Receiving Wide Coverage ...
More Capital Needed: Fed Chair Janet Yellen has pushed for higher capital requirements for SIFIs, and details of the Fed's plans in that area are to be released Tuesday at a Senate Banking Committee hearing, the Wall Street Journal reports. Some larger banks could face a levy as high as 4.5%, as the Fed is looking for a capital surcharge as much as two percentage points higher than the 2.5% maximum in Basel III requirements. Fed officials haven't settled on their exact range yet. The Fed is also looking at penalizing banks that have an overreliance on short-term funding; this would largely affect banks with large broker-dealer operations, including Goldman Sachs and Morgan Stanley. The proposals raise the question of whether U.S. regulators are putting domestic banks at a disadvantage versus foreign rivals. The New York Times notes the Fed is pursuing the stricter requirements because it wants the biggest banks to shrink. "This measure might also create incentives for them to reduce their systemic footprint and risk profile," Fed Governor Daniel Tarullo said. The largest banks should be able to meet the new demands, but are expected to voice their concerns to regulators.
Big Orange Breached: Home Depot confirmed the data breach that was reported last week. The home improvement retailer, known for its orange-colored signage, said payment systems at any of its 2,200 stores in the U.S. and Canada (but not Mexico) were infected by malware, some of which may be the same Black POS software used in the attack on Target last year. Home Depot "stopped short" of addressing when, or even if, the data breach had ended. Home Depot is looking back to April to pinpoint when the attack occurred, and the retailer still doesn't know how many customers were affected, the FT said. Even without an exact number, some are speculating it could be the largest attack ever on a retailer, the Times said. The Journal also reported that attorneys general in California, Connecticut, Illinois, Massachusetts and New York have partnered to investigate the breach. Of particular concern is how well Home Depot is handling the breach's effect on its retail customers, specifically whether teh company had the right safeguards in place to protect consumer information. The Times quoted an Internet-security expert, Eric Cowperthwaite, as saying, "Home Depot is in trouble here. This is not how you handle a significant security breach, nor will it provide any sort of confidence that Home Depot can solve the problem going forward."
Wall Street Journal
Some bad news, some good news for banks: "Overall, profit at the big six banks is expected to be down 10.6% from the second quarter. Still, it would be up from the prior year for the first time in 2014, the analyst estimates show," the paper reports, citing a Thomson Reuters analysis. The gains will be driven by rebounding loan demand, and higher fee revenue from giving advice on mergers and acquisitions.
Operation Choke Point is hurting Native Americans, writes Barry Brandon, executive director of the Native American Financial Services Association, in an op-ed. Some tribes have started businesses that offer online short-term loans. The businesses produce revenue for the tribes, which goes directly to social programs for tribe members. But Choke Point is trying to shut down the tribes' businesses.
New York Times
Royal Bank of Scotland is making its RBS Citizens Financial Group look better than it actually is, Antony Currie writes in a "BreakingViews" column. In its IPO documents, RBS says the U.S. operations are more valuable than they actually are, basing the valuations on too-rosy assumptions about what regulators will allow the operator of Citizens Bank to do, in terms of capital requirements and share buybacks, Currie claims.