Trump's CFPB pick is... who?; muni issuers still avoid Wells
Receiving Wide Coverage ...
CFPB nominee: President Trump is expected to nominate Kathy Kraninger to head the Consumer Financial Protection Bureau, succeeding acting director Mick Mulvaney. Kraninger is an associate director an official at the Office for Management and Budget, which Mulvaney also heads. Her nomination, which "is expected to be a contentious fight in Congress about the direction the agency is taking in the Trump administration," could take months. Wall Street Journal here and here, New York Times, Washington Post
Wall Street Journal
Still in the penalty box: Large municipal bond issuers, including New York City, Chicago, California and Ohio, are continuing to shun Wells Fargo as an underwriter, "the latest sign larger customers haven't forgiven its sales-practices scandal." "There's no question that the business bans that came up two years ago had an impact on our growth," Phil Smith, head of Wells Fargo's government and institutional banking group, said. "We still have some pockets where bans are being renewed or the worst part is, it's just hard to hire us."
Speaking of Wells, a federal judge in San Francisco approved a $142 million settlement between the bank and customers who had accounts opened in their names without their permission.
Skin in the game: A group of investment bankers at Goldman Sachs "have been quietly moonlighting as venture capitalists. These corporate consiglieres, who advise on mergers and underwrite securities, oversee a venture-capital portfolio worth several hundred million dollars."
Happy trails: William Dudley, the soon-to-be-former president of the Federal Reserve Bank of New York President confident in the economy's future as he heads for retirement. "I'm proud that we've gotten monetary policy back to a place where we are normalizing policy and the balance sheet is shrinking," he said. "We've done that in a way without creating a lot of market indigestion at this point. I wouldn't say 'mission accomplished' because we still have a ways to go on that, but I'm pretty proud of that."
Sell signal?: Just as the Federal Reserve is scheduled to release the results of the first round of its annual stress tests, 22 of the largest banks are ready to pay out a record $170 billion in dividends and stock buybacks over the coming year, the most since 2007, before the financial crisis. It's also a larger amount than they expect to earn, which could "lower their defenses against another catastrophic shock to the financial system."
"The natural reaction to this, for anyone who lived through 2008, can be summed up in one word: sell," say the editors of the FT. "A psychological legacy of the great crisis is that expressions of optimism from the banking industry, while they might reflect strength in the underlying economy, feel decidedly ominous."
Citi settles Libor case: Citigroup has agreed to pay $100 million to settle allegations by 42 state attorneys-general that it tried to rig the Libor rate, "the latest in a series of penalties" that so far has cost banks more than $9 billion.
Glory days: AIG may be "a shadow of its former self" before the financial crisis, but under CEO Brian Duperreault is trying to "restore some of [its] swagger." But investors are "wary about the speed of any turnround."
Competitive barrier: Four large global banks — Goldman Sachs, Wells Fargo, BNP Paribas and Deutsche Bank — have joined a new bond underwriting platform being developed by Bank of America, Citigroup and JPMorgan Chase. The platform, which "aims to improve the technology used in the sale of bonds," could enable Wall Street "to maintain its influence on the lucrative market for debt issuance" and protect its turf from "tech start-ups and financial data companies investing in the market."
"Not subprime mortgages, not Countrywide, not Angelo Mozilo. I wish I had that kind of power." — Former Countrywide Financial CEO Angelo Mozilo, who insists that neither he nor his company had anything to do with causing the housing crisis.