Receiving Wide Coverage ...
It ain't over...: Wells Fargo's settlement last week didn't end its woes. While the bank was making apologies, officials were assessing the situation. Sen. Jeff Merkley, D-Ore., a member of the Senate Banking Committee, called on the panel to hold hearings to find out exactly what happened. A member of the Federal Reserve Board also weighed in. "What I have seen is that too many banks, instead of putting in place a comprehensive system for assuring that all their employees understand what is legal and ethical across the board, only respond when there is a particular problem," Fed Governor Daniel Tarullo said in an interview with CNBC. New York Times, Washington Post, American Banker
Pondering blockchain: Blockchain, the technology underlying bitcoin, has the potential to "be as revolutionary as the internet itself," according to Richard Lumb, Accenture's group chief executive for financial services. But, he says, "there is an elephant in the room that will need to be confronted." Blockchain's ability to create a "permanent, immutable ledger of transactions," while vital in building trust in digital currencies, "could severely limit blockchain's usefulness" in other areas of financial services. "By clashing with new privacy laws like the 'right to be forgotten' and by making it nearly impossible to resolve human error and mischief efficiently, blockchain's immutability could end up being its own worst enemy," Lumb tells the New York Times. That could also "eventually run at odds with existing regulations" that require personal financial data to be easily deleted, he adds.
The Financial Times has a similar take. Blockchain is difficult to shut down or hack into, transactions can't be reversed, and it's transparent. While these features appealed to financial services companies at first, "they may prove difficult to put into practice," the paper says. "The unprecedented transparency of transactions sits uneasily with the privacy needs of secretive bankers, whose plans for blockchain diverge from the aims of bitcoin's advocates."
Justice delayed?: New York State's lawsuit against Maurice R. Greenberg, the 91-year-old former CEO of American International Group, is set to go to trial Tuesday, more than 11 years after the charges were originally filed. Greenberg and AIG's former CFO, Howard I. Smith, 71, are accused of engineering phony transactions in 2000 and 2001 to make its reserves look bigger than they really were. If they lose, Greenberg and Smith could be forced to disgorge about $25 million in bonuses, plus interest. Wall Street Journal, New York Times
Open for new business: Bridgewater Associates, the world's largest hedge fund, is opening up its flagship Pure Alpha fund to new money for the first time since 2009 and has already raked in $22.5 billion. "The inflows mark a striking contrast to the pattern seen in many other parts of the hedge fund industry, where many funds have experienced redemptions as a result of market losses," the Financial Times said. "It also shows the loyalty that Bridgewater continues to command from many of its clients, in spite of suffering unusually large losses in a flagship fund this year and facing questions about its corporate culture." Wall Street Journal, Financial Times
Wall Street Journal
GSEs win again: Fannie Mae and Freddie Mac prevailed in yet another lawsuit brought by investors. A federal judge in Kentucky dismissed claims brought against the Federal Housing Finance Agency, which regulates the two agencies, and the U.S. Treasury over a 2012 change to the bailout agreements in which the GSEs agreed to send nearly all their profits to the government. Similar lawsuits in other states have also failed.
Not to worry: International banking regulators have pledged not to increase bank capital requirements, "another signal that changes to postcrisis capital rules may not be as onerous as the industry once feared." The Group of Central Bank Governors and Heads of Supervision, which oversees the Basel Committee on Banking Supervision, cautioned the committee to honor its pledge not to "significantly" increase how much capital banks will need to hold. Speaking for the U.S. Federal Reserve, Fed Governor Daniel Tarullo said he doesn't want ongoing international talks to result in significantly higher capital requirements, "suggesting the industry's worst fears may not be realized as global regulators conclude their review of the rules."