Deutsche, UBS plan revival; Landlord charged with fraud

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Rejected
A federal judge in New York ruled Wednesday that President Trump can’t block subpoenas from House Democrats seeking financial documents from Deutsche Bank and Capital One, two of the president’s lenders. “After a hearing, U.S. District Judge Edgardo Ramos said that Congress has broad powers to conduct investigations and that the subpoenas had a legitimate legislative purpose,” the Wall Street Journal reports.

“We remain committed to providing appropriate information to all authorized investigations and will abide by a court order regarding such investigations,” a Deutsche Bank spokeswoman said.

“The ruling was the second setback this week for Mr. Trump’s efforts to prevent the release of his financial records,” the New York Times says. On Monday a federal judge in Washington ruled that Trump’s accounting firm must comply with congressional subpoenas. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker

If podcasts are your thing, The Daily from the Times has a companion piece titled, “The Bank That Kept Saying Yes to Trump.”

Separately, Deutsche CEO Christian Sewing told the bank’s shareholders at its annual meeting that he is prepared to make “tough cutbacks” as the bank’s stock hit another all-time low.

“We will accelerate transformation by rigorously focusing our bank on profitable and growing businesses which are particularly relevant for our clients,” Sewing said. “This is my pledge, and you can be sure of that.”

Wall Street Journal

Ponzi-like
The Securities and Exchange Commission and the Justice Department filed charges against Robert C. Morgan, “one of the nation’s largest landlords,” for running a “Ponzi scheme-like” scam against small investors and of “misleading banks to obtain bigger loans by using fake loan documents.” The Justice Department accused Morgan, whose firm owns 140 properties and 34,000 units in 14 states, of conspiracy to commit bank fraud, wire fraud and money laundering.

“The Morgan case is being followed closely by the real-estate industry because many of Mr. Morgan’s apartment loans flowed through government mortgage giants Fannie Mae and Freddie Mac, which bought and repackaged them into securities purchased by investors. That has raised questions whether Fannie Mae and Freddie Mac sufficiently ensure buyers of multifamily apartment buildings aren’t misstating incomes — a common problem that plagued single-family housing before the 2008 crisis.”

Delayed
If Harriet Tubman is going to take Andrew Jackson's spot on the $20 bill, she’s going to have to wait. Treasury Secretary Steven Mnuchin said the proposed move, announced in 2016 under the Obama administration, won’t take place at least until 2028. Mnuchin said at a House Financial Services Committee hearing that he was focused instead on new security features for the bill. When campaigning, Donald trump "expressed admiration for Mr. Jackson" and called the move to Tubman “pure political correctness.”

Financial Times

The ties that bind
Speaking of that crisis, the paper sees echoes of it in the newly revealed scandal in the sale of taxi cab medallions in New York City, which shows that “predatory lending survives in new and surprising sectors. The unhealthy ties between the government and the financial sector (something which echoes the Wall Street/Washington revolving door that was a feature of the 2008 crisis) continue as well. Three administrations, from both sides of the aisle, helped fuel New York City’s medallion bubble. Credit unions pushed what can only be described as subprime loans to drivers, some of whom had little collateral and did not have to make a down payment.”

Toughen up
Germany’s Federal Financial Supervisory Authority (BaFin) ordered N26 — “one of the continent’s most valuable fintechs — to strengthen its anti-money laundering practices after raising a number of concerns about the fast-growing bank.” BaFin said the company, which is valued at $2.7 billion, “must hire more staff, improve the way it documents its compliance processes, rerun checks on some existing customers and eliminate backlogs in its transaction monitoring.” The company said it has already addressed some of those concerns and plans to meet the regulator’s deadline.

Fighting back
“A more significant overhaul of strategy may be warranted,” for UBS, which has suffered a drop in profits following the departure of its former chief Andrea Orcel, the paper says. One UBS banker noted, "He’s very difficult to replicate.”

New York Times

No protection
The Trump administration’s “see-no-evil approach to mortgage lending” is part of a “broader effort to prevent the Consumer Financial Protection Bureau from protecting consumers of financial products,” the paper says in an editorial. “Perhaps the most obvious lesson from the 2008 financial crisis was the need for stricter supervision of mortgage lending. But it seems that it was not clear enough, because the Trump administration is now proposing to reduce federal oversight of mortgage lending.”

Quotable

“I will not enjoin enforcement of the subpoenas.” — Judge Edgardo Ramos of U.S. District Court in Manhattan, rejecting President Trump’s request to block Deutsche Bank and Capital One from complying with congressional subpoenas to disclose their past dealings with the president

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