Now it begins: True to his word, President Donald Trump on Friday plans to start the process for dismantling the Dodd-Frank act, signing an executive order to roll it back. He also plans to sign a separate document to delay the so-called fiduciary rule on retirement accounts, which is supposed to take effect in April.
"This is a table setter for a bunch of stuff that is coming," White House National Economic Council Director Gary Cohn said. Wall Street Journal: here, here and here; Financial Times
U.S. President Donald Trump, smiles while being introduced during the National Prayer Breakfast in Washington, D.C., U.S., on Thursday, Feb. 2, 2017. For the first time in decades, America's oldest allies are questioning where Washington's heart is. "The world is in trouble -- but we're going to straighten it out, ok? That's what I do," Trump said to an audience of religious and political leaders at the National Prayer Breakfast. Photographer: Win McNamee/ Pool via Bloomberg
Win McNamee/Bloomberg
Receiving Wide Coverage ...
The devil in the details: A "brewing fight between financial startups and banks" over Section 1033 of the Dodd-Frank act "shows how rancorous, and complex" the process of dismantling the law could prove, the Wall Street Journal reports. The section, the Journal explains, says that banks must "make available to a consumer, upon request…information relating to any transaction, series of transactions, or to the account" and "in an electronic form that can be used by computer applications."
While fintech startups says this means they have the right to retrieve data from customers' bank accounts when granted permission, traditional banks say there should be restrictions. A group of "well-funded" fintech startups recently created the Consumer Financial Data Rights group to lobby for protecting Section 1033 and pushing for its broad implementation.
On another Dodd-Frank front, seven Republican legislators introduced a resolution to repeal the CFPB's new rule on prepaid debit cards. The rule, issued in October and scheduled to go into effect this fall, requires prepaid card issuers to provide more consumer protections, including greater disclosures. The rule would also cover digital wallets, "raising concern among some business executives that it could slow innovation in the rapidly developing industry," the Wall Street Journal noted.
The resolution was led by Sen. David Perdue, and the "most active industry opponent of the rule" has been Netspend, a unit of Total System Services, which is based in Georgia, the senator's home state.
Stephen J. Lubben, a Seton Hall Law School professor and an expert on bankruptcy, thinks the effort to dismantle Dodd-Frank "will start in earnest with the Orderly Liquidation Authority," the special bankruptcy procedure for large financial institutions. One reason is that the authority has few defenders, Lubben writes on the New York Times' DealBook page. "Who is going to stand up for an obscure piece of insolvency law that is easily painted as a bailout tool?" Lubben asks.
Wall Street Journal
Shifting seats: JPMorgan Chase named Frank Pearn, previously the bank's chief administrative officer of global compliance, as its new chief compliance officer, the fourth person to hold the job in the past four years. He will report to chief risk officer Ashley Bacon, reflecting the bank's recent decision to consolidate its compliance and risk functions. Pearn replaces Lou Rauchenberger, who is moving to a new senior regulatory role at the bank.
New York Times
Sorry: Deutsche Bank CEO John Cryan apologized "in especially contrite terms" for the German bank's "long list of misdeeds" as it reported a $2 billion loss in last year's fourth quarter and its second annual loss in a row. "We would like to apologize sincerely. Serious errors were made," Cryan said. "The unusually strong expression of humility," the Times said, "signaled another step away from the aggressive risk-taking that was part of the lender's attempt to keep pace" with its American investment banking rivals. Still, Cryan said the bank will continue to retain a strong presence in the U.S. "We cannot be the international bank we need to be and want to be unless we can deal with the largest economy in the world," he said.
Quotable
"Americans are going to have better choices and Americans are going to have better products because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year." — White House National Economic Council Director Gary Cohn
The Arkansas Republican is currently the vice chairman of the House Financial Services Committee and has a deep background in the banking industry and policy.
The Buffalo, New York-based bank set a goal four years ago to limit its commercial real estate loan portfolio to 160% of its capital and reserves, and it's closing in on that target, says Chief Financial Officer Daryl Bible.
Democratic Sens. Elizabeth Warren, Mass., and Sheldon Whitehouse, R.I., decried the U.S. Chamber of Commerce's suit against the Consumer Financial Protection Bureau's credit card late fee rule, saying the suit is an example of the kinds of frivolous litigation it opposes elsewhere.
The New York megabank is working to deploy artificial intelligence as it seeks to make its own operations more efficient. Solomon also sees an "unprecedented" opportunity in financing clients' needs as they invest in AI.
In an ongoing case, Citi and the New York attorney general are disputing who is responsible for wire transfer fraud that drained a customer's retirement savings.
