Mnuchin vows no bank breakups; CRA needs an update

Receiving Wide Coverage ...

No breakups: Treasury Secretary Steven Mnuchin told the Senate Banking Committee unequivocally that the Trump administration has no intention of breaking up big banks or of separating commercial banking from investment banking. Doing so, he said, would create problems for the "financial markets, on the economy, and liquidity."

"The statement was a strong indication the Trump administration's review of U.S. banking regulations will be less onerous than Wall Street's worst fears," the Wall Street Journal commented. "Officials say their priority is overhauling regulations with the aim of boosting lending and economic growth." Wall Street Journal, Financial Times, American Banker

T.J. Kirkpatrick/Bloomberg

In on India: SoftBank, the Japanese telecom and technology group, has purchased a 20% stake in Paytm, the Indian digital payments and ecommerce company, for $1.4 billion. That places an implied valuation of about $7 billion on the Indian startup, up from about $5 billion just since last August.

The investment comes just as SoftBank is facing questions from some disgruntled shareholders, including allegations of kickbacks to company executives involved in Indian startups. "The difficulties for SoftBank come as it is poised to begin investing $100 billion in technology startups around the world, and they have drawn concern from a Saudi Arabian investment vehicle that is set to commit $45 billion to the SoftBank technology fund," the Wall Street Journal reports.

Wall Street Journal

Update needed: The Journal looks at the Community Reinvestment Act, the federal law that was designed to stop lending discrimination in low-income neighborhoods but appears to be in need of some serious updating. For example, the area just south of Trump Tower in Midtown Manhattan is crowded with skyscrapers and high-end stores and restaurants. "In the eyes of federal-bank regulations, though, that sliver of New York City is a poor neighborhood where median incomes are relatively low."

"The anomaly has yielded a hidden benefit for banks such as JPMorgan Chase and Wells Fargo that have crowded branches into the area," it says. "Having robust branch representation in supposedly low-income areas gives them a better score on a key regulatory test that can help determine how fast they expand."

AI to the rescue: Bank of New York Mellon plans to use artificial intelligence to help automate tasks in its data center. The goal, says Suresh Kumar, the bank's chief information officer, is to free up IT employees to focus on more strategic initiatives.

Financial Times

Taking the heat: Deutsche Bank is the latest big bank to come in for "stinging criticism" from shareholders at its annual meeting, who voiced anger "at a decade of painful share price falls, lackluster returns and high misconduct charges," according to the FT.

New York Times

Behind the bubble: In an op-ed piece, Robert J. Shiller, Sterling Professor of Economics at Yale and a leading scholar on the U.S. housing meltdown that triggered the Great Recession and the global financial crisis, says "there is still no consensus on why the last housing boom and bust happened." Which is a problem if we want to avoid similar ordeals in the future.

What is clear, he writes, is that the reasons "are not to be found in the conventional data favored by economists but rather in sociologically important narratives — like tales of getting rich through 'flipping' houses and shares of initial public offerings — that constitute the shifting mentality of the era."

Not done yet: Jon Corzine, the former Goldman Sachs CEO, U.S. Senator and Governor of New Jersey before paying a $5 million fine for his role in the 2011 collapse of MF Global, "is plotting his next and possibly final act: starting a hedge fund. And not just any hedge fund, but one designed to take advantage of the turmoil in the Trump era."

In his first interview since the MF Global meltdown, Corzine tells the Times that his new fund "will seek to anticipate what often seems unpredictable: how the Trump administration and other world leaders will enact policy and, in turn, move markets."

Quotable

"We do not support a separation of banks from investment banks." — Secretary of the Treasury Steven Mnuchin.