FHA to tighten mortgage standards; The man who can make or break a credit card

Receiving Wide Coverage ...

Talking points
Deutsche Bank’s “global investment bank, including its embattled U.S. operations,” are a key issue as the bank negotiates a possible merger with its German rival, according to the Wall Street Journal. Commerzbank “wants a clear picture of Deutsche Bank’s willingness to restructure its investment bank.” Deutsche, meanwhile, has “long argued that the units are essential to a global investment bank serving European companies abroad. Deutsche Bank has also seen its significant U.S. presence as key to its plans.”

Separately, for the second time in a month, HNA, Deutsche Bank’s single largest shareholder, has reduced its stake in the bank. According to a German regulatory statement, the Chinese conglomerate “cut its holding to 5.11% and now owns just 0.19%, with the remainder of the stake covered by derivatives that will gradually unwind. This means that, while HNA still has more than 5% voting rights, it has next to no economic interest left in the German bank’s stock.”

Headed to the Fed?
President Trump said he would nominate Stephen Moore, a fellow at the conservative Heritage Foundation and a former campaign adviser, to the Federal Reserve’s board of governors, placing a “fierce critic of the central bank’s leadership inside the consensus-oriented institution.” Moore’s confirmation “would bring a more partisan political advocate to a Fed board typically populated by technocratic policy veterans,” theJournal says.

“Moore is widely viewed as the most political nominee to the Fed board since the Reagan era,” the Washington Post says.

Coverup?
Swedbank’s “heavily redacted” report on alleged money laundering isn’t placating “investors, government ministers and money laundering experts,” who say the report is “insufficient and damaging to confidence in the Swedish lender’s board and management.”

“I unfortunately get the feeling that the bank’s management is trying to hide dark facts rather than doing what is in its power to bring clarity and calm to the market,” Joacim Olsson, head of the Swedish Shareholders’ Association, told the Financial Times.

The bank claims the report “shows that [it] has taken the necessary steps to sever relationships with customers deemed suspicious by its internal monitoring systems.” However, “local bank secrecy laws have hindered the bank’s ability to make its case to the public, CEO Birgitte Bonnesen said.”

Wall Street Journal

Mortgage musings
The Federal Housing Administration said it will tighten underwriting standards for “borrowers with low credit scores and high loan payments relative to their incomes,” the paper reports. This could cut the number of first-time homebuyers able to get mortgages.

mortgage
Mortgage concept. Financial agent complete wooden model of the house with last piece with text mortgage. Wide banner composition with bokeh background.

Separately, American Banker reports, “more than a dozen of the world's largest banks are accused of price fixing on roughly $486 billion of bonds issued by Fannie Mae and Freddie Mac.”

Trend setter
Brian Kelly — also known as The Points Guy — is “one of the most powerful people in credit cards," the paper says. Reviews on his website “can make or break a card. Banks pay to advertise there and some seek his input before launching new products. The banks also pay TPG when its readers get their credit cards. That has created a symbiotic relationship between Mr. Kelly and the banks. TPG’s financial success depends largely on the banks continuing to pay. The banks pay up because they are attracted to TPG’s large readership. More than 10 million people visited the site in January.”

Tech buy
BlackRock plans to pay $1.3 billion to buy eFront, a French software firm that “provides reporting on private equity and alternatives for financial institutions, tracking everything from fees to deals to fundraising. For BlackRock, the bid is part of a larger effort to diversify away from the stock-and-bond offerings that it is best known for as the asset-management industry comes under increasing price pressure. CEO Laurence Fink has said he wants more of the company’s revenue tied to technology.”

Artificial sweeteners
Bitwise Asset Management, in its application to the Securities and Exchange to launch a bitcoin-based exchange-traded fund, says “nearly 95% of all reported trading in bitcoin is artificially created by unregulated exchanges.” The study, which “adds to a growing body of research that casts doubt on just how much cryptocurrency is changing hands daily … is an attempt to alleviate the agency’s longstanding concerns that a bitcoin ETF would leave investors exposed to fraud and market manipulation.” Bitwise says its fund, if approved, “would be based upon the 5% of trading it considers … well regulated, transparent and efficient.”

Financial Times

Disciplined
Citigroup fired eight traders from its Hong Kong trading desk and suspended three others after finding that they misled clients. The bank said it “identified personal conduct that did not meet our standards and we have taken appropriate action.”

“The firings come in the wake of several investigations by the Hong Kong Securities and Futures Commission (SFC),” which disciplined several other banks in unrelated incidents.

Quotable

“Our re-imagining of how we hire is part of a broader objective at the firm where we are asking ourselves: ‘Can we better meet our diversity goals by broadening the pool of candidates we are considering?’” — Matt Mitro, head of campus recruiting at JPMorgan Chase, which is testing neuroscience-based video games to help it assess applicants’ attention, memory and altruism

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