Receiving Wide Coverage ...
Out of the shadows: The Consumer Financial Protection Bureau proposed disclosure and consumer protection rules for prepaid debit cards. Under the proposal, which would take effect in a year, prepaid cards would be required to carry a standardized disclosure of the card's monthly fee as well as details on fees for cash withdrawals, customer service calls, overdrafts and reloads. The cards would also have to provide the same liability protection that applies to credit cards. "The rules bring prepaid cards out of the shadows, with protections that in many ways are stronger than those for traditional bank accounts," said Lauren Saunders, the associate director of the National Consumer Law Center, which lobbied for the rules. New York Times, Financial Times, American Banker
Wall Street Journal
Big banks amend living wills: Five of the country's biggest banks – JPMorgan Chase, Bank of America, Wells Fargo, Bank of New York Mellon and State Street – released revisions to their so-called living wills to try to persuade regulators they could absorb financial distress without requiring taxpayer bailouts. The stakes are high for the five banks, the Journal reports. "If regulators deem these revisions to be insufficiently credible, those institutions could be ordered to hold higher levels of capital on their books, or to restructure and shed business lines." In April, regulators said these banks didn't adequately demonstrate how they could wind down operations in an orderly fashion and gave them a chance to address weaknesses in their plans.
Citi to boost Mexico unit: Citigroup said it plans to invest more than $1 billion in its Mexican subsidiary over the next three years and add its name to the unit. Previously called Banco Nacional de México, or Banamex, the unit will now be known as Citibanamex. Most of the money will be used to expand the bank's ATM network and mobile banking offerings. "These investments in Citibanamex reaffirm our commitment to Mexico and our confidence in its prospects," CEO Michael Corbat said in a statement.
Fitch warns Wells: Fitch Ratings lowered its outlook on Wells Fargo from stable to negative and said the bank could lose its AA credit rating as a result of the damage to its reputation and profits from the phony accounts scandal. The rating agency said there is a "heightened probability" of a downgrade over the next 12 to 18 months. "Wells, the most valuable bank in the world before the scandal erupted, still has one of the strongest credit ratings in the industry — testament to a hard-won image as a customer-friendly lender and dependable financial performer," the FT said. Fitch said the $185 million fine levied by the CFPB is manageable, but the "ensuing reputational damage, risk oversight failures, impact to its selling practices, and the resulting effect on earnings [stand to be] much larger issues than the actual fine."
Barclays bows out: Barclays, which has been doing business in Egypt since 1864, is calling it quits. The British bank agreed to sell its banking operations there to Attijariwafa Bank, the biggest bank in Morocco by revenue, for $500 million.
New York Times
To be released: A federal judge ruled Tuesday that the U.S. government improperly withheld documents from investors who sued the government over its decision in 2012 to seize all of the profits of Fannie Mae and Freddie Mac. The judge also ordered the release of the documents, "some of which appear to reach the highest levels of the Obama administration." Investors led by Fairholme Funds sued the government in 2013, arguing that the government's decision to begin extracting all profits from the GSEs was an illegal seizure of private property.
Hail regulation: While it may prompt flashbacks to 2008, Deutsche Bank's woes shouldn't damage the global financial system, says Peter Thal Larsen, global economics editor at Reuters Breakingviews, writing in the New York Times. And the reason? The regulators. "Despite its many problems, Deutsche is far better equipped to absorb a shock than it was eight years ago," he writes. "So is the financial system as a whole. This is because of the efforts of bank regulators. After the collapses and bailouts of 2008, watchdogs set out to make the banks more resilient. They forced lenders to raise more capital and maintain greater reserves of liquid assets that could be sold in a panic. They reduced links between banks by forcing derivatives into centralized clearinghouses. And they embarked on the legal and administrative challenge of ensuring that even a large lender could be safely allowed to fail." So far, none has.