Finance Brief: Week in Review & What’s Ahead


Week in Review

Executive branch

  • Investigators from the Securities and Exchange Commission and the Commodity Futures Trading Commission have been looking into whether securities laws were violated when investment products tied to the Chicago Board Options Exchange Volatility Index, or VIX, crashed during the market sell-off earlier this month, according to several unnamed sources. The regulators’ reviews of the products began Feb. 5, when a Credit Suisse Group exchange-traded note tied to the VIX plunged after a major U.S. market sell-off, prompting the bank to announce plans the following day to liquidate the ETN.
  • Public companies should disclose potential cybersecurity weaknesses even if hackers have not exploited them, the SEC recommended in updated guidance on cyber risk disclosures. The agency also said that executives of publicly traded firms must not trade in their company’s shares when possessing nonpublic information about cyber breaches.
  • Senate Minority Leader Chuck Schumer (D-N.Y.) recommended that President Donald Trump nominate Dan Berkovitz as a Democratic member of the CFTC, according to unnamed sources. Berkovitz, a lawyer at the firm WilmerHale who worked as the CFTC’s general counsel from 2009 to 2013, is under review by the White House, a source said, meaning it’s likely that if he’s nominated, the Senate would move his nomination alongside that of Dawn DeBerry Stump, a Republican who was nominated to the CFTC in June.
  • The 2010 Dodd-Frank Act’s Orderly Liquidation Authority mechanism for the resolution of failing banks should be kept, but altered to fix some “serious defects,” according to a report by the Treasury Department. Agency officials said they would prefer seeing banks resolved using bankruptcy code rather than OLA, and that eliminating the liquidation mechanism outright could lead to chaotic conditions in the global regulatory system in the event of a major, global firm’s failure.

Financial services industry

  • The CFTC plans to issue a record $30 million whistleblower award to an applicant who informed the regulator that JPMorgan Chase & Co. did not tell wealth-management clients about conflicts of interest. That led to the bank agreeing in December 2015 to pay a record $367 million settlement, resulting in the largest whistleblower award issued by the CFTC.
  • The Supreme Court declined to take up an appeal filed by Fannie Mae and Freddie Mac investors that the 2012 “sweep” of profits to the U.S. Treasury from the government-sponsored enterprises violated investor rights. The court’s denial means a 2017 ruling against the shareholders will remain in place.
  • JPMorgan said that a “very low number” of customers had their personal information compromised by a technical glitch that made their accounts accessible to other customers between 6:30 p.m. and 9 p.m. ET on Feb. 21.

Congress

  • Twenty-five GOP senators called for President Donald Trump to reconsider his decision to withdraw the United States from the Trans-Pacific Partnership, arguing that rejoining the trade pact would help Trump achieve his goal of increased U.S. economic growth.
  • Democrats on the Senate Banking Committee who are facing tough reelection races this year have seen increased campaign donations connected to banks that would see rollbacks in regulations under a bipartisan bill benefiting small and mid-sized banks. Employees of the New York-based lender Signature Bank, for example, have divided $112,000 in donations for the 2017-2018 election cycle between Sens. Joe Donnelly (Ind.) and Heidi Heitkamp (N.D.) — both of whom support the legislation.

What’s Ahead

  • The House and Senate are both in session this week.
  • Federal Reserve Chairman Jerome Powell this week is scheduled to testify before the House Financial Services Committee and then the Senate Banking Committee. He’ll be presenting his first semi-annual monetary policy report since he became head of the central bank earlier this month.
  • The SEC plans to propose scaling back rules slated to take effect in 2019, and finalized during the Obama administration, that require mutual funds to disclose to shareholders the liquidity of assets that are difficult to sell.

Events Calendar (All Times Local)

Monday
NABE economic policy conference 8 a.m.
SFIG conference in Las Vegas 9 a.m.
SEC’s Jackson speaks at CECP CEO Investor Forum 12 p.m.
House Rules Committee hearing on capital requirements bill 5 p.m.
Tuesday
NAHREP Housing Policy & Hispanic Lending Conference 8 a.m.
U.S. Chamber of Commerce’s Invest in America summit 8 a.m.
NABE economic policy conference 8 a.m.
SFIG conference in Las Vegas 9 a.m.
American Enterprise Institute event on GSE reform 9 a.m.
House Financial Services Committee hearing with Fed’s Powell 10 a.m.
FDIC community bank webinar 1 p.m.
House Ways and Means Committee meeting on FY 2019 budget 1:15 p.m.
Brookings Institution discussion with Janet Yellen and Ben Bernanke 2 p.m.
House Small Business Committee hearing on community banks and credit unions 2 p.m.
Wednesday
NAHREP Housing Policy & Hispanic Lending Conference 8:30 a.m.
SFIG conference in Las Vegas 9:15 a.m.
Brookings Institution event on Trump’s trade policy in Asia 10 a.m.
Brookings Institution event on wage growth 1 p.m.
CSIS event on U.S.-India trade 3 p.m.
Thursday
Senate Banking Committee hearing with Fed’s Powell 10 a.m.
Friday
WITA event on trade enforcement 9 a.m.

New Report: How Americans & Investors Are Reacting To Market Volatility

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