THURSDAY JANUARY 14, 2021 VOL. 186 No. 9 AMERICANBANKER.COM Follow us on Twitter @AmerBanker CFPB, OCC on collision course 5 over who regulates fintechs CRE cracks deepen The Office of the Comptroller of the Currency appears intent on being the Delinquency rates for commercial real estate loans were holding federal chartering agency for tech firms with steady until the pandemic struck. Now they are on the rise as hotels, banking ambitions. But some experts say the retailers and other business segments continue to struggle. Consumer Financial Protection Bureau is better suited for the job. Page 4 See story on page 3 Wells Fargo establishes 1% 6 new office to oversee consumer practices 0.8% A team led by Michael Lipsitz, a lawyer hired away from Santander last year, will look at everything from whether prices are fair to 0.6% whether complaint data contains notable trends. Page 5 0.4% New Senate Banking chief sets dramatic change of course 0.2% 7 Sen. Sherrod Brown, D-Ohio, said elevating affordable housing issues, examining the 0% financial system through a climate and racial justice “lens” and holding banks accountable 4Q18 1Q19 2Q19 3Q19 4Q191Q202Q203Q20 for their impact on consumers will be among Source: Federal Reserve Board his priorities. Page 6 Visa and Plaid call off 8 merger, ending DOJ litigation dailybriefing Are CRE foreclosures Visa and Plaid have terminated their 3 on the horizon? tie-up and reached an agreement with Commercial real estate portfolios have the Department of Justice to dismiss the Citi shuffles consumer held up better than expected during the litigation brought against them when the 1 banking leadership team pandemic. But rising delinquencies and deal raised antitrust questions. Page 7 In a memo to staff on Tuesday, fears of a delayed economic recovery are announced a new head of U.S. consumer renewing questions about credit quality. Deutsche, Signature banking and said that two of its other high- (See chart above.) Page 3 9 to stop doing business with ranking bankers would essentially switch Trump and his company roles. Page 2 Keane stepping down In the wake of last week’s riot at the U.S. 4 as Synchrony CEO Capitol, New York-based Signature is also Acting Comptroller Brooks The Stamford, Conn.-based credit card calling on the president to resign before his 2 expected to step down soon issuer said Tuesday that Brian Doubles, the term ends next week. Page 7 Brian Brooks is planning to leave the Office president and former chief financial officer, of the Comptroller of the Currency within will succeed Margaret Keane in April. Page 4 Global banks warn of days, according to a published report and a 10 market chaos if court source familiar with the situation. Page 2 rushes Libor exit Some of the world’s biggest banks are urging a U.S. judge not to immediately terminate Libor after a group of borrowers filed suit claiming the benchmark was the work of a “price-fixing cartel.”Page 8 THURSDAY JANUARY 14, 2021 AMERICANBANKER.COM PAGE 2

lines of business,” Selva said in the memo. depart within a week. CONSUMER BANKING “This move will ensure we are enabling An OCC spokesman declined to say continuous career development by whether Brooks will resign soon. broadening experience and building a It is unclear whether Treasury Secretary Citi shuffles versatile leadership team.” Steven Mnuchin would name a first deputy comptroller to fill in as the agency’s leader consumer or hold off and let former Federal Reserve OCC Chair Janet Yellen, President-elect Joe Biden’s pick for Treasury secretary, select an banking interim. Acting Brooks joined the OCC in March when he leadership was tapped by Mnuchin to be chief operating Comptroller officer and first deputy comptroller. Brooks had been on the job for just seven weeks team when then-Comptroller Joseph Otting Brooks resigned halfway into his five-year term; By Laura Alix Brooks was named acting comptroller in January 12, 2021 expected to May. Mnuchin, Otting and Brooks had Citigroup announced a slate of leadership worked together as executives at OneWest changes in its U.S. consumer banking Bank in Pasadena, Calif. business on Tuesday. step down Brooks’s next step is unclear, but Gonzalo Luchetti will become head of U.S. speculation immediately began about consumer banking, effective Feb. 1. Luchetti soon whether he was headed back to Coinbase, is currently head of consumer banking in a digital cryptocurrency exchange platform Asia Pacific and Europe, the Middle East and By Kate Berry and Hannah Lang where he had served as chief legal counsel. Africa. Before moving to Asia, he was Citi’s January 12, 2021 Brooks also had been an executive vice global head of wealth management and Brian Brooks is expected to step down as president and general counsel at Fannie insurance in the U.S. acting head of the Office of the Comptroller Mae. In a memo to staff, Anand Selva, the of the Currency within days, paving the way CEO of global consumer banking, praised for President-elect Joe Biden to nominate a Luchetti for launching digital partnerships successor after his inauguration. in India