Speedier bank mergers; a new take on the Equifax hack

Receiving Wide Coverage ...

Silver lining
Mortgage originations may be slowing, but the market for “humdrum” mortgage servicing rights sure isn’t, with volume up 14% last year from the year before. “The increase in servicing transfers is the latest ripple effect from a slowdown in the housing market, which has forced lenders to slim down, consolidate or close up shop,” the Wall Street Journal reports. “Many of the sellers are independent mortgage lenders that don’t have deposits to fund themselves or other lines of business that can help them withstand a downturn. Stronger players — both banks and nonbanks — have been picking up servicing rights from weaker lenders that need to raise cash.”

Is investment firm Thoma Bravo overpaying in its $3.7 billion deal to acquire Ellie Mae, the mortgage-processing software provider? Maybe not. “It’s a pretty price to pay for exposure to a market that is being buffeted by rising interest rates, slipping home-price gains and worries about affordability,” the New York Times says. “But such headwinds make the cost benefits of outsourced automation all the more attractive to lenders. That may explain why Ellie Mae’s stock traded slightly above the offer price, suggesting that Thoma Bravo’s $99-a-share offer may not be the final word.”

American Banker looks at the pros and cons of the deal.

Washington Post real estate columnist Kenneth Harney takes issue with a “provocative” study from Freddie Mac that says senior homeowners are preventing millennials from buying homes because they want to “age in place” rather than sell their homes. Harney says the report’s conclusions are a “simplification. Millennials have lower homeownership rates for a complex set of reasons — some of them financial, some of them simply reflective of changing personal preferences. You can’t blame it all on the old folks.”

Separatelty, Mark Calabria, the Trump administration’s nominee to head the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac and a critic of the 30-year mortgage, starts his confirmation hearing before the Senate Banking Committee on Thursday. Here's what to look for.

Meanwhile, the Financial Times reports the Trump administration “is considering bypassing Congress as it looks to privatize” Fannie and Freddie.

Wall Street Journal

Move it along
Bank mergers are getting a faster decision these days. The median time for the Federal Reserve to approve or reject a deal fell to 3.8 months in the first half of last year, down from 5.6 months in the same period of 2017 and 7.0 months in 2015. The average time for a decision from the Office of the Comptroller of the Currency declined to 1.9 months last year from 2.6 months in 2016. “That stance could potentially help fuel more consolidation, though it has also raised concerns that regulators aren’t scrutinizing mergers closely enough,” the paper says.

Transition
Mastercard said its chief financial officer, Martina Hund-Mejean, is retiring after more than 10 years on the job and will be succeeded by its chief financial operations officer Sachin Mehra on April 1. Mehra will “help lead the credit-card company’s expansion into adjacent businesses as new competition from technology companies continues to transform the payments industry,” the paper says. One of those areas is business-to-business payments and services.

Financial Times

A call for action
Several of Deutsche Bank’s largest investors are “running out of patience with the lender’s poor performance and tumbling share price” and want CEO Christian Sewing “to make deeper cuts to its perennially lossmaking U.S. investment bank. There are also doubts over the position of Garth Ritchie, head of Deutsche Bank’s investment bank.”

New York Times

Dereliction of duty?
The Consumer Financial Protection Bureau showed it “was more interested in rewarding the [payday] lending industry than protecting borrowers” last week when it proposed “to gut rules conceived during the Obama era that shield borrowers from predatory loans," the paper's editorial board says. "The agency’s abdication of its mandate to protect consumers underscores the need for state usury laws, which have passed in 16 states and offer the surest path to curtailing debt-trap lending.” The matter could become a political campaign issue in 2020, the paper says, “and Republican candidates will have a difficult time ducking the issue.”

Ant expands
Ant Financial has agreed to buy WorldFirst, the U.K. payments company, in a $700 million deal “that marks the biggest push yet by Jack Ma’s Chinese financial services giant in Europe.”

Washington Post

High times
A House Financial Services subcommittee held hearings on a bill that would protect banks and their employees “from punishment for providing services to cannabis businesses that are legal on a state level.” The event was “considered so momentous that several banking groups sent out news releases and held conference calls.”

Elsewhere

A monitor displays Equifax signage on the floor of the New York Stock Exchange.
A monitor displays Equifax Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Sept. 15, 2017. Rediscovering their love for U.S. stock funds, investors added the most money since June during the past week, as the Trump administration plotted strategy for pushing a tax overhaul and the S&P 500 rose to a record. Photographer: Michael Nagle/Bloomberg

What were they really after?
It's easy to remember the Equifax data hack, “the consumer data security scandal of the decade,” when cyberthieves stole sensitive personal information on more than 140 million people back in 2017. CNBC reports the enormous trove of data from the hack has largely disappeared, failing to show up where you would expect it to, such as the hundreds of underground websites selling stolen consumer data. “As the investigations continue … most experts familiar with the case now believe that the thieves were working for a foreign government, and are using the information not for financial gain, but to try and identify and recruit spies.”

Quotable

“I hate to say that we’re more cost effective than Bank of America. We’ve certainly spent 100, 150 or 200 million (pounds).” — Barclays U.K. Chairman Gerry Grimstone, disclosing the amount the bank has spent so far to move its operations and staff out of the U.K. in preparation for Brexit. On Tuesday BofA vice chairman Anne Finucane said her bank has spent about twice that, or $400 million.

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Originations M&A Payments Payday lending Marijuana banking Cyber attacks Deutsche Bank CFPB Equifax
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