Tag Archives: Federal Reserve

Deutsche Bank Is First Bank Busted for Breaking Volcker Rule

Deutsche Bank AG was hit with the Federal Reserve’s first major fine for failing to ensure traders abide by the Volcker Rule’s ban on risky market bets — and will also pay even more for letting currency desks chat online with competitors, allegedly revealing positions.

The simultaneous sanctions, totaling almost $157 million, fault lax oversight of traders that persisted into last year. The company — which raised $8.5 billion from investors this month to recapitalize — admitted to the Fed in March 2016 that it still lacked adequate systems for keeping tabs on dealings that might run afoul of the Volcker ban.

“Significant gaps existed across key aspects of Deutsche Bank’s Volcker Rule compliance program,” the Fed said Thursday, fining the firm $19.7 million for the lapses. As for chats, the bank failed to detect that currency traders engaged in “unsafe and unsound conduct,” disclosing some positions or talking about coordinating strategies, the Fed said. The company will pay $136.9 million for that.

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Donald Trump Expected to Pick Shadow Banker for Key Position at the Fed

The swamp expands…

THE FEDERAL RESERVE’S vice chair for supervision is arguably the most important financial regulator in the federal government. No agency has greater oversight responsibility of U.S. financial institutions than the Fed. And the vice chair influences what kinds of trades those institutions can make, how they must prepare for unexpected losses, and what punishment to mete out when banks fail to uphold the law.

Hedge funds and private equity firms are sometimes called “shadow banks” because they exist outside the regulatory perimeter, even though they engage in bank-like lending and investment activities.

They want to keep it that way. And President Trump’s expected nominationof Randal Quarles to the vice chair’s role is about as close a guarantee as the shadow banking sector can get that the feds won’t be bothering them any time soon.

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A Federal Reserve Bank Ignored Insider Trading Investigation When Re-Appointing Its President

NEW DOCUMENTS OBTAINED by a Federal Reserve watchdog group suggest that the Federal Reserve Bank of Richmond’s board of directors may have known that its president was under federal investigation when the board re-appointed him to a new term.

That president, Jeffrey Lacker, resigned his position this week after acknowledging his role in a leak of nonpublic information about Fed policy to an analyst for hedge fund and asset manager clients. The situation highlights the often cozy relationship between central bankers and Wall Street.

In a carefully worded announcement submitted by his attorney Tuesday, Lacker admitted to an October 2012 phone conversation with Medley Global Advisors analyst Regina Schleiger, where she described Fed deliberations over purchasing $45 billion of U.S. Treasury bonds per month as part of their quantitative easing program. Lacker did not deny this, or report Schleiger’s possession of confidential information to Fed staff. In his statement Lacker said, “I realized that my failure to decline comment on the information could have been taken … as an acknowledgment or confirmation of the information.”

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Richmond Fed President Jeffrey Lacker resigns, admits to leaking confidential information

And he certainly should have been charged…

Jeffery Lacker, the president and CEO of the Federal Reserve Bank of Richmondand a member of the Federal Open Market Committee, abruptly announced his resignation on Tuesday, revealing himself as the source of a leak of confidential information that spurred investigations by the Department of Justice, the Office of the Inspector General of the Federal Reserve Board, the Federal Bureau of Investigation, the Commodity Futures Trading Commission, and others.

Lacker was already set to retire from the Richmond Fed in October, but said Tuesday that he is resigning immediately due to his role in the leak scandal, which stemmed from confidential information about the Fed’s plans to help support the country’s economic recovery being leaked to Medley Global Advisors in 2012.

Here’s some background on the scandal from the Wall Street Journal:

The leak probe centers on a confidential Sept. 12-13, 2012, meeting of senior Fed officials, when the Fed voted to begin a new effort to spur the economy by buying $40 billion worth of mortgage-backed securities each month. The Fed announced the move after the meetings concluded. It left open the possibility of further stimulus.

The important details of the Fed’s internal deliberations at the September meetings were supposed to be disclosed by the Fed in early October.

Before that happened, The Wall Street Journal published a story reporting that Fed officials at the September meeting were considering further action to stimulate the economy. The Sept. 28 story said there was a “strong possibility” the Fed would begin purchasing large amounts of Treasury bonds.

The next week, Medley sent a research note to its clients saying with more certainty that the Fed was “likely to vote as early as its December meeting” to begin monthly purchases of $45 billion worth of Treasury bonds.

The Oct. 3 Medley note, which came the day before the Fed released the meeting minutes, included confidential details that indicated the information came from inside the Fed.

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Federal Reserve on track to raise U.S. rates twice more this year: Evans

The Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week, and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, a Fed rate-setter said on Monday.

The public comments from Chicago Fed President Charles Evans were among the first since the U.S. central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures.

“Three is entirely possible,” Evans, speaking on Fox Business Network TV, said of hikes in 2017. “As I gain more confidence in the outlook I could support three total this year. If inflation began to pick up, that would certainly solidify (that expectation). It could be three, it could be two, it could be four if things really pick up.”

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Daniel Tarullo, Federal Reserve Regulatory Point Man, to Resign

WASHINGTON—The Federal Reserve’s lead architect of postcrisis financial regulations plans to resign this spring, giving President Donald Trump more freedom to remake the central bank and to accelerate a deregulatory agenda by putting his own appointees in charge of overseeing Wall Street.

Daniel Tarullo, a 64-year-old Fed governor and the government’s most influential overseer of the American banking system, wrote to Mr. Trump on Friday saying he would resign “on or about” April 5. The move had been expected, and will remove from the policy-making debate one of the strongest voices for imposing safeguards on big banks and nonbanks to protect against another meltdown. Mr. Trump and many of his advisers have criticized those rules as hampering economic growth, and have suggested they will fill vacancies with officials who will handle banking policy with a lighter touch.

Stock prices for megabanks jumped on the news of Mr. Tarullo’s imminent departure, with shares in Bank of America Corp. andCitigroup Inc. rising almost 1% in the half-hour following the announcement.

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Federal Reserve issued a cease-and-desist order to BB&T Corp. over alleged deficiencies in its anti-money-laundering controls

From the WSJ article:

Such orders don’t state that the bank has laundered money, but rather that their internal systems for detecting criminal activity and reporting it to the government are deemed unsound by regulators. The policing of such violations has become more severe since the financial crisis.

Brian Davis, a BB&T spokesman, said the firm has a “long history of quickly addressing regulatory concerns,” and has already made “significant enhancements” to its anti-money laundering compliance program. He said the firm is “committed to working alongside our regulatory partners to implement the needed improvements as quickly as possible.”