Banking

Dimon sees a strong fourth quarter; Wells CEO unveils new reporting metrics

Wall Street Journal

Biden’s HUD pick

President-elect Joe Biden is expected to nominate Rep. Marcia Fudge, D-Ohio, to head the Department of Housing and Urban Development. ‘If confirmed, the Ohio lawmaker will lead an agency that could play a role in helping Americans struggling with rent and mortgage payments during the coronavirus pandemic.”

Find a way

A Brookings Institution fellow is calling for new mortgage products and credit scores to increase homeownership rates and wealth among Black American families.

“For me, the future of housing is about creating new mortgage products specifically for residents who’ve been punished by previous policies,” Andre M. Perry, a fellow at the Brookings Institution’s Metropolitan Policy Program and scholar-in-residence at American University, told the Journal. “In many parts of the country, you have thousands of properties that are priced [too low], where banks won’t back them with a mortgage. We need new products that enable low-income renters to become homeowners in those areas. I want us to find a new credit-scoring system that enables people, particularly those who have not had the ability to accrue assets, to get credit for paying their bills on time and showing consistency. We also need cooperative housing in terms of ownership, where multiple families can have a share in a facility that they collectively own.”

Financial Times

Finishing strong

JPMorgan Chase CEO Jamie Dimon said the bank’s trading and investment banking revenues “are up about 20%, maybe a little more” so far in the fourth quarter, “signaling a strong end to a year when volatility and central bank interventions paid off big for Wall Street.” Dimon “was the first of his peers to give detailed guidance on performance for the final three months of 2020.”

“I do think we hit the bottom, and we’re growing,” he said.

Taking a break

Deutsche Bank’s head of accounting Andreas Loetscher “is temporarily stepping aside after Munich prosecutors last week launched a criminal investigation into potential violations of professional duties” when he was a partner at EY, where he “was one of the lead auditing partners in charge” of auditing the books of Wirecard, the failed German payments company. “EY will become Deutsche Bank’s auditor in 2021,” the FT noted.

“Germany’s audit watchdog Apas, which is probing Mr. Loetscher along with several other EY partners, in late September told Munich prosecutors that the Big Four firm may have acted criminally. Apas suspects that EY partners knew they were issuing ‘factually inaccurate’ audits for Wirecard in 2017 and 2018. If proved, this can be punished with up to three years in jail under German law.”

AML relief

“Congress is expected this week to approve the first overhaul of the country’s anti-money laundering laws in decades. Under the law, banks will no longer act as information-collecting middle men between companies and law enforcement, lowering their cost of compliance.” The change is “supported by politicians of both parties, bank regulators and banks themselves.”

New York Times

The Pope and the CEOs

Ajay Banga of Mastercard and Brian Moynihan of Bank of America have signed on as Guardians for Inclusive Capitalism, a group of 27 corporate chiefs who will oversee the Vatican’s Council for Inclusive Capitalism, announced Tuesday by Pope Francis. “The group has announced pledges toward environmental and sustainable-business goals that fit into the ESG movement, with Francis’ blessing.” The 27 guardians “will meet each year with Francis and Cardinal Peter Turkson, who leads the Vatican department dealing with many social issues.”

Washington Post

Settled

Nationstar Mortgage, “the largest non-bank home loan servicer in the country, has agreed to a $91 million settlement for allegedly violating consumer protection laws after the Great Recession. The case could serve as a warning to companies that prey on borrowers during the pandemic.”

“The Consumer Financial Protection Bureau collaborated with attorneys general from all 50 states and mortgage regulators in 53 jurisdictions in the case against Nationstar,” which is now known as Mr. Cooper. “The CFPB complaint said Nationstar failed to identify requests for loan modifications. The company allegedly foreclosed while some homeowners were still waiting for their loan modification applications to be processed — even though Nationstar had promised it would not do so.” The company was also accused of “improperly increasing borrowers’ payments and misrepresenting when homeowners would be eligible to have their private mortgage insurance premiums canceled. The claim alleged that Nationstar also failed to forward real estate tax payments from escrow accounts in a timely manner.”

“Mortgage servicing could face increased scrutiny early next year as the incoming Biden administration and some states are expected to take a harder line with lenders that fail to work with borrowers hurt by the pandemic,” American Banker reports.

Elsewhere

Changes coming

Wells Fargo CEO Charlie Scharf said the bank “will debut new financial reporting metrics in January to give better insights into its performance,” Reuters reports. “In January, Wells Fargo will report earnings reflecting for the first time the new business lines Scharf put in place in February when he increased the bank’s official segments to five from three. He has also installed new external leadership, created new executive positions and launched a broad cost-cutting initiative targeting $10 billion in annualized savings over the long term.”

Quotable

“Our internal reporting is getting far, far better. I think that will translate through.” — Wells Fargo CEO Charlie Scharf, announcing changes to the way the bank reports financial data when it releases fourth quarter earnings in January.



 

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