U.S. Rep. Robert Pittenger of Charlotte says examining Dodd-Frank regulations that he argues are hurting the banking industry and U.S. economy will be high on the House Financial Services Committee’s to-do list this year.
Pittenger is one of three members of the committee from the Charlotte area. The others are Rep. Patrick McHenry, a Republican from Lincoln County, and Mick Mulvaney, a Republican from Indian Land, S.C.
Today’s “hyper-regulatory environment” is affecting banks large and small and putting “enormous brakes on our economy” by making it tough for some businesses to get loans, Pittenger said. The committee will seek to find ways to ease the regulatory burden on community banks, which Dodd-Frank regulations are especially hurting, he said.
Pittenger said the committee will also review the Path Act, which would wind down Fannie Mae and Freddie Mac, mortgage giants the U.S. government seized in 2008. In 2013, the committee approved the act, which never made it out of Congress. Pittenger supports the act.
Pittenger said the committee will also examine what to do about the Export-Import Bank of the United States, a federal agency that has become a hotly debated topic in business and political circles.
Some conservatives have pushed for an end to the bank, which provides U.S. companies with loans to fulfill export orders. Pittenger is among critics who refer to the bank as a type of “corporate welfare.”
WSJ: BofA’s government-backed subsidiary financed trades
Bank of America for years used its government-backed U.S. banking subsidiary to finance billions of dollars in controversial trades for clients of its European investment-banking arm, The Wall Street Journal reported Wednesday, citing internal documents and people familiar with the matter.
Last year, the bank’s Merrill Lynch unit “quietly” started phasing out the practice of using funds from its U.S. banking subsidiary to finance transactions that, among other things, helped hedge funds avoid taxes on stock dividends, according to the Journal.
In an email Wednesday, a Merrill Lynch spokesman told me it no longer uses the subsidiary, Charlotte-based Bank of America National Association, to finance so-called “dividend arbitrage.”
Dividend arbitrage is legal in other countries but not in the U.S.
Bank of America largely runs the strategy from London. The spokesman said the subsidiary and other affiliated entities never suffered losses from the transactions.
Wells Fargo: Cheaper gas not fueling consumer spending
It’s been hoped for by some businesses and economists that the recent decline in gasoline prices will free up money that consumers will spend elsewhere, giving a boost to the U.S. economy.
But according to Wells Fargo’s chief financial officer, John Shrewsberry, cheaper gas is not fueling gains in consumer spending.
“It’s still good for the consumer, but it’s not leading to increased consumption in a way that people traditionally imagined,” Shrewsberry said Tuesday at an investor conference in Aventura, Fla.
The drop in oil prices could hurt banks if it leads to defaults on loans to the oil and gas industry. Shrewsberry said Wells Fargo is reviewing its outstanding oil and gas loans to determine which actions it might need to take, such as increasing its reserves to cover losses.