Receiving Wide Coverage ...
Fixed: Just one day before its widely anticipated annual meeting, Wells Fargo got a bit of good news from U.S. financial regulators. The Federal Deposit Insurance Corp. and the Federal Reserve said the bank "adequately remediated the deficiencies" in its 2015 living will plan and is no longer subject to the "growth restrictions" the regulators imposed on the bank when it failed the test last December.
Still, the bad news keeps coming. The city of East Orange, N.J., said it withdrew its funds from the bank, accusing it of engaging in predatory-lending practices and exacerbating mortgage foreclosures in the city.
The New York Times offers a preview of the company's annual meeting, with an emphasis on the possibility some members of its board of directors could fail to win reelection. The bank does have one influential ally, though: Warren Buffett's Berkshire Hathaway, which owns about 10% of the bank's stock, is expected to support the board. That "could ultimately carry more weight than that of investors like pension funds, which tend to be more vocal in their criticism," the paper notes.
Wall Street Journal
Wider umbrella: The European Union's General Data Protection Regulation, which takes effect in May 2018, is expected to protect customers of U.S. banks, credit card companies and insurance companies, too, not just EU citizens.
Come here Watson: IBM plans to use its Watson technology to help Wall Street banks catch rogue traders and solve other security and compliance problems. The Watson Financial Services product "looks for patterns in traders' chats and emails while also analyzing numerical trading data," the paper reports. The computer giant is developing other capabilities for the technology as well, including analyzing regulatory text to assess the sufficiency of a company's compliance programs, and helping banks detect suspicious customers or transactions.
A lesson in finance: The paper investigates the federal Parent Plus program, in which millions of American parents have taken out loans to help their children pay for college. "The problem is the government asks almost nothing about its borrowers' incomes, existing debts, savings, credit scores or ability to repay. Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times." As of September 2015, more than 330,000 people, or 11% of borrowers, hadn't made a payment in at least a year.
"Parent Plus is one thread in a web of higher education loan programs that have come to resemble the subprime mortgage industry a decade ago," the paper says.
Laissez-faire: "Main Street lending institutions should not have to keep paying for the sins of others," Sen. John Kennedy, R-La., says in an op-ed piece. So he is introducing a bill, called the Reforming Finance for Local Economies Act, that would exempt community banks and credit unions with assets of less than $10 billion from Dodd-Frank.
Under his bill, small banks "would no longer have to reduce products and services and divert resources to compliance. Their skill in evaluating risk would no longer be reduced to a mathematical exercise. They would be free to concentrate on providing traditional banking services to the customers they know by taking in local deposits and making loans to local borrowers, whose creditworthiness is closely monitored."
Silver lining: Failed banks, including IndyMac and Washington Mutual, may be remembered with disdain by the public, but for thousands of former employees of these disgraced businesses, working at these institutions was generally a positive experience. "I have wonderful, lifelong friends because of that," says one former underwriter.
Taking on the giants: UnionPay has become the largest bank card group in the world by value of transactions, although nearly all of it comes from its home market in China. But that might be about to change, as the company plans to take on Visa and MasterCard globally, thanks to a "clear mandate" from the Chinese government. Already banks in countries like Myanmar, Indonesia, Malaysia and Kazakhstan have started issuing the company's cards "to an increasing cohort of non-Chinese customers."
New York Times
Failed thinking: Financial columnist William D. Cohan says the "crafty" Gary Cohn, head of the National Economic Council, is playing Sen. Elizabeth Warren, D-Mass., "for the fool" over her desire to try to recreate Glass-Steagall. "What's unfortunate is that she has yet to figure out that not only is the idea of separating investment banking from commercial banking not the panacea she is hoping it will be, but it is also not something banks' clients, customers and counterparties want to have happen," Cohan, a former Wall Street banker himself, writes.
Forgiving: VantageScore, the credit scoring model developed by TransUnion, Equifax and Experian, will soon be putting more weight on the trends in a person's credit report. "The new data is meant to provide more context to a consumer's debt load and help lenders get a more holistic view of a person's credit behavior and risk level," the Post reports. "The shift could make the key number more forgiving for people who have debt."
"For many people in emerging markets, this will be the first card they come in contact with. That's a big shift from when Visa and MasterCard were the only game in town." – Neil Katkov, senior vice president at Celent on UnionPay's plan to expand globally