Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. The regulator for the largest banks in the U.S. has a new warning for the companies he supervises — if you have a consistent history of violations and problems, you might be too big and we could force you to break up. The “too big to manage” plan that Acting Comptroller of the Currency Michael Hsu outlined in a speech Tuesday marks a stark shift in tone at his agency, which has been dogged by years of accusations that it has been too cozy with the largest financial institutions. “One thing that happens that’s different for the largest banks than for all the other banks, is that some of the largest banks can stay in a state of poor management for a really long period of time without a forcing action,” Hsu said at the Brookings Institution. ”That’s a problem.” So why is it landing like a dud? MM found that industry reps aren’t worried about Hsu’s plan — a multi-stage process in which a bank is put on notice and hit with enforcement actions before facing growth restrictions and then divestiture if they don’t fix regulatory concerns. Hsu stressed that big banks are critical to a growing U.S. economy. Hsu’s methodical approach and a perceived lack of urgency also rang somewhat hollow with Wall Street watchdogs. They want immediate action on repeat rule-breakers like Wells Fargo, which is already subject to a Federal Reserve growth cap. The concern is that the plan is just talk. Sarah Pray, managing director for policy at Americans for Financial Reform, told MM, “process is nice, but results, delivered promptly, that finally end chronic abuse of consumers by too-big-to manage banks would certainly be better." “Good framework for future cases but should be applied immediately to Wells Fargo and Citi, two recidivists that today are clearly TBTM,” said Better Markets president and CEO Dennis Kelleher. “It is long past time for action, not talk.” To be fair, the speech signals a firmer hand going forward at the Hsu-era OCC. It will keep banks on their toes about future moves by the veteran bank regulator. Susan Ochs, a former Treasury official who now advises CEOs, said it could help executives as a “regulatory cudgel” when they face resistance to change from shareholders. Federal Reserve Bank of Minneapolis COO Ron Feldman raised doubts about Hsu’s proposed fixes but, in the big picture, said his speech was “remarkable.” “Almost all of the comptroller of the currencies that I’m familiar with spend their time talking about the value of the national bank charter and don’t ever touch this set of issues,” he said. Why does this week feel too big to manage? — Please send tips to zwarmbrodt@politico.com.
| 
