Kushner bank loans questioned; B of A fires two in harassment probe

Receiving Wide Coverage ...

The heat is on: Regulators are taking a closer look at banks' dealings with Jared Kushner, President Trump’s son-in-law. Citigroup loaned Kushner's firm $325 million to finance office buildings in Brooklyn “shortly after Mr. Kushner met in the White House with Citigroup’s chief executive, Michael L. Corbat. There is little precedent for a top White House official meeting with executives of companies as they contemplate sizable loans to his business,” the New York Times said.

Olivier Douliery/Bloomberg

The paper also reports that Joshua Harris, a founder of Apollo Global Management who was advising the Trump administration on infrastructure policy, met with Kushner “on multiple occasions” and Apollo later lent $184 million to Kushner’s firm. The loan, to refinance the mortgage on a Chicago skyscraper, was “triple the size of the average property loan made by Apollo’s real estate lending arm.”

Separately, the New York State Department of Financial Services has asked Deutsche Bank and two local New York City banks, Signature Bank and New York Community Bank, for information about their relationships with Kushner. “The inquiries, which are expansive and comprehensive, seek information about Mr. Kushner’s individual finances and those related to his family’s real-estate company, Kushner Cos.,” the Wall Street Journal reports.

A spokeswoman for Kushner Cos. said the firm had received no letters from the agency and called the inquiries “harassment solely for political reasons.” Wall Street Journal, Financial Times, American Banker

Ready to roll (back)?: The U.S. Senate is expected to approve “the most significant rollback of postcrisis financial rules since Republicans took control of Washington last year. The bipartisan legislation, supported by the Trump administration and top Federal Reserve officials, would relax dozens of rules for small to medium-size banks, shaking up the banking sector with policy changes that could encourage deal-making and make it easier for banks to expand.”

But is that a good idea? Hal Scott, a professor of international financial systems at Harvard Law School, and Lisa Donner, executive director of Americans for Financial Reform, debate the question in the Financial Times. Scott says freeing up banks to lend more will boost the economy, while Donner says looser rules put taxpayers at risk.

Wall Street Journal

Outta here: Bank of America said it fired two employees in its prime brokerage unit after they were found to have interfered with its investigation into alleged inappropriate behavior by Omeed Malik, one of the top executives in the unit that caters to hedge funds. Malik was fired in January following complaints from female employees that he made inappropriate advances to them.

On notice: The Securities and Exchange Commission has issued “dozens of subpoenas and information requests” to companies involved in the cryptocurrencies market, the paper reports. “The sweeping probe significantly ratchets up the regulatory pressure” on players in the business and “follows a series of warning shots from the top U.S. securities regulator suggesting that many token sales, or initial coin offerings, may be violating securities laws” designed to protect investors.

Settled: Deloitte & Touche agreed to pay $149.5 million to settle Justice Department allegations that it failed to detect a massive fraud by one of its clients, which led to the 2009 collapse of Alabama’s Colonial Bank, one of the biggest bank failures of the financial crisis. Deloitte’s client, Taylor Bean & Whitaker Mortgage Corp., reportedly overdrew its account at the bank for years, and sold fake mortgages, to cover up its own cash shortfall.

Financial Times

Going green: BBVA is expected to announce Thursday that it will help finance $100 billion of green energy and other sustainable development projects over the next seven years. The Madrid-based lender will also become the first large bank to disclose how much of its balance sheet is exposed to carbon-related assets. “The announcement by BBVA comes as banks face mounting pressure from investors and regulators to step up their response to climate change,” the FT says.

New York Times

Iced out: Wells Fargo is being accused of freezing, and often closing, accounts suspected of being defrauded.

Quotable

“It appears that much of our evolving digital infrastructure is devoted to activities, like the proliferation of cybercoins, that are worse than frivolous.” — James McAndrews, former head of research at the Federal Reserve Bank of New York.