Housing market signals warning; another Deutsche Bank scandal?

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Fix-and-flip flop
The fix-and-flip market is slowing, "a sign of the darkening outlook in the U.S. housing market." The number of mortgages with terms of three years or less, popular with house flippers, fell by 11% in the third quarter to the smallest amount in more than three years. The decline may "indicate that the market's short-term risk-takers see limited upside—and possible turbulence—ahead."

Robert J. Shiller, the Yale economics professor who closely tracks the housing market, says it's too early to call the end of the current rise in home prices, which he calls the "third biggest housing boom in the modern era. How long this will last and where it is heading next are impossible to know now. It can't go on forever, of course. The data can't tell us when prices will level off, or whether they will plunge catastrophically. All we do know is that prices have been roaring higher at a speed rarely seen in American history."

Wall Street Journal

Duped
HSBC and Standard Chartered "were among the institutions told by Huawei [Technologies] in recent years that it wasn't doing business in Iran through a Hong Kong company called Skycom Tech. For the two lenders, it was a crucial assurance since both were under court oversight for their own U.S. sanctions violations involving Iran, and couldn't risk further missteps." The Chinese company's chief financial officer was arrested last week in Canada at the behest of American authorities.

Financial Times

Another scandal?
Deutsche Bank, which has been embroiled in several recent scandals, including its role in the Danske mess and a raid by German authorities of its Frankfurt headquarters, is now involved in a new one that the Finance Ministry calls a "grave matter." According to the FT, the bank reported to German tax authorities "suspicious transactions that may have allowed clients to claim dividend tax credit on shares they did not own." "It clearly involves illegal conduct," a member of the country's Green Party said.

New start?
Danske Bank has elected a new chairman, "completing its clear-out of top officials" following a €200 billion money laundering scandal in its Estonian branch. Denmark's biggest bank named Karsten Dybvad, the head of the Confederation of Danish Industry, to head the bank. He succeeds Ole Andersen. The bank faces several criminal investigations, including in the U.S.

New York Times

Costly bill
The Times looks at how much the 1MDB scandal may cost Goldman Sachs, whose stock is already down 20% in recent weeks. "The ultimate size of the legal hit may largely depend on whether the Department of Justice and others can demonstrate that Goldman's controls were inadequate and that wrongdoing could take place more easily in its environment. Regulators such as the Federal Reserve and the New York State Department of Financial Services may also decide to penalize Goldman."

Elsewhere

Lighting rod
JPMorgan Chase CEO Jamie Dimon is "being followed around the U.S. by a growing crew of critics who want the bank to join their fights against climate change, human-rights abuses, and private prisons. They've tried to get his attention by scaling Park Avenue flagpoles, blocking Seattle traffic with tepees, bursting into conferences, and blasting audio of crying children outside his apartment. Years after Occupy Wall Street was driven out of Lower Manhattan, Dimon's critics add up to one of the biggest protest movements in finance. It's a preview of what might happen if he were ever to run for office."

Quotable

"We have to get it right. I don't see it as an existential crisis. I will work full time to get into all these delicate questions and together with the board and management team try to bring Danske Bank to a position where there's trust and confidence in the bank again." — Karsten Dybvad, who was elected chairman of Denmark's Danske Bank over the weekend.

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