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Time to do something: Federal Reserve Board Gov. Jerome Powell said the U.S. faces a “now or never moment” to fix the country’s housing finance system. “What really provoked me to come forward is this feeling that we are almost in a now or never moment here,” he said following a speech at the American Enterprise Institute. In the speech, he noted the government now controls about "80% of the purchase mortgage market" through Fannie Mae and Freddie Mac and other federal agencies. He called for Congress to come up with ways to encourage private capital investment in the mortgage market to avoid another taxpayer bailout. “Powell’s intervention is unusual given the Fed is not charged with designing or evaluating plans for the housing finance sector,” the Financial Times notes. “However, the central bank is responsible for overseeing banks and more broadly for financial stability.” Wall Street Journal, Financial Times, American Banker
Wall Street Journal
Under surveillance: A federal court in Washington, D.C., gave the Justice Department the go-ahead to secretly monitor transactions at eight major banks for signs of alleged North Korean money laundering. The search warrant was approved in May but unsealed Thursday. The DOJ said hundreds of millions of dollars of illegal transactions moved through the banks and were used to support North Korea’s weapons programs. The banks haven’t been accused of wrongdoing.
Keeping pace: Michael McGovern, Brown Brothers Harriman’s chief information officer, has been put in charge of the investment bank’s new Investor Services business, which looks to sell in-house technology to external asset managers and other financial institutions. The company will offer fintech tools such as risk and compliance management, software-as-a-service applications, and other digital services.
“The shift is aimed at keeping pace with demand from asset managers and financial institutions for technology that enable them to make better real-time decisions, manage risk and streamline investment operations,” the paper says.
Stressing homebuyers?: Canada’s Office of the Superintendent of Financial Institutions is considering a rule that would require all prospective homebuyers, including those with a 20% or more down payment, to undergo a so-called stress test before getting a mortgage. Borrowers would have to qualify for a rate 200 basis points higher than the real rate.
No reason to leave: The head of the U.K.’s Financial Conduct Authority wants to know why financial firms feel the need to relocate from London just because of Brexit. “When I hear people say that firms need to relocate to continue to benefit from access to EU financial markets, I start to seriously wonder,” said Andrew Bailey, the FCA’s CEO. “Does Brexit have to mean abandoning the benefits of free trade and open markets in financial services? It should not. Does it require membership of the single market to get the benefits of free trade with the EU? No.”
On the prowl: JPMorgan Chase may have been outbid by Vantiv earlier this week for Worldpay, but the mere fact it “even considered such a move is enough to kindle talk that animal spirits are again stirring among the largest U.S. banks,” the paper comments.
Robot traders: UBS unveiled two artificial intelligence systems at its new “futuristic” London office that can help traders perform better. “Many of the world’s biggest banks have for years been automating manual, repetitive tasks done by support staff to save money,” the paper says. “But now they are putting the latest forms of artificial intelligence to work at the heart of operations among their star traders, allocating funds and analyzing data to develop strategies.”
Looking outside: Mark Tucker, the incoming chairman of HSBC and himself an outsider, may be weighing external as well as internal candidates to replace Stuart Gulliver as CEO. “If the board goes ahead with an external appointment for the role, it would be for first time in its 152-year history,” the paper notes. “The bank has already broken the mold by hiring Tucker from Asian insurer AIA, the first time its chairman has been appointed from outside.”
“It is not a current risk. The economy is healthy, the housing system is healthy. But if we don’t get off of this we will find ourselves I believe over time back in a bad place with a lot of exposure to the taxpayer and financial instability issues.” — Federal Reserve Board Gov. Jerome Powell.