OCC loses fintech charter case; Zuckerberg to defend Libra
Receiving Wide Coverage ...
Facebook CEO Mark Zuckerberg is expected to tell the House Financial Services Committee Wednesday that “broad skepticism of Facebook has detracted from the company’s argument” that its proposed Libra digital currency “will promote financial innovation and provide affordable payment tools for people without bank accounts or who want to easily send money world-wide,” the Wall Street Journal reports.
“I believe this is something that needs to get built, but I understand we’re not the ideal messenger right now,” Zuckerberg said in prepared remarks, which were published on the committee’s website. “We’ve faced a lot of issues over the past few years, and I’m sure people wish it was anyone but Facebook putting this idea forward.”
“In his testimony, Mr. Zuckerberg is expected to promote the benefits of Libra,” the New York Times says. “He plans to describe Libra as a democratizing financial system that will mostly benefit the poor, as well as the estimated 14 million people in the United States who do not have access to bank accounts and who cannot afford banking fees.”
His testimony “is likely to prove a key test of whether the troubled project is able to win enough support in Washington to allow it to proceed,” the Financial Times comments.
"We’ve told [Facebook] that we thought that their launch was premature, that they had not addressed fundamental issues around money laundering," Bank Secrecy Act requirements and other issues, Treasury Secretary Steven Mnuchin told members of the House panel, American Banker reports.
Zuckerberg “will attempt to distance” his company from the Libra project and let the coalition of 21 companies it created “take the reins.”
Federal prosecutors in Manhattan charged current and former investment bankers at Goldman Sachs, Moelis & Co. and Centerview Partners with operating a “long-running international scheme stretching over the course of years, whose participants earned tens of millions of dollars in illicit profits from illegally trading on stolen inside information," the FT reports.
The bankers “were among six people charged in four separate indictments, which together laid out several interconnected alleged conspiracies in which insiders at multiple banks obtained nonpublic information about publicly traded companies and shared it with traders," the Journal says. "The alleged scheme has ensnared securities traders, the son of a pharmaceutical executive, bankers and others in a wide-ranging federal investigation.”
Wall Street Journal
The Office of the Comptroller of the Currency “doesn’t have the authority to grant national charters to financial technology companies,” a federal district court judge in New York has ruled, “a blow to the Trump administration’s effort to offer firms a new pathway to the traditional banking system. The ruling is a victory for state financial regulators that want to block the OCC from issuing national operating licenses to so-called fintech firms that would let them operate across the country without having to comply with state-by-state rules, including limits on loan interest rates.”
The decision “stops OCC’s attempt to usurp state authority by establishing a federal fintech regulatory framework at the expense of consumers,” said Linda Lacewell, New York’s Superintendent of Financial Services, the plaintiff in the case. The OCC plans to appeal the decision.
Fintechs “face a murky path into the banking system” following the ruling, American Banker reports.
The ax falls
U.S. Bancorp said it is eliminating the assistant branch manager and teller coordinator positions at all of its roughly 2,800 branches across the country, citing changed consumer behavior. The bank said last spring that it was planning to close between 10% and 15% of its bank branches by the end of next year. A spokeswoman for the bank said the cuts would affect less than 2% of its workforce, which totaled about 74,000 people.
Bill Daley, Bank of New York Mellon’s head of government affairs and communications, is leaving the bank after just five months on the job. Daley said he made the decision after his former boss, CEO Charles Scharf, left to become CEO at Wells Fargo. BNY Mellon said Daley’s departure “was expected as Bill joined us a few months ago largely as an adviser to Charlie.”
“Investors will hear the same refrain ad nauseam over the coming weeks” as European banks report their third-quarter results: “Running a bank in Europe, already an uphill struggle since the crisis, is about to get even harder. Chief among their woes is the specter of persistently low interest rates in the eurozone.”
“Bank executives in Europe are depressed, despondent and concerned; there’s a confluence of factors that is undermining profitability in the medium term,” one adviser to several large European banks told the paper. “There are genuinely fundamental questions about their future.”
Save us from ourselves
British consumers “want banks to monitor their spending for signs they are heading into unmanageable debt problems,” according to a study by the Money and Mental Health Policy Institute, which says banks “should intervene with text messages or other forms of communication when customers’ finances appear to be out of control.” About half of the more 2,000 people the group surveyed said their bank “should use their financial data to identify financial problems and offer help. Two-thirds also thought that financial institutions should try to spot financial problems as they develop and offer support when things go wrong.”
Co-founder Vernon Hill has stepped down as chairman of the U.K.’s Metro Bank, “weeks before his planned departure from its board at the end of the year.”
“The board thanks Vernon for his vision which inspired and created Metro Bank 10 years ago,” said Michael Snyder, the bank’s senior independent director, who will take over as chairman on an interim basis. “He leaves a lasting legacy of creating fans through exceptional customer service and has revolutionized British banking.”
New York Times
Looking for an answer
The Federal Reserve, the European Central Bank and the Bank of England have “joined forces to examine why there are so few women in monetary policy and what can be done about it.”
“The underrepresentation of women is perhaps nowhere as visible as in central banks,” said Ana Lamo, a senior economist at the ECB.
“People pay far too high a cost — and have to wait far too long — to send money home to their families abroad. The current system is failing them. The financial industry is stagnant and there is no digital financial architecture to support the innovation we need.” — Facebook CEO Mark Zuckerberg, in remarks prepared for his testimony before the House Financial Services Committee Wednesday