Receiving Wide Coverage ...
Settled: Bank of America has agreed to pay $404 million to Freddie Mac to settle disputes over residential mortgage loans sold to Freddie between 2000 and 2009. Some good news for the bank? "The deal should largely shield Bank of America from any further 'put-backs' of crisis-era loans sold" to both government-sponsored enterprises, notes the Journal. B of A already agreed to a $1.28 billion repurchase settlement with Freddie back in 2011. (That settlement, however, covered loans sold by Countrywide.) It also already settled twice with Fannie Mae. The bank plans to use existing reserves to cover the latest payout. Freddie previously struck similar deals with Citigroup, Wells Fargo, JPMorgan Chase and SunTrust Bank.
Approved: The Federal Reserve has approved the capital plans it required Goldman Sachs and JPMorgan Chase to resubmit following this year's stress tests. Both banks passed the tests back in March, but were asked to redraft their plans to address significant weaknesses. An anonymouse previously told Dealbook "the Fed had some concerns about the banks' forecasts for losses and revenue in the event of a crisis." Wall Street Journal, American Banker, Financial Times
RBS Apology: Royal Bank of Scotland, which didn't exactly have the best week ever last week, started off this one by issuing an apology after a system breakdown left customers unable to use their debit and credit cards. The bank, which offered no details about what caused the system failure, did promise to compensate customers "left out of pocket" as a result. This may prove to be no small task; given that yesterday was Cyber Monday, the biggest online shopping day of the year. Per the FT, this is RBS' fourth technology breakdown in two years.
Wall Street Journal
In case yesterday's FT article on de novo Bank of Bird-in-Hand had anyone feeling too optimistic, the Journal reports that the number of banking institutions in the U.S. has fallen to its lowest level since at least the Great Depression. Of course, "the consolidation could help alleviate concerns that the abundance of U.S. banks leads to difficulties in oversight or a less-efficient financial system," the paper notes. "Meanwhile, overall bank deposits and assets have grown, despite the drop in institutions."
This may come as a surprise: executives at Wells Fargo and spokespersons for Bank of America, JPMorgan Chase and Citigroup say the banks will likely offer loans that don't meet the Consumer Financial Protection Bureau's qualified mortgage definition. Regulators, including CFPB director Richard Cordray, have encouraged banks in recent months to lend responsibly outside the QM standard.
"Banks Need to Embrace Technology or Die." This message is brought to you by Francisco González, chief executive of BBVA.
Investment bankers are bracing themselves for lower bonuses this year. "For the second year in a row, global investment banks are cutting overall pay even as their profits are going up, undermining a previous relationship between a lender's overall performance and the level of bonuses it pays," the paper reports. But this accompanying editorial argues that the drop off is not as steep as it should be. "Bankers' high pay is one of the things that makes it very hard for governments to rebalance their economies away from finance especially in the U.S. and Britain," the op-ed notes. "It is impossible for most other industries to compete with the generous remuneration packages that banking can offer."
New York Times
New York's crackdown on payday lending continues. Per Dealbook, regulator Benjamin Lawsky has sent subpoenas to 16 so-called lead generator websites that sell sensitive customer data to payday lenders. His office remains concerned with curbing payday lending, but is also worried that consumer information is "getting into the hands of swindlers," the article reports, before recounting the story of one New York resident who was contacted by a phony lender following her use of one of the sites.
How are bank settlement fines calculated? It's hard to say exactly, writes Dealbook columnist Peter J. Henning. "When the government agrees to a settlement imposing civil penalties on a company, the amount appears to have been reached through negotiation without any effort to explain how the payment was calculated," he argues. "Of course, the beneficiary is often the United States Treasury because some penalties ... go straight to the government's coffers."