Homeowners rush to refi; did JPM execs dismiss warnings about Jeffrey Epstein?

Receiving Wide Coverage ...

The rush to refi
Homeowners are rushing to refinance as mortgage rates have dropped “to their lowest level in nearly three years.” The average rate on a 30-year, fixed-rate mortgage fell to 3.6% on Thursday, down from nearly 5% in November.

“Still unknown is whether the falling rates will boost a homebuying market that looked moribund last year. Low interest rates often encourage purchases, but worries about the economy—telegraphed by the low rates—may hold purchasers back.” Wall Street Journal, Washington Post

In memoriam
Manuel Medina Mora, “one of the most influential Mexican bankers to work on Wall Street” during a long career at Citibanamex, Citigroup’s Mexican unit, died Wednesday at the age of 69 of amyotrophic lateral sclerosis, or Lou Gehrig’s disease. “Medina Mora was a powerful executive at what became Citi’s most important foreign unit, credited with turning a laggard Mexican lender into a lifeboat for the large U.S. bank as it rebounded from the 2007-2009 financial crisis.”

Fabrizio Saccomanni, the chairman of UniCredit, Italy’s largest bank, died suddenly on Thursday, just one day after attending the bank’s second-quarter results presentation. He was 76. Saccomanni joined the bank’s board in April 2018 as part of an overhaul to improve governance. Prior to that he had been a former deputy governor of the Bank of Italy and the country’s economy and finance minister.

Receiving Wide Coverage ...

Charged
Malaysia filed criminal charges against 17 current and former directors of Goldman Sachs for their alleged role in the 1Malaysia Development Bhd scandal. Among those charged are Richard Gnodde, CEO of Goldman Sachs International, Michael Sherwood, the former co-head of that unit, and John Michael Evans, who left the bank in 2013 and later became president of Alibaba Group.

The charges revolve around bond sales Goldman arranged for 1MDB in 2012 and 2013, which the Malaysian government says were issued under false or misleading statements to “dishonestly misappropriate billions from the bond proceeds.” Wall Street Journal, Financial Times, New York Times

Wall Street Journal

Risk management update
The Committee of Sponsoring Organizations of the Treadway Commission, or COSO, a key standard-setter on internal controls, “is preparing to publish a set of guidelines for companies on how to manage cybersecurity and other enterprise risks. The new guidance is expected to address how companies can apply the principles of enterprise risk management, or ERM, to protect against cyberattacks; how to better craft risk-appetite statements; and how to better manage risk and compliance across an enterprise.”

COSO’s chairman, Paul Sobel, said the forthcoming guidance “has been under discussion for nearly a year and isn’t being crafted in response to the incident at Capital One.”

Financial Times

Home field advantage
Deutsche Bank’s “already nervous” 50,000 employees outside Germany are angry that the bank is tightening vacation rules and ending long-service awards — while keeping them intact for its 41,000 workers in its home country. “A ban on carrying forward unused annual leave at the end of the year has been imposed with immediate effect, leaving workers little time to rearrange their holiday plans, while 10, 25 and 40-year service awards will be ditched from October.”

“The policy shift comes at a fraught time for employees of Germany’s largest lender, with 18,000 jobs set to disappear under one of the most radical investment bank restructurings since the global financial crisis.”

New York Times

Warning signs
Compliance officers at JPMorgan Chase recommended “a decade ago” that the bank cut its ties to the financier Jeffrey E. Epstein “because his accounts posed unacceptable legal and reputational risks. Yet Mr. Epstein, who had been charged with sex crimes and pleaded guilty in 2008 to solicitation of prostitution, remained a JPMorgan client until 2013.”

“The main reason, according to six former senior executives and other bank employees familiar with the matter, was that Mary C. Erdoes, one of JPMorgan’s highest-ranking executives, intervened to keep him as a client. Ms. Erdoes, viewed within JPMorgan as a potential successor to [CEO] Jamie Dimon, was not alone in making the case for Mr. Epstein inside the bank.

James E. Staley, who ran the bank’s asset-management division, which included the private bank, from 2001 to 2009, built JPMorgan’s relationship with Mr. Epstein.” Staley is now CEO of Barclays.

Joseph Evangelisti, a spokesman for the bank, denied the allegations. “Mary would never overrule our compliance team or other controls functions to retain a customer,” he said. “She has only one recollection of formally meeting with the customer, which was the day she fired him as a client.”

Quotable

“My applications are up across the board. Every time the Fed starts talking is when my phone starts ringing off the hook.” — Angela Martin, a Nashville-based loan officer at Movement Mortgage, about the number of consumers calling to refinance their mortgages.