Receiving Wide Coverage ...
Car trouble: In the wake of problems at Wells Fargo, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are reviewing automobile guaranteed asset protection products and how lenders handle refunding premiums to customers. The lenders being reviewed include Capital One, Santander Consumer USA and U.S. Bancorp, as well as GM Financial, Nissan, Ford and Infiniti. Wells reportedly charged more than 800,000 auto loan customers for the insurance without asking them and in some cases failed to refund premiums, when required.
Santander replaced the head of its troubled subprime auto loan unit, Jason Kulas, after just two years on the job, with Scott Powell, CEO of Santander’s U.S. holding company, who takes on the auto portfolio in addition to his other duties.
AML probe: The New York Department of Financial Services said it is reviewing the New York branch of Habib Bank for “serious deficiencies” in its anti-money laundering program going back more than a decade. The agency is seeking up to $630 million in penalties from the bank, Pakistan’s largest. Although Habib is planning to withdraw from New York, the agency wants a hearing next month.
Meanwhile, the Australian Prudential Regulation Authority announced on Monday that it will conduct an independent inquiry into the “governance, culture and accountability” practices at Commonwealth Bank of Australia following allegations of money laundering compliance failures at the country’s biggest bank. The move follows a civil suit brought by the country’s financial intelligence agency against the bank and a review by its securities regulator.
“The Australian community’s trust in the banking system has been damaged in recent years, and CBA in particular has been negatively impacted by a number of issues that have affected the reputation of the bank,” said Wayne Byres, APRA’s chairman. “Given its position in the Australian financial system, it is critical that community trust is strengthened.”
Wall Street Journal
Reality check: A surge in prices for bitcoin and other digital currencies could be called irrational exuberance. “I’m not here to burst anyone’s bubble. The blockchain will radically alter financial services, much as Napster changed the music business,” Andy Kessler, a technology and markets reporter writes in an op-ed piece. “But at some point the market will wake up and apply rational valuation techniques. Sure, Bitcoin could trade to $10,000, $100,000, who knows? I just can’t get there.”
Minding the store: American banks are insisting retail borrowers take out asset-based loans to protect themselves from troubles in the industry and so they remain ahead of other creditors in the event of default. “Banks are very cautious because of the turmoil in the industry,” said Jaime Ward, head of retail finance at Citizens Bank. “Retailing is volatile. Companies can come and go quickly.”
New York Times
Pack mentality: The Federal Reserve is leading a full-court press on miscreant banks, including levying fines, penalties and implementing heightened reporting requirements, says David Zaring, an associate professor of legal studies at the University of Pennsylvania’s Wharton School.
“Big banks have increasingly faced sanctions from regulators working in packs, at times led by the Fed, which is taking a broad view of what counts in ensuring that the banks it regulates are safe and sound,” he writes. “The Fed appears to have come around to the idea that bankers must adhere to all their regulatory requirements, even the ones that come from other regulators.”
“If your job at the bank is to manage the retail exposure, you’re looking at every one of your loans carefully.” — Josh Sussberg, partner in the restructuring group at the law firm Kirkland & Ellis.