(Washington)

The Consumer Financial Protection Bureau, a name hated by Republicans, loved by Democrats, and tolerated by banks, may be set to die a prolonged death. The agency, which was created by the Obama administration, has held almost limitless power to create and enforce new financial regulation, all created by hardline anti-financier Elizabeth Warren. Now, a courtroom battle over one of the punishments it set out may lead to its ultimate demise. The agency already lost some power when a court ruled that the CFPB did have too much freedom, but it decided against dismantling it altogether.


FINSUM: The big battle here is over Trump’s ability to fire the head of the CFPB, which he currently does not have the ability to do unless it is “for cause”. Once that power comes to Trump, the whole situation changes.

Source: Bloomberg

Published in US

(New York)

We have been covering this story for a few months and today developments took a dramatic turn in terms of what a Trump version of Glass-Steagall might look like. Generally, it appears that investors should not worry all that much as the administration will not seek to actually split investment banks from retail banks. Treasury secretary Steve Mnuchin does not support doing so, as he told Congress yesterday, saying “We do not support a separation of banks from investment banks”. Doing say would create problems for “financial markets, on the economy, and liquidity”.


FINSUM: While rhetoric and reality can sometimes be far apart, this seems to be a clear statement that the administration won’t tear banks apart. Investors can breathe a small sigh of relief.

Source: Wall Street Journal

Published in US

(New York)

Banks benefitted a great deal from Donald Trump’s election. Expectations surged that Trump would bring about changes that would help them, including higher rates and deregulation. However, that picture has blurred of late as Republicans have been slow to push through changes. Banks may be a good buy no matter what though, as three main aspects will support them. Firstly, gradual rates increases—which seem likely—will benefit them. Secondly, their thick capital cushions, and finally, some very modest regulatory reforms, which do not seem too politically complicated. All three could mean that banks will see a strong performance to come.


FINSUM: Banks may see a strong fundamental performance, but their valuations are still too high if there are no major changes, at least in our opinion.

Source: Wall Street Journal

Published in Equities
Tuesday, 16 May 2017 00:00

Big Trouble Brewing in US Real Estate

(New York)

Investors should be worried about US real estate. That is the conclusion of new data analyzing the US housing market. This worries are particularly high at the top end of the market, where a mountain of new luxury apartment inventory is about to hit the market at a time when vacancy rates are already rising. As a result of the glut, banks have been tightening credit lines to developers, and previously planned projects are stalled. Rental inflation also appears to have peaked, all of which has weighed on residential REITs.


FINSUM: This article paints a pretty bleak picture of US real estate, but on the flip side, the low end of the market seems like it will stay strong as first-time Millennial buyers keep things buoyant.

Source: Wall Street Journal

Published in Markets

(Washington)

The pulse of Washington has changed dramatically in a matter of months, and so has the direction of financial regulation. The Obama administration added much financial regulation that opponents are now seeking to tear down. At this very moment there are new proposals to dismantle Dodd-Frank, terminate the fiduciary rule, and potentially separate retail from investment banking. This article takes a look at the competing visions of the future of financial rulemaking, breaking down the debate into two camps. These two are those who think banks need to be reined in to make the system safer and those who think that market forces are the best regulator of all.


FINSUM: We fall somewhere in between these two views. We think some regulation is necessary to ensure safety and limit misbehavior relating to being “too big to fail”, but at the same time such rules needed to be very smartly written to mesh well with market forces and not create perverse incentives.

Source: Wall Street Journal

Published in Politics
Page 1 of 36

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…