And so it begins Representatives from the largest U.S. banks are expected to soon receive requests to testify before the House Financial Services Committee, “an opening salvo in House Democrats’ plans to put the industry back in Washington’s crosshairs.” Last week Rep. Maxine Waters, D-Calif., the new head of the committee, said she planned to hold “many hearings” on the biggest banks. The initial hearings are expected to take place before the spring.
Representative Maxine Waters, a Democrat from California and ranking member of the House Financial Services Committee, listen to testimony from Janet Yellen, chair of the U.S. Federal Reserve, during her semiannual report on the economy to the House Financial Services Committee in Washington, D.C., U.S., on Wednesday, July 15, 2015. Yellen said prospects are good for further improvement in the labor market and the economy, keeping the central bank on track for an interest-rate increase in 2015. Photographer: Drew Angerer/Bloomberg *** Local Caption *** Maxine Waters
Drew Angerer/Bloomberg
Waters recently met privately with JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon. The two visited her in Washington separately to give her "their perspectives on a wide range of topics, including where they stand on the economy, and left the door open to a continued dialogue with her,” CNBC reported.
But the new Congress is looking beyond American banks. Waters and Adam Schiff, D-Calif., the head of the House Intelligence Committee, are planning a joint investigation into Deutsche Bank’s business dealings with President Trump. “The investigation into Deutsche Bank will be one of the most closely watched probes launched by the new Democratic-controlled House because it could provide a glimpse into Trump's finances and ties abroad.”
"Any hearings would likely reflect the more aggressive stance Ms. Waters has taken toward financial regulation compared with that of House Republicans who helmed the committee during the past eight years," according to the Wall Street Journal.
Wall Street Journal
Sounding the alarm U.S. banks reported more than 24,000 suspected cases of elder financial abuse to the Treasury Department last year, 12% more than the previous year’s record number and more than double the amount from five years earlier. “The increase occurred as new federal and state laws are prompting banks to take a more active role in trying to address frauds and scams that target older customers. For their part, banks are beefing up training programs for employees on how to detect, stop and report issues without violating a customer’s privacy.”
Working together Lawmakers in Washington may finally have an issue they can agree upon: Resolving the future of Fannie Mae and Freddie Mac, the two mortgage guaranty agencies that were placed in government conservatorship during the 2008 financial crisis. “For more than a decade, lawmakers have tried and failed to overhaul the mortgage-finance giants. Now, Republicans and Democrats in Congress say it is time to try again. Meanwhile, the Trump administration may soon propose steps to ease government control.”
Financial Times
Replacing Libor Intercontinental Exchange is looking to launch an alternative interest rate benchmark to replace the scandal-ridden London interbank offered rate, which global authorities want to phase out over the next two years. The proposed standard, called the ICE Bank Yield index, would be based on transactions reported to the Financial Industry Regulatory Authority plus daily data submitted by 13 international banks. “The exchange’s move is an attempt to resolve a stand-off between markets and global regulators. Watchdogs are concerned that Libor is not based on real market transactions. But the benchmark has become so pervasive that it is still central to thousands of derivatives, bonds, credit cards and loan contracts.”
Sexism alleged A female banker at Coutts, the British private banker to the ultrawealthy, is suing the bank for alleged age and sex discrimination, claiming she was passed over for promotion because of “unspoken sexism.” The banker, Donna Ball, accused the bank of having a culture of “glass ceilings and women being paid less than men.” The bank, a unit of Royal Bank of Scotland, denies the allegations. Last year Coutts disciplined one of its star male bankers following complaints by female employees of physical and verbal harassment.
Elsewhere
Big Brother is watching China is looking to launch a "social credit system" next year that will "keep track of everything everyone is doing,” from their credit and tax payment history to how they behave on public transportation. The system will include an app that “will alert people if they are within 500 meters of someone in debt.” The app, which can be accessed through WeChat, China’s most popular instant messaging platform, translates to “map of deadbeat debtors.” The Evening Standard reports, "The idea is that it will allow people to 'whistle-blow on debtors capable of paying their debts.'”
No motive Four of the five people killed in a deadly shooting at a SunTrust bank branch in Sebring, Fla., Wednesday were bank employees. Police have yet to determine the shooter’s motive and suggest it may have been a random act.
Quotable
“All the policy puzzle pieces are out there, what is lacking is the political will to put them together. Divided government is the best time for us to legislate.” — Rep. Patrick McHenry, R-N.C., commenting on possible Congressional action on Fannie Mae and Freddie Mac.
Many legal experts think the Supreme Court will rule in favor of the Consumer Financial Protection Bureau in a case challenging its funding. Such a ruling would unleash a flurry of litigation that has been on hold pending the outcome of the constitutional challenge.
Lawmakers including one of the original sponsors of the Corporate Transparency Act have filed an amicus brief in the appeal against an Alabama court ruling that the law is unconstitutional, which would throw into question Treasury's newly-established beneficial ownership structure.
The Connecticut bank —a regional traditionally regarded as a cautious lender — said nonperforming loans and leases rose 53% year-over-year. The uptick was in mostly the commercial-and-industrial loan space, although there was one nonperforming commercial real estate loan, executives said.
The two regional banks are anticipating that borrower demand will increase in the back half of the year. High interest rates and economic uncertainty have been muting the appetite for borrowing.
In a letter to Treasury Secretary Janet Yellen last week, the Massachusetts senator highlighted the growing use of cryptocurrencies by malicious organizations abroad and underscored the need for anti-money-laundering and counterterrorism provisions in future proposals.
