08 Jan On bank enforcement, look for tough-guy Trump, analyst says
The Trump administration may not be the hands-off, business-friendly Washington that many pundits expect when it comes to bank enforcement, one analyst wrote Monday.
Capital Alpha’s Ian Katz pointed to a $70 million fine levied against Citibank for failing to comply with a 2012 consent order related to anti-money-laundering procedures.
It’s not a big amount, Katz acknowledged, and it also follows a year in which enforcement action fines fell to a four-year low, as The Wall Street Journal reported last November.
Still, Katz believes there’s a straight line between the recent Citi C, -0.94% fine and the president’s tweet denying a Reuters report that speculated that Wells Fargo WFC, -0.51% may be let off the hook with all Consumer Financial Protection Bureau matters up for consideration under the new, Trump-appointed head.
While regulators such as the Office of the Comptroller of the Currency, which fined Citi, don’t report to Trump, “they’re not independent of political reality, and they’re not insulated from social media,” Katz said.
Through the tweet, in which Trump said, “I will cut Regs but make penalties severe when caught cheating,” the president was stressing that “deregulation” is one thing and enforcement another, Katz said.
“A highly publicized and televised perp walk makes for just the kind of dramatic reality TV that Trump helped popularize,” Katz added. “It shows his government being tough on bad guys. Obviously, every enforcement case is different and has its own merits or demerits. But we think Trump-appointed regulators will get the message.”
Citigroup shares have gained 24% over the past 12 months, beating the 20.3% increase in the S&P 500 SPX, -0.06% , while Wells shares are up about 14%.