Wall Street Journal

Dismantling Dodd-Frank: Rather than fully repealing the Dodd-Frank act, Donald Trump's transition team is instead looking at dismembering the parts of it that "Republicans find most objectionable," according to the Wall Street Journal. One part they want to jettison is the Financial Stability Oversight Council's authority to designate large nonbanks as "systemically important." Another priority is overhauling Title II, which gives regulators the authority to take over a failing bank and liquidate it rather than bailing it out.

Questions abound about what the incoming administration plans to do about Fannie Mae and Freddie Mac. Since the election shares of both GSEs are up more than 60%, even though Trump "gave little if any indication during his campaign of what might happen to them" if he won. "In talking to the campaign, the one thing they are telling me is that anyone who thinks they know what Trump thinks about Fannie and Freddie is making it up," said David Stevens, president of the Mortgage Bankers Association. "This remains the great unfinished business from the great recession," added Ed DeMarco, former acting director of the Federal Housing Finance Agency, which regulates Fannie and Freddie.

What happens with the two GSEs isn't the only thing that could "upend" the mortgage market. Rising interest rates and reduced regulation pose risks too. "Changes in these areas could affect the course of the housing recovery, the availability of credit to borrowers and the extent to which lenders are willing to take on new risk," the Journal says. "It may also affect the current structure of the mortgage market, in which banks mostly have focused on plain-vanilla and jumbo loans while nonbank lenders have targeted riskier borrowers, sometimes with more exotic mortgage products."

Financial Times

Ignored warnings: Tesco Bank, the U.K. bank that must reimburse £2.5 million to 9,000 customers whose accounts were hacked into and robbed, "ignored warning signs that its vulnerable software was being targeted by cyber criminals for months," the Financial Times reports. CyberInt, an Israeli firm, "said it had found evidence that Tesco Bank customers' current accounts, savings accounts and credit card details were being traded on the dark web, the unsearchable part of the internet used mainly by criminals," according to the paper. "The number of times that we tried to reach out to Tesco and got no response is quite shocking," added Martin Alderson, chief executive of Codified Security, a mobile app testing firm.

Buffett on Wells: Warren Buffett broke his silence on the Wells Fargo scandal. In an interview with CNN, Buffett called Wells "a great bank that made a terrible mistake." "It was a dumb incentive system, which when they found out it was dumb, they didn't do anything about it," Buffett said of the bank's cross-sell incentives. The investor said he hasn't sold any of his shares and supports new CEO Timothy Sloan as "exactly right" for the job.

New York Times

Unjust: The fact that no bankers were punished for their role in the financial meltdown eight years ago may have played a role in Donald Trump's election, write Times' financial columnist Gretchen Morgenson. "The failure to prosecute even one or two high-profile bankers — or force them simply to pay fines and penalties out of their own pockets — left millions of Americans believing that our justice system was unjust," she writes. "When Mr. Trump asserted that the system was rigged, he tapped directly into such misgivings."

Quotable ...

"We have to get rid of it or make it smaller. Banks are unable to lend. It's made our country noncompetitive. It's slowed down growth" — President-elect Donald Trump on Dodd-Frank.

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