Receiving Wide Coverage ...
Game On: MetLife is suing the U.S. government for designating it as a systemically important financial institution. The life insurer plans to file a lawsuit in the United States District Court for the District of Columbia Tuesday. MetLife is the first firm to try to shake off the systemically important label by going to court, the New York Times reports. An article in the Wall Street Journal sheds light on why company chief Steven Kandarian is willing to head into the fray. He's "concerned that the label will require MetLife to hold an unnecessarily fat capital cushion that could crimp its ability to raise dividends and buy back shares while putting it at a competitive disadvantage to other life insurers that aren't held to the same standard." The Financial Times notes MetLife risks forming a testy relationship with the Financial Stability Oversight Council, its future regulator.
Warren Treasures a Win: Investment banker Antonio Weiss has dropped out of the running for a top post at the Treasury Department. The papers are hailing Weiss's decision as a victory for Sen. Elizabeth Warren, who had vociferously opposed the Lazard banker's nomination for the position of under secretary for domestic finance. Warren and other populist-leaning Democrats had argued Weiss was too close to Wall Street to act as an effective overseer.
Some analysts point out Warren's victory is incomplete, as Weiss will still have a voice at Treasury he'll be serving as a counselor to Secretary Jack Lew. Nonetheless, the press agrees the Massachusetts senator has growing clout. "The fresh sign of Ms. Warren's influence carries broad political significance at a time when the Democratic Party, following its 2014 midterm losses, is split over whether it should be promoting more-populist economic policies," the Wall Street Journal reports. The Financial Times and the New York Times echo the sentiment. On the other hand, the NYT notes, lawmakers attempting to push back against the financial industry's influence in Washington have lost some recent battles. "In less than a month, lobbyists from the major financial firms have twice attached measures to unrelated bills that roll back banking regulations."
Meanwhile, the Washington Post has the most colorful quotes about how Weiss's nomination tanked. Former Lazard banker Steven Rattner tells the paper that Weiss "had 'become a pawn in a struggle for the heart of the Democratic Party.' He said 'poor Antonio' was a 'great guy caught in the crossfire' after laying bare his personal finances in the hope of getting 'a modest sub-Cabinet job.'"
Wall Street Journal
HSBC's attempts to step up its anti-money laundering regime are falling short, according to anonymice tipping off the paper about a forthcoming report to the Justice Department. The article doesn't have a lot of specifics about the report's findings, but it does include a number of striking and sometimes comical details about HSBC's changing culture. Joe Evans, a top compliance staffer at the bank and former Drug Enforcement Administration official "surprised his new colleagues by spitting tobacco juice into a cup while in the office," according to the paper. "The bank also handed out parrot-decorated 'I am a Changed Bird' certificates to encourage U.S.-based staff to behave ethically and show awareness about compliance issues."
Small financial institutions and nonbank lenders may be the big winners in an expected refinancing upswing, according to the paper. Lower mortgage interest rates and reduced federal loan fees may prompt a surge of borrowers with loans backed by the Federal Housing Administration to refinance. That's great news for the mortgage market but less thrilling for big banks, many of which have cut back on FHA lending in recent years.
The founder of a major consumer debt relief nonprofit has a stake in the payday loan business, according to the paper. Howard S. Dvorkin, the former president of Consolidated Credit Counseling Services, owns interests in companies that offer payday loans and serve payday lending companies, the paper reports. "We're not in the payday-loan business, period," Dvorkin tells the paper, though he admits "There could be some people that could say, 'Wow, that's weird.'"
Market volatility put a drag on banks' fourth-quarter earnings, according to previews from a number of executives. While market swings can be lucrative, this time around traders were caught off-guard, analysts suggest.
Deutsche Bank is weighing the sale of its Postbank retail business, the paper reports. Anonymice say the proposal could be part of the bank's forthcoming strategic plan, although Deutsche says "speculations about the sale of business units, including Postbank, are irresponsible."
Banks are urging Treasury Secretary Jack Lew to make changes to the rules governing clearing houses, the paper reports. Banks say they are worried about "what would happen should a clearing house itself fail." They want Lew to take action on a number of fronts, including "limiting liability to banks in the event of a collapse, forcing the clearing houses to have more 'skin in the game' by injecting their own capital, increasing transparency, specifying what collateral is used and setting resolution plans."
New York Times
Doral Financial's capital plan isn't cutting it with the Federal Deposit Insurance Corp. "The FDIC took issue with the fact that Doral's capital plan includes a $230 million tax refund, which the Commonwealth of Puerto Rico is refusing to pay," the paper reports.
Journalists may get prickly when confronted by software that writes the news for them, but financial firms have no such qualms, according to an article in the MIT Technology Review. Companies including T. Rowe Price, Credit Suisse, and USAA are using Quill, writing software developed by Narrative Science, "to write up more in-depth, lengthy reports on the performance of mutual funds." American Banker readers may recall that we named Narrative Science a top tech company to watch back in 2012. Last year, we reported at least one bank was using Quill to pen suspicious activity reports in order to ease the burden on compliance officers.