and Southeast Asia, as well as Politico on Tuesday reported that Brooks growing the company’s wealth management is planning to leave and that the agency’s business during the pandemic. chief operating officer, Blake Paulson, is in “This move will ensure strategic continuity line to succeed him in the remaining days and strong leadership as we accelerate the of the Trump administration. Separately, transformation of our business model,” said a source familiar with the situation told Selva, who preceded Luchetti as head of U.S. American Banker that Brooks plans to consumer banking. Selva stepped into his current role when Jane Fraser, who had held the role previously, was named Citgroup’s Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 CEO. Phone 212-803-8200 AmericanBanker.com On May 1, David Chubak, now head of U.S. retail banking, will become head of Citi Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 retail services, the company’s private-label Managing Editor Dean Anason 770.621.9935 and cobranded consumer and commercial Reporters/Producers credit card businesses. Craig Vallorano, Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 currently head of Citi retail services, will Washington Bureau Chief Joe Adler 571.403.3832 become head of U.S. retail banking. Chubak Executive Editor, Technology Miriam Cross 571.403.3834 and Vallorano are essentially switching roles Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 with this move, giving Chubak exposure to BankThink Editor Rachel Witkowski 571.403.3857 credit cards and Vallorano experience in John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 retail banking. Hannah Lang 571.403.3855 “U.S. consumer banking operates as a Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 single unified franchise with an integrated Digital Managing Editor strategy that leverages strengths, assets, Christopher Wood 212.803.8437 Jackie Stewart 571.403.3852, Kevin Wack 626.486.2341 best practices and partnerships across

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To be sure, the latest percentage is was similarly upbeat during a separate COMMERCIAL LENDING comfortably below that of all real estate industry conference. He said he expects TD’s loans, where delinquencies were 1.92% at commercial real estate exposures, which he the end of the third quarter. But it’s the first said are mostly in major metropolitan areas Are CRE time the rate for commercial real estate in largely grade A-type properties, will be loans has hit the 1% mark in five years. “manageable” over the long run. foreclosures Bankers say they are closely and regularly “And we are well reserved should the monitoring their commercial loan portfolios. situation turn out to be a lot different than They’ve also had more latitude to offer what we are expecting,” he added. on the deferral and forbearance programs under Jennifer Demba, an analyst at Truist the Coronavirus Aid, Relief and Economic Securities, said bank management teams are horizon? Security Act, and at the same time have built telling her they don’t expect to incur “any up massive reserves to cover losses. real” commercial real estate losses “until the By Allissa Kline Brian Foran, an analyst at Autonomous middle of 2021.” But continued hiccups in January 12, 2021 Research who covers regional banks, said the vaccine rollout will put further strain on Nearly a year into the pandemic, the circumstances of the macro environment commercial real estate loans, she said. big questions loom about the future of make it nearly impossible for bankers to “What’s the demand for the vaccine, commercial real estate portfolios. project how bad the portfolios might get how fast can it get rolled out, and how can Namely, how much longer can banks and when. The nation’s coronavirus vaccine the efficacy get better?” Demba said. “The offer deferrals on loans that have soured rollout is behind schedule, and the latest stock market is pricing in the second half of during the pandemic recession, are employment report showed that 140,000 the year for normalization. If [the rollout] foreclosures inevitable, and how quickly jobs were lost in December, the first net doesn’t improve, it could be fourth quarter could foreclosure rates rise if the spigot decline in payroll since the spring. or 2022. I think that’s the biggest wild card, opens? “I think they’ll be optimistic from the to be honest.” Bankers, who have struck a largely standpoint of, ‘Look, we built a lot of As of Tuesday morning, 9.3 million people reassuring tone about their ability to reserves in 2020, so we have some cushion, had received their first dose of the vaccine, manage the credit risk, are likely to face such but we still don’t know,’” Foran said when according to the Centers for Disease Control questions starting Friday when JPMorgan asked what bankers might say during calls and Prevention. The Trump administration, Chase, Citigroup and other big banks begin on fourth-quarter results. “Unfortunately, which aimed to vaccinate 20 million people to report fourth-quarter results. But they there’s not a whole lot