CFPB claims challenged; HSBC FX trader convicted

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Disputed data: President Trump now has more than enough reason to fire Consumer Financial Protection Bureau Director Richard Cordray following a Treasury Department report that says the CFPB’s recent rule prohibiting mandatory arbitration agreements doesn’t benefit consumers so much as “Mr. Cordray’s trial lawyer pals,” the Wall Street Journal’s editorial board says.

According to Treasury, a study the CFPB conducted in 2015, “only 13% of class actions that the CFPB studied resulted in a recovery for members,” the paper said. “In the average case, plaintiffs received $32 while attorneys hauled in more than $1 million.”

“The CFPB’s oversights are so many and so egregious that they suggest intent more than negligence, and the Treasury report provides ample evidence that the rule is arbitrary and capricious, which would make it illegal,” the editors conclude. “It also gives the President all the more reason to replace Mr. Cordray.”

“The bureau failed to meaningfully evaluate whether prohibiting mandatory arbitration clauses in consumer financial contracts would serve either consumer protection or the public interest,” the Treasury report said.

The Washington Post said it was “highly unusual” for the Trump administration to “attack a rule proposed by one of its own agencies.”

“It is not unusual for such regulators to disagree, but rarely do those squabbles spill out into public view,” it said. Wall Street Journal, New York Times, Washington Post, American Banker here and here

FX trader convicted: A federal jury in Brooklyn found Mark Johnson, HSBC’s former global head of foreign-exchange cash trading, guilty of misusing information about a client’s $3.5 billion currency trade to make millions for the bank. Johnson was the first banker to face criminal charges following a Justice Department investigation into forex rate manipulation.

Mark Kauzlarich/Bloomberg

One of Johnson’s lawyers said he planned to appeal, adding, “Today an innocent man was convicted.” Wall Street Journal, Financial Times

Wall Street Journal
Insurance deal: Hartford Financial Services Group agreed to pay $1.45 billion for Aetna’s unit that provides life, disability income and other insurance products to company benefits programs. The acquisition will nearly double Hartford’s business in this sector, making it one of the top two players in the business, according to Chairman and CEO Christopher Swift. The company’s annual premiums in the business will increase to about $5 billion from $3.15 billion this year.

Financial Times
A woman’s touch: Diversity isn’t just the right thing to do, it’s also good for business, especially in banking, Simon Samuels, a banking consultant at Veritum Partners, writes in an op-ed piece. Yet bankers don’t seem to realize this, or are at least slow to put it into practice.

“Putting aside the wider benefits of gender diversity, there is clear evidence that it leads to higher profits,” Samuels writes, citing a 2012 Credit Suisse study. “Yet banks — widely viewed as citadels of capitalism, with a laser-like focus on profit maximizing — are among the least diversified industries, with barely a fifth of senior managers at European banks being female.”

“There is also academic evidence suggesting gender diversity improves risk management,” he adds. “So embracing diversity in the risk functions of banks may also help them avoid some of the traps that alpha male risk managers tend to fall into.”

Quotable
“I just don't believe in this bitcoin thing. I think it's just going to implode one day. I think this is Enron in the making. It just doesn't make sense.” — Saudi billionaire investor Prince Alwaleed bin Talal on CNBC.