Tellers Emerge as Threat; 'Liar Loans' Make a Comeback

New York Times

Tellers have become a serious threat to bank security, according to law enforcement and prosecutors. Because teller jobs offer low pay and are not as important as they used to be, due in large part to mobile banking, the positions are sometimes attracting workers with criminal intent, according to an article in the New York Times. The job provides unusually direct access to customers' personal details. Rich and elderly customers are most at risk, especially when their accounts receive Social Security direct deposits.

Banks that have been victimized by their tellers include JPMorgan Chase, TD Bank, Capital One Financial, Fifth Third Bancorp and Lynrocten Credit Union in Lynchburg, Va. It can be difficult to catch the thieves. One teller kept changing jobs, moving from bank to bank, ultimately stealing about $2 million before he was caught. The thief and his co-conspirators re-routed checks to addresses they controlled, created fake driver's licenses and created fake businesses to buy credit-card terminals.

Tellers can also be vulnerable to bribes by outside criminals; since average teller pay is around $26,000, it's easy to see how a teller could be bribed. New York's attorney general has attempted to persuade JPMorgan, Bank of America and Wells Fargo to limit tellers' access to customer data.

Wall Street Journal

Based on the $154.3 million penalties that Barclays and Credit Suisse will pay to settle investigations, it appears the banks were trying to have their cake and eat it too, when it came to dark pools. The banks marketed the dark pools as a way for mutual funds and other traditional asset managers to avoid having to give away their secrets to high-speed, computer-driven traders. But it seems Barclays and Credit Suisse were going behind the mutual funds' backs and catering to high-speed traders as well.

Banks may have been reluctant to do too much to anger the high-speed crowd, because they account for about two-thirds of their trading volume. Barclays and Credit Suisse reached their settlement with the New York state attorney general and the Securities and Exchange Commission.

Low-documentation mortgages, aka "liar loans," are making a comeback. Blackstone Group and other big money managers are pushing lenders to make more "Alt-A" mortgage loans, in which borrowers don't have to fully document their income, unnamed sources told the Journal.

The mortgages have not yet been packaged and securitized. Borrowers need to have good credit and "substantial assets or income, even if they can't produce verification of annual wages."

Banks are staying clear of these mortgages for the time being (does anyone seem to recall QM?), leaving the market to small and medium-sized nonbank lenders. Quicken Loans kicked the tires on the market, but decided to take a pass, the nonbank lender's chief economist said.

Buyers of these mortgages include Blackstone and other private equity firms, hedge funds and mutual funds. In addition to Blackstone, the Journal also names Neuberger Berman, Pacific Investment Management and Legg Mason as buyers. And, of course, these mortgages carry higher yields.

An activist investor has called for the breakup of CIT Group. Hudson Executive Capital wants CEO John Thain to sell off CIT's various pieces, given its recent underperformance, unnamed sources said. Hudson owns a 0.5% stake in CIT.

CIT is already moving in that direction; last year it said would explore a potential sale or spinoff of its commercial-air unit. CIT's acquisition last year of OneWest Bank helped push it over the $50 billion-asset threshold, nudging it into SIFI territory. But Hudson Executive wants CIT to also think about selling its rail business and lending operations.

Hudson Executive, a new hedge fund, said it wants to work with management teams. Investors in the fund include former Wells Fargo CEO Richard Kovacevich and former J.P. Morgan Chase & Co. head William Garrison.

Financial Times

The paper looks at Rocket Loans, the new online personal loan purveyor owned by Quicken Loans. Rocket Loans is an extension of the self-service loan application Rocket Mortgage; read American Banker's coverage of Rocket here.

Rocket Loans purports to make fast decisions on loan applications and distribute the loan proceeds to customers the next day, the FT reports. To say it's a crowded field Quicken/Rocket is entering is an understatement. In addition to the biggest players, like Lending Club and Prosper, there are "literally hundreds" of online lenders entering the market for online personal loans, Discover Financial Services CEO David Nelms said recently.

Elsewhere ...

Christian Science Monitor: A homeless panhandler in Detroit now accepts cards. Abe "Honest Abe" Hangeston now accepts donations through his Square reader, allowing him to take handouts in cash, debit and credit. A light winter in Detroit has reduced the number of snow-shoveling jobs for Hangeston, which forced him to look for other avenues to generate income. "My business is being homeless," Hangeston says on his website.

Associated Press: The savings rate for U.S. consumers rose to 5.5% of after-tax income, as of the end of the December, according to the Commerce Department. It's the highest level since December 2012.

Consumerist: The site attempts to provide a concise explanation of each of the mobile payments apps introduced in the past year or so. The goal is to help explain which app does what, and thus help consumers decide which one is best for them. The task Consumerist set for itself is easier said than done. For PayPal's mobile payments app, for example, it's impossible to say where it can be used because its locator service was down. Merchant Customer Exchange's CurrentC is currently only available for use in Columbus, Ohio.

Samsung Pay can't be used by anyone with a Samsung smartphone; it's only available on Samsung Galaxy S5 and S6 phones. These users can also use Google's Android Pay, if they so desire. Consumerist also briefly describes Walmart Pay and Apple Pay.