Receiving Wide Coverage ...
Incentive to cheat?: Wells Fargo was hit with the largest penalty in the history of the Consumer Financial Protection Bureau to settle charges that thousands of employees created unauthorized bank and credit card accounts for customers in order to collect bonuses for themselves. The company fired 5,300 employees as a result. The bank agreed to pay a $185 million regulatory enforcement action plus another $5 million in customer remediation. Wells' own analysis found that thousands of its employees had signed up customers for more than 1.5 million deposit accounts and more than 565,000 credit card accounts without their knowledge or consent. They also issued debit cards without customers' approval, including issuing PINs and creating phony email addresses. "The settlement underscored incentives and sales goals led employees to illegally open new accounts," American Banker reports.
"Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed," CFPB Director Richard Cordray said, adding that the penalty "should serve notice to the entire industry." In addition to the CFPB, the Office of the Comptroller of the Currency and the Los Angeles City Attorney announced settlements with Wells. The bank said it regretted the activity and takes responsibility for its actions. Wall Street Journal, Financial Times, New York Times, Washington Post
Feds target merchant banking: The Federal Reserve and the Comptroller of the Currency are recommending that Congress repeal legislation passed in 1999 that allows commercial banks to engage in merchant banking and commodities trading. The banking lobby immediately denounced the proposals as "unfortunate" and "ill-considered." Goldman Sachs would be hardest hit by the proposals. The bank "has a long history in merchant banking and often invests in nonfinancial businesses. The bank is also a bigger player in commodities trading," the Wall Street Journal noted. Wall Street Journal, Financial Times, New York Times
Wall Street Journal
MasterCard sued over swipe fees: A U.K. regulator filed a £14 billion ($18.72 billion) damage claim against MasterCard for allegedly causing higher prices due to its high swipe fees. The claim was filed in the Competition Appeal Tribunal by former Chief Financial Services Ombudsman Walter Merricks, who said it was the biggest such claim in U.K. legal history. The claim follows a 2014 ruling by the European Court of Justice that upheld a 2007 European Commission decision that MasterCard's interchange fees on cross-border transactions violated competition rules between 1992 and 2007.
BofA settles broker suit: Bank of America agreed to pay $12.8 million to settle allegations that it wrongfully withheld bonus payments to a group of former Merrill Lynch advisers. The settlement, which was approved by a federal judge in North Carolina, mean an average $47,000 payout to about 270 former advisers who worked at Merrill before it was bought by BofA during the financial crisis. The brokers said the bank failed to follow the proper procedures when it terminated the advisers "with cause," which made them forfeit bonuses they had earned through long-term incentive plans.
No checks for Trump: Wall Street firms are divided on whether to allow their employees to donate to Donald Trump's presidential campaign. The issue isn't The Donald, apparently, but his running mate Mike Pence, the governor of Indiana. Goldman told its 550 partners they can't make campaign contributions to sitting state and local elected officials or candidates running for municipal offices for fear of violating SEC pay-to-play rules. But partners would be allowed to donate to groups such as the Republican National Committee. Other big Wall Street banks say they are looking at contributions on a case-by-case basis.
Linked mobile apps: Barclays and Commonwealth Bank of Australia have linked their mobile banking apps to allow each other's customers to transfer money instantly. Customers will be able to send money using just a mobile phone number without having to enter codes and account numbers. The partnership is the "first time two global banking groups have linked their respective mobile apps," the paper says.
New York Times
No-fee payroll cards: Workers in New York State who receive their wages on prepaid cards must be allowed to make unlimited, free withdrawals from at least one nearby ATM, according to rules released Thursday by the New York State Department of Labor. The rules also ban fees for such things as monthly maintenance, account inactivity or contacting customer service. Companies will also have to offer workers the option of being paid by cash or check and will not be allowed to require that employees accept a payroll card.