Housing goals Mark Calabria, the new head of the Federal Housing Finance Agency, wants to “set a path to end the conservatorship” of Fannie Mae and Freddie Mac, while making them “stronger, healthier companies.”
Mark Calabria, director of financial regulation studies at the Cato Institute, testifies on Capitol Hill in Washington, D.C., U.S., on Thursday, March 25, 2010. Photographer: Brendan Hoffman/Bloomberg News
Brendan Hoffman/Bloomberg
“My objective is to get us to a spot where we don’t have to worry about the system blowing itself up,” he said in his first interview since getting the job.
Fannie Mae and Freddie Mac have managed to circumvent the congressionally mandated $600,000 pay cap on their CEOs’ salaries through a relatively simple maneuver: “They created a new job — president — transferring some of the work traditionally done by the CEOs to the new positions, according to government investigators. The presidents will be paid more than $3 million each.” Calabria, said he is “reviewing” the issue.
Separately, "the Trump administration is cracking down on national affordable housing programs because of concern over growing risk to the government's almost $1.3 trillion portfolio of federally insured mortgages."
Priced out Herman Cain withdrew his name from consideration for the Federal Reserve Board, citing the “big cut in pay” he would have had to take if he took on the role. Cain, who was never formally nominated by President Trump, also “faced significant GOP Senate opposition” and “drew criticism on both Wall Street and Capitol Hill, in part due to sexual-harassment allegations, which he denied.”
Cain’s decision “moved a spotlight to the other man Mr. Trump has said he wants to put on the Fed, his economic adviser Stephen Moore, who faced scrutiny on Monday for a series of magazine columns that denigrated women, including his then-wife,” the New York Times reports.
Sign of the times Big credit card issuers are moving more of their advertising to social media sites like Facebook as “traditional modes of solicitation, including mailings that the banks have relied on for decades, aren’t bringing in enough new card customers.”
New frontiers A week after announcing plans to close up to 450 branches, U.S. Bancorp said Monday it will open its first branch in Charlotte, N.C., by the end of this year and plans to “open, redesign or move about 60 to 80 branches in its core markets by the end of next year.” The bank said it eventually plans to open 10 branches in the Charlotte metro market, where it already has 800 employees. “U.S. Bank’s plans underscore a trend in the banking industry. Overall, banks are closing branches as customers turn more toward digital tools. However, banks are still selectively adding branches in areas adjacent to existing branches and new markets.”
Financial Times
Good call In a concession to trying to become “the world’s first truly global bank,” Revolut, the U.K. upstart bank, “is considering introducing a disruptive new innovation to its business: a phone number. Since it launched in 2015, users have been unable to make a phone call to Revolut’s live customer service team, with the London-based fintech company arguing that text-based instant messaging was more efficient.” The company will now accept incoming calls “in certain instances.”
Lean and mean Barclays, which is under pressure from activist investor Edward Bramson to reduce its investment banking business, “is planning to cut bonuses as part of a cost-cutting drive to boost returns at the underperforming” division. “The rate at which bankers accrue annual bonuses is set to be more closely tied to performance, with accrual in the first quarter expected to be down by double digits compared with last year.” Bramson is seeking a board seat at the bank’s annual meeting, scheduled for next week. Last month, CEO Jes Staley took direct control over the unit after its former head, Tim Throsby, left the bank suddenly.
Quotable
“I was told what the ethical restrictions would be. I would have to let go of most of my business interests. I could not serve on any boards. I could not do any paid speeches. I could not advocate on behalf of capitalism, host my radio show or make appearances on Fox Business. Without getting too specific about how big a pay cut this would be, let’s just say I’m pretty confident that if your boss told you to take a similar pay cut, you’d tell him where to go.” — Herman Cain, explaining why he decided to withdraw his name from Fed consideration
The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
