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ABA calls Fed's decision to lower dividend payouts unconstitutional

Banking Essentials Newsletter - November Edition

Online Brokerage Space Should Remain Rich Source Of M&A

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery


ABA calls Fed's decision to lower dividend payouts unconstitutional

In today's earningsspotlight is First NiagaraFinancial Group Inc.

On the regulatoryfront, FINRA issued to member firms its first monthly cross-marketequities supervision report cards designed to help firms identify and stopspoofing and layering activity.

The decision to lower dividend payouts to Reserve Bankmembers could be tantamount to breachof contract and the taking of property without compensation, whichis unconstitutional under the Fifth Amendment. In a letter to the FederalReserve Board, the American Bankers Association raised the issue of Congress'decision to place conditions on the 6% dividend that is regularly paid out inexchange for funds held at regional Reserve Banks.

In banking news,Citigroup Inc.withdrew from a $1.5 billion bridge loan deal with Gulf-based Adeptio, sourcestold Reuters. It failedto obtain internal approval to be among a group of banks providing financing toAdeptio to acquire Kuwait Food. Kuwait Food's business dealings in Iranreportedly raised compliance worries at Citi.

Houston-based GreenBancorp Inc. has established an initiative called ManagedAsset Reduction Strategy to substantially reduce the uncertainty in thefinancial results caused by its energy loan portfolio. "[O]ur results areclearly being impacted by the challenging energy cycle and the duress that itis causing throughout the oil patch," Chairman and CEO Manny Mehos said. "Asa result, [the company] determined that the prudent course of action is to exit theenergy lending business."

BofIHolding Inc. CEO and President Gregory Garrabrants said heexpects newly formeddigital lenders to struggle with acquisition costs, creating an opportunity forthe bank to offer similar products.

On the M&A front, Warren, Pa.-based unitNorthwest Bank isbuying 18 FirstNiagara branches in the Buffalo, N.Y., area. The branches are being sold toresolve antitrust concerns related to First Niagara's pending merger withCleveland-based KeyCorp.

In California, Mechanics Bank will acquire CaliforniaRepublic Bancorp for $37.19 per share.

Assetmanager CambridgeAssociates LLC appointed David Druley , effective July 1.

AresManagement LP and ApolloInvestment Corp. have each expressedinterest to acquire AmericanCapital Ltd.'s assets, sources told Reuters. Interestedparties in American Capital's auction also include andBlackstone Group LP.

In the broker-dealerscene, the respective clearing houses of CME Group Inc., IntercontinentalExchange Inc. and OptionsClearing Corp. have been authorizedby the Federal Reserve Bank ofChicago to each open an account at the central bank, the Financial Times reports.

During its earnings call, CME executives said that thecompany experienced rapid growthin trading volumes across Asia. "The investments we have madein boots-on-the-ground sales campaigns and product sales in Asia, for us, isbearing significant fruit," according to Derek Sammann, CME's seniormanaging director of commodities and options products.

LPLFinancial Holdings Inc. Chairman and CEO Mark Casady saidduring the company's earnings call that the proposed fiduciary standard forretirement savings advisers could make some services less profitable buthelp the company gainmarket share.

In the financialtechnology space, the Federal Trade Commission is whether , through itsVenmo service, has been or is engaged in deceptive or unfair practices inviolation of the FTC Act.

EllieMae Inc. has raisedits outlook for full-year 2016. The company now estimates revenueto be in the range of $325.0 million to $329.0 million for 2016, an increasefrom the previous range of $317.0 million to $321.0 million.

Inother parts of the world

The British Bankers' Association will establish a workinggroup to look into the implications of the lifting of internationalsanctions on Iran, insiders told Sky News.

The European Parliament voted to passa law that aims to clean up the benchmark-setting process, improvetransparency and prevent conflicts of interest like those that resulted inLIBOR rigging scandals during the past years.

Theday ahead

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

In Asia, the Hang Seng fell 1.50% to 21,067.05, whilethe Nikkei 225 was down 3.61% to 16,666.05.

In Europe, as of midday, the FTSE 100 was down 0.81%to 6,271.18, and the Euronext 100 had fallen 1.48% to 879.34.

Onthe macro front

The personal income and outlays report, the employmentcost index report, the Chicago PMI report, and the consumer sentiment reportare due out today.

TheDaily Dose is updated as of 7:30 a.m. ET. Some external links may require asubscription.