Regionals Push to Change $50B Asset Rule; Anti-CFPB Ad Backers for Arbitration

Wall Street Journal

Megabanks are "lying low" while Congress tries to wrap up its budget for the year. But that doesn't mean some other financial-services institutions aren't trying to push through their own agendas. Regional banks want to ease their regulatory burden, specifically by raising the $50 billion threshold that triggers stricter oversight under Dodd-Frank. The change is seen as helping institutions like Capital One Financial and M&T Bank. Democrats on the House Financial Services Committee have opposed the measure, but have also indicated a willingness to compromise on some of it. Big money managers, like BlackRock, are also looking for some help. Asset managers, insurance companies and others want to avoid the systemically important financial institution designation.

To gain regulatory approval for its acquisition of Citigroup's OneMain Financial unit, Springleaf Holdings has reached an agreement to divest some branches. Springleaf will sell 127 branches to Lendmark Financial Services in Covington, Ga., as part of a settlement agreement with the Justice Department and seven attorneys general.

Financial Times

The banking system in the U.S. is made for two groups of people, according to University of Georgia law professor Mehrsa Baradaran. One is the government-supported banking system for the well-off. The other is the melange of check-cashers, payday-lenders, title loan sharks and prepaid card slingers for those who can't afford the government-backed banking system. One solution that Baradaran proposes in her book, "How the Other Half Banks: Exclusion, Exploitation and the Threat to Democracy," is to authorize the U.S. Postal Service to make loans the working class can afford and provide other basic financial services. Baradaran in September wrote a BankThink column for American Banker, based on her book.

New York Times

The paper looks at the corporate backers of the Orwellian anti-Consumer Financial Protection Bureau TV ad that ran during the Republican presidential debate. The ad portrays the CFPB as a sinister group straight out of George Orwell's "1984," with two large red banners portraying its director, Richard Cordray, and its founder, Sen. Elizabeth Warren, D-Mass. (American Banker last week analyzed what the ad may mean for the groups that oppose the CFPB and how it could help Warren raise money.)

While the TV spot itself does not mention arbitration, the Times points out group that paid for the ad, the American Action Network, opposes efforts to restrict mandatory arbitration. The American Action Network and other groups that support arbitration say it's a more efficient way to handle disputes than the court system. The courts, they say, put those matters into the hands of trial lawyers.

The Times article also goes into some of the other current efforts to protect the arbitration system and to stop the CFPB from doing anything to jeopardize arbitration. The CFPB, these groups have said, wants to stop financial-services companies from banning some consumer class-action lawsuits. The U.S. Chamber of Commerce, in one effort, has lobbied lawmakers to require the CFPB to conduct a study before issuing any rule, according to unnamed sources.

The Justice Department last week issued a proposal to protect members of the military from mandatory arbitration. The San Francisco city attorney has sued American Express over its "illegal" practices that involve arbitration.

Washington Post

The District of Columbia has suddenly garnered the interest of community banks that ignored it for years. How so? Sandy Spring Bancorp is headquartered in Olney, Md., just a couple dozen miles north of D.C., and connected to the District via mass transit. But although the bank has been around for 147 years, it never opened a branch in D.C., until this month. "The Potomac River was a barrier folks didn't want to cross," Sandy Spring CEO Daniel Schrider said.

That's changing as more affluent, young professionals move into the District. Another sign of D.C.'s appeal was United Bankshares' agreement last week to acquire Bank of Georgetown. That will double the West Virginia company's size in the District. The total number of banks operating in the District of Columbia is now 35, up from 24 in 2000. Deposits at D.C. banks have more than doubled in the past decade and quadrupled since 2000.

Elsewhere ...

Barron's: Blue Hills Bancorp in Norwood, Mass., could see its stock price rise over the coming weeks or months. Several factors make Barron's think Blue Hills is poised for an increase. It converted from a mutual to a stock-owned bank in July 2014; since then, as is typically the case with mutual conversions, its stock has risen 40% above its offering price. However, Blue Hills' stock still only trades for about tangible book value.

Blue Hills is also currently overcapitalized. Barron's says that will change as Blue Hills starts to buy back its cheap stock and reinvest in its business. Blue Hills taken other encouraging steps, like hiring a banking veteran as its CEO and introducing commercial lending.

Barron's also boasted about one of its stock picks last year, Columbia Banking System in Tacoma, Wash., as its shares have increased 45% since its first story ran. However, now that Columbia has fulfilled its prediction, Barron's says to stay away from the stock.