Wall Street Journal
Drip, drip, drip: Just when you thought all of the various Wells Fargo scandals had been settled, or at least known about, comes word that the Labor Department is investigating the bank for allegedly pushing holders of lower-cost 401(k) plans it manages into more expensive IRAs and pressuring them into buying the bank’s in-house funds. “Under the Employee Retirement Income Security Act, entities that serve these accounts are supposed to put their clients’ interests ahead of their own,” the paper notes.
Getting closer to yes: The House and Senate are moving closer to passing joint legislation that would roll back parts of the Dodd-Frank law and ease regulations on small and medium banks. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, signaled he may be willing to go along with the version passed by the Senate several weeks ago, provided he gets support for separate bills the House favors but were not part of the Senate-passed bill. Hensarling’s change of heart was first noted by American Banker’s Neil Haggerty, which prompted a flurry of other media stories.
The price you pay: MetLife’s CEO and CFO took pay cuts last year following a scandal in the company’s retirement-services business in which it neglected to pay pension benefits to more than 10,000 retirees. CEO Steven A. Kandarian’s total compensation fell 3.6% while CFO John C.R. Hele received 6.4% less than the year before. The company had to increase its reserves by $510 million to cover the cost of the missed payments.
Who’s next?: Countries that largely avoided the 2008 financial crisis may now be most at risk to be “victims of any credit squeeze” resulting from higher interest rates, according to the paper. “Leading the list are Australia, Canada and Sweden. They had all the benefits of the lowest global interest rates in history, without first suffering the economic meltdown and bank failures that led the U.S. and Europe to take emergency action.” Now, however, they’ve been on a “borrowing binge” that may not end well.
Wrong time to relax: The Trump administration’s pursuit of eased bank regulation just as the economic rebound may be in its latter stages, is questioned by U.S. managing editor Gillian Tett. “Banks today are much better capitalized than before,” she avers, “and much of the risky lending is now occurring in the non-bank world, namely by hedge funds, private equity groups and mutual funds. But that is not a reason to relax. [The] timing seems peculiar. After all, the U.S. economy is in its eighth year of an expansion and the Fed is now raising interest rates.” The Wall Street Journal published a similar article on Thursday.
Forgive us: TSB, the British bank that botched the transfer of over a million accounts last weekend, said it will waive about £10 million in overdraft fees and pay “tens of millions of extra interest” to depositors in order to keep customers from fleeing the bank. The transfer of the accounts from Lloyds to TSB, which is owned by Spanish firm Sabadell, “caused days of chaos when the new system proved unable to handle the volume of users,” sparking “public outrage” and parliamentary inquiries. TSB CEO Paul Pester said the bank was “calling in the cavalry to get this thing fixed.”
New York Times
Goodbye to all that: The paper examines Deutsche Bank’s announcement early Thursday to sharply pare back its investment banking presence on Wall Street following a “terrible 10 years.” But what exactly took it so long? And which banks stand to benefit from DB’s departure? Hint: They’re not based in Europe.
“I’d be happy to attend multiple signing ceremonies in the White House, The more pens the merrier.” — House Financial Services Committee Chairman Jeb Hensarling R-Texas, about the prospects for a Dodd-Frank rollback bill to pass both houses of Congress.