Wall Street Journal
Dodd-Frank-mandated rules on providing more information on the quality of the mortgages and other loans that back securities are expected to be finalized Wednesday. The Securities and Exchange Commission's rules on asset-backed securities will require banks to provide data to investors like borrowers' credit scores and debt levels. The idea is to help investors rely less on credit ratings. The SEC is also expected to release rules forcing Moody's, S&P and other debt-rating agencies to reduce or eliminate conflicts of interest when it comes to the selling of their services to the companies and municipalities whose debt they rate.
Fewer homeowners are underwater on their mortgages, according to a Zillow report. That's the good news. The bad news is that the majority of those homes that are underwater are in the bottom third of home values. That's a problem because a higher proportion of low-price, underwater homes may make it more difficult for homeowners to move up to larger homes, which will crimp purchases by first-time home buyers.
A Silicon Valley executive told Wells Fargo CEO John Stumpf 12 years ago that Stumpf shouldn't buy a house in San Francisco, because the tech industry would soon make Wells, and the traditional banking industry, irrelevant. Stumpf bragged to the FT in an interview that his bank has since grown to become one of the largest in the nation and tech companies have failed in obliterating the concept of traditional banking. Stumpf said he nevertheless looks to Amazon, Google and Apple for inspiration; and banks have a limited degree of protection from tech startups that look to disrupt banking since those companies don't want to get so deep into banking that they become regulated by federal agencies. Stumpf also touted Wells' "digital innovation lab," in which its researchers are testing ways to use Google Glass to identify potential bank robbers, and how to use smartwatches to make payments. Wells is also launching a "start-up accelerator" and plans to make equity investments in financial-technology companies. The bank has already made two such investments.
Is that a threat or a promise? In another part of his interview with the FT, Stumpf said " target="_blank">banks will stop making mortgage loans to borrowers with low credit scores, unless Fannie Mae and Freddie Mac stop forcing banks to repurchase loans that go bad. Stumpf acknowledged government officials' concerns that credit standards are tight, but said banks simply won't make these types of loans with the "put-back" threat hanging over their heads. "If you guys want to stick with this programme of 'putting back' any time, any way, whatever, that's fine, we're just not going to make those loans and there's going to be a whole bunch of Americans that are underserved in the mortgage market," Stumpf said.
The U.S. banking arm of HSBC says it will fight a lawsuit alleging that it helped commit international fraud in the U.K.'s Keydata Ponzi scheme scandal. The suit, filed in New York, accuses HSBC of missing red flags in the liquidation of SLS Capital, which issued Keydata bonds. HSBC was the custodian of the life insurance policies that backed the bonds.
South Korea appears to be the next front in the investigation of banks' manipulation of exchange rates. South Korea sent inspectors to the country's four largest commercial banks this weekKookmin Bank, Woori Bank, Shinhan and Hana Bankto examine documents for signs of possible collusion.