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Analysts start computing capital shortfalls under stress capital buffer; DOL starts to probe Wells

Banking Essentials Newsletter - November Edition

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Analysts start computing capital shortfalls under stress capital buffer; DOL starts to probe Wells

Fed Gov. DanielTarullo's big reveal yesterday was the plan to exempt banks with in assets from the CCARqualitative review and to replace the 2.5% capital conservation buffer with themore flexible — probably larger — "stress capital buffer." Had the latteralready been in effect this year, it would have been a "modest negative"for JPMorgan Chase & Co.,according to Keefe Bruyette & Woods analysts. RBC Capital Markets analysts,on the other hand, expect a capital shortfall at Bank of America Corp., while Discover Financial Services, American Express Co. and Rhode Island-based benefit themost.

In more banking news:

Lawsuits againstWells Fargo & Co.are piling on. One by shareholderGary Hefler names CEO John Stumpf, CFO John Shrewsberry and Carrie Tolstedtas defendants, Bloomberg News reports. And there's a second group of employees suing,this time not only on behalf of California employees but for those acrossthe U.S. as well, according to The NewYork Times' DealBook.

And the LaborDepartment has joinedthe fray. In response to senators' request for a probe, the agency is starting a"top-to-bottom review," The WallStreet Journal reports. Sen. Elizabeth Warren now thinks "Every other federalagency with jurisdiction in this matter should follow DOL's lead." Meanwhile,FBR & Co.'s Paul Miller thinks the recent volatility in Wells stock is only"the beginning of an uphill battle," as the bank struggles to fix itsreputation and deal with financial consequences that "could be material."

In people news, Karen Peetzis retiring as Bank of New York MellonCorp. president at the end of the year, and CU Today reports that 's new boardmember is DebbieMatz, the former NCUA chair.

And Russell Elmerhas returned to online lender from to succeed GeneralCounsel Jason Altieri.

The headlines for asset managementlargely concern Perry Capital's decision to close its flagship funds. It's another suckerpunch for the industry, and the WSJ remarksit isn't the only recent one. Across the pond, Brevan Howard Asset Management LLPnow charges some investors 0% fees.

Specialty lender AmericanExpress Co. won back the ability to stop merchants from nudging customersinto using other cards. An appeals court overturned a ruling that the practice wasa violation of antitrustlaw, and The New York Times' DealBookquotes the panel's opinion as saying, "Though merchants may desire lower fees,those fees are necessary to maintaining cardholder satisfaction — and if a particularmerchant finds that the cost of Amex fees outweighs the benefit it gains by acceptingAmex cards, then the merchant can chooseto not accept Amex cards."

CurveGlobal,the derivatives exchange created by ,Bank of America Merrill Lynch, JPMorgan, GoldmanSachs Group Inc., CitigroupInc. and the Chicago Board Options Exchange, among others, is now liveand in competition withIntercontinental Exchange Inc.

Congress now has a BlockchainCaucus, and it is spearheaded by Reps. Jared Polis and Mick Mulvaney.

Also on Capitol Hill, the House Financial Services Committee holds hearingstoday. One is on the FinancialStability Board's implications for U.S. growth and competitiveness. The otherlooks at bills on consumeraccess to banking services. Among them are H.R. 5660, or the Retail CheckingAccount Protection Act of 2016, and H.R. 4116, which would amend the Federal DepositInsurance Act so that an insured depository institution's reciprocal deposits don'tcount as brokered deposits. The American Bankers Association has commented on thelegislation, calling the FDIC's definition of brokereddeposits "overly broad" and arguing that those currently categorizedas such should not be assumed to be "less stable than those originated organically."

In other parts of the world

Asia-Pacific:

Europe:

Middle East &Africa: Attijariwafa comes to Chad;Saudi shares rally

The day ahead

Early morningfutures indicators pointed to a higher opening for the U.S. market.

In Asia, the HangSeng rose 1.09% to 23,571.90, and the Nikkei 225 was up 0.84% to 16,683.93.

In Europe as ofmidday, the FTSE 100 was down 1.59% to 6,799.63, and the Euronext 100 dropped 2.34%to 869.66.

On the macro front

The Redbook,S&P Case-Shiller HPI, the consumer confidence report, the Richmond Fed ManufacturingIndex and the State Street Investor Confidence Index are due out today.

The Daily Dose is updated as of 7:30 a.m. ET. Some external links mayrequire a subscription.