Fed looks at relaxing big bank rules; Wells western retail chief leaves

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Relaxing the rules
Federal Reserve Vice Chairman for Supervision Randal Quarles is scheduled to testify before the Senate Banking Committee Tuesday that the Fed is looking at revising "asset-size and other thresholds in its capital and liquidity rules" that would "broaden the number of banks receiving regulatory relief … under an initiative that changes how it defines a big bank." Wall Street Journal, American Banker

But former FDIC chairman Sheila Bair says regulators and legislators must hold firm on maintaining strict bank capital rules. "Tough capital rules are a competitive advantage, not weakness," she writes in an opinion piece in the Financial Times. "Thick capital buffers keep the banking system functioning through economic cycles. Every dollar reduction in bank capital weakens the public's protection against big failures.

"Our first priority should be to prevent large bank failures," she adds. "Weakening the capital base of U.S. banks makes us vulnerable to insolvencies and widespread credit disruption during the next downturn, and dramatically increases the likelihood of another taxpayer bailout."

Vowing to stay
Eric Blankenstein, the fair lending enforcement official at the Consumer Financial Protection Bureau, expressed regret for writing racially insensitive blogs 14 years ago but vowed to stay on the job, saying he is "absolutely committed to carrying out the bureau's fair lending mandate." Wall Street Journal, Washington Post, American Banker

Change at the top
Danske Bank named Jesper Nielsen, the head of its domestic banking business, as interim CEO. He succeeds Thomas Borgen, who resigned last month after the bank disclosed that $235 billion of mostly Russian money was laundered through its small Estonia branch over several years.

"What went wrong at one of Europe's most prestigious banks?" The FT presents a timeline of events at Denmark's largest bank.

Wall Street Journal

Over and out
Lisa Stevens, head of retail banking in Wells Fargo's western region and a top lieutenant of the bank's former retail chief Carrie Tolstedt, who left under a cloud following the bank's phony accounts scandal two years ago, is leaving. "Mary Mack, who took over the retail bank after Ms. Tolstedt stepped down from the role in summer 2016, has since curtailed some of Ms. Stevens's responsibilities," the Journal said. "At one point, Ms. Stevens ran retail banking for about a third of the U.S. and small-business banking for Wells Fargo."

Don't fear the robots
HSBC Bank USA says the two human-like robots at its flagship New York City branch have increased daily foot traffic about five times and improved customer service since they were installed in June, but don't threaten anyone's job. Rather, the bank "hopes to add more bankers to its Fifth Avenue flagship store to cope with the increase in customers." The robots are programmed to greet customers and can answer questions on about 300 bank activities.

Cyber fine
The U.K.'s Financial Conduct Authority has fined Tesco Bank £16.4 million ($21.4 million) for failing to protect clients from a cyberattack nearly two years ago that lasted two days and in which criminals charged £2.26 million ($2.94 million) on customers' debit cards. "This is the first time the FCA has taken enforcement action related to a cyberattack, revealing the regulator's willingness to address lapses of risk management by financial institutions."

"The attack was the subject of a very specific warning that Tesco Bank did not properly address until after the attack started. This was too little, too late. Customers should not have been exposed to the risk at all," said Mark Steward, the agency's executive director of enforcement and market oversight.

Financial Times

Lurking in the shadows
Three different executives from the European Central Bank in recent weeks "have spoken in concerned tones about the risks posed to the financial system by the growing role of 'shadow banking,' where asset managers, insurers and others carry out bank-like business. Yet, it is policymakers themselves who must take at least some of the blame for creating these shadowy risks."

Elsewhere

Got live if you want it
Ripple said Monday that xRapid, its cross-border payments platform that uses the cryptocurrency XRP to handle money transfers between international banks, is now commercially available. "The development marks the first time XRP will be used in commercial application by financial services firms, and is seen as a critical milestone in Ripple's bid to make cryptocurrencies and the underlying blockchain technology a part of the financial mainstream." The company will go live with the system with three financial institutions.

Quotable

"Do I regret some of the things I wrote when I was 25...? Absolutely. The tone and framing of my statements reflected poor judgment." — Eric Blankenstein, the CFPB's fair lending enforcement officer disavowing racially insensitive blogs he wrote 14 years ago.

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