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Wednesday, May 6, 2015

Does Compliance Matter For Bank Performance, Alger Fair Fund Established, FTC Allows $12.4B Merger

  • IMF Working Paper: Does Basel Compliance Matter for Bank Performance?
  • CFTC Chairman Timothy G. Massad requested budget increase, again
  • SEC Commissioner Bowen gave a speech to Managed Funds Association
  • The Federal Reserve issued an enforcement action against Truxton Trust Company  
  • A Fair Fund distribution plan for the Alger Fund was established for $40 million
  • The FTC voted to allow the $12.4 billion auto parts merger

The IMF published a fascinating paper entitled Does Basel Compliance Matter for Bank Performance? The "results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency". This is a fascinating article that will no doubt be used by those against additional financial regulation. It is a curious paper to come out of the IMF, however. In that way it is quite reflective.

CFTC Chairman Timothy G. Massad spoke before the Senate to once again provide an argument for the need for funds. The current budget provides an increase of $35 million over last year and Massad is asking for an additional $322 million. He makes the case brilliantly as did CFTC Commissioner Sharon Y. Bowen in a speech made a few weeks ago. Bowen took the request one step further asking to be self-funded. That certainly seems like an ideal way to fund an organization that brought in over $6 billion last year in penalties and enforcement actions.

SEC Commissioner Bowen gave a speech before the Managed Funds Association 2015 Compliance Conference. She used the time to discuss her stance on financial regulation and advocated for 1) the governance of designated contract markets (DCMs) and SEFs and 2) an improved culture.

The Federal Reserve Board on Tuesday announced the execution of the enforcement
action against Truxton Trust Company in Nashville, Tennessee. The order created a civil penalty $11,285. Why this tiny amount is being paid to the National Flood Insurance Program remains unclear. 

A Fair Fund distribution plan for the Alger Fund was established in the amount of $40 million. You can obtain a copy of the plan and submit comments by going here: Currently the fund is deposited at the U.S. Treasury. 

The SEC announced registration for outreach programs designed to help companies comply with new rules. Specifically these workshops will discuss Regulation Systems Compliance and Integrity, or Regulation SCI, which was adopted in November 2014 -- compliance for its requirements begins in the fall. Regulation SCI is focused on policies and procedures for technological systems, business continuity, automated systems and general corrective actions "when system issues occur". “The compliance outreach program provides an opportunity for the SEC and regulated entities to discuss compliance issues associated with Regulation SCI,” said OCIE Acting Director Marc Wyatt. Registration materials are available here.  Questions should be addressed to:

The FTC voted to allow the $12.4 billion merger of the world’s largest auto parts suppliers, ZF Friedrichshafen AG and TRW Automotive Holdings Corp., as long as they agree to divest TRW's linkage and suspension business to prevent any harm to competition in the North American market for "heavy vehicle tie rods". The merged company has six months after the agreement to sell TRW assets to an FTC-approved buyer.

Upcoming Events & Meetings

William C. Dudley, President and CEO (Speaker)
Date: May 8, 2015
Time: 9:45 a.m.
Event: The 17th Annual Bronx Bankers Breakfast
Location: Villa Barone Manor , 737 Throggs Neck Expressway , Bronx, New York 

 New York Fed contact: Eric Pajonk,, 212-720-1735.

CFTC’s Market Risk Advisory Committee to Meet on June 2
CFTC Headquarters lobby-level Hearing Room
1155 21st Street, NW, Washington, DC 20581
10:00 a.m. to 1:30 p.m.
Commissioner Bowen will discuss issues related to: "(1) the appropriate industry response to current and potential cybersecurity threats; and (2) the concentration of Futures Commission Merchants, and its effect on, and other factors currently affecting, market liquidity." The meeting is open to the public and can also be listened to via conference call (866-844-9416). Watch the live webcast at

In Case You Missed It
  • Monday, May 4, 2015 Recap: FRB Reports on Credit & Lending Practices, May CRA, Deutsche Bank Maintains WKSI Status, Peer Analysis May Lead To Overvaluation
Last week 

  • Monday, April 27, 2015 Recap: Credit Detail, More CFTC Charges, Puzzling Low T-Yields, and the Fed Testifies Before The Senate 
  • Tuesday, April 28, 2015 Recap: Ex-Evercore Banker & Girlfriend Charged, IMF on Islamic Banking, Bank Profitability, and a $600K Payday For Whistleblower 
  • Wednesday, April 29, 2015 Recap: Fed Funds, Bernake's Response To Taylor's Rebuke, GDP, China's Looming RE Battle & Pay Vs. Performance 
  • Thursday, April 30, 2015 Recap: Algorithmic Trading, Community Banks, Personal Income Report, Another FX Scheme, Banking Applications and Compliance Outreach
  • Friday, May 1, 2015 Recap: Financial Literacy, 18yrs For Investment Fraud, FCStone Sanctioned, Pan-African Banks, Piwowar's Dissent and Alaska's $51B Fund

Two Weeks Ago 
  • Monday, April 20, 2015 Recap: Treasury Auctions, FX Ponzi, BlackRock Fail, Dudley's Fed Speech, and the FFER
  • Tuesday, April 21, 2015 Recap: More Regulation For Large Banks, Youth Savings, Piwowar's Speech, Flash Crash Culprit, the OFAC & FNRG Halted
  • Wednesday, April 22, 2015 Recap: #EXIM2015, Obama's PPPs, Goldman Sachs In The "Dark", $1.5M Payday, Massad Speaks, and Yellen Stabilizes
  • Thursday, April 23, 2015 Recap: GDP, Deutsche Bank, Community Banks, Repos, and the Treasury Gets New Blood
  • Friday, April 24, 2015 Recap: New Federal Reserve Auditor, Inventories Up, CEI Same, Insider Trading, Fair Fund Delays & Alizadeh's Grand Jury Indictment