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Here Comes the Fintech Regulation…: The U.S. Treasury Department released a paper Tuesday urging the need for greater transparency in the online lending industry through stronger regulatory oversight. The FT cited it as the first attempt by a U.S. regulator to produce a framework for an industry that emerged during the financial crisis. That marketplace lenders and other fintech companies are subject to far less regulatory scrutiny compared to legacy financial institutions has been a concern of regulators, which the department highlighted in its report. These lenders also have fewer disclosure requirements for small business loans. Treasury issued six policy recommendations ranging from special protections for small business borrowers to creating an inter-agency working group to monitor marketplace lenders. "It is probably the most well understood, well known and comprehensive set of recommendations we've seen," said David Klein, chief executive of CommonBond. Wall Street Journal, Financial Times, Washington Post, American Banker
Wall Street Journal
Jefferies and Goldman Sachs have stopped buying LendingClub loans following an internal review that led to the departure of Renaud Laplanche, the startup's chief executive. Jefferies had planned to package $150 million of the loans into bonds for investor sales early this month; Goldman hadn't set a date for its securitization deal. Goldman has also been working with the startup in recent days to help it determine how to access capital markets.
As dark clouds linger over the online lending industry, Wells Fargo is launching a one-year loan offering geared to small-business customers, who have been gravitating to the faster marketplace lenders. The FastFlex loan ranges from $10,000 to $35,000 and is quickly funded – as soon as the next business day, compared to the days or weeks it takes the bank's other loan offerings – with a weekly repayment schedule. The offering adds to the conversation that legacy banks could disrupt some the very fintech startups seeking to disrupt an old system, by acquiring the young companies, or parts of them. In this case, Wells will be a test of whether banks can build their own technology to compete with fintechs.
Agents with the Federal Bureau of Investigation have found evidence to suggest at least one Bangladesh Bank employee acted as an accomplice in the February theft of $81 million from the Bangladesh central bank's account at the Federal Reserve Bank of New York. Bangladesh Bank has suggested some of the blame lies with Swift and has also previously threatened to sue the New York Fed over the stolen funds. Though the New York Fed acknowledged the event, it maintained that its systems were not compromised. The New York Fed blocked 30 transfer requests from the Bangladesh central bank in February, though five were executed. Bangladesh Bank, whose Swift interbank-messaging terminal wasn't working for a time after the cyberheist occurred and was likely disabled by the hackers, said it did not receive inquiries from the Fed about the transfer requests in time to cancel them. Officials from all three parties vowed to catch the thieves. You can read a roundup of the situation here.
UBS executives blasted the negative interest rate environment, which it blamed on central banks' loose money policies. The bank has already had to pass on negative rates to businesses and increase rates it charges on some loans – and could extend those measures even further and to wealthier clients if conditions remain or worsen, chief executive Sergio Ermotti said. "Because of low and even negative interest rates, we and the whole industry are now presented with a frankly absurd question: do we still really want to take on client assets when doing so costs the bank money—and when we have to back up liquid assets with an unreasonably large amount of capital?" he asked. "I have my doubts as to whether this is good for the financial system and the economy."
Credit Suisse reported its second consecutive quarterly loss Tuesday, weeks after it revealed plans to cut thousands of jobs and make balance-sheet reductions. The bank's wealth management business, which it's relying on as it attempts to steer away from investment banking, reported better-than-expected figures in profitability.
Royal Bank of Scotland is promoting junior investment bankers more quickly in an attempt to retain talent in its corporate and institutional banking arm, as hedge funds, asset managers and fintech companies offer more attractive and competitive opportunities for young employees. Now, graduates who start at RBS as analysts are being fast-tracked to associate positions, promoted after about two years instead of three. Goldman Sachs and Barclays have taken similar measures in the past year.
Many banks, now in the process of resetting borrowing limits for energy customers, are cutting limits by 20% to 25%, compared to 15% to 20% cuts in the second half of 2015. Despite a 60% rally in oil prices, banks and their advisers say cash-strapped borrowers are likely to fall into bankruptcy. Loan losses for big U.S. banks grew 61% in the first quarter on a year-over-year basis.
New York Times
Standard Chartered has hired former Symantec Corp. (best known for its Norton antivirus software) executive Cheri McGuire as its chief information security officer. She will be responsible for the bank's information and cyber security governance and report to the group's chief information officer, Michael Gorriz.
Bloomberg: Developing countries may face "financial abandonment" as banks are being slammed with sanctions and money laundering penalties making them unwilling to send money to some areas. The World Bank reported more than half of 170 local and regional banks it surveyed reported losing their relationships with global partner banks. Hundreds of them have closed accounts with money-transfer services operating in the $582 billion remittance business. U.S. banks ramped up desrisking practices in 2012 after Standard Chartered was found moving millions of dollars through the financial system on behalf of sanctioned Iranian, Sudanese and Libyan entities. The U.S. Treasury has acknowledged that closing the accounts of clean organizations is a problem and is assuring banks they won't be penalized for innocent mistakes; and the U.S. Government Accountability Office is examining the effects of banks closing branches, accounts and services for remittance providers in high-risk markets.
Quartz: Movie star turned activist Emma Watson is the latest celebrity to be implicated in the Panama Papers leaks. The International Consortium of Investigative Journalists' Panama Papers database lists Watson as the beneficiary of a company called Falling Leaves Ltd., which is under the jurisdiction of the British Virgin Islands and has an address in the nation of Georgia. A spokesperson for the actress maintained she set up an offshore account for "safety and anonymity" and that she "receives absolutely no tax or monetary advantages."