Receiving Wide Coverage ...
Pushback Against 'Audit the Fed': Federal Reserve Board Governor Jerome Powell took a stand on Monday against the "Audit the Fed" bill that's been gaining traction among some Republicans legislators. Powell himself is a member of the GOP, but he's no fan of the proposal to subject the central bank to policy audits by Congress. The plan could reverse "decades of deliberate effort by the Congress to insulate the Fed from political pressure in carrying out its day-to-day duties," Powell said in a speech. Philadelphia Fed President Charles Plosser and Dallas Fed President Richard Fisher also panned the bill on Monday in separate appearances on Fox Business Network, according to the Wall Street Journal. Both the Journal and the Financial Times note this opposition comes as Sen. Rand Paul, who is among the 30 co-sponsors of the bill, rallies support for the legislation in Iowa. There's one thing Powell and Paul agree on when it comes to the bill: each say it could pave the way to abolishing the Fed. One man's disaster is the other man's dream.
Forex Negotiations Afoot: The Justice Department is out for admissions of guilt in its probe into alleged manipulation of foreign currencies, according to the New York Times. Federal prosecutors are reportedly telling big banks including JPMorgan Chase, Barclays, Citigroup and the Royal Bank of Scotland they must plead guilty to criminal charges if they want to settle the cases. As the Times notes, recent precedent suggests big banks' criminal pleas "carry a social stigma" but "limited actual fallout." The paper also points out big banks are being investigated for currency misconduct in a separate New York state inquiry. In other foreign-exchange news, Barclays, Deutsche Bank and Credit Suisse each plan to start charging fees for trades made at the so-called 4 p.m. fix, according to the Journal. "The fix, a key currencies benchmark, was a central focus of the recent investigation into alleged wrongdoing in the foreign-exchange industry."
Wall Street Journal
The Federal Housing Administration may temper a provision that allows federal prosecutors to go after banks that make errors in their mortgage loans. Housing regulators hope that weakening the False Claims Act would prompt banks to boost FHA lending to creditworthy but "weaker" borrowers. The DOJ is reportedly pushing back against the proposed change, arguing it "cedes too much ground" to bank lobbyists.
A majority of consumers expect mortgage interest rates to stay level or decrease later this year, according to a January Fannie Mae survey. That could impact demand in the housing market, since people presumably aren't in a rush to lock in lower rates.
"When Fed officials say they are investigating and hope to regulate shadow banking, what they mean is they want to regulate what kind of transactions occur in the securities and capital markets," opines the American Enterprise Institute's Peter J. Wallison. He says this would overstep the authority granted to Fed and the Financial Stability Oversight Council under Dodd-Frank.
The paper's banking coverage is dominated by the news that HSBC's Swiss unit allegedly had a longstanding tradition of helping wealthy clients dodge taxes. Politicians in the U.S. and the U.K. say they want to let loose the dogs of war. "While HSBC has paid billions in fines to the United States and other nations, it outrages me that not a single individual has been prosecuted or held accountable," Congresswoman Maxine Waters said. A separate article suggests the public revelation of HSBC's alleged misdeeds may prompt the DOJ to reopen its 2012 deferred prosecution agreement with the bank. A banker at TSB writes in an op-ed "HSBC's travails are a microcosm of the banking industry's problems" with governance, management accountability, global banking and other issues.
New York Times
The Securities and Exchange Commission should be more transparent about its decisions to grant or deny companies' requests for "bad actor" waivers, according to Peter J. Henning. The waivers exempt banks and brokerage firms from automatic bans on securities trading. Henning says these waivers allow the SEC to adjust the harshness of its penalties to the circumstances of individual cases. The problem is the SEC announces only the waivers it grants and none that it denies and fails to make public the standard it uses to make these decisions. This gives the impression that "everyone who asks for a waiver receives one, regardless of whether that is the case," Henning writes.
Pittsburgh Tribune: Branch closures in Pennsylvania and throughout the U.S. are hurting local economies, according to the Pittsburgh Tribune. The paper suggests small business owners have a harder time getting loans when they can't build relationships with local bankers and it's particularly difficult for older residents to find a way to access their money.