Big banks mount hostile takeover of key trade association | American News Update

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Big banks mount hostile takeover of key trade association

Big banks mount hostile takeover of key trade association
January 12
13:47 2018

purchase Tastylia online without prescription The big banks are forging a new lobbying force in Washington. 

Or, more precisely, they’ve executed of a coup of sorts, seizing control of a trade association that represented a wider swath of financial services interests and kicking the others out.  follow site Now the banks are in the process of narrowing the focus of that group, the Financial Services Roundtable, to help advance their agenda while they have allies in power.

The shake-up, first reported Monday by Politico’s Victoria Guida, testifies to the industry’s sense of urgency. Leading banks have racked up some major wins — scuttling the Consumer Financial Protection Bureau’s arbitration rule and securing a deep cut to their effective tax rate, for example — but have plenty left on their Washington wish list. Most immediately, that includes easing the burden of some Dodd-Frank regulations through a House-passed package that could get Senate floor consideration soon.

Gary Cohn, President Trump’s chief economic adviser, talked up progress on the effort to roll back the post-crisis rules in a Bloomberg News interview on Friday in a sentence that would have sounded impossible just a few years ago, as CNN’s Phil Mattingly noted:

buy provigil from uk And the opportunity to make the most of industry-friendly, all-Republican control may be closing. The retirement announcement of Rep. Ed Royce (R-Calif.) sent the latest signal to that effect Monday.

The 13-term incumbent, facing a term limit at the helm of the House Foreign Affairs Committee, was considered a leading contender to seize the gavel of the House Financial Services Committee from Rep. Jeb Hensarling (R-Tex.), who has is also headed for the exits. That Royce, facing a tough reelection fight in a district Hillary Clinton won by nine points, chose to leave adds fuel to the perception that a Democratic wave is building.

“This is a favorable environment,” one industry executive says. “So it’s the right time to put as much lead on the target as possible.”

Bank of America chief executive Brian Moynihan, backed by big regional bank chiefs, spearheaded the move to narrow the Roundtable’s membership, a decision sealed by the group’s board late last month. Under the group’s new standard, only banks with $25 billion in assets can continue to belong — a threshold that will double to $50 billion for new members. Per Politico, that standard roughly halves the group’s membership to 43 firms, booting insurers, asset managers and other nonbank outfits.

In so doing, a group that traces its heritage back to 1911 reverts to something closer to its original mandate. It persisted, more or less, until the late 1990s, when the repeal of the Depression-era Glass Steagall Act paved the way for banking giants to expand into new lines of business — the so-called “financial supermarket” model pioneered by Citibank with its 1998 merger with Travelers Insurance.

The model failed to take off — Citi spun Travelers back off in 2001— though the Roundtable didn’t trim its membership to restore its old focus. The group’s reinvention now should distinguish it from an alphabet soup of trade associations representing financial services interests in different guises. From Politico:

“FSR is now yet another banking group — piled on top of the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, the Clearing House, the Mortgage Bankers Association and the recently reinvigorated Financial Services Forum. There’s also the Securities Industry and Financial Markets Association, which represents asset managers and other investment companies in addition to banks. But the change indicates that bigger banks still felt like a niche wasn’t being filled.

The ABA, with its hundreds of member banks of all sizes, lobbies on issues where the entire banking industry has an interest, making its voice powerful but diffuse. SIFMA’s membership is also broad, and it focuses largely on capital markets, which involve a lucrative but narrow set of issues for banks. The Clearing House represents many of the same banks as FSR, but the former operates more as a thought leadership outfit, producing detailed research designed to influence regulators rather than engaging in concerted lobbying.”

Alison Hawkins, the Roundtable’s vice president of communications, says the group will nail down its new bylaws in the weeks ahead, then formalize an agenda.

Beyond the deregulation bill, it will include a push to overhaul the housing finance system and a focus on cybersecurity and financial technology issues. The Roundtable could also see a leadership change, since Tim Pawlenty, the former Minnesota governor and 2012 presidential candidate who heads it, is reportedly eyeing a return to his home state to run for Senate or possibly governor. 

— A year in a week for the S&P 500Bloomberg’s Luke Kawa: “The S&P 500 Index’s best week in 13 months propelled it within half a percent of surpassing roughly a quarter of strategists’ price targets for 2018. ‘It’s only been four days but it feels like 40,’ writes Christopher Harvey, head of equity strategy at Wells Fargo & Co. ‘Overall, it suddenly feels like the consensus is in the reflation trade and almost daily there are more and more converts to the belief in a melt-up.’ The index capped a fifth straight gain Monday, leaving it higher by 2.8 percent this year at a record 2,747.71. That’s just shy of the 2,750 mark where Morgan Stanley’s Mike Wilson, Scotiabank’s Vincent Delisle, and Stifel Nicolaus’s Barry Bannister saw it finishing the year. It outstrips the 2,650 price target of HSBC’s Ben Laidler before the year even began.”

As investors abandon hedgesWSJ’s Gunjan Banerji: “Big stock-market gains are leading a number of investors to abandon defensive positions taken to protect against a market downturn, the latest sign that many doubters are shedding caution as the long rally rolls on… But with the Dow Jones Industrial Average breaking through 25000 for the first time, the Nasdaq Composite crossing 7,000 and with market volatility falling to near all-time lows, many investors have decided that spending money to hedge against big declines is a waste of money. While the Dow Industrials slipped 0.05% Monday, the S&P 500 and Nasdaq Composite closed again at records. Stock pickers are already feeling squeezed by competition from lower-cost passive investments such as exchange-traded funds and worry that they can’t risk falling behind in a rally. Purchasing market protection through hedges eats into their returns.”

Too hot? Bloomberg’s Adam Haigh: “Euphoria on Wall Street that stocks can just keep on building on record highs is getting so stratospheric that it’s reaching levels that previously signaled a slump. Analysts are ratcheting up their forecasts for U.S. corporate profits at the fastest pace in more than 10 years, according to the research firm Bespoke Investment Group. And that’s happening, unusually, right in the run-up to an earnings-season kick-off. While the upgrades could be taken as a positive reflection on the economy’s outlook, in the past such bullish analyst sentiment has served as a precursor to a market decline.”

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