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Washington Wrap: US may release bank rule on shell companies following Panama Papers leak


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Washington Wrap: US may release bank rule on shell companies following Panama Papers leak

The Washington Wrap isa weekly look at regulations, news and chatter from the Capitol. Send tips andideas to


A leak of 11.5 million documents from Panamanian law firm MossackFonseca released by the International Consortium of Investigative Journalistson April 3 may have expedited the U.S. Department of Treasury's plan to issue arule requiring banks to identify the names of people behind shell companies,Reuters reportedApril 7.

The leak revealed a web of rich and famous people around theworld who asked the law firm to set up offshore accounts and companies for taxevasion purposes.

Terrence Oved, partner and chairman of the corporate,entertainment and real estate department at Oved & Oved LLP, saiddisclosure requirements were already in the works but the Panama Papers haveaccelerated the process.

The Treasury Department wants to know who the beneficiariesof shell companies are and, in Miami and New York City, buyers of luxury realestate over a certain threshold must already disclose the owners behind theshell company, he said.

"It's not enough anymore to just say, 'This is the LLC,and it's just in care of an attorney or an accountant's office,'" he said.

Creating offshore companies is not illegal when certaindisclosure requirements are met, he said. "The real question is whether ornot individuals that are associated with these accounts violated anylaws," he said.

A man broke into a Bureau of Labor statistics building onApril 4 after scaling the building and breaking in through a second-floorwindow, Bloomberg News reportedApril 5. But there was no data worth stealing, according to the newswire. Thebuilding where data for reports such as the non-farm payrolls report is held inanother building, the Frances Perkins Building. The breached building onlyhouses public data.

Rep. Alan Grayson, D-Fla., may have violated an ethics codeby using his House office and staff to run personal financial matters,including a family-run hedge fund, the Office of Congressional Ethics foundApril 5, The New York Times reported.In addition, the investigation found he used House resources for his politicalbid for the Senate. Grayson says he did not do anything wrong, the paperreported.


While the Consumer Financial Protection Bureau believespayday lending needs to be reformed, financial technology, community banks andcredit unions could be an alternative to the lenders, CFPB Director RichardCordray told theSenate Committee on Banking, Housing and Urban Affairs on April 7. Cordraypointed to the National Credit Union Administration's payday loan alternatives,which allow credit unions to offer loans to members in the amount of $200 to$1,000. He said he wants to keep those alternatives in place under any paydayregulations the agency adopts. Community banks should also be allowed to havesimilar types of loans, he added.

Democratic presidential candidate Sen. Bernie Sandersoutlined his plan for breaking up the big banks to the editorial board of the NewYork Daily News on April 4, but critics said his plans lacked detail.He said he believes the presidential administration has the authority underDodd-Frank to break up banks. When asked if the Fed has the authority, he saidhe wasn't sure. "Well, I don't know if the Fed has it," he said."But I think the administration can have it."

Jamie Dimon, CEO, president and chairman of , thinks largeand small banks need to work together, he wrotein an op-ed for The Wall Street Journal onApril 5. Community banks "dependon large banks to make their service offerings possible," he wrote.JPMorgan provides services to 339 small banks and 10 corporate credit unionsand provided them $4.7 billion in intraday credit last year, he said. "Ibelieve I can say, on behalf of most of the nation's largest banks, includingthe one that I lead, that we are very supportive of the efforts by small andregional banks to work responsibly with their regulators and, if necessary, theCongress to address new rules and requirements," he wrote.

Other members of the Federal Reserve System may not agreewith Federal Reserve Bank of Minneapolis President Neel Kashkari'stoo-big-to-fail plan. Kashkari hosted a symposium on ending too big to fail on April 4but faced pushback during a question-and-answer session. "Passion andanecdotes are an attempt to substitute for serious analysis," V.V. Chari,a consultant for the Federal Reserve Bank of Minneapolis, told panelists.


Want to start a bank? Call up the FDIC, Chairman MartinGruenberg said April6. The agency is scaling back its heightened supervisory monitoring period forde novos from seven years to its pre-crisis period of three years, he said in aspeech.

He said at a press meeting following the speech that hewants to make the process as "user-friendly" as possible. The FDICworks closely with the OCC and state commissioners on the review process fornew charters and can make the process easy to navigate "so that we can getto a successful outcome," he said.

"If you want to get the attention of FDIC staff, calland say, 'I'm interested in starting a new community bank,'" Gruenbergsaid. "You will get a lot of people very eager to work with you."

An appeals court is asking the Consumer Financial ProtectionBureau to justify its structure of having a single director, The Wall Street Journal reportedApril 5. The inquiry is part of a lawsuit filed by mortgage lender PHH Corp.,which claims CFPB Director Richard Cordray acted outside of his authority whenhe decided to impose a $109 million fine on the company instead of the $6.5million fine imposed by an internal CFPB judge, the paper reported. The case isbeing heard by a panel of judges on April 12.

Sen. Jeff Merkley, D-Ore., introduced a bill April 7 thatwould amend the Truthin Lending Act to require any issuers of loans of $5,000 or less to registerwith the Consumer Financial Protection Bureau if the loan is closed-ended andpayable in installments of less than 12 months or if open-ended, repayablewithin a defined time. It would also ban overdraft fees on general-use prepaidcards.

The U.S. Department of Labor its final fiduciary rule onApril 6, which is intended to make financial advisers to put their customer'sbest interests first by reducing. Labor Secretary Thomas Perez called the rule"a huge win for the middle class." Sell-side analysts coveringmultiple parts of the finance industry generally agreed that the final rule wasa bit less onerous than the original proposal.

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