Fed Walks a Fine Line on Rates; DoJ Vows to Prosecute Bankers

Receiving Wide Coverage ...

Fed Balancing Act: The Federal Reserve's policy-making Federal Open Market Committee announced Wednesday that the central bank will keep interest rates low in the near-term, though it could change course sooner than expected if data shows greater economic improvement. The Fed's statement, which was approved by an 8-2 vote, noted that unemployment levels remain subpar. "There are still too many people who want jobs but cannot find them, too many who are working part time but would prefer full-time work, and too many who are not searching for a job but would be if the labor market were stronger," Fed chair Janet Yellen said at a press conference. Industry observers agree the Fed's statement suggests officials want to have plenty of room to shift policy if needed. The New York Times' Binyamin Appelbaum says the Fed "appeared to be playing for time, delaying decisions about its next steps for as long as possible as it grapples with the limits of its ability to improve economic conditions." A strategist at BTIG tells the Financial Times "the Fed is having it both ways in this statement" by "pushing back against the near-term hawks" while leaving open the possibility of a faster rate increase. Meanwhile, Richard Barley of the Wall Street Journal's "Heard on the Street" warns that continued near-zero rates will only create further market distortion. Wall Street Journal, Financial Times, New York Times

DoJ on Individual Accountability: Justice Department officials are now eager to go after individual bankers accused of wrongdoing, if two separate speeches on Wednesday are any indication. "We have investigations open right now that are focused on the conduct of individuals at specific financial institutions" whose behavior has "undermined the integrity of our markets," Attorney General Eric Holder said in a speech at NYU's law school, highlighting the DoJ's foreign-exchange probe. Holder also suggested the government should consider new ways to incentivize whistleblowers and witness cooperation. Elsewhere, Marshall Miller, the deputy of the DoJ's criminal division, said he would risk being "a little too Brooklyn" in his candor and urged banks under investigation to name culpable employees if they want to duck criminal charges. As the papers note, the DoJ has been subject to widespread criticism for failing to prosecute individual bankers tied to the financial crisis. Is change in the air? Wall Street Journal, Financial Times, New York Times, Washington Post

Auto Oh-No's Over CFPB Proposal: The Consumer Financial Protection Bureau proposed, as expected, to broaden its supervision of 38 nonbank auto lenders Wednesday, inciting pushback from the auto industry. The FT reports an anonymous "head of one large auto group" has vowed to look into litigation as a way to fend off increased oversight from the CFPB. The Times has a short, fairly straightforward take.

Wall Street Journal

"The Justice Department has been unable to recover $97 billion arising from enforcement actions and other criminal cases, an amount that has tripled since 2004," the paper reports. While the dollar amount of criminal fines and restitution for victims has increased, "the percentage collected hasn't." Part of the issue is that fraudsters' flagrant spending often leaves them with little money for payouts by the time a judgment is handed down, according to the paper.

"The Commodity Futures Trading Commission took steps to ease postcrisis restrictions on government-owned electric companies and other utilities amid complaints new rules would make it harder to hedge against shifts in energy prices and other business risks," according to the paper. The changes will exempt traders who conduct large amount of swaps with public utilities from registering as dealers.

Financial Times

Wells Fargo has loosened its lending standards for borrowers who want to purchase condominiums, according to the paper. The lender had "required much greater detail from borrowers applying for mortgages with down payments of 25% of the value of the property or less. However, the equivalent level of detail will now be needed from those with a down payment of 10% or less."

Banks partnering with Apple Pay may find that it's a mutually beneficial relationship after all, according to the Lex team. Even if banks have to give Apple a discount on their card fees, the logic goes, they'll benefit from Apple's technological wizardry and popularity. Meanwhile, Apple "has no appetite to be regulated like a big bank" so it is "unlikely to take most of the value from the relationship."

New York Times

Manhattan has the biggest income gap of any U.S. county, with its wealthiest residents buoyed by "the rise of the financial industry … which has helped lift the income of the most affluent households to levels reached before the recession," according to a report.

Washington Post

Apple is fortifying privacy protections for iPhone and iPad users. The company announced Wednesday that it has changed its encryption so that it's "not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8." Neither the company nor anyone except the device's owner will be able to access the information stored on iPhones and tablets without the user's passcode, although Apple "will still have the ability — and the legal responsibility — to turn over user data stored elsewhere, such as in its iCloud service."

An online project by the Urban Institute maps "the distribution of 100 million mortgages originated from 2001 through 2012, broken down by race and ethnicity."