Executives of the top US banks during investor calls have expressed concerns about the country's economic recovery and said further relief measures are needed. "The pace of job growth and the rebound in consumer spending have slowed, and the diminished pace of reopening and the end of some stimulus programs are presenting headwinds," Wells Fargo CEO Charles Scharf told an industry conference.
TD Bank has filed a lawsuit alleging that fintech Plaid tried to mislead customers by using the bank's logo and color scheme in its efforts to collect consumer data. Plaid denied wrongdoing and stated that it was surprised by the lawsuit, saying "good-faith discussions" on the matter had been underway.
A report by the House Select Subcommittee on the Coronavirus Crisis says the Treasury Department encouraged lenders to give preference to existing customers in applications for Paycheck Protection Program loans, effectively putting underserved businesses at a disadvantage. A Treasury spokesperson said the department "encouraged all banks to offer loans to their existing small business customers, but no Treasury official ever suggested that banks should do so to the exclusion of new customers."
Citadel Securities has filed a lawsuit challenging the Securities and Exchange Commission's approval of a new kind of stock order proposed by IEX Group. Citadel said the "D-Limit" order, which gives traders some protection against unfavorable price moves, "will undermine the reliability of our markets and harm tens of millions of retail investors."
The growth in popularity of environmental, social and governance-oriented funds is one potential factor behind the skewed relationship between value and growth stocks, writes columnist Mike Dolan. Inflows into ESG-marketed equity funds are up 20% from last year.
President Donald Trump is expected to continue loosening regulations on financial institutions by removing some Dodd-Frank restrictions. Democratic presidential candidate Joe Biden has not announced his agenda but has expressed support for postal banking and has said he would work to expand the Community Reinvestment Act to include nonbank lenders.
Sen. Sherrod Brown, D-Ohio, is advocating for the Anti-Money-Laundering Act of 2020 which increases penalties for banks that repeatedly violate the law and require limited liability corporations to reveal their true owners. Brown, who may chair the Senate Banking Committee if the Democrats win the Senate in November, told the International Consortium of Investigative Journalists: "I think if some bankers go to jail, that stuff stops happening."
The New York Department of Financial Services is bringing together digital asset firms and other experts to develop new digital techniques for the submission of regulatory reports. The department said it hopes to come up with "common standards" for digital regulatory reporting, using open-source technology.
With mortgage lending booming and Rocket Companies having a largely successful initial public offering in August, several other mortgage lenders are now considering going public. However, investors are still struggling to value Rocket, and other factors, such as changes in the mortgage market and the future of Fannie Mae and Freddie Mac, could weigh on lenders' listing decisions.
Some US financial firms in their earnings reports have signaled that they have lowered their compensation ratio for traders and investment bankers. The five biggest Wall Street banks have seen $24 billion more in trading revenue this year over last year, though banks' other divisions are largely struggling because of coronavirus-related disruptions, and issuing bonuses amid high US unemployment could bring backlash.
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