This weekend marks four years since Bank of America Corp. completed its acquisition of struggling mortgage lender Countrywide Financial Corp., a deal that remains the source of some of the Charlotte lender's biggest problems.
"There are not many days when I get up and think positively about the
Countrywide transaction," chief executive Brian Moynihan said during a
conference call with investors last August.
Bank of America has lost more than $40 billion in legal expenses, real estate losses and settlements with government agencies since it bought Countrywide in 2008 for $2.5 billion, the Wall Street Journal wrote today. In a story last summer, the Observer detailed those hits.
"You have to put it down as one of the worst (deals) in history," Gary Townsend of Maryland investment firm Hill-Townsend Capital told the Observer at the time.
Now, bank officials say they are modifying mortgages, working through legal problems and otherwise moving past the Countrywide-related troubles.
Bank of America's earnings have improved in recent quarters, and its
stock price is up more than 45 percent for the year after a steep fall
in 2011.
Bank of America became a national powerhouse by snapping up rivals through a series of mergers under former CEOs Hugh McColl Jr. and Ken Lewis. Its involvement with Countrywide began with a $2 billion investment in August 2007. By January 2008, Lewis agreed to buy the whole company, part of a push to become No. 1 in major consumer banking businesses, from credit cards to mortgages.
"We view this as a one-time opportunity," Lewis said during a conference call announcing the deal, "to acquire the best mortgage platform in the business at a time when the value is very attractive."
Friday, June 29, 2012
BofA's Countrywide troubles remain, four years later
Euro zone leaders agree on plans to boost banks
Welcome to the morning roundup. Here's a look at today's banking and finance news.
Europe. European leaders said they will speed up plans to create a single supervisor to oversee the euro zone's banks, the Wall Street Journal reports. During a two-day summit, the leaders also agreed on efforts to reduce borrowing costs for Spain and Italy. Meanwhile, stock futures climbed this morning amid a global rally on the news.
Barclays. A scandal involving the rigging of key interest rates could have far-reaching effects on the global banking industry, analysts told Reuters, as the head of Barclays fought to keep his job. Other banks could face fines for their involvement in manipulating the key lending rate between banks, and the head of the Bank of England called for "real change" in the industry.
Health care ruling. Investors had mixed reactions to Thursday's Supreme Court ruling that upheld the nation's health care overhaul, the New York Times reports. Hospital stocks rose, while stocks of insurers lost as much as 5 percent. Some medical device and pharmaceutical stocks also saw declines, the Times writes.
JPM. JPMorgan Chase & Co.'s chief investment officer, who retired after the bank disclosed its $2 billion trading loss, left with about $21.5 million in stock and options, Bloomberg reports. Ina Drew will keep $17.1 million in unvested restricted shares and about $4.4 million in options that she would have been required to forfeit if the bank fired her "with cause," Bloomberg writes.
Consumer spending. Consumer spending was flat in May for the first time in six months, but weak inflation pressures should ease the burden on some households, Reuters reports.
Thursday, June 28, 2012
JPMorgan trading losses could reach $9 billion
Welcome to the morning roundup. Here's a look at today's banking and finance news.
JPM losses. Losses on JPMorgan Chase & Co.'s trading blunder could total as much as $9 billion, far higher than earlier estimates, the New York Times reports, citing sources familiar with the situation. CEO Jamie Dimon initially said the bank's $2 billion trading loss could double within the next few quarters. But losses have mounted as the bank works to exit its position.
Reverse mortgages. Federal regulators say new rules might be needed to address hidden dangers in reverse mortgages, the Wall Street Journal reports. Those loans, which enable cash-strapped seniors to borrow against the equity in their home, sometimes come with deceptive marketing practices and complicated terms, the Consumer Financial Protection Bureau said. Big banks, including Charlotte's Bank of America Corp., have left the reverse mortgage market in recent years.
Risky lending. The U.S. Federal Home Loan Banks' unsecured lending to foreign banks jumped as the European debt crisis intensified, raising concerns about their risk management, Bloomberg reports. An auditor's report said the Federal Housing Finance Agency, which oversees 12 regional Home Loan Banks, should tighten limits on that lending.
Economic reports. Consumer spending and export growth in the U.S. were weaker than expected in the first quarter, suggesting less momentum in the economy, Reuters reports. A separate report showed the number of Americans filing for jobless benefits fell last week but remains elevated. Meanwhile, stocks opened lower this morning amid concerns at home and overseas.
