Receiving Wide Coverage ...
Deutsche Ditches Dodd-Frank: When it comes to avoiding the odious capital requirements of the Dodd-Frank Act, those who can are voting with their feet. Germany's Deutsche Bank (DB) has become the latest big non-U.S. financial institution to ditch the bank holding company status of its Yankee subsidiary, Taunus Corp. That's according to disclosures by the bank and Federal Reserve's website, as reported in the Wall Street Journal.
The move follows a similar parry by Barclays PLC (BCS) of the UK. In Deutsche Bank's case, it ditched bank holding company status as of Feb. 1 for Taunus—which is named after a Teutonic mountain range—and made Deutsche Bank Trust Co. its main U.S. holding company. The move is expected to prevent Germany's biggest bank from having to inject billions of dollars of capital into Taunus by 2015, Reuters reports. Prior to Dodd-Frank, the Federal Reserve had allowed foreign banks to hold little or no capital in the U.S. and instead focused on their capitalization at the group level. Regulators and lawmakers who objected to such treatment finally got their chance to act under Dodd-Frank. Taunus had been a particular thorn in the side of the Federal Deposit Insurance Corp. for maintaining a negative capital ratio, according to the Financial Times. "We have always had and will continue to have appropriate capital levels in all of our U.S.-regulated entities," a Deutsche Bank spokesman said on Wednesday. "This action, which does not diminish any of our regulatory oversight, allows us to streamline our organisational structure, strengthening an already strong institution." Just what constitutes "appropriate" capital levels, of course, is in the eye of the beholder. As foreign rivals come up with Dodd-Frank work-arounds, U.S. banks mired in the costly and laborious task of complying with it are sure to press claims that it's hamstringing their ability to compete. It's an argument their foreign rivals may unwittingly bolster with their hasty exits. Wall Street Journal, Financial Times, Reuters
Sound of Silence: The whodunit that is MF Global has taken its latest turn with word that a House panel has issued a subpoena to Edith O'Brien, formerly the assistant treasurer of the now defunct firm. The legal maneuver is more political theater than serious effort to get at the facts, considering that O'Brien has already declared she will invoke her constitutional right against compelled self-incrimination rather than testify—unless she's granted immunity from prosecution in advance, that is. Separately, MF Global is under federal investigation by regulators, the FBI and federal prosecutors in New York and Chicago, according to the New York Times. The bigger fish that Republican lawmakers are keen to fry is Jon Corzine, the former MF Global chief executive, Goldman Sachs (GS) honcho, New Jersey senator/governor and flaming liberal. Corzine's tormentors are not framing it in quite those terms. "We owe it to the thousands of customers of MF Global — the ranchers, farmers and investors who lost money — to get to the bottom of how this could have happened," pontificated Rep. Randy Neugebauer, the Texas Republican who is the chairman of the Financial Services Subcommittee on Oversight and Investigations. In getting to the bottom of the "How this could happen?" question, an O'Brien with immunity could prove an entertaining witness indeed. Corzine has previously said she's the gal who provided him with the all-clear to funnel large sums of customer funds into a failed last-ditch bid to save his firm—and reputation. The non-hearing has been set for March 28 at 2 p.m. New York Times, Wall Street Journal
Fan and Fred Party On: Officials at wards-of-the-state Fannie Mae and Freddie Mac aren't letting a mere multi-billion dollar taxpayer bailout get in the way of the good times. A federal watchdog has faulted Fannie and Freddie, the failed mortgage finance companies, for dropping more than half the $600,000 it spent at a Mortgage Bankers Association conference last October on things "of questionable value," Reuters reports. "There is no indication that any business conducted by the Enterprises with their clientele at the convention could not have been conducted as well without this largesse," according to an audit by the inspector general of the Federal Housing Finance Agency, which oversees Fan and Fred. Among the expenditures that might have added to the fun but were otherwise of no value: $140,415 for dinners and business meals. The housing organizations could have done just as much business without the wining and dining, the IG declared. Both Fannie Mae and Freddie Mac said they were "entirely within the authorities delegated" to each of them by the FHFA to make the decision to attend the conference and sponsor it. Disgruntled taxpayers can at least take solace in knowing that Fan and Fred didn't foot the bill for a performance by the retread soft-rock group Chicago at the Hyatt Regency Chicago convention. The cozy, if not incestuous, ties between the federal home financiers and the MBA will come as no surprise to American Banker readers. Reuters, Bloomberg BusinessWeek
Wall Street Journal
Housing market beware: the economy is improving. That's the good news-bad news take a Heard on the Street column delivers. The logic: as the economy ticks its way up, so too are Treasury yields. And where Treasury yields go, mortgage rates are soon to follow. "Already the more than 0.3-percentage-point jump in 10-year yields over two weeks, in response to stronger economic sentiment, has mortgage rates creeping higher," reports Heard. "Wednesday's release of the latest, weekly mortgage applications data highlighted the risk. The Mortgage Bankers Association reported that for the week ended March 16, mortgage loan application volume fell 7.4% on a seasonally adjusted basis."
New York Times
Wall Street is shamelessly sucking up to social media outfits in the competition to underwrite their IPOs, but things are entirely different when it comes to letting their employees express themselves via the networks. The Times reports that Morgan Stanley (MS) has to date pumped out a mere 2,000 Tweets that have been pre-vetted by its legal department. At Wells Fargo (WFC), mortgage consultants are likewise producing pre-approved Facebook posts. It's enough to make Mark Zuckerberg and Jack Dorsey cry all the way to the bank.