Wall Street Journal
If you want to catch up on FinCen's proposed expansion of anti-money laundering and know-your-customer requirements, which was released for public comment in February, the Journal offers a primer today. The gist is that "Treasury wants financial institutions to understand who owns or controls an account and keep detailed records that law-enforcement officials can access." While regulators have wanted banks to identify beneficial owners of accounts for years, the rule would codify this expectation. And not just for banks: Securities and commodities brokers and mutual funds would also have to identify beneficial ownership, and FinCen might extend the rule to mortgage lenders, casinos and even gemstone dealers. The Journal quotes an ABA official summing up why banks are wary of this plan: "You don't want to deputize bankers as junior G-men. … We're not good at it." Come to think of it, that pretty much sums up the trouble with AML laws in general. FinCen's holding a hearing on the proposal in Chicago next week.
Now that her fellow commissioners have nixed her plan to reform money market funds, SEC chairwoman Mary Schapiro is calling in the cavalry, namely the Financial Stability Oversight Council. The umbrella regulatory body, created by Dodd-Frank, could make a "formal recommendation" to the SEC to tighten oversight of the funds, which would make it harder for her agency not to act, she writes in an op-ed. Or the council could stamp fund sponsors with the dreaded "systemically important" label, which would subject them to oversight by the Fed.
Who says bipartisanship is dead? Here's a joint op-ed by Congressman Keith Ellison, Democrat from Minnesota, and Jim Renacci, Republican of Ohio, making the case for their co-sponsored bill designed to help "thin file" and subprime customers build or rebuild their credit scores. The bill would remove "regulatory uncertainty" that's prevented utilities and cellphone carriers from reporting on-time payments to the credit bureaus. Such reporting would not be mandatory under the plan, the lawmakers write.
Stephen Morse, the former head of compliance for Barclays' investment bank, whom employees warned about Libor-rigging in 2008 to little avail, left the company last year, well before the scandal broke, for a better job. He's now head of compliance at TD Bank. Hey, you learn by making mistakes, right?
Financial Times
Comptroller of the Currency Tom Curry is worried that banks' loan-loss reserves are running precariously low, as banks have relied on reserve releases to juice profits the last few years.
New York Times
The U.S. Court of Appeals for the District of Columbia "may yet be the institution that dooms many or even most of the Dodd-Frank financial reforms," writes columnist Floyd Norris. The court has nixed several SEC rules on the grounds that the agency failed to do a proper cost-benefit analysis.
More than 100 lawmakers, including Senator Scott Brown of Massachusetts, have been lobbying regulators "behind the scenes" to modify their proposed implementation of the Volcker Rule, the Times reports. Republicans, such as Brown, have pressed to ease the rule's restrictions, while Democrats want to tighten them. Brown, whose state includes the money management mecca of Boston, is particularly concerned about the rule's limitations on selling hedge funds to bank customers. Your Morning Scan hesitates to even mention Brown's reelection race against Elizabeth Warren here; that's a minefield.
