Goldman hires two tech execs; Deutsche settles mortgage suit

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Deutsche Bank became “the first lender to settle civil claims of allegedly rigging U.S. mortgage bond markets, resolving one of the lender’s many legal headaches for $15 million.” Deutsche and 15 other banks were sued for “allegedly using their dominant position to inflate prices and overcharge investors for mortgage bonds issued by Fannie Mae and Freddie Mac.” Pennsylvania’s treasurer, who brought the case against Deutsche, praised the bank for its “early cooperation in this suit.”

Separately, Gratitude America Ltd., a nonprofit foundation created by the late financier Jeffrey Epstein in 2012 ostensibly to “support the expression of gratitude for the ideals of America,” the Wall Street Journal says, “appears to [have been] designed to generate tax benefits.” The foundation, which was “funded with a $10 million gift in 2015 from financier Leon Black, … banked through an account at Deutsche Bank, where Mr. Epstein was a customer in Deutsche Bank’s Key Client Partners group, which is reserved for the bank’s wealthiest and often most profitable customers.”

“Deutsche Bank’s connection to Gratitude America and Mr. Epstein’s status at the bank haven’t been previously reported. The bank has said it is closely examining any business relationship with Mr. Epstein and is cooperating with all relevant authorities. Epstein died by suicide last month in a Manhattan jail cell while facing federal sex-trafficking charges. Mr. Epstein’s finances, including his relationship with Deutsche Bank, have come under scrutiny amid the federal investigation, which is ongoing.”

Financial Times

Another warning

US Bancorp “trimmed its long-term growth outlook to reflect lower interest rates and the imminent adoption of new accounting standards. The move follows a pattern set this week by other large U.S. banks, several of which have nudged their targets down in the face of the changing economic environment.”

The bank told shareholders at its investor day “that it now expects revenues to grow in a range of 5-7% over the long term, a reduction of one percentage point.” The bank also “suggested” that the current expected credit loss accounting standard, which will require banks starting next year to account for expected credit losses as soon as they make loans, “had an impact on its growth outlook.”

Two for tech

Goldman Sachs, “which likes to describe itself as more of a tech company than a bank,” has hired two senior technology officers. Marco Argenti, a vice president of technology at Amazon Web Services, was named co-chief information officer to replace departing Elisha Wiesel, “a move that could accelerate the bank’s migration to cloud services.” It also hired Atte Lahtiranta, a senior Verizon executive, as its new chief technology officer. “Both Mr. Argenti and Mr. Lahtiranta are joining as partners, despite an initiative by Goldman boss David Solomon to make the partnership smaller and more exclusive.”

Conviction upheld

Mark Johnson, HSBC’s former chief currency trader, lost his appeal of a 2017 fraud conviction for a $3.5 billion foreign-exchange deal for Scottish energy company Cairn Energy. “Johnson’s case was the first jury trial to stem from the forex-rigging scandal, for which banks paid around $10 billion in fines. He was fined $300,000 and sentenced to two years in a federal prison.”

New York Times

No money for gun sales

Beto O’Rourke, the Democrat presidential candidate, “called on banks and credit card companies … to stop providing services for sales of assault-style weapons — or any firearms that are sold without background checks — and to stop doing business with manufacturers that produce assault-style weapons. The statement came on the same day of a concerted effort by business leaders to influence the gun debate. In a letter on Thursday, the heads of 145 companies in the United States — including Twitter, Uber, Levi Strauss, Amalgamated Bank and Dick’s Sporting Goods — urged Senate leaders to consider an expansion of background checks and stronger ‘red flag’ laws.”

The Democratic presidential candidate said on Twitter that credit cards "have enabled many of America’s mass shootings."

Quotable

“However inadvertent or deliberate, credit card companies and banks profit off of those who terrorize our communities. And we know that in this moment, no one can sit on the sidelines. Everyone has a responsibility to do their part.” — Democrat presidential candidate Beto O’Rourke, calling on banks and credit card companies to refuse to provide services for some firearms sales

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Mortgages Earnings Career moves Crime and misconduct Finance and investment-related court cases Goldman Sachs
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