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Capital One's Cabela's deal may fall through; court dismisses ICBA vs. NCUA suit

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Capital One's Cabela's deal may fall through; court dismisses ICBA vs. NCUA suit

Some tough luck in the regional and community banking space:

Capital One Financial Corp.'s acquisition of Cabela's credit card portfolio isn't likely to get regulatory approval, CEO Richard Fairbank admitted yesterday. And any reapplication will have to wait until the company's anti-money laundering consent order is lifted.

In New Jersey, another deal is getting scrapped for regulatory reasons. Investors Bancorp Inc. and Bank of Princeton agreed to call off their merger, because the FDIC's go-signal might not come before the March 31 deadline.

Elsewhere, a large deal is still the best path for New York Community Bancorp Inc. to breach the $50 billion-asset mark after the termination of the company's merger with Astoria Financial Corp., New York Community President and CEO Joseph Ficalora said in an earnings release. The company today reported fourth-quarter 2016 net income of $113.7 million, or 23 cents per share. In comparison, it was a net loss of $404.8 million, or 87 cents per share, a year ago.

And a U.S. court has dismissed the Independent Community Bankers of America's lawsuit against the National Credit Union Administration. The ICBA's challenge to the credit union regulator's push to expand business lending was thrown out on procedural grounds; the court said the primary argument "would not apply in this instance, [and], having reached this conclusion, it is not clear what remains of the plaintiff's suit." ICBA CEO Camden Fine said the group "will continue to pursue efforts to level the tax and regulatory playing fields between community banks and credit unions through all avenues."

The NCUA is also facing a lawsuit by the American Bankers Association over its expansion of membership.

Elsewhere in banking, Wells Fargo & Co. reacted to news that its branches were getting advanced notice of risk committee inspections: It will not be doing that anymore. The bank told Reuters "To the extent the 24-hour notice could be an issue or be perceived as an issue, we want to take that off the table."

There's also some good news for Wells Fargo employees. Its 400-branch-closure plans notwithstanding, one regional president told the Triangle Business Journal: "We've got plenty of jobs for everybody."

On the other hand, compliance experts may find their services to no longer be in high demand. The Financial Times reports on how they might be the next to go, thanks to artificial intelligence.

Meanwhile, Gary Cohn's golden parachute is getting press coverage. A source for the FT calculates it adds up to approximately $106 million, after taxes. Cohn had left Goldman Sachs Group Inc., where he was CEO Lloyd Blankfein's likeliest successor, in order to head the National Economic Council.

Remember Sergey Aleynikov? He had left Goldman for a new job, but was arrested in 2009 for taking his former employer's high frequency trading code. Convicted in 2010, he spent a year behind bars. A federal appeals court set him free in 2012, but he was rearrested, this time under New York state law. In 2015, he was convicted on one charge and found not guilty on another. The jury was deadlocked on a third charge. The conviction was later, again, overruled. Most recent update: A New York appeals court has reinstated the conviction. He plans to appeal. The New York Times covers the development.

And Citigroup Inc. expects to finalize its Brexit plans in the first half of the year, the FT reports, citing the bank's EMEA CEO, Jim Cowles.

Sources for the FT also say that asset managers and private equity firms, led by Carlyle Group LP and Blackstone Group LP, are looking to keep their passporting rights via Luxembourg.

On the regulatory front:

The New York Times reports Andrew Ceresney is returning to Debevoise & Plimpton. Ceresney, former SEC enforcement director, will become co-chairman of the litigation department and handle criminal, securities and other regulatory cases.

Richard Berner, director of the Treasury Department's Office of Financial Research, wrote in a blog post: "The financial crisis of 2007-09 now seems distant, and the chance of a future financial disruption seems remote, [but] vigilance is vital. ... No other organization has the same mandate [as the OFR]."

Under Rep. Jeb Hensarling's Financial CHOICE Act, the OFR would be abolished.

And Treasury secretary nominee Steven Mnuchin supplemented his confirmation hearing with written answers to the Senate Finance Committee members' follow-up questions.

On Dodd-Frank, he said: "Taking a fresh look at all aspects of the Dodd-Frank legislation should be one of our highest priorities ... Small- and mid-sized institutions [should not be] suffering from an inappropriate regulatory burden."

On the Volcker rule: "We need to provide a proper definition of proprietary trading, such that we do not limit liquidity in needed markets. ... This is why we have suggested a 21st Century Glass-Steagall may be appropriate."

On the Fed: "The Federal Reserve is organized with sufficient independence to conduct monetary policy and open market operations. I endorse the increased transparency we have seen from the Federal Reserve Board over recent years."

On market stability: "I do not believe at this time that additional regulations are needed to ensure market stability; however, I expect that we will review this issue at [the Financial Stability Oversight Council] on an ongoing basis."

On heading the FSOC: "If confirmed I will not continue, as you suggest, the FSOC's existing practice of acting as an opaque regulator. ... I support a comprehensive review of the FSOC's powers and institutional processes. ... [And] if confirmed as chairperson of FSOC, I will review the work the council has done on so-called
shadow banks and non-banks to analyze the risk that they pose to the economy."

On Fannie Mae and Freddie Mac: "Important elements of my vision for housing finance reform include increasing private sector participation and protecting taxpayers. The passage of over eight years since entering conservatorship combined with the broad recovery in housing prices make this a very good time to relook at the GSEs."

And President Donald Trump tweeted national security plans will be unveiled today. "Among many other things, we will build the wall!" Click here for SNL data on U.S. banks' exposure to Mexico.

In other parts of the world

Asia-Pacific: China urged to join Trans-Pacific Partnership; AMP shutters venture capital biz

Europe: Santander posts large profit; Generali surprised by Intesa; Brexit ruling

Middle East & Africa: Kenyan banks face new headache; Aramco seeks IPO advisers

The day ahead

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

In Asia, the Hang Seng was up 0.43% to 23,049.12. The Nikkei 225 rose 1.43% to 19,057.50.

In Europe as of midday, the FTSE 100 climbed 0.26% to 7,168.66, and the Euronext 100 was up 0.86% to 939.43.

On the macro front

The FHFA house price index and the EIA petroleum status report are due out today.

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