Morgan Stanley tries the cloud; Santander-Orcel feud escalates

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Wall Street Journal

Tougher to borrow
The Consumer Financial Protection Bureau plans to eliminate a temporary regulatory loophole that “could limit the availability of credit for home loans” by borrowers with high debt-to-income ratios. The loans have “transformed the mortgage market by allowing more to obtain home financing” but also put “the government on the hook for an additional $260 billion of mortgages last year.”

“At issue is an obscure half-decade-old provision” that expires at the beginning of 2021. “Thursday’s move could potentially replace the provision with a tougher version of the regulation. The proposal is expected to generate pushback from real estate and mortgage industry groups that favor maintaining a relaxed set of rules that ensure loans are broadly available. Others say that these borrowers are riskier.”

Separately, the CFPB banned two Buffalo-based debt collection firms and fined them more than $60 million to settle charges that they “harassed, threatened and deceived” customers. The firms “routinely added $200 to customers’ debt, in some cases inflating the debt balance by more than 600%. The debt collectors also falsely threatened borrowers with legal action and impersonated government or court officials to pressure them to pay, the agency alleged.”

Put it in the Vault
Morgan Stanley is rolling out to its 3.2 million wealth management customers a “Digital Vault, an encrypted platform where they can store financial documents and share them with the bank more securely than faxing, emailing or mailing information.”

“The tool reflects financial institutions’ confidence in shifting confidential records from their own servers to third-party systems accessed online, or in the cloud. The platform is part of a broader transformation of the bank’s wealth-management business, which oversees about $2.5 trillion in assets for U.S. clients.”

Separately, Morgan Stanley has hired veteran health care investment banker Jim Forbes away from UBS, naming him a vice chairman in its investment bank. “Forbes has historically advised clients in the healthcare-services sector, which includes everything from managed-care companies to hospitals and labs. His clients have included Anthem, Ventas, Bain Capital and KKR.”

Financial Times

Metro's mess
Shares in Metro Bank dropped nearly 16%, to an all-time low, Thursday after the U.K. bank disclosed that it lost £2 billion in deposits in the first half and announced a “messy plan” to replace co-founder Vernon Hill as chairman. The stock is down 76% so far this year. On Wednesday the bank said Hill will stay on the board as a non-executive director and set no timetable for naming a new independent chairman. Hill told the paper “he wanted his replacement to spend some time as a director before taking the helm” and vowed not to take a “back seat” in running the bank, which could “set the stage for a protracted transition.”

Heating up
Santander accused Andrea Orcel of “dubious ethical and moral behavior” as the fight between the Spanish bank and UBS’ former investment banking chief heated up. Santander said Orcel “secretly recorded private conversations with Santander executives in January after his offer to become chief executive had been withdrawn in a dispute over pay and profile.” Orcel is suing Santander for €100 million, and the bank said earlier this week it would vigorously defend itself.

Elsewhere

Guilty plea
A former trader at Scotia Capital and Bear Stearns pleaded guilty to federal charges that he manipulated precious metals markets for nine years, “the latest in a series of crackdowns in the commodities markets by the Justice Department.” The trader, Corey Flaum, “is cooperating with an ongoing federal criminal investigation” and is scheduled to be sentenced October 29.

Quotable

“I’ve never seen anything like it. How do you stop him being chair in all but name?” — A Metro Bank investor about the bank’s decision to hire an independent chairman to replace current chairman Vernon Hill, who insists he is “not leaving”

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