Receiving Wide Coverage ...
Fintech Boost: The Office of the Comptroller of the Currency announced a proposal Friday that would grant special limited-purpose banking licenses to financial technology firms that would give them "greater freedom to operate across the country without seeking state-by-state permission or joining with brick-and-mortar banks," as the Wall Street Journal described it. "The move could open the door to more competition between the old and new financial firms, and provide a bigger opening for some large tech companies to consider new ways to offer digital payments or other services."
The proposal, announced by Thomas Curry, the comptroller of the currency, "marks the first substantive attempt by a front-rank U.S. agency to get to grips with a part of the financial system that has been transformed since the crisis," the Financial Times said.
The Journal offers response from a variety of observers.
Federal Reserve Board Governor Lael Brainard said the Fed wants to strike a balance between regulatory oversight and encouraging financial innovation. "It is important that regulators and supervisors not impose undue burdens on financial innovations that would provide broad social benefits responsibly," she said.
Going Private: Gretchen Morgenson, the New York Times' financial columnist, says Treasury secretary-designate Steven Mnuchin "is right" in wanting to turn Fannie Mae and Freddie Mac back to the private sector from government ownership. "It looks as if a more pragmatic and positive approach to the companies and their role in the mortgage market is on the way," she writes. "This is good news indeed for small lenders who rely so heavily on Fannie and Freddie to buy the mortgages they underwrite, freeing them to repeat the process rather than hold the loans on their balance sheets. And when small lenders benefit, borrowers do, too, by having more choices."
But the Wall Street Journal's Heard on the Street column says shareholders of the two agencies, who have seen the price of their shares skyrocket since Donald Trump was elected, "should calm down. Definitive action on these companies remains a long way off, and the interests of shareholders aren't high on the agenda of policy makers."
The Journal looks at some people and companies who stand to benefit from Fannie and Freddie returning to private hands.
Wall Street Journal
Split market: Government policies focused on "lowering the cost of capital instead of increasing the availability of credit" have created a bifurcated housing finance market, where "well-off households and home builders have their choice of loans, while many others without solid credit or stable incomes are locked out," the paper reports. "Money has been cheaper and more abundant than ever, but — for some — much harder to get."
"We are at a point when housing should be going gangbusters. It's not going anywhere," Lewis Ranieri, the father of mortgage-backed securities, told the paper. "The people with access to credit have become rich, and the people without access don't even have a chance to climb up the ladder."
Financial Times
Divide and rule: The FT's Lex column examines last Friday's decision by Wells Fargo to formally separate its CEO and chairman role. "Does dividing to rule have any value beyond crisis management?" Lex asks. "Historically, researchers have found no correlation with performance."
Quotable ...
"It will be much better for the health of the federal banking system and everyone who relies on those institutions, if these companies enter the system through a clearly marked front gate, rather than through some back door." — Comptroller of the Currency Thomas Curry on the OCC's proposal to grant banking licenses to fintech firms.
