The Washington Wrap is a weekly look at regulation, news and chatter from the Capitol. Send tips and ideas to email@example.com.
President-elect Donald Trump added two early campaign supporters to his team of assistants and advisers. On Dec. 21 Trump appointed Peter Navarro, an economist and professor, as head of the newly formed White House National Trade Council. Navarro, who helped form Trump's trade and economic policy during the campaign, will serve as assistant to the president and director of trade and industrial policy. The National Trade Council will be in charge of advising the president on trade and labor policies, specifically in manufacturing and defense industries.
The same day, Trump announced that billionaire investor Carl Icahn has accepted an offer to serve as a special adviser on issues related to regulatory reform. Icahn, who supported Trump early in the campaign, will not have an official role with specific duties but will be an adviser in an individual capacity. In the announcement statement, Icahn said "it's time to break free of excessive regulation and let our entrepreneurs do what they do best: create jobs and support communities."
Former U.S. attorney Debra Wong Yang was floated as the next chair of the Securities and Exchange Commission, Bloomberg reported Dec. 19, citing an unnamed source "with direct knowledge of the matter." Yang, currently a partner at law firm Gibson Dunn & Crutcher, was seen at Trump Tower on Dec. 5. Current SEC Chair Mary Jo White said she would step down from her role at the end of the Obama administration.
Deutsche Bank Securities Inc. agreed to a $37 million settlement with the Securities and Exchange Commission and the state of New York over an investigation into its electronic equities order routing services. The company allegedly misled investors into thinking orders were being routed to the most optimal venue when, in reality, the bank's dark pool ranking model failed to regularly update its assessment of the best venue for an order.
Deutsche also got in trouble with the Financial Industry Regulatory Authority, or FINRA, for deficient disclosures regarding its alternative trading system, or ATS. The bank will pay a fine of about $3.3 million for failing to provide all ATS users with all available services and features, resulting in some clients - including high-frequency trading firms - to receive services that others may not have known were available.
Deutsche Bank AG has also agreed in principle with the U.S. Justice Department to settle an investigation into its sale of residential mortgage-backed securities in the U.S. The bank, subject to the negotiation of definitive documentation, will pay a civil monetary penalty of $3.1 billion and provide $4.1 billion in consumer relief in the U.S. Deutsche is likely to see pretax charges of about $1.17 billion in the fourth quarter due to the penalty. The potential $7.2 billion deal is about half the sum regulators had initially sought.
Credit Suisse Group AG is also settling in principle with the DOJ for $5.28 billion — a $2.48 billion civil monetary penalty and $2.8 billion in consumer relief — over similar allegations. The Swiss bank expects to book a pretax charge of about $2 billion on top of its existing reserves in the fourth quarter.
In a related case, the DOJ sued U.K.-based Barclays Bank Plc and several of its U.S. affiliates over accusations of fraud in the sale of RMBS in the run-up to the financial crisis.
FINRA announced Dec. 21 it fined 12 firms a total of $14.4 million for "significant deficiencies" in its recordkeeping of broker/dealer and customer information. The firms allegedly failed to maintain electronic records in "write once, read many" formats, making them vulnerable to alteration or destruction. Wells Fargo Securities LLC, Wells Fargo Prime Services LLC, RBC Capital Markets LLC and RBC Capital Markets Arbitrage S.A. were among the companies hit with the largest fines.
The Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks issued a consent order Dec. 20 to BB&T Corp. unit Branch Banking and Trust Co. over internal control deficiencies related to the Bank Secrecy Act and Anti-Money Laundering compliance program. BB&T said it expects a similar order from the Federal Reserve in the near future.
The FDIC said Dec. 22 it is seeking comment on a new handbook for de novo organizers applying for deposit insurance. The FDIC said it designed the 34-page handbook as a "practical and plain language guide" to help explain the processes behind starting a de novo institution. Comments on the handbook can be emailed to the FDIC until Feb. 20, 2017.
The Federal Reserve advanced a number of rules this week. On Dec. 19, the Fed kicked off the public comment period for proposed guidelines used to evaluate requests for joint accounts at the Federal Reserve Banks. Under a joint account, multiple depository institutions could facilitate settlements through an agent that acts on behalf of those depository institutions.
The same day, the Fed approved a rule requiring large banks to publicly disclose their consolidated liquidity risk metrics every quarter based on the previous quarter's averages. The rule also requires covered institutions to disclose their liquidity coverage ratios, high-quality liquid asset amounts and projected net stressed cash outflow amounts, among other granular data points.
On Dec. 20 the Fed extended the comment period on proposed rulemaking that would limit physical commodity trading activities conducted by financial holding companies. The comment period, originally set to close Dec. 22, was extended to Feb. 20, 2017.
Fed Chair Janet Yellen told University of Baltimore graduates they should be optimistic about their employment prospects heading into a job market that's stronger than it has been in almost a decade. Yellen, speaking at a mid-year commencement ceremony days after the Federal Open Market Committee decided to raise rates, said the 4.6% unemployment rate is near pre-recession levels and pointed to steady job creation with a low layoff rate.