans like their local banks, even if they detest the megabanks after the financial crisis. Small banks are better positioned to understand their customers' needs and as a result, usually provide better service." Meanwhile, the FT's Lex column separately addressed the issue. "In the short run, it is not a bad thing that de novos have been few and far between," it argues. "Consolidation or new ownership can rid the system of weaker players. And too much competition leads to lax underwriting. But small banks can benefit communities by making good loans that do not appeal to larger lenders." Incidentally, a Journal article, published Tuesday night, highlights the heightened role smaller players — mostly nonbank lenders, but also some community banks and credit unions — are playing in the mortgage market, as big banks retrench from the business line. "The competition is benefiting consumers in some places, while helping find jobs for displaced workers," it notes "Smaller lenders, whose loan officers can know their customers better, have shown a willingness to be more flexible and close loans quickly, analysts say."

Wall Street Journal

Richmond Fed President Jeffrey Lacker thinks the U.S. bankruptcy code should be changed to avert the failure (and subsequent bailout of) the nation's big financial firms.

Financial Times

Lawrence Tomlinson's report criticizing RBS' treatment of business customers has come under fire for deleting similar criticism of Lloyds Banking Group that was present in an earlier draft. "The entrepreneur's willingness to make such a fundamental change to his report at a late stage, and to direct his criticisms at a single named bank, has caused some to question his methods and motivation," the article notes.

The paper features a profile of the Independent Community Bankers of America, which is "using its increasing clout in Washington to hammer away at institutions that could be considered too big to fail." Says ICBA President Camden Fine of the group's lobbying efforts: "We like being the underdogs. We won't let go, like a little bulldog."

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