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By Bloomberg

A bill introduced last week by Senate Banking Committee Chairman Richard Shelby would raise the minimum amount of assets for a bank to be designated systemically important to $500 billion from $50 billion.

The Alabama Republican’s bill could spare 25 mid-size lenders from annual stress tests and having to prepare “living wills,” exercises that cost banks millions of dollars a year. Among firms that could get relief are U.S. Bancorp, Bank of New York Mellon Corp. and Capital One Financial Corp. Only the six largest U.S. banks have more than $500 billion in assets.

The proposed change is part of a bill that would mark the biggest revision of the 2010 Dodd-Frank Act. Some Democrats have said they’re open to raising the threshold, though not as high as Shelby proposed, which might lead to a compromise. If it’s set at $250 billion, as some analysts expect, regional banks such as SunTrust Banks Inc., BB&T Corp. and Fifth Third Bancorp would get a reprieve.

Wherever the bar is set, the bill would allow regulators to designate banks below that level as systemically important after an elaborate process that gives firms a right to appeal. A committee vote is scheduled this week.

The 31 banks considered systemically important are subject to two stress tests a year, conducted by the Federal Reserve. While both tests use the $50 billion cutoff to determine whether a bank is systemically important, only the one mandated by Dodd- Frank is required to do so. There’s nothing preventing the Fed from raising or lowering the bar for the second test.

Compliance Action

Australian Broker BBY Enters Administration as Rescue Talks Fail

BBY Ltd., an Australian brokerage and wealth manager, entered administration after negotiations to raise capital fell through.

Accounting firm KPMG was appointed Monday as voluntary administrator, according to an e-mailed statement from receiver PPB Advisory, which is working for BBY’s bankers. Stock-exchange operators ASX Ltd. and Chi-X Australia Pty Ltd. suspended BBY’s access to trading infrastructure.

BBY clients were said to be warned by ASX to move options positions or risk seeing them closed for the brokerage’s failure to meet capital requirements, the Australian Financial Review reported. BBY couldn’t secure a A$2.5 million ($2 million) to A$3 million rescue package with George Wang’s AIMS Financial Group, according to the AFR.

“It is understood that the directors of BBY Limited have been negotiating with a number of different parties to raise additional capital but the firm has not been successful in this regard as yet,” according to the statement from PPB Advisory.

Sydney-based BBY offers equity research, trading services and access to new capital raisings for Australian companies.

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Facebook Attacked by Data Watchdog for Flouting EU Privacy Rules

Facebook Inc. is riding roughshod over European data- protection laws, Belgium’s privacy regulator said in a report the watchdog described as “staggering.”

The way Facebook users’ private lives are “being treated without respect needs tackling,” Willem Debeuckelaere, president of the Belgian commission, said in an e-mailed statement on the results of an investigation into Facebook’s practices.

The European Union’s 28 privacy watchdogs are coordinating national probes into possible violations of EU law by Facebook’s revamped policy for handling personal photos and data. The social network earlier this month temporarily escaped daily fines in a tussle with the Dutch privacy regulator over its revamped policy for users’ photos and data.

Facebook “scoffs at” European and Belgian privacy rules “at several levels,” the country’s regulator said, adding that it wants to analyze in depth a series of problematic areas.

The Belgian regulator said it has the power to investigate the company for violations of its citizens’ privacy rights, even though Facebook has its European base in Ireland.

Menlo Park, California-based Facebook said in an e-mailed statement that it told the Belgian authority there is nothing more important than user privacy and “we work hard to make sure people have control over what they share and with whom.”

Facebook, which is already regulated in Europe, said that while the applicability of the Belgian watchdog’s efforts are unclear, it will review the recommendations “with our European regulator, the Irish Data Protection Commissioner.”

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Interviews/Commentary

Criminal Banks Merit Tough Scrutiny on Waivers, Waters Tells SEC

Representative Maxine Waters of California urged the Securities and Exchange Commission to rigorously question whether it will let five banks carry on business as usual after they plead guilty to criminal charges related to currency manipulation.

Waters, the U.S. House Financial Services Committee’s top Democrat, sent a letter May 14 to SEC Chair Mary Jo White. She asked the regulator to use a “rigorous, fair and public process” to decide whether to give banks permission to keep overseeing mutual funds or issuing certain securities.

The SEC declined to comment.

Citigroup Inc., JPMorgan Chase & Co., UBS Group AG, Barclays Plc and Royal Bank of Scotland Group Plc will admit guilt in coming days, people familiar with the talks have said, as the U.S. Justice Department and other regulators wrap up an investigation into whether they colluded to rig foreign-exchange benchmarks.

The pleas will require the banks to ask regulators such as the SEC and the Labor Department for permission -- called waivers -- to keep their hands in several lines of business.

“These disqualification provisions are important tools that protect investors, the markets and the public by deterring misconduct, reducing recidivism, promoting market integrity and removing bad actors from the market,” Waters wrote.

Waters has criticized the SEC’s routine granting of such waivers. In March, she authored legislation that would require the SEC to hold a public comment period before determining whether to grant them.

In a March speech, White said that the agency shouldn’t use waivers as an “additional enforcement tool.”