Receiving Wide Coverage ...
The Mercurial Subprime Market: New lenders, including Lending Club and Freedom Plus, are servicing the subprime sector, reports the Journal. These entrants are hoping to fill the void left by banks, reluctant to lend to the demographic following the financial crisis (and all the resulting regs.) The Journal notes these firms are lending at interest rates "approaching 10% and sometimes much more
a premium above prime loans
but less than what many consumers pay for credit cards and payday loans." It also notes that newcomers are "avoiding the subprime label." (One firm calls the market "emerging prime.") Of course, there's plenty of reason to. While credit remains an issue for many Americans post-crisis, concerns about subprime lenders, particularly in the mortgage market, have been growing for some time. Just Wednesday, New York's top banking regulator Benjamin Lawsky demanded data from Nationstar, a top servicer of troubled loans, amid worries that its "explosive growth
may create capacity issues that put homeowners at risk." Back in February, Lawsky expressed similar concerns about mortgage servicer Ocwen Financial and halted a deal that would have transferred $39 billion in servicing rights to the company from Wells Fargo. Ocwen Chairman William Erbey defended his firm's business relationships which have come under Lawsky's scrutiny in a new interview with the Journal. "We're comfortable with the relationships we've got," Erbey tells reporter Andrew Johnson. "We believe that it creates shareholder value by creating greater transparency as to the business roles of each of those entities."
Barclays' Bonus Kerfuffle: Barclays CEO Antony Jenkins has elaborated on why his bankers' pay increased last year while profits fell. In an interview with the U.K.'s Telegraph, Jenkins says he was looking to avoid a "death spiral," particularly in the investment banking unit where attrition rates for senior directors were already high as a result of resignations. This explanation didn't rate too highly with FT banking columnist Patrick Jenkins. "His argument contradicted the whole spirit of the management values he has openly espoused up to now," the columnist wrote. "By publicly admitting that he paid bonuses only because he was afraid of losing staff, he gave the clear impression that he was in thrall to his own bullying bankers." The decision to increase pay also has shareholders clamoring for a shake-up at the top of Barclays' investment unit, the FT reports. But other U.K. banks, including Royal Bank of Scotland, HSBC and Standard Chartered, echo Barclays' sentiments that they will lose staff overseas if they can't compete on salaries.
Wall Street Journal
An analysis by the paper finds more than 1,600 stockbrokers violated regulations by failing to disclose bankruptcy filings, criminal charges or other red flags on their records, without regulators noticing.
Bank of America is launching a checkless checking account product for low-income customers that charges a flat monthly fee for use, but doesn't allow overdrafts. "The new checkless account could help [B of A] stem losses on customers who maintain balances too low for the bank to break even," the paper notes.
New York Times
Columnist Farhad Manjoo decries any comparison between Mt. Gox's loss of $470 million worth of Bitcoin and Citigroup's recent $400 million fraud-related loss in Mexico: "When scandal engulfs traditional financial institutions like Citigroup, there are investigations and calls for greater oversight human oversight
To save their nascent currency, Bitcoin's backers may be forced to alter their philosophy and embrace the same messy humans auditors, insurers and even regulators that the currency's most ardent supporters have long abhorred."
Columnist Jesse Eisinger, who gives a shout out to this American Banker article, draws this conclusion from banks' current fight over Volcker's treatment of collateralized loan obligations: "Changing the banking system is a fight that will never end
To paraphrase a famous orator: They shall fight it in the courts, they shall fight it with the regulators, they shall fight it in the halls of Congress. They will search ceaselessly for vulnerabilities and loopholes. They will sow doubt about the rules."
