Receiving Wide Coverage ...
Quicken's Ad Miscalculation?: Quicken Loans continues to see pushback in the press regarding the ad it aired during the Super Bowl for its new product, Rocket Mortgage. The advertisement described how the Rocket Mortgage app worked – essentially, that you push a button in the app to start an expedited mortgage application process. And, Quicken posited, when it's easier to get mortgages a domino effect occurs that benefits the national economy. But, as The Upshot from the New York Times notes, many felt that the ad was a reminder of the financial crisis (even the Consumer Financial Protection Bureau tweeted about it) and raises questions about how we should view growth in the economy. But perhaps the reactions to the ad are somewhat overblown. After all, Quicken was one of the few big non-bank lenders to survive the financial crisis because it did not deal in subprime loans. And its Rocket Mortgage product, while simplifying the process in certain ways, isn't quite the golden ticket to a mortgage as you might believe.
Yellen Heads to Capitol Hill: Federal Reserve chairwoman Janet Yellen is set to speak publicly for the first time in two months when she heads to Congress for a two-day testimony today. And her backdrop couldn't be murkier. As the Wall Street Journal glibly puts it, we're in a situation where it's the world versus Janet Yellen. The Fed took years to plan its exit out of zero interest rate territory, and that exit finally occurred in December. But no other central banks followed – in fact, the European Central Bank and Bank of Japan have now inched toward negative rates. And then, of course, there's the volatility in the stock market, which acted against the Fed's big move. So you can expect her to attempt to lay a bridge over troubled waters during her testimony. But, of course, the biggest question ahead of her appearance is whether she'll be open about the Fed's plans for future rate increases – it has alluded to four more this year, but that now seems unlikely – or whether she will keep mum, lest her words become another reason for market fluctuations.
Deutsche Bank Eyes Bond Buyback: Deutsche Bank is reportedly considering a buyback of several billion euros worth of its debt. The move, which has already caused its stock price to soar above recent lows, appears to be an effort to improve opinions of its securities. The plan caps off something of a rocky few days for the German bank. Deutsche's co-chief John Cryan issued a letter to his colleagues that argued the bank remained "rock-solid" despite the sell-off it faced. The letter was peppered with terms like "clarity of purpose" and "common and worth goals," but at its core served as Cryan's argument that bank did not need to raise liquidity or change its course. And while the buyback news has clearly left many investors sitting happier, not all are pleased with recent events. Some who hold the bank's new AT1 securities, a form of hybrid bonds, were concerned that the bank had delayed coupons on the debt. That shouldn't be a surprise, since the hybrid bonds are designed to absorb losses and Deutsche had already long suspended its dividends. But with few options to sell the securities, those investors may now feel loaded down by the debt – an impression that could come back to haunt Deutsche.
Wall Street Journal
The Consumer Financial Protection Bureau is planning to hold banks and credit unions to the fire in an effort to get them to offer "small-dollar" loans. While no formal rule has been set, the move is a clear step toward the CFPB's not-so-secret goal of combatting the payday lending industry. But the CFPB's rhetoric presents something of a mixed message for financial institutions. Banking regulators, including the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, had all but banned banks from issuing the short-term loans because of the risk involved. As a result, the likes of Wells Fargo and U.S. Bancorp exited the space, for fear of raising regulators' hackles. While the CFPB has indicated it is working with regulators to come up with a way to execute this plan, banks and credit unions are undoubtedly in a bind.
Financial Times
A financial fraud Justice League is forming across the pond, as British banks and the Bank of England have launched the Joint Fraud Taskforce. The taskforce, led by UK home secretary Theresa May and BoE governor Mark Carney, is intended to improve coordination and combine resources to stamp out fraud. The effort comes at a time when fraud levels have grown rapidly in the UK – fraud had increased 5% year-over-year in September overall, with rates of check, card and online banking fraud topping that. Goals of the taskforce will include spotting gaps in intelligence, improving information sharing among financial institutions and creating a "most wanted list" for fraudsters.
UBS has become the latest European bank to revise its salary or bonus procedures in the wake of the sell-off hitting the continent's banking industry. The company has chosen to freeze salaries until at least the salary review during the second quarter, including for those who expected a pay bump following a promotion. While UBS did not recorded a major loss like some of its peers, its pre-tax income still fell to $230 million in the fourth quarter from $284 million the year prior. Previously, fellow Swiss bank Credit Suisse's chief Tidjane Thiam asked his board to slash his 2015 bonus by between 25% and 50% after posting yet another full-year loss.
British regulators have remained mum on the impact a British exit from the European Union, or Brexit, would have on the country's banking industry. The paper polled seven of the banks with the largest operations in the UK, and none had been asked about the impact of a Brexit or contingency plans in the event of one by the Bank of England's Prudential Regulation Authority or other regulators. That's a surprise to many, especially given that Irish banking regulator Cyril Roux has even asked Irish banks about their preparedness on the impact of the Brexit. Still, not everyone in the UK seems all too concerned – David Duffy, chief executive of Scotland's Clydesdale Bank, said that it would be difficult to assess the Brexit's impact until it happens since it's unclear how the move would affect growth.
New York Times
Want to improve your profits? Then you may want to consider expanding the gender diversity of your company's leadership. A new study from the Peterson Institute for International Economics and EY (formerly known as Ernst & Young) found that an increase in the share of women in top management positions from zero to 30% would correlate with a 15% jump in profitability. That factor alone makes the study's other findings regarding gender diversity all the more troubling. The study found that in nearly 60% of the companies it reviewed there were no female board members, and in 50% there were no female executives. And only 5% had a female chief executive. The report found that board quotas that require a level of female membership were not associated with a rise in profitability. Instead, the study suggested that childhood-based initiatives aimed at improving the success of female students were a better strategy to improving this situation.
Elsewhere ...
Quartz: The Chinese New Year has also become a celebration for online payments. China's popular messaging mobile app WeChat has once again launched a "red envelope" effort, named after the envelopes that hold the monetary gifts common during the holiday. Started in 2014, the scheme aims to get consumers on WeChat to use its mobile payment system, WeChat Payments, to send gifts to friends. This year, more than 8 billion "red envelopes" were sent using WeChat Payments through Feb. 8, eight times the amount from 2015. And the plan won't online benefit WeChat's parent company Tencent in the short run – now that they have their bank cards set up on the payments platform, the company expects many of the "red envelope" senders to continue using the service for other payment needs.