of clarity they’ll be by the end of 2020, shifted strategy Tuesday may wind up giving more nonanswers than able to give.” saying it would release all of the vaccines answers because the economic outlook At an industry conference in December, instead of holding some back for the remains fuzzy at best. PNC Financial Services Group Chairman required second dose. The 2021 U.S. Real Estate Market Outlook, and CEO William Demchak said the For now, banks are stuck in a credit “gray compiled by CBRE Group, predicts that “real Pittsburgh company’s criticized assets in zone” of uncertainties, Foran said. Will estate conditions will start 2021 in a state of real estate — “think about hotels, think people go back to the office or keep working flux” as some sectors “grow strongly” while about retail” — are “not getting better, at home? Will they want to return to in-store others will keep struggling. The lack of clarity they’re getting worse” while “office space is shopping? Will they go out to eat and stay in on asset pricing won’t help, CBRE Global going to struggle” depending on its location. hotels and travel for business? Chief Economist Richard Barkham said. Meanwhile, multifamily loans “behaved “Those are different versions of the “Banks will forbear and forbear until pretty well,” but “massive drops in rent” same question: Has the pandemic been a they see the value of the underlying asset, in metro areas such as New York and San temporary pause or a permanent change?” and then they might foreclose because Francisco will “have impact,” he said. Foran said. “Those are the known unknowns then they can crystalize their losses,” he At the same conference, Darren King, for banks. Some things are going back to said. “We think 2021 will be quite a strong chief financial officer at M&T Bank in normal, and some things are permanently year in economic growth ... but as we turn Buffalo, N.Y., said a portion of the bank’s changed, and we could take an educated the corner and price discovery [happens], I commercial real estate borrowers that guess” at what will happen in each area, think you will see more banks foreclosing,” requested forbearance have returned to “but ultimately we won’t know until we get especially on hotel and retail loans. regular payments. However, some CRE loans through this.” Although commercial estate as a whole may end up being reclassified as troubled has held up better than expected since the restructurings or nonaccrual, he said. pandemic upended the U.S. economy, the “We’re feeling positive with what we’re sector is becoming more distressed. The seeing, but also recognize we’ve got a ways latest research from the Federal Reserve to go yet,” King said. shows 1% of all commercial real estate loans This week Bharat Masrani, president and were delinquent as of Sept. 30, up from CEO of Toronto-Dominion Bank, which 0.68% the end of 2019. operates a $420 billion-asset U.S. subsidiary,

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and he was named president in 2019. soon, with President-elect Joe Biden set to C-SUITE Additionally, Synchrony said Tuesday that take office on Jan. 20, the agency has shown its current board chairman, Robert Hartnack, no signs of abandoning its interest in fintech will retire as part of the transition plan. It also banks. Keane said that Jeffrey Naylor, who has served on On Tuesday, Brooks published an op- the board since 2014, will become the lead ed in the Financial Times suggesting that stepping independent director. the government should consider allowing bank charters for “open-source software that manages deposit-taking, lending, or down as FINTECH REGULATIONS payments, if it doesn’t have officers or directors?” Synchrony Some have raised the possibility that CFPB, OCC Brooks could try to issue a quick approval for Figure before Jan. 20. The San Francisco- CEO on collision based lender, which offers home loan refinances, home equity lines of credit and By Laura Alix personal loans, is seeking a novel charter January 12, 2021 course over that would enable it to accept uninsured Margaret Keane, the CEO of Synchrony deposits — instead of insured deposits Financial, will resign this spring as part of a who regulates — and therefore evade certain regulatory CEO succession plan, the Stamford, Conn., requirements imposed on other banks. But company said Tuesday. the application has drawn swift opposition Effective April 1, Keane will leave her post fintechs from traditional banks and is the subject of a as chief executive and become executive lawsuit by state regulators. chair of the $96 billion-asset company’s By Kate Berry “There is no prohibition against the agency board of directors. Brian Doubles, who is January 12, 2021 continuing to act on licensing applications,” currently president, will become president As the Office of the Comptroller of the an OCC spokesman said. “The agency and CEO and will also join the company’s Currency maintains its focus on granting continues to conduct its regular business.” board of directors. bank charters to fintech companies, some But some experts suggest that