Receiving Wide Coverage ...
What Housing Rebound? That must have been a dream. Two reports in Wednesday's papers served as ice-cold buckets of water on any hope you may have had that the value of your home was surging. First, the Journal reported on a National Association of Realtors release, which said single-family housing prices rose 4.4% in the 12 month-period that ended in the second quarter; that's the slowest annual pace since 2012. In sum, the Journal says, good news for buyers, bad news for underwater homeowners. Next, the FT asked Trulia to analyze federal income data and this is what it found: the income gap between the richest and poorest U.S. metro areas has widened to its largest-ever margin, slowing any type of housing recovery.
Ocwen Woes Continue: Moving on to mortgage servicing, one of the nation's largest servicers, Ocwen, on Tuesday said it will restate results for 2013 and the first quarter of 2014, which may not have complied with accounting principles. The report of a "material weakness" is the latest in a string of bad news for Ocwen, which has been under regulatory scrutiny for alleged conflicts of interest with an affiliate. The myriad regulatory problems have Ocwen's investors worried. "They can't grow until they resolve the regulatory questions, and the regulatory problems are nowhere near resolved," KBW analyst Bose George told the Journal. Wall Street Journal, Financial Times, American Banker
Wall Street Journal
Banks wants the Fed to delay the Volcker Rule provision that would require them to sell private equity and venture capital investments. The industry is seeking a delay of up to seven years, unnamed sources tell the paper. The rule affects both the large banks that manage the funds, and smaller banks that own stakes in the funds. Americans for Financial Reform, which pushes for tougher financial regulations, criticized banks' efforts to seek a delay.
The largest banks are pulling back from the repurchase-agreement market, the sector the paper describes as the "plumbing" that keeps short-term money moving among hedge funds, investment banks and other firms. Banks that are pulling back (the Journal names Goldman Sachs, Barclays, B of A and Citigroup) say new regulations make it more expensive to engage in repo trading. The Federal Reserve Bank of New York is sponsoring a conference Wednesday on repo trading.
Two economics professors offer a solution to banks' substandard living wills. The banks should issue a special class of bonds, in which the bondholders have no control over the company. The capital raised by the bonds would prevent government involvement, and would "[allow] the firm to shed a substantial portion of its liabilities, but [compensate the] bondholders with control of a firm with a healthier balance sheet," they write.
RBS Citizens Financial Group is hiring about 70 people for its commercial banking division, as it preps for an IPO. The Royal Bank of Scotland unit, which plans to divest its U.S. banking unit Citizens Bank, is hiring in Washington, Los Angeles and Charlotte, N.C., and is also spending on new technology the FT reports, citing Robert Matthews, a vice chairman. One goal is to improve Citizens' return on equity ahead of the IPO.
JPMorgan Chase has hired the former chairman of Lloyds Banking Group, Sir Win Bischoff, as chairman of its primary European holding company. Bischoff replaces Tom Hoppe.
New York Times
Have the huge growth spikes in auto lending got you worried that it's the next subprime mortgage meltdown? Don't worry about it, Moody's Analytics says. Banks have been "conservative" in their lending, the bond rating agency says in a report, with lending standards tight and only 10% of total auto loans going to borrowers with sub-620 credit scores. Even better, delinquency rates have not risen, Moody's Analytics says.