Wall Street Journal
Ocwen Financial has put things right with the New York Stock Exchange after filing its annual report for 2014 last week. The NYSE had previously threatened to kick the troubled mortgage-servicing firm off the exchange for failing to comply with its listing standards. Now there's a new bullet for Ocwen to dodge: the firm said Monday it is working with lenders to adjust its debt arrangements in order to avoid liquidity problems.
Sen. Richard Shelby's proposed regulatory reform bill would weaken "qualified mortgage" rules, thereby increasing risk to the housing market, according to John Carney of "Heard on the Street." The draft legislation assumes it's safe to ease standards on which loans count as QMs as long as banks agree to hold them on their books or sell them to another party that will do the same. But Carney argues this logic overestimates banks' risk management abilities: when times are good, banks may take risk too lightly, and the financial crisis "showed banks will sometimes take on short-term risks in the hope of immediate reward even if it risks their long-term health."
The prolific Carney also weighs in on plans for a "single security" to be issued by Fannie Mae and Freddie Mac in place of the housing giants' separate mortgage-backed bonds. He's a fan, theorizing that a single security will boost liquidity in the MBS market, potentially pushing down mortgage rates charged to consumers.
The paper's editorial board is displeased with federal judge Denise Cote. An unsigned op-ed accuses the judge of permitting hearsay in a lawsuit over whether the U.S. unit of Japanese bank Nomura misled Fannie and Freddie about the quality of mortgage-backed securities sold to the GSEs in the run-up to the housing crisis.
Spain's Banco Popular is on the hunt for foreign acquisitions, according to the paper. Banco Popular figures snapping up assets overseas will help the company diversify, helping to protect it in the event of another economic crisis. But investors still have unhappy memories of the bank's problem-filled purchase of regional Spanish lender Banco Pastor in 2011.
Deutsche Bank's retail banking head Rainer Neske is stepping down this week as the bank prepares for its annual meeting Thursday. The paper notes the performance of the bank's retail operations has been a source of disappointment for investors.
If bankers want bank-bashing to end, they've got to take responsibility for their misdeeds, according to Robert Jenkins, senior fellow at the nonprofit group Better Markets and a former member of the Bank of England's financial policy committee. He says that means making sincere public apologies, acknowledging the taxpayers whose money became a lifesaver for the financial system during the crisis, cleaning house and getting on board with the regulatory realities of the future. Unsurprisingly, readers are going head-to-head over these recommendations in the comments section, with some arguing that bankers have already expressed plenty of remorse for the crisis while policymakers and regulators have gotten off easy. A good number are on board with Jenkins' perspective, while still others agree with the issues he identifies but argue that only cultural change rather than regulation will get banks to change their ways.
What would European banks do if the U.K. pulls out of the European Union? Deutsche Bank is intimating it might move its big operations back to Germany in an effort to influence public opinion as Britain prepares for a referendum on EU membership in two years, according to the paper.
"A former Bank of America executive has been sentenced to 26 months in prison, having admitted playing a key role in multiple frauds over eight years in the $3.5 trillion U.S. municipal bond market," the paper reports.
New York Times
Speaking of banking culture, Andrew Ross Sorkin says a new study suggests it's still pretty rotten. In a study of more than 1,200 financial professionals in the U.S. and U.K., "about a third of the people who said they make more than $500,000 annually contend that they 'have witnessed or have firsthand knowledge of wrongdoing in the workplace,'" he writes. Nearly one in five say they think unethical or illegal activity is part and parcel of being successful in today's financial world. Sorkin notes the report was paid for by a firm that represents whistle-blowers but argues this doesn't discredit its findings.
Meanwhile, Neil Irwin writes Wall Street is back to its big old self seven years after the financial crisis. Profits are booming, and "the number of people working in the securities business nationally has returned to 2007 levels, as has the gap between the compensation of Wall Street workers and that of everyone else." While this is good news for the finance industry, Irwin suggests it may not be great for everybody else, since a large financial sector "can drain talented workers from the rest of the economy and create damaging boom-and-bust cycles."