Stress test Thursday; Bank regulators to testify in Senate

Receiving Wide Coverage ...
Wooed: Citigroup hired Alison Harding-Jones, a senior investment banker at UBS Group, to head up mergers and acquisitions for its Europe, Middle East and Africa operations. Currently based in Hong Kong, Harding-Jones will move to London in October to start her job as vice chairman of EMEA corporate and investment banking at Citi. Wall Street Journal, Financial Times

Wall Street Journal
Ready to testify: Federal Reserve Governor Jerome Powell and acting Comptroller of the Currency Keith Noreika are expected to offer “significant ways to ease regulation of banks” in testimony before the Senate Banking Committee on Thursday. They are expected to discuss ways to simplify the Volcker rule and ease bank capital requirements.

Michael Nagle/Bloomberg

“Their testimony is the latest evidence that bank overseers are taking a deregulatory tone following the election of President Donald Trump,” the paper notes. “Officials say their aim is to increase lending and boost the economy, but critics have said some of the changes would undo protections adopted after the financial crisis.”

Stressing out?: Regional banks with big commercial real-estate portfolios — such as Key Bank, M&T Bank and Zions Bancorp – have the biggest risk of failing the Federal Reserve’s bank stress tests, with first round results to be announced Thursday. That’s because this year’s test assumes a larger decline in commercial real estate prices — 35%, compared to a 30% drop in last year’s tests — and a bigger drop in multifamily properties.

The Journal provides a primer on stress tests.

Buffett to the rescue: A unit of Berkshire Hathaway has agreed to acquire a 38% stake in Home Capital Group, the troubled Canadian mortgage lender, for C$400 million. Warren Buffett’s conglomerate will acquire the stake through its wholly owned subsidiary Columbia Insurance Co. The deal also includes a C$2 billion loan.

Pulling back: Giant bonds funds, which have traditionally relied on banks for pricing, have taken on that role themselves as banks reduce risk in the face of tighter post-crisis regulation. “Banks still act as middlemen in bond trading, but what trading they do is directed at bigger funds,” the paper says.

“There’s no question that bank balance sheets are much more constrained than they used to be,” said Scott Clemons, chief strategist at Brown Brothers Harriman.

Moving on: Don Duet, the former co-head of Goldman Sachs’s technology division, has joined Vapor IO as president and chief operating officer. In tandem with Crown Castle International, a wireless infrastructure provider, the startup is launching a data center services business.

New York Times
Showing contempt: The Consumer Financial Protection Bureau has asked a federal judge to hold National Asset Advisors, which sells homes to lower-income borrowers, in contempt for failing to respond to a judge’s order to turn over material to the CFPB. The move shows the agency “is not backing down even as the Trump administration and Republicans in Congress support proposals that would greatly reduce its enforcement powers,” the paper said. “The agency has sought to enforce in court compliance with subpoenas in about eight matters, but this is the first time it has sought to hold a company in contempt for not complying with a judge’s order.”

Washington Post
Smoked out: PNC Bank confirmed it is closing the account of the Marijuana Policy Project, an influential group that backs legalizing pot. “It's because we accept contributions from businesses or individuals who are involved with state regulated marijuana businesses,” Mason Tvert, a spokesman for the group, told CNNMoney. Selling marijuana is still a federal crime, and many banks are leery of dealing with the industry even though it’s legal in several states.

Quotable
“The Volcker rule provides a practical example of how conflicting messages and inconsistent interpretation can exacerbate regulatory burden. Under my leadership, the OCC is undertaking improvements in our internal operations to attack that problem in ways that are within our control.” — Keith Noreika, acting comptroller of the currency.