Receiving Wide Coverage ...
Too Cozy?: The Fed established a team in Washington to review whether it's too cozy with the banks it regulates. The New York Times described the review as a "surprise announcement." The Fed's inspector general will simultaneously conduct a similar review, looking specifically at whether "top officials were hearing all the opinions of Fed bank examiners." The moves were announced Thursday, ahead of Fed Governor Daniel Tarullo's and New York Fed President William Dudley's testimony on Friday before a Senate committee. Dudley is expected to be questioned aggressively about whether the Fed is guilty of "regulatory capture." Among the areas to be studied in the Fed's internal review is whether board members are supplied with adequate information to make sound oversight decisions. Lawmakers will have plenty of ammunition to level charges that the Fed has been captured, from the secret recordings of Fed conversations about Goldman Sachs, to the recent revelation that a Goldman employee received confidential information from a Fed worker about a bank the Fed regulates.
Commodities Hearing: "If you liked what Wall Street did for the housing market, you'll love what they're doing for commodities," Sen. Carl Levin, D-Mich., said during a Thursday committee meeting that examined large banks' handling of their commodities businesses. "It's time to reduce bank involvement with physical commodities," Levin said. Executives from Goldman Sachs, JPMorgan Chase and Morgan Stanley all said during the hearing that they are correctly managing risks in commodities. In one interesting anecdote from the hearing, JPMorgan said it had initially estimated its losses in the event of a catastrophic disaster, involving something like an oil spill, would be about $50 million. But after the Fed contacted JPMorgan with concerns that its estimate was too low, JPMorgan changed its mind and increased its operational capital in light of the Fed's concerns.
Wall Street Journal
This probably won't help M&T Bank or BancorpSouth feel any better, but the feds are going after casino operators, too, for potential violations of anti-money laundering regulations. Wynn Resorts is the subject of a probe into whether it violated money-laundering laws. Casinos, of course, "conduct a large amount of cross-border and cash transactions," the Wall Street Journal reminds readers. According to the article, officials from the U.S. Attorney's offices in both Manhattan and Las Vegas, as well as the Internal Revenue Service and the Drug Enforcement Administration are all investigating Wynn. Interestingly, a Wynn spokesman gave a fairly vehement denial that his company is being investigated. "We have serious doubts that any such investigation is taking place," the spokesman said.
The head of the National Security Agency says it's "a matter of the 'when,' not the 'if,'" a major cyberattack hits the U.S. in the next decade. Michael Rogers told the House Intelligence Committee the U.S. isn't prepared for such an attack. Rogers is worried specifically about an attack on U.S. "infrastructure like the electrical grid, nuclear power plants, air traffic control and subway systems." This year's attack on JPMorgan Chase is suspected to have been conducted by Russian groups, but it was reiterated at the hearing that firm proof of the Russians' involvement still hasn't been confirmed.
Here's the requisite bucket of cold water for any thoughts you may have had for an uptick in bank M&A activity. Yes, everyone who's been predicting (hoping) for a wave of mergers and acquisitions was cheered by BB&T's recent deal for Susquehanna Bank (plus many other bank deals this year). But "Heard on the Street" notes there are lots of banks that want to be buyers, but too small a supply of sellers for there to be much dealing going on.
New York Times
The alleged manipulation of foreign exchange markets isn't the problem, BankThink contributor Mayra Rodríguez Valladares writes in a column for the Times. The real issue is directors and executives aren't held accountable, she writes.