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Finance Brief: CFPB Proposes Changes to Prepaid Card Rule

Washington Brief

  • The Consumer Financial Protection Bureau announced plans to make changes to its prepaid card rule, with public comments on the proposals due within 45 days. The CFPB’s proposals would adjust the rule to require consumers register any prepaid cards before filing a complaint, and would allow providers to send disclosure forms to consumers digitally in some cases. (The Hill)
  • House Freedom Caucus Chairman Mark Meadows (R-N.C.) said conservative lawmakers aren’t interested in the House GOP’s proposal to impose a border adjustable tax on business income from imports, even if the plan is to phase in the proposal. Earlier this week, House Ways and Means Committee Chairman Kevin Brady (R-Texas) suggested that a five-year phase-in could assuage some of the concerns of industry groups and conservative lawmakers. (The Washington Examiner)
  • President Donald Trump appointed Lynne Patton, an event planner who worked with Trump before his presidential run, to direct the Department of Housing and Urban Development’s regional office overseeing New York and New Jersey. Patton has no professional experience with housing policy. (The New York Daily News)

Business Brief

  • Bank of America Corp. is no longer obligated to comply with a 2010 Federal Reserve enforcement order that arose after bank traders were found to have manipulated bids for competitive municipal debt offerings. The decision means Bank of America doesn’t have to send the Fed reports each quarter on its internal oversight of competitive bids. (Reuters)
  • The U.S. Justice Department is investigating hiring practices at Barclays Plc for possible violations of federal antitrust laws related to executive-level promises that the British bank would not hire employees away from JPMorgan Chase & Co. (Financial Times)
  • The price of bitcoin fell Thursday by as much as 19 percent, the biggest drop in two years. The cryptocurrency was trading at almost $3,000 on Monday before plummeting to just above $2,000 on Thursday. (Bloomberg News)

Chart Review

Events Calendar (All Times Local)

Friday
Harvard University event on the state of U.S. housing 12 p.m.

 

General

Trump Warms to North America Trade ‘Fortress,’ Canada Envoy Says
Josh Wingrove, Bloomberg News

Canada’s ambassador to Washington is striking an upbeat tone on looming trade talks with President Donald Trump’s administration, saying the U.S. is now warming to cooperating with Mexico and Canada on trade. In a pair of Ottawa appearances this week, David MacNaughton said while challenges lie ahead, Canadian ties with the White House are as close as they were under Barack Obama’s administration and Canada will “end up coming out of all this better than we are now.”

Shares End Week Stronger as Havens Yen, Bonds Fade: Markets Wrap
Garfield Clinton Reynolds and Eddie Van Der Walt, Bloomberg News

Global stocks bounced back from the previous session’s losses as shares in Europe were buoyed by corporate news. Futures on the S&P 500 rose 0.1 percent after the index fell 0.2 percent on Thursday.

Banking

Federal Reserve terminates 2010 enforcement action against Bank of America
Pete Schroeder, Reuters

The Federal Reserve announced Thursday it had terminated a 2010 enforcement action taken against Bank of America after the bank admitted to bid-rigging in the municipal debt market. The termination means the bank is no longer required to submit quarterly progress reports to the Fed on how its risk management program monitors competitively bid transactions.

Barclays hirings under US scrutiny
Caroline Binham and Martin Arnold, Financial Times

The US Department of Justice is scrutinising whether Barclays breached antitrust laws by promising to stop poaching JPMorgan Chase bankers, in another blow for the British lender’s chief executive, Jes Staley. The DoJ asked Barclays for more information on discussions between its top brass and senior JPMorgan executives following a string of high-level departures from the US bank to its British rival.

Lawmakers remain split as regional banks press for relief
Ian McKendry, National Mortgage News

Senate Banking Committee Chairman Mike Crapo sounded optimistic Thursday about reaching a bipartisan deal for regulatory relief, but a hearing with regional and large-bank representatives once again emphasized the gulf between what lawmakers are likely to pass and what the industry is seeking. The Idaho Republican commended a Treasury Department report released this week that provided a list of recommendations to streamline financial regulations, citing several as ideas for possible legislation.

Banking in the Age of Dodd-Frank
Michael Rapoport, The Wall Street Journal

Banks may soon enter a new regulatory era, reflected by Treasury Department proposals this week to roll back parts of the Dodd-Frank Act. Since the 2010 law, banks’ stocks have posted gains but haven’t yet fully recovered from the financial crisis.

Kathy Castor puts faith in Senate GOP to resist completely repealing Dodd-Frank
Mitch Perry, Florida Politics

Last week, the GOP-led House of Representatives voted to repeal many of the stricter regulations enacted after the 2008 financial crisis. It was part of a desire to roll back rules that they say have hurt banks, restricted consumer growth and slowed economic progress.

Financial Products and Investments

Consumer Bureau asks for input on prepaid cards
Lydia Wheeler, The Hill

The Consumer Financial Protection Bureau (CFPB) is asking the public to comment on some proposed changes to its rules for prepaid cards. Under the proposed changes, a consumer would have to register their prepaid card in order to dispute unauthorized charges and take advantage of the full slate of consumer protections provided by the rules.

