Morning Scan

Wide spreads in jumbo mortgage pricing; U.K. bank fraud flourishes

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Wall Street Journal

Diverse pricing

Interest rates on jumbo mortgages, “which usually fall within a 10th of a percentage point of each other, are all over the place. Some mortgage brokers see even wider variance,” with one lender offering a 3.25% rate while another quoted a 5% rate for the same borrower.

“It is happening because important components of the jumbo marketplace—the correspondent and securitization channels—have gone nearly dormant during this crisis. As a result, there is a much smaller pool of lenders willing to offer jumbo loans. And because banks now hold on to these jumbo loans indefinitely, they are setting their rates and qualifying standards as their individual balance sheets dictate. While a competitor might offer better rates, a bank may decide it doesn’t make financial sense to match them.”

Pen at the ready

Former House Speaker Paul Ryan is “jumping into the rush on Wall Street toward blank-check acquisition companies. He will serve as chairman of a vehicle known as Executive Network Partnering Corp., which will seek to raise roughly $300 million in an initial public offering.”

The Wisconsin Republican “is one of the boldest names yet to join a surge this year in the creation of blank-check companies. Also known as special-purpose acquisition companies, they turn the traditional IPO model on its head by going public before acquiring a business. They have gained popularity as deal makers look to take advantage of the economic dislocation caused by the coronavirus pandemic.”

Poised for action

European Central Bank officials “signaled that they could roll out new monetary stimulus in the fall to shore up economic growth, as the region wrestles with rising unemployment and a possible wave of corporate bankruptcies. While ECB officials signaled relief that the 19-nation currency union had avoided an even deeper downturn, they warned of possible turbulence ahead as governments start to wind down policies aimed at supporting businesses and workers through the coronavirus pandemic,” according to the minutes of the ECB’s July 15-16 monetary policy meeting.

“Recent economic data suggest that the eurozone economy is recovering after contracting by 12.1% in the three months through June from the previous quarter, exceeding the 9.5% drop in the U.S. over the same period.”

Financial Times

Fraud boom

“Financial frauds against U.K. bank customers increased by two-thirds in the first half of this year, suggesting that criminals have seized upon coronavirus worries to steal more from savers.” Barclays reported “a 66% increase in reported scams in the first six months of 2020, which included the pandemic lockdown, compared with the last six months of 2019. Fraud volumes also rose 61% between May and July this year, as certain lockdown measures were eased and customers became more willing to spend.”

“The most recent increases in fraud have been driven by a jump in reported investment scams, in which criminals target customers looking to earn a better return on their cash. Reported investment scams leapt 49% — to the highest level Barclays had ever received —between June and July.”

New York Times

For the bank that has everything

Goldman Sachs has money and power. Now it has its own font, called Goldman Sans, “part of a quest for digital cool.”

“To create its typeface, Goldman hired Dalton Maag, a stately 29-year-old British design firm that crafted Bookerly, used on Amazon’s Kindle e-readers, and the BBC’s BBC Reith, which is distinctly British, with subtle hints of calligraphy. Goldman’s brief was clear: The bank wanted something that was so legible you could read strings of numbers on a phone screen or a smartwatch but that would still look good on 50-foot billboards.”

Washington Post

Working for everyone

Raphael Bostic of the Atlanta Fed, the first Black president to head a regional Federal Reserve Bank, “is rethinking what the Fed’s mandate means. Bostic hesitates to point to a specific, short-term policy target, calling instead for deeper thought and discussion about historic racism and inequality and how that legacy still stands today.”

“Part of what is needed, and what we’re wrestling with, is rethinking exactly what our mandate means,” he told the Post. “The important thing about our mandate is that, to me, it says we should be making sure the economy works for everyone, because that’s the way you get to the largest maximum employment. That’s the way you get to the strongest, most resilient economy.”

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