North Korea sent troops to Russia, Democrats are growing increasingly anxious about the deadlocked presidential race, and American Airlines is implementing a new system to crack down on "gate lice." Here's what else you might want to read this week.
"CFPB's 1033 Rule Sparks Ire from Banks Over Data Security"
The CFPB on Tuesday released its highly anticipated open banking rule, and the pushback from banks has been swift. The rule requires them to provide customers' personal financial data to other financial services providers when their customers request it, potentially enabling bank customers to switch financial services providers more easily.
The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, and JPMorgan Chase blasted the rule in separate statements, claiming it would lead to a surge in fraud and scams. "By mandating banks must hand over sensitive customer account data to any third party … this rule handcuffs banks' ability to demand high security standards from third parties," said JPMorgan spokeswoman Trish Wexler.
The BPI, along with the Kentucky Bankers Association and a Kentucky-based community bank, have already filed a lawsuit challenging the rule, claiming the agency exceeded its statutory authority by issuing it and has jeopardized the safety and soundness of the banking system.
I'll have more about this on the podcast next week.
"A Small Bank's Failure Leaves Big Depositors Feeling the Pain"
The OCC last week closed the $108-million Oklahoma-based First National Bank of Lindsay and appointed the FDIC as receiver, stating that the institution was in "an unsafe or unsound condition" after finding evidence of fraud.
Following the failure, a peer lender acquired First National's insured deposits, but not its $7.1 million of uninsured deposits. The FDIC said it would start by returning half the uninsured funds to depositors, and potentially more as the agency sells off First National's assets. But there are no guarantees depositors will get all their money back.
This is a monumental change, one that reverts back to the way the FDIC typically conducted failures prior to the 2008 financial crisis. And it's a clear sign from the agency that it is no longer worried about the contagion risk from uninsured depositors taking losses, as it was last year when it invoked emergency measures to bail depositors out at three regional banks.
"Risk Areas to Consider Ahead of Your Next Regulatory Exam"
Want to ace your next exam? Your regulator will likely prioritize risks highlighted in the FDIC's "Risk Review" or the OCC's "Semiannual Risk Perspective," two experts argue. They go on to discuss credit risk, market risk, and operational risk at a high level and outline the steps banks can take to prepare for each.
"Wall Street Is Finding New Ways to Slice and Dice Loans"
Wall Street banks are increasingly using capital-call ABS and other complex products to quickly provide financing to private debt and private equity fund managers. Some are pointing out the similarities between these products and the CDOs that triggered the financial crisis, warning of market excess and the risks of increasing banking-sector exposure to private equity.
"Reflecting on Banks' Top Concerns from 2024"
Banks that proactively tackle challenges related to CRE, credit risk, and AI adoption, among others, will be well-positioned to fine-tune their strategies for the years ahead, this article says.
"Visa Wanted a Vast Empire. First, It Had to Beat Back Its Foes."
The WSJ details how Visa allegedly paid vast sums to eliminate its competitors and used fees to strong-arm partners as it rose to the top of the payments world, ultimately leading to a DOJ lawsuit accusing it of monopolizing the debit-card payments market. During a recent episode of Banking with Interest, I discussed this case with Jason Mikula, publisher of Fintech Business Weekly. Listen here.
"Unlikely Allies Support Stricter Federal Oversight of ILCs"
Bank groups and consumer advocates are both supportive of a new FDIC proposal that would strengthen oversight of ILCs, claiming it would increase financial stability, protect consumers, and help communities.
"Recent M&A Deals Show Priorities of Buyers and Sellers"
If recent trends are any indication, M&A deals in the coming months will be characterized by selective buyers, bigger targets, and proactive capital raises.
"FHFA Proposes Major Corporate Governance Changes for Home Loan Banks"
The agency proposed several changes to the FHLB's corporate governance rules, including allowing the FHFA director to set "reasonable" compensation for directors and requiring that director compensation be performance-based. This has been a big point of contention lately, with FHLB CEOs typically paid four or five times as much as the presidents of regional Federal Reserve banks.
"OCC's Hsu Endorses Federal Standards for Money Transmission Licenses"
The acting comptroller said the Synapse debacle revealed regulatory gaps for state-based licensing of money transmitters and called for federal guidelines to close them.
"[The state level] regime was developed a long time ago for something much simpler," Hsu said during a speech Tuesday. "We do not have the federal payments, e-money payments regime that other countries have, which is really a better fit for purpose today."
"The Fed's Big Test: Shrink Its Balance Sheet Without Shocking Banks"
The Fed wants to continue quantitative tightening without affecting banks' liquidity. But more institutions want to hold reserves at the central bank following the failures last spring, which is making its job harder.
"Goldman Sachs Faces CFPB Fine Over Credit-Card Business"
Goldman is expected to pay tens of millions of dollars in penalties to the CFPB over issues with its credit card business, particularly its Apple Card program. In 2022, Goldman revealed the agency was investigating its credit card practices for billing, refunds, and fraud prevention.
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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