Quarles wants bank input on stress tests; Banks lending again
Here's a snapshot of what four of the biggest banks reported before Goldman announced its results.
Receiving Wide Coverage ...
Fed roundup: President Trump plans to nominate Columbia University economist Richard Clarida as vice chairman of the Federal Reserve Board. He also said he will select Michelle Bowman, Kansas’ bank commissioner, to fill the spot on the seven-member Fed board reserved for a community banker. Both nominations require Senate confirmation. The Wall Street Journal notes Trump “opted against nominating outspoken critics of the central bank, which he repeatedly criticized during the 2016 election campaign.” Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker
Meanwhile, Fed Vice Chair for Supervision Randal Quarles will tell the House Financial Services Committee on Tuesday that he wants banks to have some input on how the central bank’s annual stress tests are conducted. “That is a change bankers sought unsuccessfully during the Obama administration, arguing it was unfair for the Fed to set the scenarios behind closed doors,” the Journal notes. “Such a change could give the industry more influence over the parameters for the annual exams.” Wall Street Journal, American Banker
Separately, the president plans to nominate Dan Berkovitz, the Commodity Futures Trading Commission’s general counsel under President Obama, to fill the final open seat on the commission. Berkovitz, who “played a key role in the passage and implementation of the 2010 Dodd-Frank regulatory overhaul law,” would fill the second Democrat seat at the agency.
Wall Street Journal
Here’s my card: Mastercard has hired Michael Froman as vice chairman and president of strategic growth as it strives to “partner with governments to boost card payments.” Froman, a former official under Presidents Obama and Clinton, will be in charge of promoting card usage and financial inclusion both in the U.S. and abroad.
Give us our debts: In a sign that U.S. banks “have finally reopened the lending taps to corporate America,” commercial and industrial loans outstanding hit a record $2.13 trillion in March, up 9.3% compared to a year earlier. That is “by far the biggest increase since the 2016 election,” the paper says. “While the industry data reflect only one month of recovery, bankers said they were an encouraging sign and predicted a more sustained pickup as U.S. business gets more comfortable about taking on more debt.”
Looking for revenue: Barclays is setting up a “venture capital-style unit” it hopes will add “billions of pounds to its annual revenues by 2025.” The unit, called Barclays UK Ventures, will focus on areas such as artificial intelligence, blockchain and smart contracts but will have a “relatively unfettered mandate” to explore opportunities.
Something like that may have a more difficult time happening in America, where a “paralyzed regulatory system” slowing the country’s financial innovation and “allowing other governments to take the lead and overseas companies to out-innovate American entrepreneurs,” says Zac Townsend, a partner at the venture capital firm of Deciens Capital.
“While others move forward, Congress is focused on petty squabbles over rewriting the Dodd-Frank rules for traditional banks. They are missing the point,” he writes in an op-ed. “Right now, U.S. laws protect incumbents from innovation and disruption. We need legislation that helps smaller, innovative financial companies to start, grow and offer new choices to millions of Americans.”
“I personally believe that our stress testing disclosures can go further, and that we should consider additional measures, such as putting our stress scenarios out for comment.” — Federal Reserve vice chair for supervision Randal Quarles.