policymakers In a press release, Keane said that she experts have disrupted the debate about may want to rethink letting the OCC oversee and Doubles had worked together for over a nontraditional bank owners by saying a fintech banks due to the perception that the decade and praised his recent work on the different agency should be in charge. national bank regulator did not sufficiently company’s strategy and key growth initiatives. The OCC just last month approved hold banks responsible for consumer “With Synchrony in a position of strength, LendingClub’s bid to become the first online compliance in the years leading up to the now is the right time to begin this planned lender with a bank charter, and speculation 2008 financial crisis. leadership transition,” she said. “Brian has is growing that acting Comptroller Brian “Every company wants a level playing helped build this company every step of the Brooks may approve the controversial charter field,” said Richard Gottlieb, a partner at way and is the natural successor to advance application by Figure Technologies just days Manatt, Phelps & Phillips. “If there were our progress and lead Synchrony through the before the end of the Trump administration. a fintech charter for the CFPB, it would next stage of our journey.” But a growing list of observers now argue establish guardrails that companies can Keane, 61, has run the private-label that the Consumer Financial Protection operate in and would understand the full credit card business since 2011, when it was Bureau is better suited to charter and regulate extent of what they can and cannot do.” General Electric Capital Retail Finance. She fintechs at the federal level, given the bureau’s steered the company through its initial public mission of preventing consumer harm. Incoming administration’s plate ‘is offering in 2014 and oversaw its rebranding The new wrinkle sets up a potential turf war already full’ as Synchrony Financial. The company is now between the two agencies. A CFPB task force The CFPB task force’s recommendations, the largest issuer of private-label credit cards last week recommended that Congress give while nonbinding, further complicated the in the U.S. and has partnered with retailers the CFPB — not the OCC — the authority to continuing debate about the appropriate that include Gap Inc., Verizon and Amazon. issue federal charters to financial technology regulatory framework for fintech companies. A mainstay in American Banker’s ranking companies engaged in lending, payments or Giving the CFPB chartering and regulatory of the Most Powerful Women in Banking, remittances. authority for fintechs would require an act Keane also earned praise for making “The OCC is ill suited to license fintechs,” of Congress and support from the Biden Synchrony a good corporate citizen and an said Dan Quan, managing partner at Banks administration. attractive place to work. Street Advisory and a former head of the Many experts say the Biden Doubles, 45, has been with Synchrony CFPB’s fintech office. “The biggest risk is administration’s views on fintech charters for 11 years. He was the company’s chief really conduct [such as] consumer harm.” remain opaque. financial officer before and during its IPO, Even though Brooks could depart the OCC “The Biden administration has a lot of

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 14, 2021 AMERICANBANKER.COM PAGE 5 other priorities right now,” said Henry Coffey, it could shine a brighter spotlight on the Wells Fargo. managing director and banking analyst at question of which agency ultimately is the Lipsitz, who reports to Chief Operating Wedbush Securities. best-suited to regulate fintechs. Officer Scott Powell, will head up a small Quan agreed that fintech charters are “If [fintechs] are as big and cool as they team of senior bank employees charged with low on the list of pressing issues facing the think they are, and if they are going to take ensuring that the perspective of consumers incoming administration. on this much market share over time, then plays a significant role in decision-making. “Their plate is already full,” Quan said of these companies need to be regulated The office’s work will be focused on two the Biden administration. from the consumer point of view,” said consumer-facing business units: Consumer Yet he agreed with the task force’s view Coffey. “When you look under the hood Lending and Consumer and Small Business that fintechs should be regulated by the CFPB and at the advertising, some of these Banking. because they pose more risks to consumers [fintech] companies are offering great value Powell oversees regulatory execution at than to the federal banking system. propositions — and some are not.” the scandal-plagued Wells Fargo. He said in “This is the CFPB’s wheelhouse,” Quan said. But state regulators hope that, should an interview Tuesday that the new office is “Most fintech firms do not pose significant Congress decide to give the CFPB authority part of the bank’s efforts to bolster its risk and safety and soundness risks, as most of them over fintechs, the