No help Former Federal Reserve Bank of New York President William Dudley’s suggestion in a Bloomberg op-ed that the Fed should work against President Trump’s reelection doesn’t help Fed Chair Jerome Powell “navigate monetary policy in a tricky political moment,” the Wall Street Journal’s editorial board says. “Mr. Dudley may be in private life now, but he left the Fed as recently as 2018. Urging his recent colleagues to act politically now will feed President Trump’s conviction that the central bankers have it in for him even if their monetary decisions are based on sound economic judgments. He will also damage the Fed’s ability to rally Congress and the business community to its defense. Perhaps Mr. Dudley is angling to become the next Fed Chair if Mr. Trump is defeated. But his partisan, reckless op-ed should disqualify him from any consideration.”
Meanwhile, Sen. Thom Tillis, R-N.C., a member of the Senate Banking Committee, said he was “very disappointed” that Dudley appeared to be “lobbying the Fed to use its authority as a political weapon against President Trump,” and called for the panel to hold a hearing “regarding Fed independence and the danger of this institution taking unprecedented and inappropriate steps to meddle in the presidential election.”
Wall Street Journal
Financial crime fighters The Treasury Department’s Financial Crimes Enforcement Network has created a division responsible for investigating foreign money-laundering threats. The Global Investigations Division, which replaces FinCEN’s Office of Special Measures, “will oversee investigations into terrorist financing and other crimes involving illicit finance, working closely with foreign governments.” It will be led by Matthew Stiglitz, a senior official in the Justice Department’s criminal division.
Concept of Approved mortgage application form lay down on wooden desk with rubber stamp and calculator.
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Turning the page Swedbank, Sweden’s fourth largest bank, has hired Jens Henriksson as its CEO “to rebuild trust in the company following a money-laundering scandal. The appointment comes as Swedbank looks to turn the page on a crisis that led to the firing in March of former CEO Birgitte Bonnesen.” Henriksson, who most recently worked for Folksam, a Swedish insurance company, succeeds acting president and CEO Anders Karlsson, who will return to his prior position as chief financial officer.
Watch it The Office of the Comptroller of the Currency is warning banks to tighten their underwriting standards when making so-called asset-depletion, or asset-dissipation, mortgages, in which the borrower pledges their assets as well as income to repay the loan. The loans, originally “designed for people who don’t have a conventional paycheck, including retirees or workers in the gig economy, … are reaching a broader set of borrowers, raising concerns that lenders aren’t properly measuring their risk.”
“As banks have expanded [asset-depletion underwriting] to qualify other applicants, examiners have noted weaknesses in policies and practices,” said Richard Taft, the OCC’s top credit-risk official, adding, banks “should develop and implement policies, processes, and control systems in a manner consistent with safe and sound banking practices.”
Elsewhere
Joining the crowd Citigroup quietly raised its minimum wage to $15 per hour in June. The disclosure was made to Rep. Maxine Waters, chair of the House Financial Services Committee, who asked the bank about raising its minimum wage to $20 per hour. The action by Citi follows similar moves by its large bank peers, including JPMorgan Chase, Wells Fargo and Bank of America.
Quotable
“My major task as president and CEO of Swedbank is to rebuild the trust for the bank, to further develop the bank’s sustainability profile, and to continue the successful digitalization journey.” — Jens Henriksson, the new CEO of the Swedish bank, which is recovering from a money laundering scandal
Lake Shore Bancorp in Western New York has reached a "standstill agreement" with the Stilwell Group, which has promised not to force a merger or sale in the next three years.
Swiss banking giant UBS Group received federal approval from the Office of the Comptroller of the Currency to convert its $1.6 trillion-asset UBS Bank USA from a Utah-chartered industrial bank to a national charter.
Early industry reaction to the Federal Reserve's Basel III proposals points to potential capital relief for banks, though stakeholders say the complexity of the changes makes their overall impact unclear.
Financial institutions that delay or fail to take this leap risk losing customers and revenue, said speakers at the inaugural On-Chain Executive Summit.
CISA and Microsoft urge organizations to secure endpoint management systems as threat actors increasingly seek to disrupt operations with wiper malware.
Piermont Bank hired Dennis Day for a new executive role focused on payments; the American Bankers Association announced the global expansion of its widely used Fraud Contact Directory; MC Bankshares moved one step closer to finalizing its sale to an investor group; and more in this week's banking news roundup.
