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DOJ reportedly rushed HSBC deal; Venezuela's president rants against Citi

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DOJ reportedly rushed HSBC deal; Venezuela's president rants against Citi

The HouseFinancial Services Committee's probe into the Justice Department's with HSBC Holdings Plcfound that Eric Holder and others decided on a DPA because they worried aboutthe impact a different consequence might have. The DOJ's investigation intoHSBC's alleged anti-moneylaundering violations was also said to have been rushed, because the DOJwanted to release its conclusions beforeNew York's Department of Financial Services could. And that rush reportedlymeant the DOJ informed HSBC of the settlement amount without confirming itfirst with the Treasury Department.

Also on the regulatory and legislative fronts:

Cleveland FedHead Loretta Mester, at a conference in Sydney, said: "U.S. monetary policyshould remain focused on promoting price stability and maximum employment, andfinancial stability should not be added as athird objective for monetary policy. … While interest rates affect thefundamental value of assets, it is not clear that they affect the speculativeor bubble portion, [and] any benefits of using [monetary policy] to stemfinancial imbalances, mispricing of assets, or excessive leverage need to beweighed against the economic costs."

Sen. MikeRounds yesterday introduced the TAILORAct, which will require financial regulators to consider individualinstitutions' risk profiles and business models when imposing rules — and tore-evaluate (and revise) all regulations since Dodd-Frank accordingly.

AnotherDemocrat, Rep. Peter DeFazio, could reintroducethisweekhis bill for a 0.03% financialtransactions tax. The Hill reportsDeFazio expects the tax to bring in more than $417 billion in 10 years.

Banking:

will keep 304 branches after theirmerger and expects to have its headcount back at pre-acquisition levels by2021. Sen. Charles Schumer and Rep. Brian Higgins had a hand in the developmentand separately announced that their deal with CEO Beth Mooney includes 500 to600 newjobs in New York through 2018 and probably 300 to 400 more in 2019 to 2020.Branches sold will also go to institutions that will likely keep them and thosethat work there.

Moody's keptits outlook for Canada's biggest banks at negative, due to the likelihood thatthe Canadian government will soon formalize the details of bank recovery andresolution and therefore reduce its support of the industry. The rating agencyalso expects asset quality to deteriorate because of still-low oil prices.

will bethe first money center bank to release earnings this week, and Keefe Bruyette& Woods analysts think the company "could surprise to the upside."They also say FICC and equity trading revenues might rise 17% and 12%,respectively, year over year.

A SupremeJudicial Court ruled North Carolina-based Bank of America Corp. can still be taxedlike a Massachusetts resident, after BofA contested $2.2 million in statetaxes. The Boston Business Journalnotes the ruling could affect Bankof New York Mellon Corp. and NorthernTrust Corp.

And NicolasMaduro accused aCitigroup Inc. unit ofplanning to close the Venezuelan government's foreign currency accounts within30 days. Reuters quotes the Latin American country's president as saying: "Doyou think they're going to stop us with a financial blockade? No, gentlemen. Noone stops Venezuela." A later Reuters reportconfirmed Citi will cease its correspondent banking and servicing for someaccounts. Currency controls in Venezuela have left its government heavilydependent on the bank for foreign currency transactions.

In people news:

Georgia-basedSynovus Financial Corp.named Kevin Blair itsnext CFO.

'sformer COO, Robert Sjogren,joined another Californian bank, CUBancorp, as chief risk officer.

Massachusetts-basedBerkshire Hills Bancorp Inc.'sCFO is James Moses,previously of Webster Bank NA.

succeeds JohnEdelen as Federal Home Loan Bankof New York's chief risk officer in the interim.

And ChrystinaGiorgio is now president and CEO of Independent Community Bankers ofAmerica's payments-services subsidiary, ICBA Bancard. She replaces Linda Echard.

Specialty lenders:

On top ofeverything else, online lenders are dealing with an increase in charge-offrates. The Wall Street Journal reportspart of the problem is that borrowers aren't using their loans to pay off olderdebts like they say they will. LendingClubCorp. CEO Scott Sanborn has tried to deal with the issue byrejecting applicants with high debt-to-income ratios.

Here's anupdate on the FHFA's principalreduction modification program — Floridaand New Jersey have by far the greatest number of potentially eligible borrowers.

Asset management:

On privateequity-based asset managers, Oppenheimer's Chris Kotowski writes: "Thecurrent M&A exit pipeline should be relatively unaffected [by Brexit] for afew quarters and the equity and financing markets are open." Having said that,Carlyle Group LP "hasmore money in the ground than dry powder in Europe, and on balance that wouldpose some risks."

Incidentally,in more Brexit news, Chancellor George Osborne was in New York "to speakto Wall Street chiefs about how [the] U.K. is open forbusiness."

And a sourcefor Bloomberg News says two former SorosFund Management LLC employees and one previously with Blue PoolCapital have launchedOld Farm Partners, a fund of hedge funds with about $65 million in AUM. Thefounders are Barry Purcell, Kieran Cavanna and Nishi Shah.

In other parts of the world

Asia-Pacific:BTMU, Mizuho to join internationalpayment system; ClearView eyes Asian buyer

Europe:May to become UK PM; CreditSuisse closes Russia private bank; DNB, Tryg report Q2 results

Middle East& Africa: Israeli court stayspay cap proposal; Angola lowers growth forecast

The day ahead

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

In Asia, theHang Seng rose 1.65% to 21,224.74, while the Nikkei 225 was up 2.46% to16,095.65.

In Europe, asof midday, the FTSE 100 was down 0.05% to 6,679.45, and the Euronext 100 rose1.31% to 862.09.

On the macro front

NFIBSmall Business Optimism Index, Redbook and the wholesale trade report are dueout today.

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