consumer bureau would control infrastructure. do not take deposits.” work in coordination with the states and not “It’s another part of our evolution, as we But Brooks pushed back against the undermine them. continue to build out our customer-centric CFPB task force’s recommendation that the While Congress did not give the CFPB culture,” Powell said. “It will be a step-by- consumer bureau oversee the process. (CFPB licensing authority in the Dodd-Frank step, multiyear journey.” Director Kathy Kraninger appeared to support Act, it built into the agency’s DNA robust Powell is the former CEO of Santander the group’s unanimous recommendations.) interaction with the states, noted John Ryan, USA, where one of his major priorities was He cited the Dodd-Frank Act’s separation president and CEO of the Conference of State resolving the Spanish-owned bank’s many of chartering authority and prudential Bank Supervisors. regulatory problems. Shortly after joining supervision from the enforcement of “At this point where the states are making Wells Fargo in December 2019, Powell consumer protection as a rationale for the so much progress, to try to sideline them is hired Michael Cleary, another onetime OCC to move forward with charter approvals. particularly disturbing,” Ryan said. Santander executive, to head sales practices “Under the law, the agency that grants management and oversight. national charters to companies engaged in Powell and Cleary are among a number of lending, payments, or deposit-taking is the CONSUMER BANKING executives brought in by CEO Charlie Scharf Office of the Comptroller of the Currency, to shore up regulatory compliance in the which has the responsibility for prudential wake of a scandal in which employees were supervision to ensure these chartered Wells Fargo found to have opened accounts customers institutions operate in a safe, sound, and did not want or need in order to hit sales fair manner,” Brooks said in a statement last establishes targets. The new team led by Lipsitz will take week. a broader view of the bank’s interactions with But the CFPB’s task force stated that consumers. Congress should “authorize the bureau to new office For example, one of the office’s issue licenses to non-depository institutions responsibilities will be to ensure that product that provide lending, money transmission, to oversee terms, conditions and pricing are fair and and payments services.” transparent, Powell said. The group also said the CFPB should Employees in the new office will also consider the benefits and costs of preempting consumer review complaint data to help identify trends state law where conflicts can “impede the and outcomes. And they will provide advice provision of valuable products and services, practices on policies and training related to employee such as the regulation of FinTech companies interactions with consumers, including older engaged in money transmission.” By Kevin Wack adults and people with disabilities, according January 12, 2021 to the bank. New battle for the states? Wells Fargo is establishing a new division Scharf, who took over as Wells Fargo’s Kraninger said the task force’s that will oversee the bank’s interactions with CEO in October 2019, has said that meeting recommendations are in effect a referral to consumers — everything from providing regulatory requirements is the company’s Congress “for legislative action.” However, advice on how products are priced to top priority. Last week, Wells took one step giving the CFPB authority over federally reviewing complaint data. forward with the announcement that it had chartered fintechs could set up a new battle The Office of Consumer Practices will be been freed from a five-year-old enforcement between the bureau and state regulators, led by Michael Lipsitz, a lawyer who joined action in connection with its controls for which now have authority over nonbank the $1.9 trillion-asset bank last year from combating money laundering. fintechs with state licenses. Santander USA, and who serves as chief Wells Fargo is still operating under 10 Still, if OCC approves Figure’s application, regulatory and policy affairs executive at public enforcement actions, including the

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 14, 2021 AMERICANBANKER.COM PAGE 6 costly asset cap imposed by the Federal do to prevent evictions in the middle of the rules he would target. Reserve Board in 2018. pandemic in the middle of the winter.” “There will be a handful … and they will The bank is scheduled to report its fourth- He also wants to examine why lenders come to a vote on the Senate floor and the quarter results on Friday. It will be the first appear to be focusing their refinancing efforts House floor, sometime, I assume before time that Wells reports results from the five on higher-income borrowers. April,” Brown said. operating units that Scharf established as “Refinancing is a really big thing in this He said that he is looking forward to part of a reorganization last year. country, as you know, as interest rates have new leadership at the financial regulators. been