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.”
“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
The Wyoming-based digital asset bank filed paperwork to challenge last month's district court ruling, which affirmed the Federal Reserve's view about its discretion over master account applications.
The former head of the Consumer Financial Protection Bureau resigned Friday after the troubled rollout of the Free Application for Federal Student Aid led some House Republicans to call for his resignation.
The San Antonio-based bank said that loan growth, fueled in part by its expansion in key Texas markets, may compensate for pressure on deposits. It slashed the number of rate cuts it expects this year from five to two.
Mississippi's Renasant names its next CEO; environmental fintech Aspiration Partners spins out its consumer brand; the OCC adds five weeks to comment period for Capital One-Discover merger; and more in the weekly banking news roundup.
The Wisconsin banking company forecasted loan growth of 4% to 6% for the full year, driven by an expansion into new commercial and consumer credit lines as well as enduring economic strength in the Midwest.
In the inaugural iteration of American Banker's news quiz, test your knowledge on top articles covering the legal battles of the Consumer Financial Protection Bureau, new technology testing at JPMorgan Chase, earnings season and more.