Week In Compliance: Senator Warren is portrayed as a communist dictator

Hello on this brilliant Friday here in New York.

from Examiner

Sen. Elizabeth Warren is portrayed as a communist dictator along with CFPB director, Richard Cordray. Se. Warren lashes back via Twitter. – from Sophia Tesfaye for Salon

Speaking of CFPB, Dir. Cordray warned the Mortgage Bankers Association that there is a disturbing lack of effort to implement TRID rules by its vendors. – from Eric W. Mills of McGuireWoods LLP for Lexology

While we are on TRID, OCC warns lenders that TRID exams are coming, attached with some helpful guidance. – from Ben Lane for Housing Wire

“The overwhelming majority of the cases we bring involve CCOs who crossed a clear line by engaging in affirmative misconduct or obstructing regulators,” Andrew Ceresney, director of SEC Enforcement Division. – from Sue Reisinger for Corporate Counsel

“One of the areas we’re spending a lot of time thinking about is the sale of complex financial instruments, particularly as they’re sold to retail investors,” said Stephanie Avakian, deputy director of SEC Enforcement Division. – from Financial Planning at NASDAQ 

East West Bank’s stock took a plunge on Thursday because it failed the Federal Reserve’s AML test. It will be required to collect much more information about customers. – from James Rufus Koren for Los Angeles Times

Los Urabenos crime group of Colombia has been placed on the OFAC Sanctions list. – from Samuel Rubenfeld for Wall Street Journal

Most Compliance Analysts Expect Increased Personal Liability. – from Mani for ValueWalk

Jobs In Compliance

Opinion: Equity-Assets Ratio

It is strange that there are Conservatives who want to raise capital requirements for banks. I thought that was only something Democrats wanted. The annual stress testing of banks by the Federal Reserve is a joke, though. All that work could be avoided with some easier measures without losing any financial engenuity. Actually, there are two main ways to make stress testing pretty much obsolete. One is raising the capital requirements. But that would reduce the money supply in the market, which, if you haven’t noticed, is pretty weak right now. It is so weak that we keep missing the inflation target of 2%. Anyway, raising capital requirements would be the monetary method of solving that problem. The other method is by requiring an equity-to-assets ratio. Currently, there is no such ratio. But what if there was a requirement to have a EA ratio of 10%? This shouldn’t be that difficult. Apple, the largest company by valuation, has a 41%. JPMorgan, the largest US bank by assets, has an EA ratio of 9%. This means that JPMorgan is four times more likely to go bankrupt that Apple. Why would we let our financial institutions be so risky? The economists who proposed this several years ago proposed a 20% EA ratio. This would allow the market to monitor a bank’s health, not the just the Federal Reserve.


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Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE. 

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