Wall Street Journal Friendlier Fed: The Federal Reserve plans to release the results of its stress tests on June 22 and June 28. At the same time, it plans to provide banks with more information about the calculations it uses to judge them in the annual tests, as well as ease the process's burdens on banks' boards of directors.
Specifically, Fed governor Jerome Powell said the Fed would "provide much more granular information about our expectations of loss rates on particular portfolios of corporate loans and other kinds of loans." He also said the Fed is "going to eliminate many of the real specific directives we give to the boards of directors. We want the boards of directors to focus on their main job of overseeing and holding accountable the management, not running the company and not getting tied up in a lot of checklists."
Jerome Powell, governor of the U.S. Federal Reserve, calls on an audience member during a question and answer session at an Economic Club of New York event in New York, U.S., on Thursday, June 1, 2017. Powell is calling for gradual interest rate increases and a start to balance-sheet reductions later this year if the economy stays on track, though he’s watching a recent slowdown in inflation. Photographer: Michael Nagle/Bloomberg
Michael Nagle/Bloomberg
Testing blockchain: The Journal interviews Dr. Lee Braine, Barclays' chief technology officer, about the bank's plans to launch a formal blockchain test with other financial services firms next year. "Almost every week new ideas in blockchain appear. Just keeping up to date on the constant flow requires time and effort for banks, regulators and startups," he says.
Join the crowd: Goldman Sachs CEO Lloyd Blankfein has joined the Twittersphere, posting a criticism of President Trump's decision to pull America out of the Paris climate agreement.
Not done yet: The Journal's Heard on the Street column advises investors not to panic about the recent decline in second quarter trading revenues announced by JPMorgan Chase and Bank of America. They should instead "focus on bigger, more positive trends that will drive bank shares."
Desperate measures: Shunned by big Wall Street banks worried about financial as well as reputational risks, Venezuela's unpopular and increasingly authoritarian government has had to resort to using small firms to arrange financing for its operations. "There's a reputational risk here for investment banks, so the government is having to turn to little-known intermediaries," according to Asdrubal Oliveros, director of the Caracas-based consulting firm Ecoanalitica.
Financial Times Fined: The European Securities and Markets Authority fined Moody's €1.24 million for failing to explain the methodology behind its ratings decisions on several global institutions, including the European Investment Bank and the European Union. It was only the third fine issued by Esma and the first for a transparency failure. "It's a very important message," said Nick Bayley, a managing director at Duff & Phelps. "It shows that [Esma] is willing to take public enforcement action."
Sold: A day after it sold the bulk of its operations in Africa, Barclays agreed to sell its Zimbabwe unit to First Merchant Bank, a Malawi-based lender. But the deal is being contested by the board and management of the Barclays unit, who appealed to Zimbabwe's high court to block the transaction.
Settled: On the morning the trial was supposed to begin, JPMorgan Chase agreed to pay $35 million to settle a lawsuit brought against it by shareholders of Good Technology. The investors claimed that JPMorgan advised the technology startup to accept a low-ball offer from BlackBerry in 2015 in order to win future business from the mobile telephone maker, costing the company hundreds of millions of dollars.
Another idea: Blackstone, the world's largest private-equity group, and Paulson & Co., the big hedge fund, are pitching a new plan that would privatize Fannie Mae and Freddie Mac and free them from government control. But their plan, which the FT said would "restore value to their investment in the companies," appears to be at odds with that of Treasury Secretary Steven Mnuchin, who said he expects the two mortgage agencies to continue paying dividends to the government.
Quotable "The post-crisis reform program has been mostly completed and has mostly been successful. But there are going to be some adjustments, and I think that is only appropriate." — Federal Reserve Gov. Jerome Powell on changes to the Fed's bank stress tests.
The Consumer Financial Protection Bureau has significantly raised the transaction threshold for its larger participant rule — which defines which firms will be affected — from 5 million annual payments to 50 million.
Sen. Mike Rounds, Rep. French Hill and former FDIC Chair Jelena McWilliams were among the speakers Tuesday at the American Fintech Council's Policy Summit.
In a congressional hearing, top officials from the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said no new rules will be adopted or proposed this year.
