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Dodd-Frank Replacement Plan: House Financial Services Committee Chairman Jeb Hensarling has a plan to revamp the Dodd-Frank Act and replace it with a capital-based alternative, which banks could opt into if they meet certain requirements, like a 10% leverage ratio (U.S. banks are currently required to meet a leverage ratio of 6%). "Think of it as a market-based, equity-financed Dodd-Frank off ramp," that will "relieve financial institutions from regulations that create more burden than benefit in exchange for meeting higher, yet simple, capital requirements," Hensarling said in prepared remarks. But the plan also includes provisions that could subject federal regulators to the appropriations process, repeal the Volcker Rule and remove the deference courts traditionally give to the agencies. For a closer look at the provisions of the plan check out American Banker's revamp cheat sheet. Financial Times, New York Times

Wall Street Journal

Wells Fargo is partnering with software firm and small business accounting specialist Xero to help its small business customers manage their finances with fewer cybersecurity and reliability concerns. As part of the agreement, customers will no longer need to share bank passwords when they log into Xero, and will get to select which account information they want to share. The agreement does not affect consumer accounts. Wells told American Banker the partnership is just one of the first moves in a broader mission to eradicate "screen scraping," a practice in which customers give third parties their online banking user names and passwords so the third parties can log in on the customers' behalf and copy and paste their account information into other programs. "It's not as robust as what we need from a security perspective, it's brittle in terms of ongoing customer experience management, and it can be frustrating for all the parties involved. So it's time to move beyond that."

With banks striving to improve their returns in a gloomy earnings environment, lenders including Citi and Bank of America are more aggressively extending credit card loans with higher interest rates, heating competition for customers. But better rewards and cash-back incentives are also eating into merchant fees charged by card issuers – usually 2% to 2.5% – meaning banks only profit this way if consumers carry balances. Mortgages aside, consumer credit soared at an annualized 10% rate in March (by $29.7 billion), but risks to banks are already on the horizon, the Journal warns. As they top out on incentives, banks will have to target riskier borrowers leading to the risk of more defaults.

There's a new business opportunity in Turkey for online payments company Stripe, after the country's banking regulators denied its rival PayPal an operating license last week. As quickly as PayPal suspended its business there, Stripe began receiving "hundreds" of account applications from Turkish startups, according to a tweet by co-founder and chief executive Patrick Collison. Collison reportedly went on to tweet about Atlas, a service it launched this year to give global entrepreneurs access to tools and infrastructure necessary to launch and build global businesses and effectively operate as U.S. entities. The company charges foreign entrepreneurs $500 to create a U.S. corporation, give them a U.S. bank account and create a U.S. Stripe payments account. "It's an increasingly interconnected world, and it's harder to draw clean lines around countries," Collison said. He claimed Atlas doesn't require a Turkish license since it doesn't link to local banks or networks.

Financial Times

Wells Fargo may be the only company besides Apple to have produced at least $5 billion in profits in each of the last 14 quarters, but the bank's revenues have been "stuck in the same groove" (of about $86 billion) since 2011. Chairman and chief executive John Stumpf seems confident in the company's business, but still, he says it can lift revenues by tweaking its retail network while building its wholesale business. "All of our new account acquisition happens at one of our branches. If you shut that down, at least today, you shut down your front engine," he said. The banking giant has the largest retail network in the U.S. (at least 6,100 branches in 39 states). Now, instead of closing branches or exiting big cities like some of its peers, it's preserving its footprint by trying smaller "bodega branches." Wells Fargo's cross-selling ratio has fallen from an average 6.36 products per household in December 2013 to 6.29 products at the end of 2015. Last year, a Los Angeles lawsuit highlighted the bank's "unfair, unlawful and fraudulent conduct through a pervasive culture of high-pressure sales." And its shares are still worth more than some of the largest banks' combined, but its premium in terms of a multiple of net assets is half what it was two years ago.

New York Times

Goldman Sachs, Morgan Stanley, Citigroup and UBS are exploring the use artificial intelligence hiring software to help them attract and retain employees, as they face increasing cost-cutting pressures. The hope is it will help avoid the financial cost of problem hires and turnover. The software judges applicants' character traits that could be crucial in determining how well they'll work in a given environment, but don't necessarily manifest themselves in a resume or interview – like teamwork, curiosity and grit.

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