extremely low for a period of time,” Brown has already told Consumer Financial Brown said. But, he added, “the average Protection Bureau Director Kathy Kraninger AFFORDABLE HOUSING person that refinances … has a much higher that she should resign. It has been reported income than the average person who holds a that the acting comptroller of the currency, mortgage that has not refinanced.” Brian Brooks could leave the agency at the New Senate Aside from focusing on housing, Brown end of the week. said he hopes to examine the financial “Kathy Kraninger, as I’ve told her on the Banking chief system through a “climate lens and through phone, she needs to resign on” Jan. 20, Brown a racial justice lens,” and expanding financial said. “If she doesn’t, she’ll be fired by the services access to the underserved. Biden people, I’d be pretty certain.” sets dramatic He said he plans to hold big banks and Referring to a Politico story earlier in the technology firms accountable for their day saying that Brooks is planning to leave change of impact on consumers, and to urge the the Office of the Comptroller of the Currency, regulatory agencies to renew their focus on Brown said, “I think that’s good that Brian consumer issues. Brooks quit.” course Brown also envisions a more active “I think he was starting to do damage there role for subcommittee chairs in the new with a number of things he did,” Brown said. By Neil Haggerty congressional session. Brown added that he doesn’t think that January 12, 2021 “You will see, in large part because of pent new legislation is necessary to strengthen the WASHINGTON — Sen. Sherrod Brown, up demand of a Senate that didn’t do anything CFPB. D-Ohio, made clear Tuesday that banking … you are going to see the subcommittee “I don’t know that they need legislation, policy will not be the sole area of focus for chairs in the banking, housing committee they just need a director that actually cares the committee that he will chair in the new active, holding hearings, writing legislation, about consumers and not the president and Congress. doing things, because they are as eager as I the president’s big corporate backers,” he Brown said housing issues received short am,” Brown said. said. shrift when the GOP ran the Senate Banking One of the ways that Brown has proposed Brown admitted that he was not sure Committee, but that will change under his to expand financial services access to whether he could enact ambitious proposals leadership. underbanked communities is by giving to reform the credit reporting system. “Housing determines so much in peoples’ consumers free FedAccount digital wallets, President-elect Joe Biden has put out policy lives. It determines closeness to a grocery allowing them to access economic stimulus proposals supporting the creation of a public store. … It determines the school district checks and other forms of government aid. credit reporting agency to promote financial your children live in,” Brown said in a press “The FedAccounts in essence will be inclusion for people who are credit invisible. conference about his priorities. administering in some way these no-fee But Brown said he hopes to examine how He noted that the committee’s full name bank accounts,” Brown said. “It costs a lot of credit scores contribute to consumers’ ability — Senate Committee on Banking, Housing money to be poor. … You have to pay to cash a to refinance loans. and Urban Affairs — often gets overlooked. paycheck when you go to a local bank often.” “If there is a way to find out about that, “You will always hear me call it Banking and Brown said he intends to hold hearings we need to do it,” he said. “It may be just Housing,” Brown said. “Housing was a word with big-bank CEOs, though he has not set a hearings, it may be calling bankers, it may be left out of this committee’s title for far too time frame. talking to the credit reporting agencies.” many years and it won’t be left out anymore.” “They have a lot of power and we need to A housing area of immediate concern for know more about how they do their business the committee, Brown said, will be protecting and is there a connection between stock residents from being evicted in the midst of prices and huge CEO payouts and huge the coronavirus pandemic. executive compensation and the flatness of “The first priority before this committee wages in our economy?” he said. “So I think has to be dealing with COVID,” Brown said. the more we hear from them the better.” “That’s the whole federal government’s first Brown also signaled that he intends priority … so this public health crisis doesn’t to invoke the Congressional Review Act become more of an economic crisis. … The to reverse rules issued during the Trump first thing in this committee will be what we administration, though he did not say which

