Receiving Wide Coverage ...
Good news, bad news: Federal Reserve Governor Daniel Tarullo had some good news and some bad news for U.S. commercial banks on Monday. First, he said the Fed is proposing easing stress-test requirements for banks with less than $250 billion in assets that don't engage in significant nonbank or international activity. But the central bank is also considering a separate proposal, to be issued sometime next year, that would have the effect of "significantly" raising capital requirements for the largest banks that are considered "systemically important," meaning the eight largest.
If banks need to break up or exit certain lines of business because they can't meet those capital requirements, then so be it, Tarullo said. "If that entails changes in the structure of the company … we do recognize that could be an outcome of what we've put in place," he said. "In pulling this package of modifications together, we have consciously shaped them in accordance with the principle that financial regulation should be progressively more stringent for firms of greater importance, and thus potential risk, to the financial system."
Deutsche stock hammered again: Shares of Deutsche Bank, Germany's largest bank, dropped more than 7% on Monday to their lowest level since 1983 despite Deutsche denying it had asked the German government for assistance – and been rejected. "This question [of a government rescue] is not on our agenda: Deutsche Bank is determined to meet the challenges on its own," said Jörg Eigendorf, the bank's chief spokesman. "The question of a capital increase is currently not on the agenda, we comply with all regulatory requirements." The German magazine Focus had reported that German Chancellor Angela Merkel had turned down the bank's alleged request for bailout funds.
The bank's stock price is down by more than half this year amid questions about its financial health, concerns that intensified two weeks ago after the U.S. Department of Justice said it wants the bank to pay $14 billion to settle charges that it sold toxic mortgage-backed securities. The bank said it wouldn't settle for anything close to that figure.
Fired Wells workers sue: A group of former Wells Fargo workers who say they were fired or demoted for refusing to create unauthorized accounts to meet the bank's cross-selling quotas are now suing the bank. Suits that seek class-action status have been filed in two separate courts in California. "These are the people who have been left holding the bag," said Jonathan Delshad, the lawyer representing the workers in both suits. "If you weren't willing to engage in these types of illegal practices, they just booted you out the door and replaced you." In a statement, Wells said it will "vigorously defend against the misrepresentations" it alleges are contained in the suits.
At the same time, the U.S. Department of Labor said it has already begun looking into Wells' labor practices at the heart of the unauthorized accounts scandal. Responding to a request last week from several Democratic senators, Labor Secretary Thomas Perez said Monday that his department will conduct a "top-to-bottom review" of the bank going back several years. "We take the concerns raised in your letter very seriously," Perez said.
And, if John Stumpf does resign as a result of this scandal, he won't be hurting for money, USA Today reports. The CEO can walk away with nearly $124 million ... "$25.2 million in retirement payments, plus a $20 million pension, deferred compensation of $4.3 million as well as the $74 million in stock he already owns," according to the paper.
Wall Street Journal
It pays to be paranoid: Swift, the interbank global messaging service, increased security while revealing three new cyber attacks this past summer, which netted the hackers no money. "The attacks will continue and get more sophisticated. We are certainly not taking a break," said CEO Gottfried Leibbrandt. "I believe that in cyber, only the paranoid survive." The company issued security patches and required its customers to update their software.
New York Times
Amex wins steering appeal: In a major victory for American Express, a federal appeals court ruled Monday the company can stop merchants from encouraging consumers to use competing cards with lower transaction fees. "Though merchants may desire lower fees, those fees are necessary to maintaining cardholder satisfaction — and if a particular merchant finds that the cost of Amex fees outweighs the benefit it gains by accepting Amex cards, then the merchant can choose to not accept Amex cards," the three-judge panel wrote. The decision reversed a 2015 lower court ruling which said that prohibiting merchants from steering customers toward other forms of payment was "an unlawful restraint on trade."