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Big loss: Gary Cohn’s resignation as head of the National Economic Council “is a significant blow to Donald Trump’s presidency, and recovering from it will be a significant challenge,” the Wall Street Journal’s editorial board says. “It is a loss, and this presidency cannot afford more like it.”

Cohn’s resignation “could reduce the already low odds of [President] Trump championing traditional Republican and business priorities in the months and years to come, including free trade, immigration, infrastructure and reducing the federal budget deficit,” adds the New York Times.

His departure also has Wall Street and banks worried.

Wall Street Journal

It's the next phase: Bank of New York Mellon CEO Charles Scharf is trying to “kick-start the bank that has been mired by slow growth and price wars that have weighed on profit.” Scharf, who was a top lieutenant to JPMorgan Chase CEO James Dimon for years before joining BNY Mellon last July, “is turning to pages of the same the playbook as part of a broader overhaul. He already has laid off staff, consolidated office space and overhauled executive pay.”

Schooled: Sen. Dick Durbin, D-Ill., wants Wells Fargo to stop marketing its products on college campuses until it has fully addressed last month’s Federal Reserve order that prohibits the bank from growing its assets. He also wants the bank to fully disclose that order to any prospective student customers. In a letter to Wells, Durbin asked the bank “to halt any plans Wells Fargo may have to expand its financial footprint on college campuses” and to provide a list of all schools with which the bank has contracts to offer financial products to students.

Sen. Dick Durbin, D-Ill.
Sen. Dick Durbin, D-Ill.

Break the monopoly: Meanwhile, banks and other private lenders are pushing for a bigger piece of the $100 billion-a-year student loan market, which the U.S. Education Department now holds a nearly 90% market share. “At stake is potentially billions of dollars in new business” for private lenders, a group dominated by Sallie Mae, Wells Fargo and Discover. The Consumer Bankers Association wants a limit on how much graduate students and parents of undergraduates can borrow from the government, leaving more room for private lenders.

Enabling act: The Dodd-Frank rollback bill now being debated in the Senate includes a few provisions that ease capital and liquidity standards for the biggest banks that the paper’s editorial board believes “will make the financial system more vulnerable in a panic.” Specifically, the bill would amend the “supplementary leverage ratio” for custodial banks by excluding deposits at a central bank. Another provision would make it more attractive for banks to buy municipal bonds, which would in turn encourage cities and states to borrow more.

“Governments and financial investors are often co-dependent, but Senators ought to resist enabling both,” the paper says.

Senators made several amendments to the Crapo bill on Wednesday, although it's unlikely the bill will be changed. One provision would require credit bureaus to let consumers block access to their credit reports for free.

The bank bill also now includes a “clarification for foreign banks,” which closes a loophole that might have allowed large foreign banks to escape strict regulation by the Federal Reserve. It would also ease somewhat regulation of banks’ commercial real estate lending. Additionally, it would take steps to combat “synthetic identity fraud” by allowing lenders to contact the Social Security Administration to verify that a name, Social Security number or date of birth belong to a real person.

Woman’s touch: Real estate investment trusts that have a higher-than-average percentage of women on their boards outperform REITs dominated by men, according to a study by Wells Fargo Securities. The firm looked at 165 equity REITs from 2006 to 2017 and found that boards with more women on them “achieved higher average price and total returns over that period.” Women account for 15.5% of REIT board members, which is up from 8.5% a decade ago, with most of the increase coming in the past five years.

New York Times

Discrimination still occurs: The paper's editorial board writes that minority communities continue to be subject to mortgage discrimination — only instead of being peddled predatory loans, they're being denied loans at all. They point to a study from the Center for Investigative Reporting that shows African Americans and Latinos (and, to a lesser degree, Asian Americans and Native Americans) were far less likely to receive conventional mortgage loans than whites. The piece also says banks are subverting the intent of the Community Reinvestment Act by funneling affordable loans in historically black neighborhoods to white newcomers, exacerbating gentrification in the process.


Breaking barriers: Amazon, which is reportedly working with several large banks to offer a “checking-account-like product” to its customers, could become the third largest bank in the U.S. in as little as five years if it wants to, according to a report by Bain & Co. “We could imagine Amazon's banking services growing to more than 70 million U.S. consumer relationships over the next five years or so — the same as Wells Fargo,” says the report. “Once Amazon has established a cobranded basic banking service, we expect the company to move steadily but surely into other financial products, including lending, mortgages, property and casualty insurance, wealth management, and term life insurance.”


“Almost every week we hear new revelations about misbehavior by Wells Fargo — this time, continuing to charge students high fees for financial products that they aggressively market on campus. Students need to know the real story about this bank.” — Sen. Dick Durbin, D-Ill.

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