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
Unexpected changes in spending patterns on the P2P app caused the company to miss internal and analyst targets, resulting in a more cautious shift in its annual guidance and a plummeting stock in afterhours trading.
The Consumer Financial Protection Bureau will not enforce or supervise the 1071 small business lending rule, it announced in a press release. The rule requires collecting data on the race, ethnicity, gender and LGBTQ status of loan applicants.
Executives at the San Antonio bank say their business customers should be able to pass along higher costs from tariffs to consumers. Still, the bank acknowledged the risk of a recession.
The Small Business Administration is backing new legislation that would double the size limit on its manufacturing loans. Supporters say the bill has support on both sides of the aisle in Washington.
Large banks are ramping up AI investment at the same time they are reducing their workforces, though no one seems ready to publicly draw a connection between those two actions.
Ex-National Credit Union Administration board member Todd Harper outlined legal, economic and political dangers of recent firings of independent regulators.
