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Separately, economist Lawrence Lindsey has withdrawn his name from consideration for vice chair of the Fed.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.
Harmonizing standards for liquidity coverage ratios and discount window pledges could prevent the type of strains that led to last year's bank failures, according to a new paper whose authors include former Federal Reserve Govs. Dan Tarullo and Jeremy Stein.
Ally Financial ended a six-month search for its next chief executive by hiring Discover CEO Michael Rhodes. The move adds a new wrinkle to Discover's pending sale, though Discover said that Rhodes hadn't been expected to have a long-term role at Capital One following the merger's completion.
The report seeks to help banks "disrupt rapidly evolving AI-driven fraud," according to Treasury's Nellie Liang. The report found banks have difficulties accounting for AI risks.
The banking giant has launched an online platform that links small-business owners and entrepreneurs in need of capital to community development financial institutions. The platform was developed in partnership with Community Reinvestment Fund USA.
A panel at CBA Live explored the contract provisions banks need to consider before embarking on new banking-as-a-service relationships and what catches their eyes in consent orders from banking regulators.