Will single bond set stage for GSE overhaul?; Female-led firms borrowing more
Receiving Wide Coverage ...
In her first Congressional appearance since being confirmed last year, Consumer Financial Protection Bureau Director Kathy Kraninger “said she wants to work with businesses to prevent harm to consumers, pledging a collaborative approach to policing financial companies.” She outlined “a philosophy of working with companies on enforcement and supervision, emphasizing the cost of regulations as well as benefits, while protecting consumers.” She also said the agency “could propose a regulation to rein in bank overdraft fees, an issue that industry analysts and consumer advocates didn’t expect to advance under the Trump administration.” Wall Street Journal, Washington Post, American Banker
The number of women-owned businesses that applied for a business loan rose 13% last year, indicating that female-led firms “continue to be a growth engine for the U.S. economy. But women still have a long way to go in order to have gender equality in the lending market.” Biz2Credit, an online credit marketplace for small companies, also found the average loan amount for women-owned companies was $48,341, 31% less than the average $70,239 for male-owned businesses.
In the U.K., lenders “will be asked to publish how much funding they provide to female-led businesses as part of a new voluntary investor code. The initiative comes after a government review, carried out by Alison Rose, deputy chief executive of NatWest, revealed a big gender investment gap. It recommended the establishment of an Investing in Women Code to boost the number of female entrepreneurs. Three of the U.K.’s big five banks — Lloyds, RBS and HSBC — have already pledged to sign the code.”
Meanwhile, Bank of America Merrill Lynch said “it could take another two centuries to close the gender financial wealth gap as men continue to control the majority of the world’s financial assets.” While “women are accumulating wealth one and a half times faster than men,” the bank’s “she-conomy” report said, “the economic gender gap is closing at a ‘snail’s pace’ and it could take another 202 years to reach equality at the current rate.”
The bank “pledged an additional $50 million for women-owned businesses backed by fashion designer Tory Burch’s foundation, doubling its commitment from five years ago.”
Paper or plastic
Philadelphia became the first big American city to prohibit stores from not accepting cash. Starting in July, most retail stores must accept cash or face a fine up to $2,000. Some places will be exempt, such as parking lots and garages.
“It just seemed to me unfair that I could walk into a coffee shop right across from City Hall, and I had a credit card and could get a cup of coffee. And the person behind me, who had United States currency, could not,” said Councilman Bill Greenlee, a co-sponsor of the bill.
Wall Street Journal
One for all
The Securities Industry and Financial Markets Association voted to support a single mortgage-backed bond for Fannie Mae and Freddie Mac, a move that “could set the stage for an eventual overhaul of the housing-finance system, featuring new competitors to Fannie and Freddie that also could issue bonds on the single-security platform. Supporters also say the change will deliver long-needed improvements to the infrastructure that underpins the housing-finance market and potentially decrease rates for homeowners.” The first such security is expected to be issued in June.
Who needs humans?
Goldman Sachs launched five new exchange-traded funds “that rely on indexes built with machine learning and artificial intelligence. Goldman’s foray into computer-driven ETFs is the latest sign of Wall Street’s increased reliance on sophisticated automation.”
“With machine learning, you can get the benefits of hundreds of stock pickers in a low-cost quantitative way,” said Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA.
Goldman Sachs and JPMorgan Chase may have stopped “the intern-recruiting madness” for college students, but other banks haven’t, “which could set the two investment banks back in the competitive scramble for junior employees.”
What took you so long?
Political correspondent Henry Mance wonders why Goldman Sachs “is unfashionably late to the dress-down party. The House of Commons decided in 2017 that male MPs didn’t have to wear ties in the chamber. When your workplace is slightly more traditional than the U.K. parliament, you need to take a look at yourself.”
The U.S. nonbank mortgage industry, suffering from overcapacity and “excessive transaction costs,” the paper says will be challenged further this year as "Lay-offs and merger activity will rise."
Pressure from above
The Bank of England “took the rare step of announcing that it is forcing Visa Europe to implement recommendations of an independent review into its continent-wide outage in June that prevented millions of customers from making payments.” The central bank said Friday it will use “its statutory powers to force Visa to appoint accountancy firm PwC to assess whether the payments provider has properly implemented the recommendations of a report by EY, another firm, into the incident last year.”
The rise of JPMorgan Chase, “from the railroad and steel consolidations brokered by John Pierpont Morgan on Wall Street more than a century ago, to the repeal of Glass-Steagall, the financial crisis, and Jamie Dimon's leadership,” is discussed in a video featuring J.P. Morgan biographer Jean Strouse, bank analyst Mike Mayo and CNBC banking reporter Hugh Son.
“We’ve become the new ‘business rock stars.’ Money-laundering was the buzzword of the year last year, and I wouldn’t be surprised if compliance officer became the buzzword this year.” — A Copenhagen-based compliance officer, commenting on the recent demand for bank compliance professionals following money laundering scandals involving three of the region’s biggest banks, Danske Bank, Nordea and Swedbank.