Tag: The Federal Reserve

Trump: Bad Bankers Beware

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


So now President Trump has thrown himself into the discussion about Wells Fargo. Maybe now the bank will get the justice it deserves. And maybe now the message about Trump’s intentions about financial regulation will become less fake.

First a little background. Three months ago Federal Reserve Chair Janet Yellen made some pretty startling comments for a Fed chief, publicly criticizing Wells’ behavior toward its customers as “egregious and unacceptable.”

She was talking, of course, about the bank’s years-long practice of signing up its customers for checking accounts, savings accounts, credit cards and other products without asking their permission or even telling them. But since then there have been reports and admissions by the bank of several other excesses, such as charging auto loan customers for insurance they didn’t ask for, dunning mortgage customers for interest rate-lock extension fees when the bank itself caused the delays, overcharging military veterans on mortgage refinance loans, and allegedly closing customers’ accounts without telling them why it did so.

You would think that the Fed – which regulates Wells and other big banks – would have come down on the bank by now. Yet nothing’s happened since Yellen made those comments.

Then last week the president injected himself into the fray. Continue reading "Trump: Bad Bankers Beware" →

Janet Yellen's Final Exam

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Although he professes to “really like her a lot,” President Trump appears to have made up his mind that that the next chair of the Federal Reserve won’t be the incumbent of the past four years, Janet Yellen.

On Tuesday, according to media reports, the president asked Republican senators for a show of hands on whether they favored current Fed governor Jerome H. Powell or John B. Taylor, the Stanford University economics professor and frequent Fed critic. Results of the informal vote weren’t disclosed. On the same day, the New York Times ran an article comparing the “finalists” for the Fed chair position, mentioning only Powell and Taylor, even though the White House has said Trump is considering three additional candidates, including Yellen.

So it now looks like it’s a two-man race between Powell and Taylor. Trump has promised to make an announcement any day, at least before his trip to Asia at the end of next week.
Regardless of who he chooses, it’s certainly an appropriate time to review Yellen’s tenure as Fed chair, either as a historical exercise or as an indicator of what we can expect for the next four years in the event she is reappointed. Let’s look at some of the main points. Continue reading "Janet Yellen's Final Exam" →

Will The Fed Drop The Hammer On Wells Fargo?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


A few weeks ago Federal Reserve Chair Janet Yellen made some short – but very direct – comments about one of the big banks under the Fed’s oversight.

“Let me say that I consider the behavior of Wells Fargo toward its customers to have been egregious and unacceptable,” she said at her press conference following the Fed’s September monetary policy meeting. “We take our supervision responsibilities of the company very seriously. And we are attempting to understand what the root causes of those problems are and to address them.”

Now, for a person one of whose job requirements is to always speak cryptically, vague and ambiguously in public – Fedspeak, in other words – to call out one of the largest banks in the country and call its behavior “egregious and unacceptable” is pretty startling. That’s why I believe a major fine – at least $1 billion – against the Wells Fargo & Company (NYSE:WFC) by the Fed is coming.

Not only would it be justified, but certainly not out of line given past Fed penalties against other banks that committed far less “egregious” misdeeds. The fact that all of Wells’s transgressions were highly publicized and committed against consumers – millions of them – makes it even more imperative that the Fed let Wells have it between the eyes.

Let’s look at some recent big fines imposed by the Fed against the banks it regulates: Continue reading "Will The Fed Drop The Hammer On Wells Fargo?" →

Trump To GOP: Drop Dead

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


As much as I don’t like the fact that President Trump had to make a deal with the Devils – i.e., Democrats – to reach a temporary budget agreement, he did the only sensible thing he could do to avoid a government shutdown. He was able to increase the government’s borrowing limit and get emergency aid for Hurricane Harvey victims, all in one fell swoop.

Rather than wait around for the do-nothing Republicans in Congress to, well, do nothing, Trump agreed to a deal with the likes of Chuck Schumer and Nancy Pelosi to at least get something done that needed to be done quickly. Was it the deal he really wanted? No. Was it the best deal? Probably not. Was it the best deal he could get right now under the circumstances? Probably. That’s politics.

But it might lead to bigger, better and more important agreements down the road, most immediately tax reform, and that was more likely Trump’s primary goal. He knew he couldn’t rely on Republicans for that. Continue reading "Trump To GOP: Drop Dead" →

Fed Can't Backtrack On Regulatory Reforms

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


I’ve been pretty harsh in this column on Federal Reserve monetary policy, but the one area that I haven’t written much about– financial regulation – is probably the main area where the Fed does deserve a lot of credit.

In her speech at the Jackson Hole symposium late last week, Fed Chair Janet Yellen probably disappointed a lot of market watchers for her failure to talk about interest rates or unwinding the Fed’s balance sheet. Instead, she spent most of her speech defending the Fed’s actions in the regulatory realm in the wake of the global financial crisis and pushed back against critics who want to roll back those regulations, including President Trump, who vowed that he wants to “do a big number” on Dodd-Frank.

If Yellen wants to be reappointed to her position by Trump when it ends in February, she certainly didn’t sound like it. Then again, making comments in opposition to Trump is hardly a heroic stance.

Still, she deserves credit for defending the Fed’s position on bank regulation, and the next Fed chair, whether it’s Yellen, Gary Cohn, or someone else, should stick with the current policy, which will go a long way toward keeping our banking system safe and secure and make sure that the global financial crisis doesn’t repeat itself. After all, if you can’t trust keeping your money in a bank, nothing else matters. Continue reading "Fed Can't Backtrack On Regulatory Reforms" →