Receiving Wide Coverage ...
Putting Postbank to Pasture: One way or another, Deutsche Bank plans to ditch its Postbank retail unit. The German megabank is leaning toward selling a majority stake in Postbank over the next year and a half whilst unloading a fifth of its investment-banking assets. But it's also considering the more drastic measure of getting out of retail altogether. The latter move has been recommended by some analysts, who say Deutsche should attempt to become the Goldman Sachs of Europe, the Financial Times reports. But anonymice tell the Wall Street Journal Deutsche's board "is reluctant to make such a move because it would pose funding problems for the remaining operations." Deutsche acquired Postbank back in 2008, but it's turned out to be a bit of a dud as a profit-generator. The FT notes retail banking in Germany tends to be less lucrative thanks to lots of competition from other lenders and the fact that pennywise Germans don't really go in for high-margin products like credit cards.
DPA Debates: The Justice Department will start offering more detailed explanations of the reasoning behind deferred prosecution agreements and plea deals, according to the head of the agency's criminal division. While "an opaque or unreasoned enforcement action carries little deterrent effect," according to the DOJ's Leslie Caldwell, more thorough accounts may help companies better understand how to cooperate with authorities. The change is unlikely to pacify Sen. Elizabeth Warren, who recently criticized U.S. prosecutors for relying too heavily on DPAs when dealing with rule-breaking banks. The FT sides with Warren in an unsigned editorial, arguing that DPAs are ineffective both because fines hurt shareholders more than wrongdoers and because they kick in long after the crimes have occurred. In other words, those who think the government is too soft on banks don't want Caldwell's better DPAs they want less of them.
Wall Street Journal
Quicken Loans is out to turn the tables on government agencies with a lawsuit of its own. The consumer lender argues in a newly filed lawsuit that the Justice Department and the Department of Housing and Urban Development are attempting to bulldoze it into a settlement over extending allegedly fraudulent home loans backed by the Federal Housing Administration during the financial crisis. Quicken says government authorities have set too low a bar for fraud charges, basing "settlement demands on a sampling of 55 of 246,000 loans" and on alleged missteps such as "miscalculating a borrower's income by $17 and lending a borrower $26 too much."
Speaking of bank settlements, Morgan Stanley may pay $500 million to New York attorney general Eric Schneiderman to resolve charges over toxic mortgage-backed securities sold to investors in the run-up to the financial crisis. That's a drop in the bucket in the grand scheme of regulatory deals, but Morgan Stanley has been able to negotiate comparatively light mortgage-related penalties since it isn't a major home lender. By way of comparison, the paper notes that Bank of America and JPMorgan Chase have forked over a respective $73 billion and $26 billion so far in mortgage settlements. Morgan Stanley has paid $4.5 billion.
Federal Housing Finance Agency head Mel Watt should have raised the guarantee fees Fannie Mae and Freddie Mac charge lenders, according to an unsigned editorial in the paper. Watt decided Friday to leave the fees mostly untouched. The article warns the move could pave the way for taxpayer bailouts should mortgages sour.
Some industry observers have suggested General Electric's decision to sell its financing unit is a victory for the effort to reduce systemic risk. But the American Enterprise Institute's Peter Wallison says all regulators really want to do is rein in shadow banking.
New York Times
Gretchen Morgenson tends to give the hairy eyeball to regulatory reform plans backed by big banks. But she approves of an idea to help out low-risk, traditional banks,> proposed by Federal Deposit Insurance Corp. vice chairman Thomas Hoenig.