Receiving Wide Coverage ...

CFPB loses appeal: A federal appeals court ruled Tuesday that the CFPB's structure, in which an unusual amount of power and autonomy is invested in a single director, is unconstitutional and ordered its powers be curbed. "If it stands, the decision from the U.S. Court of Appeals for the District of Columbia would reduce the agency's independence, empowering the White House to supervise the agency and remove its director, in contrast to the current arrangement where the director's five-year term is intended to outlast a president's," the Wall Street Journal commented. The three-member panel also criticized the enforcement action that led to the court ruling, in which PHH Mortgage was ordered to pay $109 million for allegedly accepting kickbacks from mortgage insurers. The court ordered the agency to reconsider the penalties.

Senator Elizabeth Warren, D-Mass., the principal architect of the agency, said the ruling "will likely be appealed and overturned." She also tried to downplay its significance, saying it would only require "a small technical tweak" to align the agency's structure with the ruling. Wall Street Journal, New York Times, Washington Post, American Banker

Wells Fargo reboot: About 500 senior executives at Wells Fargo listened to the bank's top executives lay out their strategy for moving beyond the phony accounts scandal, which has cost the bank's shareholders billions in lost equity and delivered a huge blow to the bank's image. Not surprisingly, new business in Wells' retail bank "will be down for a while; there's just no question about that," said CEO John Stumpf, who led the call. But the bank's executives 'added that efforts by some states to penalize the bank by suspending parts of their business weren't having much effect," reported the Wall Street Journal, which reviewed a recording of the hour-long call. The bank reports earnings on Friday.

New York State and Los Angeles took action Tuesday to prohibit "predatory" sales goals at financial institutions that do business within their purview. In New York, the Department of Financial Services issued new guidance directing all state-regulated banks to keep watch over the incentive plans offered to bank employees. "The inappropriate behavior we have seen at institutions like Wells Fargo are the same ones that led to the 2007 financial crisis," Governor Andrew Cuomo said. "State chartered banks are now on notice of their obligations and it is their responsibility to ensure their employees are acting in the best interests of their customers." In Los Angeles, the city said it would prohibit predatory sales goals at all financial institutions and other companies that do busin "Predatory practices that cripple our communities extend far beyond Wells Fargo and persist across the entire industry," said one City Council member.

The New York Times reports that complaints about phony accounts at Wells date as far back as 2005, well before 2013, when Stumpf told Congress that he and other senior managers found out about the practice, and 2011, when the bank started firing employees over it.

From hype to reality: Blockchain is starting to move from hype to reality in the financial services business, the FT reports, with "start-ups and established players starting to test different uses for the technology." For example, the Australian Securities Exchange said it would move the country's equities clearing and settlement system to blockchain. Matt Roszak, co-founder of Bloq, which helps companies build blockchain networks, says the technology's progress so far "is very similar to what we saw with the internet 20 years ago or with the cloud 10 years ago."

It turns out that central banks, led by those in the U.K. and China, have become the most enthusiastic supporters of blockchain, the New York Times reports, and "are doing some of the most ambitious work of late in trying to harness the technology." For the central banks, "the goal would be to make the financial system more transparent, fast, efficient and secure. If the central banks succeed, it would be one of the greatest unexpected twists in new technology: An invention aimed at dethroning central banks and making it harder for money to be tracked instead ends up empowering those central banks and making money more easily traceable."

Wall Street Journal

Navy Federal settles with CFPB: The largest U.S. credit union agreed to pay $28.5 million, including $23 million in redress to victims, to settle claims by the CFPB that it used phony threats to collect debts and improperly froze accounts of delinquent loan customers. The CFPB said Navy Federal improperly threatened members with lawsuits, garnished wages, or reports to commanding officers when they fell behind on their loan payments.

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