Receiving Wide Coverage ... More bad news: Wells Fargo said there may be a “significant increase” in the number of fake bank accounts its employees opened, up from the 2.1 million accounts it has already acknowledged. In a regulatory filing, the bank said it reviewing accounts that were opened as far back as 2009, earlier than its original investigation, which covered 2011 to mid-2015. Financial Times, New York Times, American Banker
Wells Fargo also said it expects further regulatory sanctions from its latest scandal, in which it improperly forced some 570,000 auto loan customers to take out car insurance they didn't need, some of whom later defaulted on their loans. The bank said it is issuing refunds totaling around $80 million to affected customers.
“We want our stakeholders to know about issues that we are committed to fixing,” Wells CEO Timothy Sloan said in the filing.
Happy anniversary – not: On what it says is the official 10th anniversary of the global financial crisis, the Financial Times says financial institutions have paid more than $150 billion in penalties to American authorities as a result of "banks' alleged misdeeds from the era." Bank of America accounts for more than a third of the total, having paid out $56 billion to state and federal regulators, most of which covered the actions of two companies it acquired, Countrywide and Merrill Lynch. JPMorgan Chase, which acquired Bear Stearns and Washington Mutual, has paid the second most, $27 billion.
But things may be getting better, at least on Wall Street, where regulators have imposed “far lower penalties” in the first six months of the Trump administration than they did during the comparable period in 2016, when Barack Obama was president. Penalties levied by the three main Wall Street regulators were down 65% compared to the year-earlier period, $489 million versus $1.4 billion, according to the Wall Street Journal. That puts the industry on track for the lowest annual level of fines in at least seven years, it said.
“Lawyers who defend financial cases said a shift to a business-friendly stance at regulatory agencies in the Trump administration is one of several reasons for the decrease,” the Journal says.
Wall Street Journal Support uncertain: A Republican effort in Congress to block a rule that would prohibit banks from requiring arbitration of customer disputes may not have enough votes in the Senate to gain passage. The House voted last month to overturn the Consumer Financial Protection Bureau’s rule that prohibits mandatory arbitration, making it easier for customers to file class-action suits against banks. But “support in the Senate is uncertain,” the paper reports. “Several Republican senators have expressed reservations about voting to overturn the regulation, worried they may be portrayed as siding with banks and against consumers.”
Bank crisis: The number of African-American-owned banks operating in the U.S. has fallen to 23 this year, the lowest level in recent history, according to the Federal Deposit Insurance Corp. “That has left many African-American communities short of access to capital and traditional financial services,” the paper says.
“We have a crisis among black banks,” said Doyle Mitchell, CEO of Washington-based Industrial Bank. The number of black-owned banks has been falling for 15 years.
The number of such banks peaked more than 100 years ago, when there were 57 black-owned chartered banks, according to a study by a Howard University professor.
Financial Times High praise?: The American banking system is “notably less weak than its European counterpart,” writes John Plender, a senior editorial writer and columnist at the FT, looking back at the financial crisis. “That is because American policymakers learnt from the earlier Japanese experience of boom and bust. In the eurozone, by contrast, policymakers were reluctant to confront the challenge of the sovereign debt crisis head on. Stress tests have been un-stressful and banks remain undercapitalized relative to the U.S.”
Quotable “In a fairly short amount of time, no one is going to know how to compute what the next payment is going to be. And that’s why it’s important.” — Lou Barnes, capital markets analyst with Premier Mortgage Group, on the challenge mortgage lenders face in computing interest payments on adjustable-rate mortgages after Libor is phased out.
The Philadelphia-based bank's parent company, Republic First Bancshares, had been roiled by a yearslong proxy battle involving activist investors groups and its former CEO.
The Wyoming-based digital asset bank filed paperwork to challenge last month's district court ruling, which affirmed the Federal Reserve's view about its discretion over master account applications.
The former head of the Consumer Financial Protection Bureau resigned Friday after the troubled rollout of the Free Application for Federal Student Aid led some House Republicans to call for his resignation.
The San Antonio-based bank said that loan growth, fueled in part by its expansion in key Texas markets, may compensate for pressure on deposits. It slashed the number of rate cuts it expects this year from five to two.
Mississippi's Renasant names its next CEO; environmental fintech Aspiration Partners spins out its consumer brand; the OCC adds five weeks to comment period for Capital One-Discover merger; and more in the weekly banking news roundup.
The Wisconsin banking company forecasted loan growth of 4% to 6% for the full year, driven by an expansion into new commercial and consumer credit lines as well as enduring economic strength in the Midwest.