What was once a more consultative relationship between JPMorgan and its regulators has turned into an environment of aggressive demands to reshape the banking giant, say bankers.
With news the largest U.S. bank has settled one set of charges for $920 million and is bracing for more legal and regulatory scrutiny in the coming weeks and months, insiders say the most noticeable change has been the regulators’ use of “consent orders” to enforce wholesale changes across the institution’s risk management controls and systems. (more…)
In a move considered to be the most complete overhaul of U.S. bank capital standards since Basel I in 1988, three U.S. banking regulators (the Federal Reserve Board, Office of Comptroller of the Currency, and Federal Deposit Insurance Corporation) have finalized the three Basel III-related notices of proposed rulemaking (NPRs) from 2012 on capital rules.
17 Jul 2013Bora Yagiz
Collectively, the rules raise capital ratios, expand the base of assets for risk-based capital calculations, make changes to the methodology for calculation of credit risk weightings for banking and trading book assets and put emphasis on a stricter definition of capital, especially with regards to common equity Tier 1 (CET1) capital, the highest quality of equity. Higher quality of equity is perceived to provide a better safety net for the financial system in economic downturns, but this safety comes with a higher cost of business for the banks. Simply put, money kept as capital is not invested. (more…)
A senior Federal Reserve official wants broker-dealers to hold more capital, and be more closely watched by prudential regulators. He opposed as arbitrary recent proposals to sharply raise bank capital or restrict their size and activity. Regulators should instead ensure that capital is in place in the subsidiaries with the highest risk, such as trading, rather than seeking more debt issuance at the group holding company level.
The comments were made by Federal Reserve Bank of Richmond President Jeff Lacker, in a speech to the Council on Foreign Relations on the subject of too-big-to-fail banks. (more…)
New Century Bank lost more than $33 million because officers and directors disregarded the bank’s lending policies and failed to adhere to regulatory warnings about several commercial real estate loans, according to the Federal Deposit Insurance Corp.
07 May 2013Catherine Tomasko
The FDIC is suing the now-former executives in the U.S. District Court for the Northern District of Illinois. The complaint alleges they made numerous loans that violated the bank’s policies from April 2005 to July 2008, breaching their fiduciary duty and committing negligence along the way.
Hoping to put her stamp on the final rules for ”too big to fail” and the “Volcker Rule,” former FDIC Chairwoman Sheila Bair will head a new watchdog group called the Systemic Risk Council, featuring marquee names such as Paul Volcker and Brooksley Born.