Wednesday, 24 June 2015

Banks still reel from compliance costs

From The Australian Business Review –

” The tide might not be turning. Hopes that regulatory and compliance costs at the biggest US banks might begin to retreat after years of rising may be premature.

As several recent stumbles make clear, banks still have more work to do to get right with regulators. Examples abound. The Office of the Comptroller of the Currency recently determined that six US banks, including JPMorgan Chase and Wells Fargo, had ­failed to satisfy a 2011 order to fix foreclosure practices. As a consequence, the banks face ­restrictions on purchases of mortgage-servicing rights.

Bank of America, which got a passing grade from the OCC on its foreclosure fix, was told by the Federal Reserve this year that its “stress test” performance had showed that management wasn’t forward looking enough. BofA has said it will spend $US100 million ($128.7m) to improve its stress-test abilities.

The fact big banks still are running afoul of regulators raises doubts about the idea lenders can quickly cut back on the billions of dollars of additional costs they have incurred since the financial crisis.”

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