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that will continue to garner the company’s based lender more than $300 million. M&A attention, including the fast-growing Visa Signature Bank, the New York lender Direct for moving money around the world that’s long catered to his family, is closing using multiple card, ACH and real time two personal accounts in which Trump held Visa and payment networks. about $5.3 million, a spokesperson for the “In addition, our value added services firm said on Monday. It’s also calling for Plaid call revenue has grown in the mid-to-high- the president to step aside before his term teens,” he said. “We have great respect for officially ends on Jan. 20. Plaid and the business they have built and “We believe the appropriate action would off merger, look forward to our continued partnership.” be the resignation of the president of the Plaid CEO and co-founder Zach Perret United States, which is in the best interests ending DOJ acknowledged that the past year has of our nation and the American people,” delivered an “unprecedented uptick in the bank said in a separate statement on demand for the services powered by Plaid, Monday. litigation and our priority is to support the hundreds The lenders are following social media of millions of people who now rely on outlets and other companies in suspending By David Heun fintech.” ties with the president after he encouraged January 12, 2021 “We made great strides last year, growing attendees at a rally last week to march on the Visa and Plaid have terminated their our customers by more than 60% and adding Capitol, where they stormed the building merger and reached an agreement with hundreds of banks to our platform,” Perret and interrupted the certification of the the Department of Justice to dismiss the added. “While Plaid and Visa would have electoral college vote. At least five people litigation brought against them when the been a great combination, we have decided died in the mayhem and its immediate deal raised antitrust questions. to instead work with Visa as an investor and aftermath. Even when the initial $5.3 billion partner so we can fully focus on building the “Yesterday was a dark day for America and transaction was announced, on Jan. 13, infrastructure to support fintech.” our democracy,” Americas 2020, it fueled speculation that Visa was head Christiana Riley posted on LinkedIn potentially seeking to eliminate potential a day after the riot. “We are proud of our competitors. As recently as last month, Visa RISK MANAGEMENT Constitution and stand by those who seek to lawyers continued to defend the company uphold it to ensure that the will of the people against the DOJ objections. is upheld and a peaceful transition of power “We are confident we would have Deutsche, takes place.” prevailed in court as Plaid’s capabilities are Signature bank has served Trump and complementary to Visa’s, not competitive,” Signature to others in his orbit, including Ivanka Trump, Al Kelly, Visa’s chairman and CEO, said in and Michael Cohen. In 2011, a press release Tuesday. “We believe the the bank appointed Ivanka to its board, but combination of Visa with Plaid would have stop doing she stepped down a couple of years later. delivered significant benefits, including The New York Times reported the cutting of greater innovation for developers, financial business with ties earlier on Monday. institutions and consumers.” “We have never before commented on The concern about wiping out any political matter and hope to never do competition stemmed from Plaid’s ability Trump and his so again,” Signature said in its statement. to develop payment apps and collect and The bank will not do business in the future decipher data, two things Visa also wants to company with any members of Congress who voted emphasize. to disregard the electoral college, the Kelly noted it has been a full year since By Bloomberg News spokesperson said. the announcement Visa would acquire January 12, 2021 Deutsche Bank said last month that Plaid, and he said a “protracted and complex Deutsche Bank AG and Signature Bank, Trump’s longtime banker resigned. litigation will likely take substantial time to two of ’s favored lenders, are Rosemary Vrablic, who worked in the private fully resolve.” pulling away from the billionaire president banking division, helped manage Trump’s The scuttling of the deal does not leave in the wake of last week’s deadly riot at the relationship with the bank as the German Visa without a path for growth. U.S. Capitol. lender lent hundreds of millions of dollars of “We are focused on accelerating our The German lender has decided not to loans to Trump’s company over a number of business by advancing our broader strategy conduct any further business with Trump years. That relationship subjected the lender and continuing to drive Visa’s three growth and his company, said two people with to pressure from lawmakers and prosecutors pillars: consumer payments, new flows, and knowledge of the matter, asking not to be for information during Trump’s presidency. value added services,” Kelly added. identified because the deliberations were The Trump Organization currently still Kelly pointed to other Visa initiatives confidential. Trump owes the Frankfurt- has three loans worth about $300 million

