Tag Archives: Federal Reserve

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.”

Federal Reserve Bankers Mocked Unemployed Americans Behind Closed Doors

The Intercept:

IN 2011, UNEMPLOYMENT WAS at a near crisis level. The jobless rate was stuck around 9 percent nationally, an unusually high number due to the continuing effects of the financial crash.

House Democrats were aghast. “With almost five unemployed Americans for every job opening, too many people remain jobless because of a lack of work, not a lack of wanting to work,” said Congressman Lloyd Doggett, D-Tex. So in early November 2011, they introduced a bill to reauthorize Federal unemployment benefits, an insurance program designed to aide those looking for work.

Behind closed doors at the Federal Reserve however, the conversation struck a different tone.

The Federal Reserve’s mandate is to promote “maximum employment,” which essentially means: print enough money so that everyone who wants one has a job. Yet according to transcripts released this month after the traditional five-year waiting period, Federal Reserve officials in November 2011 were debating whether unemployment was caused by bad work ethics and drug use – rather than by the greatest financial crisis in 80 years. This debate then factored into the argument over setting monetary policy.

“I frequently hear of jobs going unfilled because a large number of applicants have difficulty passing basic requirements like drug tests or simply demonstrating the requisite work ethic,” said Dennis Lockhart, a former Citibank executive who ran the Atlanta Federal Reserve Bank. “One contact in the staffing industry told us that during their pretesting process, a majority—actually, 60 percent of applicants—failed to answer ‘0’ to the question of how many days a week it’s acceptable to miss work.”

The room of central bankers then broke into laughter.

Charles Plosser, the president of the Philadelphia Federal Reserve, cited “work ethic” as a common complaint he heard in his district, both in rural and inner city areas. A contact of his who owned 60 McDonald’s restaurants said “passing drug tests, passing literacy tests, and work ethic are the primary problems he has in hiring people.”

Audit the Fed? Maybe this time it will happen.

Senator Rand Paul and Representative Thomas Massie have re-introduced a bill in Congress to audit the Federal Reserve. The Federal Reserve Transparency Act of 2017 would require that the Government Accountability Office (GAO) “conduct a thorough audit of the Federal Reserve’s Board of Governors and reserve banks within one year of the bill’s passage.”
Rep. Massie (R-KY) stated: “It is time to force the Federal Reserve to operate by the same standards of transparency and accountability to the taxpayers that we should demand of all government agencies.” “The American public deserves more insight into the practices of the Federal Reserve… Behind closed doors, the Fed crafts monetary policy that will continue to devalue our currency, slow economic growth, and make life harder for the poor and middle class.”
Legislation to audit the Fed has met with mixed success since the 2008 economic crisis. The House passed similar measures in 2012, 2014 and 2016, all to be defeated in the Senate. The Government Accountability Office, however, did gain some limited oversight powers and performed a one-time audit pursuant to the 2010 Dodd-Frank financial reform act.
Regards,
Richard

Fed’s Powell Urges Congress to Take Another Look at Volcker Rule

Federal Reserve Governor Jerome Powell urged Congress to rewrite the Volcker Rule that restricts proprietary trading, while urging “a high degree of vigilance” against the buildup of financial risks amid improving U.S. growth.

“What the current law and rule do is effectively force you to look into the mind and heart of every trader on every trade to see what the intent is,” Powell said Saturday at the American Finance Association meeting in Chicago. “Is it propriety trading or something else? If that is the test you set yourself, you are going to wind up with tremendous expense and burden.”

Powell’s comments compare to Fed Chair Janet Yellen, who has supported the sweeping bank rules of the 2010 Dodd-Frank Act in the wake of the global financial crisis. President-elect Donald Trump has vowed to dismantle Dodd-Frank. The Volcker Rule restricts banks with taxpayer-backed deposits from making certain types of speculative “proprietary” trades.

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Fed?s Tarullo Met With Wells Fargo CEO After Bank Settlement

Federal Reserve governor Daniel Tarullo met in September with Wells Fargo & Co. Chief Executive John Stumpf shortly after the bank settled with regulators over its use of unauthorized accounts, according to calendars released by the Fed on Friday.

Mr. Tarullo?s meeting with Mr. Stumpf came just days after federal and local regulators announced they were fining Wells Fargo $185 million over two million unauthorized accounts.

Mr. Stumpf announced his retirement on Oct. 12. Tim Sloan, Mr. Stumpf?s successor as CEO, met with Mr. Tarullo later in the month, on Oct. 26.

Mr. Tarullo met twice with J.P. Morgan Chase Chief Executive James Dimon in September and October, the calendars show. The first meeting between Messrs. Tarullo and Dimon, on Sept. 13 of last year, was the first in a series of meetings with large bank chief executives. He spoke with James Gorman, the CEO of Morgan Stanley, and Mr. Stumpf the following day. Messrs. Tarullo and Dimon met again on Oct. 5.

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Fed lifts rates, sees faster pace of hikes in Trump’s first year

The U.S. Federal Reserve raised interest rates on Wednesday and signaled a faster pace of increases in 2017 as central bankers adapted to the incoming Trump administration’s promises of tax cuts, spending and deregulation.

The increase in the federal funds rate to a range of between 0.50 percent and 0.75 percent was widely expected. But the prospect of a brisker monetary tightening contributed to a selloff in shorter-dated U.S. Treasuries and stocks.

In a news conference following the unanimous rate decision, Fed Chair Janet Yellen said Donald Trump’s election had put the central bank under a “cloud of uncertainty” and already prompted some policymakers to shift their view of what’s to come.

“All the (Federal Open Market Committee) participants recognize that there is considerable uncertainty about how economic policies may change and what effect they may have on the economy,” Yellen said.

Though Trump’s inauguration is still a month away, she said “some of the participants” had begun shifting their assumptions about fiscal policy. At least five of 17 Fed policymakers appeared to have boosted their interest rate outlook since September, according to the new “dot plot” of rate projections.

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