House passes SIFI reform; Living wills of biggest banks approved

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SIFI, redefined: The House passed a bill Tuesday that would do away with the current $50 billion asset threshold that deems a financial institution to be “systemically important” and replace it with a formula using activities-based triggers. A competing bill in the Senate would simply raise the $50 billion benchmark to $250 billion. That bill comes up for a vote next month. Both bills enjoy wide bipartisan support, but “it’s unclear how lawmakers will seek to reconcile the two competing provisions,” the Wall Street Journal says.

Passing grades: All eight of the largest American banks had their living wills approved by the Federal Reserve and the Federal Deposit Insurance Corp. The Journal calls the decision “a milestone that further reduces the already-remote possibility that any of the firms would be broken up by the government.” Still, the two regulators said all eight banks still have work to do and outlined specific shortcomings at Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo. Wall Street Journal, Financial Times, American Banker

Hold the sugar: The European Commission wants the European Central Bank to regulate big investment banks in the eurozone, “the latest move to stop individual European countries from luring Brexit-hit banks with the promise of looser rules,” according to the Journal. The aim of the proposal, the paper says, is to “forestall local regulators from offering sweeteners to entice large investment banks like Goldman Sachs and JPMorgan as they search for new EU bases after the U.K. quits the trading bloc in March 2019.” Wall Street Journal, Financial Times

Today’s bitcoin news: Lawyers involved in putting together digital coin offerings say the deals must comply with existing securities laws and anti-money-laundering requirements. “Just because you’ve created a new capital-raising method doesn’t mean you’ve slipped outside the law,” one lawyer said.

The Winklevoss twins, the poster children for bitcoin, have parlayed a $65 million settlement with Facebook CEO Mark Zuckerberg in 2013 into $1.3 billion by loading up on the digital currency.

Financial Times
Coal for Christmas: Wall Street bond traders may be looking at small yearend bonuses — or none at all — as they continue to “struggle to make money in listless, lackluster markets,” the paper reports. “Revenues from banks’ fixed-income sales and trading units have been falling all year, crimped by post-crisis rules curbing risk-taking and a general lack of volatility. Recent public remarks from big bank executives suggest that trend continued into the fourth quarter, meaning that bonus pools will be shallow.”

“While M&T Bank is in no way a community bank by any reasonable definition, its chairman, Bob Wilmers, thought and acted like a community banker.” — Camden Fine, president and CEO of the Independent Community Bankers of America.

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SIFIs TBTF Living wills Brexit Bitcoin Bonuses and incentives European Central Bank