Fed eases rules on big regionals; Deutsche denies it has Trump tax returns

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Receiving Wide Coverage ...

Easier does it

The Federal Reserve “approved some of the most significant rollbacks of bank rules since President Trump took office,” including “rules aimed at easing liquidity and capital rules for large U.S. banks … that would lower regulatory costs for regional U.S. lenders with less than $700 billion in assets — a group that includes U.S. Bancorp, Capital One and more than a dozen others,” the Wall Street Journal reports.

“The Fed’s new rules would divide large U.S. banks into four categories based on their sizes and other risk factors. Regional lenders would be either entirely free from certain capital and liquidity requirements or see those requirements reduced. The changes divided the Fed, with Trump-appointed regulators and an official nominated by President Obama taking opposite sides,” the paper says.

“The changes mean that all but the largest and most complex banks will be subject to lower liquidity and capital requirements." the Financial Times says. "Smaller and less complex banks will collectively have to hold a total of 0.6% less in capital and 2% less in liquid assets than before. The rules will also allow some large regional U.S. banks to avoid having to undergo annual stress tests.”

“Banks with $250 billion to $700 billion in total assets, including firms like Capital One and PNC Financial, will now have to submit a resolution plan every three years, alternating between full and partial filings," according to the New York Times. "They are currently required to submit a full report annually. Foreign banks with operations in the United States, including Deutsche Bank, Barclays and HSBC, will also be allowed to file less often.”

“However, one key change included walking back a proposal allowing banks to change aspects of their living wills automatically,” American Banker reports.

We don’t got ’em

Deutsche Bank, President Trump’s biggest lender, told a federal appeals court that it doesn’t have the president’s tax returns. “Democratic-controlled congressional committees issued subpoenas to Deutsche Bank this year for financial records related to the president, his companies and his family.” Trump then sued the bank to block it from complying. Deutsche Bank told the court that “the only tax returns it has for individuals and entities named in the subpoenas are not those of the president,” the New York Times reports.

Krisztian Bocsi/Bloomberg

“A coalition of media organizations had asked the U.S. Court of Appeals for the 2nd Circuit to unseal a letter Deutsche Bank filed in response to the court’s questions about whether the bank has Trump’s tax returns among others" the Washington Post says. "In its 12-page order Thursday, the three-judge panel rejected the media request to make public the full letter, finding that the redacted names are ‘not relevant’ to the underlying legal issues in the case.”

Elsewhere

Help wanted

A year after it laid off 1,000 people in its mortgage processing unit, Wells Fargo is hiring again, Reuters reports. “The about-face comes as banks brace for a surge in mortgage activity fueled by lower interest rates. Refinancing activity, which accounts for a majority of mortgage applications, has more than doubled from a year ago,” while purchase activity has climbed 10%, according to the Mortgage Bankers Association.

“The latest hiring initiative could throw a wrench into Wells Fargo’s plans to cut costs. In July, the bank warned investors that 2020 costs would not be lower as previously expected since the bank hired thousands of employees to improve its risk management and work through the regulatory fallout from its various scandals.”

Catching the wave

JPMorgan Chase has set up its first trust company in Asia “to cater to a growing cadre of ultra-wealthy individuals in the region. The move by the U.S. banking giant, which already has a Delaware trust company for U.S.-based clients and one in the Bahamas, comes amid a boom in family offices, or private investment vehicles, in Hong Kong and Singapore.”

Quotable

“Today’s actions go beyond what is required by law and weaken the safeguards at the core of the system before they have been tested through a full cycle. At a time when the large banks are profitable and providing ample credit, I see little benefit to the banks or the system from the proposed reduction in core resilience that would justify the increased risk to financial stability in the future.” — Federal Reserve Governor Lael Brainard, arguing against the Fed’s plan to reduce regulatory requirements on large regional banks