OCC warns Wells Fargo; Mulvaney wins

Receiving Wide Coverage ...
Case dismissed: U.S. District Court Judge Timothy J. Kelly threw out Leandra English’s lawsuit seeking a restraining order to block President Trump from naming White House budget chief Mick Mulvaney to head the consumer agency on an interim basis. The attorney for English, who was appointed interim CFPB chief by its former director, Richard Cordray, on his last day in office last Friday, said she would appeal. Wall Street Journal, Washington Post here and here, American Banker

In a brief filed Monday night, the Trump administration argued English “cannot establish the likelihood of success on the merits of her claim” to be interim director of the CFPB. “An order compelling the president to recognize plaintiff as acting director and withdraw his designation of acting director Mulvaney would intrude extraordinarily into core executive branch operations,” the brief said. “It would lend credence to the view that the leadership of the CFPB is accountable to no one, not even to the president of the United States."

trump-donald-bl021517
U.S. President Donald Trump speaks during a listening session with the Retail Industry Leaders Association and member company chief executive officers in the Roosevelt Room of the White House in Washington, D.C., U.S., on Wednesday, Feb. 15, 2017. Questions about ties between Trumps team and Russian intelligence agents mounted Wednesday after new reports of extensive contacts between the two, which are sure to fuel Republican calls for a deeper look at Trumps links to the country. Photographer: Andrew Harrer/Bloomberg

Since its creation six years ago as part of Dodd-Frank, the CFPB “has triggered industry backlashes and partisan fights over many of its major policy steps,” the Wall Street Journal notes. “Financial companies and Republicans have painted it as a symbol of government overreach that smothers banks with regulations, reduces credit availability and limits product choices for consumers. Consumer groups and Democrats argued that it rooted out unfair and unscrupulous practices in markets for mortgage, student loans and payday lending.”

The Journal’s editorial board says English, “the woman who put the acting in acting director … now must decide whether to continue as deputy under the real acting director or quit in embarrassment.”

Boosting banks: American banks are no longer too big to fail and that the Fed’s current banking regulations are “tough enough,” Federal Reserve Board Governor Jerome Powell told members of the Senate Banking Committee at his confirmation hearing for Fed chair.

“It doesn’t help anyone for banks to waste money, if you will, to spend more money than they reasonably need to spend to accomplish the safety and soundness objectives,” he said. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker

Passing grades: All seven of the U.K.’s biggest banks passed the Bank of England’s annual stress tests and could withstand a “disorderly” Brexit from the European Union that might cause a severe economic downturn. However, the BoE asked the banks to set aside an extra £6 billion in capital to guard against other macroeconomic risks.

“In our judgment, banks are now resilient to the risks of a disorderly Brexit,” said BoE Governor Mark Carney. Wall Street Journal, Financial Times

Barclays and Royal Bank of Scotland were the weakest performers to emerge from the test, which the Financial Times called “the most severe economic downturn scenario that the BoE has ever modeled. Both lenders came through unscathed only because of actions taken since the start of this year.”

The seven banks were tested to see if they could withstand a combined £50 billion in loan losses over two years. It assumed house prices falling 33%, interest rates rising 3.25 percentage points, global economic output falling 2.4% and the pound plunging 27%.

Wall Street Journal
On notice: The Office of the Comptroller of the Currency sent a “harshly worded letter” earlier this month to Wells Fargo that it faced a formal enforcement action for failing to correct problems in its auto insurance and mortgage operations, the paper reports. The bank had until November 24, the day after Thanksgiving, to respond.

The bank announced it will stop offering personal insurance.

Help wanted: The Trump administration is reaching out to some of the country’s biggest finance and tech companies — including Goldman Sachs, JPMorgan Chase, Visa, American Express and Amazon — to help manage the government’s $1.3 trillion student loan program. Contracts with current loan servicers expire in 2019.

Top techie: Bank of Montreal hired Brett Pitts, a 17-year veteran of Wells Fargo’s digital channels group, as its first chief digital officer. He will oversee the bank’s digital portfolio and customer experience in North America.

Washington Post
This card will self-destruct: Pay With Privacy, a New York-based payments start-up, has come up with a way to fight credit card fraud: disposable credit cards.

“The concept is simple,” writes Gene Marks of the Marks Group, a consulting firm that helps clients with customer relationship management. “Each virtual card comes with its own security code and user-assigned expiration trigger. A trigger, for instance, could be set to go off after the card is used once, or after a certain dollar amount is reached. Or the cards can be targeted for use at just a single merchant.”

Quotable
“The court will deny the request.” — Judge Timothy J. Kelly, of the U.S. District Court for the District of Columbia, dismissing Leandra English’s lawsuit.

For reprint and licensing requests for this article, click here.
Credit cards Student loans Court cases CFPB Wells Fargo
MORE FROM AMERICAN BANKER