Private-Equity Firms Stand to Benefit From Supreme Court’s Curb on SEC
Dave Michaels, The Wall Street Journal

A recent decision by the U.S. Supreme Court that curbed the government’s enforcement powers over Wall Street could hurt efforts to penalize private-equity managers over fees that the government considers poorly disclosed to investors. The opinion, handed down last week, said the SEC has just five years to order firms to give back profits that it says were wrongfully taken.

Malaysia rejects US claims over assets said stolen from 1MDB
Eileen Ng, The Associated Press

A Malaysian sovereign wealth fund has rejected U.S. Justice Department allegations over money laundering and alleged theft of a treasure trove of assets including diamonds, a yacht and private jet and penthouse apartments. The Malaysian government-controlled fund known informally as 1MDB and other officials in Kuala Lumpur insisted Friday that there was no proof linking the fund to such crimes.

Housing and GSEs

President Trump chooses inexperienced woman who planned his son Eric’s wedding to run N.Y. federal housing programs
Greg B. Smith, The New York Daily News

She’s arranged tournaments at Trump golf courses, served as the liaison to the Trump family during his presidential campaign, and even arranged Eric Trump’s wedding. Now President Trump has appointed longtime loyalist Lynne Patton — who has zero housing experience and claims a law degree the school says she never earned — to run the office that oversees federal housing programs in New York.

The Housing Recovery Is Leaving Out Most of America
Patricia Clark, Bloomberg News

For further evidence of the uneven recovery among U.S. housing markets, how’s this: In the 10 most expensive U.S. metropolitan areas, median home values have increased by 63 percent since 2000, after adjusting for inflation. In the 10 cheapest metros, median values rose by just 3.6 percent.

Former Nomura RMBS trader found guilty of securities, wire fraud conspiracy
Ben Lane, HousingWire

Nearly two years ago, the Securities and Exchange Commission and the U.S. Attorney’s Office for the District of Connecticut charged three former Nomura Securities International residential mortgage-backed securities traders with fraud, alleging that they “repeatedly lied” to customers about the pricing information of mortgage bonds and defrauded customers out of millions of dollars. Earlier this year, the Department of Justice hit the three RMBS traders, Michael Gramins, Ross Shapiro, and Tyler Peters with additional charges, including one count of conspiracy, two counts of securities fraud and six counts of wire fraud.

Taxes

Mark Meadows: No support for phasing in border adjusted tax
Joseph Lawler, The Washington Examiner

House Freedom Caucus Chairman Mark Meadows suggested Thursday that he is not interested in a potential compromise offered by leadership on the border-adjusted tax proposal that has proved the most controversial aspect of the leadership’s tax reform plan. Ways and Means Committee Chairman Kevin Brady this week suggested that the idea of a five-year phase-in for the border adjustment tax could be a way of allaying the fears of retailers and other importers worried about a tax hit.

Financial Technology

Bitcoin Tumbles Most in More Than Two Years After Record Run
Lily Katz, Bloomberg News

Bitcoin sank as much as 19 percent, putting the digital currency on pace for its worst week since January 2015, as volatility climbs following a record-setting surge in the price. After flirting with $3,000 on Monday, the cryptocurrency has retreated to as low as $2,076.16 in intraday trading.

When fintech meets CRA: SoFi bank bid draws activists’ ire
Kevin Wack, American Banker

In its early days, Social Finance made loans only to borrowers who had attended name-brand universities. Graduates of elite colleges were paying relatively high interest rates on federal student loans even though they represented a low risk, and the Silicon Valley startup saw in that mispricing a chance to make money.

A Message from the Electronic Payments Coalition:

An overwhelming majority of consumers say big-box retailers are looking out for their own bottom lines, not main street interests as they may claim. The Durbin amendment has only benefited large retailers’ bottom lines, while harming consumers, small merchants, and community financial institutions. Isn’t it time we repeal this policy? Get the facts from the Electronic Payments Coalition.

Opinions, Editorials and Perspectives

Four Principles for Replacing Dodd-Frank
Charles W. Calomiris, The Wall Street Journal

The effort to repeal the 2010 Dodd-Frank Act and reform American financial regulation seems to be losing traction. Although the House voted 233-186 last week to pass Rep. Jeb Hensarling’s ambitious and substantive Financial Choice Act, it is unlikely to come to a vote in the Senate soon.

Trump promised to do ‘a big number on Dodd-Frank.’ That looks unlikely.
Editorial Board, The Washington Post

The Treasury Department has produced the proposal for financial regulatory reform that President Trump ordered up four months ago, pursuant to his claim that “we’re going to be doing a big number on Dodd-Frank.” Because “Dodd-Frank” is the shorthand title of an overhaul of Wall Street regulation adopted by a Democratic Congress and signed by President Barack Obama in response to the panic of 2008, advocates of a more stable and resilient financial sector had been dreading Mr. Trump’s attempts to roll it back.

A Message from the Electronic Payments Coalition:

Voters agree: if merchants aren’t passing along savings, the Durbin amendment should be repealed. Evidence shows big-box stores have pocketed $42 BILLION at their customers’ expense-Congress must take action to end this failed policy. Learn more from EPC.

Research Reports

The State of the Nation’s Housing 2017
Joint Center for Housing Studies of Harvard University

US house prices rose 5.6 percent in 2016, finally surpassing the high reached nearly a decade earlier. Achieving this milestone reduced the number of homeowners underwater on their mortgages to 3.2 million by year’s end, a remarkable drop from the 12.1 million peak in 2011.