“When I went to Britain I thought the regulatory environment would be much worse,” he says. “It’s infinitely better there,” says Vernon Hill, who headed for the U.K. after a career in the community bank sector in the United States. The founding of new banks has fallen virtually to zero in the U.S. since the enactment of Dodd-Frank [Stephen Moore, W$J via Kevin Funnell]
- Robert Litan in Fortune on why Elizabeth Warren went after him;
- “Economists have no idea how to measure the value created by the financial sector.” [Arnold Kling]
- W$J at end of August had an investigative report on the (opaque, high-discretion, unaccountable) system of installing “monitors” in banks and other financial institutions to settle civil or criminal charges;
- Update: in a sidebar to my City Journal piece on New York Attorney General Eric Schneiderman this summer, I covered his charges of “redlining” against small upstate banks that did not operate in inner cities; now Schneiderman has extracted $825,000 from a Buffalo bank [NY AG press release]
- No kangaroo courts at the SEC, please [Bloomberg View editorial on in-house adjudicators, earlier here, etc.]
- How the FATCA law, deplored in this space for years, makes life hard for U.S. expatriates/spouses [Colleen Graffy, WSJ]
- “Except for the ten to twelve million people who use them every year, just about everybody hates payday loans.” [New York Fed “Liberty Street Economics” via Tabarrok] Despite reports of FDIC back-off, Operation Choke Point controversy not over [Ballard Spahr via Kevin Funnell]
The Consumer Financial Protection Bureau (CFPB)’s campaign against disparate impact in car loans is raising costs for some borrowers. Thanks, Sen. Warren! “The results highlight the sometimes unpredictable consequences of attempts to regulate lending practices…. Efforts by the CFPB to police the fairness of auto loans have accelerated in recent years under Director Richard Cordray.” [Morningstar/Dow Jones, W$J]
a growing movement among academics and now governments to gradually ban the use of cash completely. It is inefficient, oils the underground economy, and makes it harder for central banks to manage the economy, or so runs the argument.
But while a “cashless economy would be far easier to both tax and control” for the authorities, it would afford to the governed both less convenience and less freedom:
A simpler and more efficient “payment technology” has never been invented. No matter how smart our mobiles get, or how much data can be loaded on to a debit card, a banknote is an incredibly efficient way to handle small transactions. It is costless, immediate, flexible, no one ever needs a password, it can’t be hacked, and the system doesn’t ever crash.
More importantly, cash is about freedom. There are surely limits to the control over society we wish to hand over to governments and central banks? You don’t need to be a fully paid-up libertarian to question whether, in a world where we already worry about the amount of data that Facebook and Google can gather about us, we really want the banks and the state to know every single detail of what we are spending our money on and where. It is easy to surrender that freedom – but it will be a lot harder to get back.
- Marcia Narine on D.C. Circuit’s recent ruling striking down part of Dodd-Frank conflict mineral disclosure rule [Business Law Prof]
- More on suit challenging constitutionality of FATCA, the law complicating many expatriates’ lives [Paul Mirengoff, PowerLine]
- “Jury Will Put A Price On Terrorism — And Stick A Bank With The Bill” [Daniel Fisher, Reuters on Arab Bank settlement]
- Operation Choke Point: “How a program meant to stamp out fraud has put a stranglehold on legitimate industries” [Reason TV video, AmmoLand on markup of Rep. Blaine Luetkemeyer’s anti-Choke-Point Financial Institution Customer Protection Act]
- Federal Reserve’s denial of core banking services to Colorado cannabis businesses: consistent with its authorizing statutes? [George Selgin/Cato, related from me on RICO suit against bankers, bonders, and others interacting with the industry]
- “A financial system based not on … charging interest for lending … but on traditional social values”: Russia’s Orthodox Church backs interest-avoiding finance system akin to Islamic sharia finance [Bloomberg, Moscow Times]
- Two popular views in tension with each other: “Wall Street = short term thinking” and “Wall Street spins meager current earnings into bubbles” [Kevin Erdmann via Tyler Cowen]
Small banks and other regulated businesses now live at the permission of arbitrary regulators in a legal system that no longer protects individual rights. That’s the message of a letter sent to shareholders earlier this year by Frank H. Hamlin III, CEO of the small Canandaigua National Bank in upstate New York. In particular, Hamlin cites the way the office of New York attorney general Eric Schneiderman has pushed around two other upstate banks (not his) on ill-defined redlining charges based on doing too much of their lending in the suburbs. I write about it in a new post at Cato at Liberty.
“The Securities and Exchange Commission today announced that BNY Mellon has agreed to pay $14.8 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by providing valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.” [SEC press release, WSJ] The SEC said at least three offspring from influential families lacked “the requisite academic or professional credentials” for the internships and proved to be “less than exemplary employees.” [Business Insider] While publicly shaming the bank, the commission did not see fit to name the foreign country involved. Similar probes on intern hiring have been aimed at other big financial institutions including J.P. Morgan, accused of hiring the children of Chinese officials [Reuters]
- “American Express Settlement Collapses Amid Charges Of Collusion” [Daniel Fisher]
- Some on Capitol Hill would like U.S. Treasury to return money seized from South Mountain Creamery in now-notorious structuring case [Washington Post, our earlier coverage]
- CEO pay shaming theory has been tried and failed twice, but why not one more try? [Marc Hodak, earlier]
- Another big courtroom reverse for SEC in use of in-house administrative law judges [Reuters]
- Judge Easterbrook on competitive federalism, Delaware, and incorporation [Robert Goddard, Corporate Law and Governance quoting Corre Opportunities Fund, LP v. Emmis Communications Corp.]
- How far will California go to tax one wealthy ex-resident? Consider saga of Gilbert Hyatt vs. Franchise Tax Board [Lloyd Billingsley, Daily Caller]
- Apparently so: “Is Securities Litigation’s Future Secure?” [Nick Goseland, Above the Law]
My new post at Cato describes how a pro-Drug-War group is using civil RICO to go after banks, bonding companies, landlords, and other commercial vendors that do business with marijuana facilities legalized under Colorado’s Amendment 64. Whatever you think of the underlying Colorado law, RICO (I argue) puts too much power in the hands of bounty-hunting private lawyers. More: Josh Blackman.
At last night’s Republican debate in New Hampshire, Carly Fiorina criticized how the Dodd-Frank law is strangling community banks, as well as its encouragement of yet bigger Wall Street firms and Congress’s failure to reform mortgage entities Fannie Mae and Freddie Mac. More on community banks here, from Scott Beyer, and in several past posts. [And: Hans Bader, CEI.]
Based in a rural village in the heart of Amish country, Bank of Bird-in-Hand is the only new bank to open in the U.S. since 2010, when the Dodd-Frank law was passed and enacted. An average of more than 100 new banks a year opened in the three decades before Dodd-Frank.