Editor's note: Morning Scan will not publish on Monday, May 25 in observance of the Memorial Day holiday. We'll be back on Tuesday, May 26.

Receiving Wide Coverage ...

What's Next for the Shelby Bill: The Senate Banking Committee approved Sen. Richard Shelby's proposed regulatory reform bill Thursday, but Senate Republicans will need to reach across the aisle to get the legislation to pass. Their chances of gaining bipartisan support for the bill vary widely in news outlets' estimations. The Wall Street Journal has a remarkably sunny outlook, declaring the bill is likely to pass later this year given that both parties are open to negotiation and Shelby has a "history of securing deals." The Financial Times portrays a much greater divide between the two parties and says the bill probably won't pass into law before the 2016 elections (and perhaps not at all). American Banker and the New York Times don't place bets on the bill's fate, but both note that committee members plan to keep working on a compromise.

Taking the Bite Out of Crime: If a bank pleads guilty to criminal charges and nobody cares, what's the point? That's the question on a lot of minds after five big banks pleaded guilty in rate-rigging settlements totaling $5.8 billion in fines and the markets yawned in response. The FT's Tom Braithwaite says investors have become accustomed to banks copping to criminal charges and then going about business as usual. Part of the problem is "backroom deals" between regulators and banks soften the blow of the settlements and make it difficult for the markets to parse the meaning of a particular case, he says. Washington Post columnist Allan Sloan goes so far as to say that criminal charges "mean absolutely nothing" these days, particularly since so many banks were involved in the forex scandal that the reputational costs associated with guilty pleas get spread around. Meanwhile, an unsigned and somewhat circuitous FT op-ed says hefty fines make sense given the seriousness of the rate-rigging charges but simultaneously supports the view that the problem is primarily a few bad apples and fines mostly punish shareholders. Elsewhere in the FT, the U.K.'s Financial Conduct Authority head Martin Wheatley says fines do work as a deterrent against future misdeeds, although it may take a while to see the effect. And a news article in the paper predicts a coming wave of civil lawsuits against banks involved in the forex debacle that will rely heavily on evidence and documents made public along with the settlements this week. (Lawyers are pumped.)

Fed Gets Subpoenaed: The Federal Reserve was issued a subpoena by House Financial Services Committee chair Jeb Hensarling over a possible leak of confidential information back in 2012. The FT notes Hensarling has been on a bit of a subpoena spree since a rule change at the start of this Congress session made it easier for House committee chairs to issue them. The paper also says the move "represents a ratcheting up of the pressure by Mr. Hensarling, who said on Thursday that the Fed had shown resistance to 'accountability and oversight' and that his decision represented a 'prudent and measured' approach.'" But Rep. Maxine Waters says the subpoena is politically motivated and it will interfere with the Fed inspector general's probe into the leak, according to the Times.

Wall Street Journal

New York financial watchdog Benjamin Lawsky is leaving office in June, but he won't let BitLicense get lost in the shuffle. The paper reports Lawsky "will soon unveil a set of new licensing rules that could have long-lasting effects on businesses using bitcoin and virtual currencies." That may be worrisome news to the digital currency community, which has expressed fear that heavy-handed regulation could stifle small businesses and innovation in this space. But Lawsky tells the paper he's taking these concerns into account. "There is nothing worse for a business person than not having clarity, so we intend to be as clear as possible," he tells the paper. "If it's not clear enough, we will give examples. And if it's still not clear enough, we will give more examples."

The Federal Housing Administration is proposing changes to guidelines for mortgage lenders intended to provide them with more clarity about when they'll be held responsible for loan errors. The goal is to get lenders to drop extra borrower requirements that have tightened access to credit.

Student loan debt will be a central issue in the 2016 presidential race, the paper predicts. Everybody agrees it's a problem, but the proposed solutions differ along party lines: Republicans want to push down tuition, while Democrats want more funding for public universities.

The Fed plans to let big banks count some municipal bonds toward meeting their liquidity requirements, the paper reports. But the change may not make much difference for banks, since the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. aren't on board (at least, not yet).

New York Times

Silicon Valley start-ups are focused on solving the problems of the rich instead of improving the lot of the masses, according to columnist Farhad Manjoo. The subjects of his criticism are start-ups peddling on-demand meals, housekeepers, personal assistants and other such services; would he have the same objections to firms in the fintech space?

HSBC may be gearing up to shed its Brazilian business. The British bank is also trying to figure out what to do with underperforming operations in Mexico, Turkey and the United States.

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