Receiving Wide Coverage ...
New QRM Rule Assessed: The reviews are coming in on the final QRM rule and reaction is mixed. The American Bankers Association indicated it could live with the new rule, which doesn't require a down payment in its criteria for being exempted from risk retention, saying it "might have been more restrictive." Former FDIC Chairman Sheila Bair, however, described the final version of the risk retention rule as "unfortunate" because "if the loan goes bad, you have much bigger losses with 0% down than 20% down." Others worried that the rule will permanently ensure the federal government's role in the housing market. "It's certainly possible that this is only the beginning of government pressure to make loans with lower lending standards," American Enterprise Institute fellow Alex Pollock told the Journal. The "Heard on the Street" column in the Journal agrees with the naysayers, equating the new rule to the thinking of disgraced former Countrywide Financial honcho Angelo Mozilo, who declared down payments "nonsense." "The new rule isn't just a small step back for mortgages, it is a giant leap backward for the financial system," John Carney writes in "Heard on the Street."
N.Y. Fed Faulted: First, there were the secret recordings showing New York Fed officials were too cozy with the banks they regulated (namely Goldman Sachs). Now comes a report that the New York Fed failed to act ahead of JPMorgan Chase's London whale fiasco, in spite of internally identified risks. A team of Fed experts had recommended the JPMorgan unit be examined as early as 2009, according to a report from the Fed's Inspector General. The exam never happened "due to many supervisory demands and a lack of supervisory resources," weaknesses in planning procedures, and a loss of "institutional knowledge" after a 2011 internal Fed reorganization, the Journal reported. The New York Fed also should have discussed the associated risks with the Office of the Comptroller of the Currency, but didn't.
Wall Street Journal
Jamie Dimon is considering teaching or helping a charity after he leaves JPMorgan Chase. The chairman and CEO, speaking at a conference in New York, said throat cancer has not yet "changed what I want to do with my life." The report did not indicate whether Dimon made the remarks as part of a broader statement about how long he intends to remain head of JPMorgan.
The Journal reports New York banking regulator Benjamin Lawsky claims mortgage servicer Ocwen Financialbackdated thousands of foreclosure notices. Lawsky will likely demand a settlement or consent order from Ocwen, requiring it to find the borrowers who were sent backdated notices and give them more time to correct their loan delinquencies, an unnamed source told the paper.
Wells Fargo is looking to expand its commercial real estate lending operations in the U.K., Ireland and continental Europe. However, some market participants question Wells' timing, as the U.K. market appears headed for a pullback.
Financial Times
John Reed, a former top executive at Citigroup, criticized current CEO Michael Corbat's strategic decision to pull out of several foreign markets. In an interview with the FT, Reed said "Obviously, it will have an impact on your customer, they're used to you being in every place and now you're not." Reed is miffed, FT columnist Gary Silverman writes, because Corbat's move dismantles Reed's dream of creating a global consumer bank.
Bank of New York Mellon and other U.S. banks want to expand their wealth management businesses in Asia. BNY Mellon plans to target two groups rich Americans living abroad and Asian families who have personal and financial ties to the U.S. and additional countries. BNY Mellon's angle is that some U.S.-based money managers may not have necessary knowledge of Asian tax structures.
New York Times
Elected officials in North Carolina, which bills itself as the "Most Military Friendly State," ignored warnings from military commanders at Fort Bragg and Camp Lejeune and approved interest rate hikes for the consumer loan industry, the Times reports. North Carolina is one of at least eight states that have dismantled laws intended to protect subprime borrowers from predatory lenders, the paper says. The military commanders said letting consumer lenders raise their rates would financially harm their troops.
Federal and state officials are looking at ways to improve cybersecurity at vendors to financial services companies. On Tuesday, Senate Banking Committee leaders sent a letter to the Treasury Department and to financial regulators asking for more details on their plans for defending against cyberattacks. The Times article notes some are questioning whether the largest banks are "too big to secure."
