Receiving Wide Coverage Battered: Amid a global freefall in stocks, Wells Fargo’s share price plunged more than 9% on Monday, its first day of trading following last Friday’s announcement by the Federal Reserve that it was banning the bank from increasing its asset base for the foreseeable future. The drop was nearly twice as steep as the 4.9% decline in the KBW Nasdaq Bank Index and the 4.6% drop in the Dow Jones Industrial Average. The bank’s market capitalization fell by $29 billion.
The New York Times looks into how Wells reached a deal with the Fed on its punishment, which also forced it to replace four of its directors. American Banker looks at what the penalties mean for other banks.
Cryptocurrency hearing: The chairmen of the Securities and Exchange Commission and the Commodity Futures Trading Commission are scheduled to testify Tuesday before the Senate Banking Committee and are expected to ask Congress to impose stricter federal oversight on cryptocurrency trading. “The currently applicable regulatory framework for cryptocurrency trading was not designed with trading of the type we are witnessing in mind,” according to SEC Chairman Jay Clayton’s prepared remarks. Wall Street Journal, New York Times, American Banker
Bitcoin fell below $6,000 on Tuesday and has now lost 70% of its value since hitting a record high of near $20,000 in December.
British banks are debating whether they should prohibit their customers from buying cryptocurrencies using their credit cards. Lloyds and Virgin Money have imposed such a ban, following similar moves at most of the largest American credit card issuers. Barclays and RBS said they are reviewing their policies.
Wall Street Journal Sworn in:Jerome Powell was sworn in as Fed chair on Monday, succeeding Janet Yellen. The oath was administered by Randal Quarles, the Fed’s vice chair for supervision.
Monday’s “ugly” market drop “is a signal of the trouble Mr. Powell may have unwinding a decade of Fed interference with bond markets to boost risk assets,” the paper editorializes.
Separately, economist Lawrence Lindsey has withdrawn his name from consideration for vice chair of the Fed. Lindsey was a top economic adviser to President George W. Bush and was an informal adviser to the Trump campaign in 2016.
Washington Post Still looking: Democrat lawmakers on Capitol Hill were up in arms after a Reuters report said the Consumer Financial Protection Bureau was dropping its investigation into last year’s massive data breach at Equifax. The agency denied the accusation. “As noted previously, the Bureau is looking into Equifax’s data breach and response,” it said. (But did the CPFB punt to begin with? That's the question American Banker asks, and the answer's not so simple.)
Quotable “Cryptocurrencies are almost a perfect vehicle for scams. The combination of credulous buyers and low barriers for scammers were bound to lead to a high level of fraud, if and when the money involved got large. The fact that the money got huge almost overnight, before there were good regulatory or even self-regulatory models in place, made the problem acute.” — Kevin Werbach, a professor at University of Pennsylvania’s Wharton School.
The U.S. arm of Spanish banking giant Santander has hired Swati Bhatia to oversee retail banking and its digital transformation efforts. Bhatia joins at "an inflection point" for the company, which aims to be "a digital bank with branches," CEO Tim Wennes said.
Mariya Rosberg is named Americas head of banking and financial services at Marsh McLennan's Oliver Wyman unit; startup ZayZoon raised $15 million in a new funding round; and more in the weekly banking news roundup.
Last year, the Raleigh, N.C.-based Integrated called off a deal to sell itself to MVB Financial after bank stocks took a hit in the aftermath of the regional bank failures. Capital hopes to expand its government-guaranteed lending with the transaction.
Once a prominent figure spurring financial institutions to engage in cryptocurrency, Bankman-Fried's downslide began with the collapse of the digital asset exchange FTX in late 2022 and hit rock bottom with his sentencing to 25 years in prison.
The bank is launching KeyVAM, a virtual account management offering it designed with fintech Qolo. Both companies said the nature of the relationship was as important as the technology it produced.