For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 14, 2021 AMERICANBANKER.COM PAGE 8 outstanding with the bank. They come due firm Friedman Kaplan Seiler & Adelman. devastate financial markets, the banks’ in 2023 and 2024. “They’re likely going to continue to get sued attorneys said. Deutsche Bank has faced scrutiny over its like this as long as it’s there.” “Plaintiffs allege that the highly regulated ties to Trump throughout his presidency. It A San Francisco judge has said he will process of setting a benchmark that is a was so concerned about its exposure after render a decision on the injunction without fundamental part of the global economy is his election, it considered restructuring the a hearing. The judge is scheduled Thursday a per se antitrust violation,” the banks said. loans but ultimately decided not to do new to hear a request by the banks to transfer the “But legitimate cooperative activities, even business with him during his presidency, case to Manhattan federal court. those involving competitors, often benefit Bloomberg has reported. Libor is derived from a daily survey of competition.” bankers who estimate how much they would Attorneys for the banks didn’t respond to charge each other to borrow. It’s used to help emailed requests for comment. LIBOR determine the cost of borrowing around the world, from student loans and mortgages to interest rate swaps and collateralized loan CORPORATE GOVERNANCE Global obligations. In the wake of the 2008 financial crisis, banks warn regulators discovered that lenders had been BofA halts manipulating the rates to their advantage, resulting in billions of dollars of fines. political of market For over three years, policymakers around the globe have been developing new chaos if court benchmarks to replace Libor by the end action of 2021. In November, officials proposed anextensionfor some dollar Libor tenors committee rushes Libor until mid-2023, to help firms cope with the transition process. exit If the benchmark were to be immediately spending switched off, many derivatives contracts By Bloomberg News already contain contractual fallback decisions for January 12, 2021 language that would enable them to Some of the world’s biggest banks are transition to an alternative rate, according urging a U.S. judge not to immediately to Y. Daphne Coelho-Adam, a counsel at now terminate Libor after a group of borrowers Seward & Kissel who is not involved in the filed suit claiming the benchmark was the case. But hundreds of billions of dollars of By Bloomberg News work of a “price-fixing cartel.” bonds, loans and securitizations lack a clear January 12, 2021 Defendants in the case, including replacement rate and could pose a threat to ’s employee-funded JPMorgan Chase, Credit Suisse Group and financial stability. political action committee, or PAC, is Deutsche Bank, said in a November filing Defendants in the case also include UBS putting its allocation decisions on hold after that an injunction abruptly ending the Group, Citigroup, HSBC Holdings and ICE a right-wing mob stormed the U.S. Capitol London interbank offered rate would wreak Benchmark Administration, which oversees last week. havoc on financial markets and undermine the rate. “For upcoming elections, we will take into years of work reforming the reference rate. account the appalling events of Jan. 6 before The plaintiffs, which include 27 consumer ‘It must be stopped’ making any PAC decisions regarding those borrowers and credit card users, are also “It must be stopped one way or another members” of Congress who voted against seeking monetary damages. or neutralized because it’s an illegal certifying the presidential election results, Attorneys not involved in the case say price-fixing agreement,” Joseph Alioto, an the bank wrote in a memo to workers who the chances of an injunction are slim. Yet attorney at Alioto Law Firm representing the contribute to its PAC. “We also will halt all it underscores the risks and legal costs plaintiffs, said in an interview. PAC funding decisions for the immediate for banks that continue to prop up Libor, The plaintiffs want Libor to be either future while the new Congress and incoming which still underpins hundreds of trillions prohibited or set at zero with borrowers administration establish their priorities and of dollars of financial assets around the repaying capital but not interest. help the country unite and move forward world. It also highlights the fragility of the The banks said in the filing that none of from the lows we all experienced on Jan. 6.” discredited benchmark, which in theory the plaintiffs have shown that they ever paid A company spokesman confirmed the could be halted by a single court decision. interest based on Libor, adding that the suit contents of the memo. q “You have to take it seriously because it is built on “baseless theories of antitrust would be a catastrophe if it was granted,” liability.” Regulators have warned that even © 2021 Arizent and American Banker. said Anne Beaumont, a partner at the law a temporary disturbance of Libor could All rights reserved.

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