Wednesday, June 27, 2012
Wells Fargo soft launches mobile deposit
Wells Fargo has rolled out a mobile deposit feature in several parts of the country -- and hopes to have it in the Carolinas by the end of the year.
The feature allows customers to take a picture of a check through the bank's mobile app to deposit it, instead of having to go to a branch or ATM. It's becoming a common part of big banks' mobile banking.
It's now being introduced in parts of Arizona and the state of Washington. It is already available in the San Francisco area, Nebraska and Kansas.
Spokesman Josh Dunn said depending on how the soft launch goes, it will be available in North and South Carolina by the end of the year.
BofA Merrill economists predict slow recovery, stronger stocks
A full economic recovery remains a long way off -- but that might actually help some investors, Bank of America Corp. economists said during a news conference today.
That's because investor sentiment has fallen so low that stocks might surprise on the upside, said Savita Subramanian, Bank of America Merrill Lynch's head of U.S. equity and quantitative strategy.
She said the markets have been responding more to macro trends and breaking news than actual company performance. Investors looking to navigate that tricky environment should focus on higher-quality stocks and yield-oriented investments, which tend to outperform the broader markets, she said.
Risky stocks have been trading at significant premiums to safe stocks for years, Subramanian said. But going forward, that trend will "basically run out of gas," she said.
Overall, the BofA Merrill economists took a cautious view on the rest of 2012, citing continued turmoil overseas, political uncertainty in the U.S. and a still-struggling housing market.
Senior U.S. economist Michelle Meyer predicted GDP growth of 1.3 percent in the third quarter and 1 percent in the fourth, below consensus estimates. Among the reasons: Housing isn't driving the recovery the way it did after past recessions; uncertainty about economic policy is forcing business owners to hold off on hiring; and continued trouble in Europe is affecting the global economy.
In one promising sign, the housing market is improving, Meyer said. Yet while housing starts will likely gradually increase, the overall level remains at historic lows. And while home prices have hit bottom, "we think bottoming is very different than starting a sustained recovery," she said.
The housing market isn't likely to really turn around until 2014 or 2015, Meyer said.
McColl's PE firm selling Charlotte-based energy services company
The private equity firm co-founded by former Bank of America Corp. chief executive Hugh McColl Jr. is selling its stake in a Charlotte-based energy services company, it announced today.
Falfurrias Capital Partners will sell its ownership interest in UC Synergetic, which provides energy and communications engineering, consulting and technical services, to Mount Airy-based Pike Electric Corp.
McColl's firm invested in UC Synergetic in 2007. Since then, the company has nearly tripled its base revenue and profitability by focusing on client service and expanding into high-growth communications, transmission and substation engineering markets through a series of acquisitions, Falfurrias said.
That solid performance convinced the former BofA chief it was time to sell, he said.
“Tripling your money is hard to beat,” he said. “We think the world of the management, and we felt we found a good home with them in (Pike Electric CEO) Eric Pike. He’ll be able to do more with them than we are.”
McColl and Pike met during a CEO seminar at Queens University of Charlotte a year or so ago; that led to early conversations about the deal, McColl said.
“It made sense for our people and him,” he said. “... He’s a smart guy, and I think he will be a good steward of that company.”
Pike Electric said in a news release it agreed to buy UC Synergetic and its parent company, Synergetic Design Holdings Inc., in an all-cash transaction valued at about $70 million.
The deal, expected to close in early July, will extend the company’s footprint in the Northeast and Midwest and boost its ability to provide outsourced engineering and other technical services, Pike said. UC Synergetic has offices across the U.S., including hubs in Atlanta, Raleigh and Boston.
Falfurrias, founded by McColl and former Bank of America chief financial officer Marc Oken in 2006, last month sold its controlling stake in Commercial Credit Group, a Charlotte-based provider of equipment financing for the construction, fleet transportation and waste industries. A few months earlier, the firm invested in Richmond investment research firm Dorsey Wright & Associates.
Going forward, McColl said his company will likely focus on businesses in the energy, clean water and financial services fields.
“I think one of the things we all know is, there’s a huge amount of money out there looking for good deals,” he said. “We’ll be doing the same thing.”
While he’s optimistic about the economic recovery, long term, he said business owners and investors are still looking for stability.
“The growth rates are not what we’d like them to be in this country,” he said. “People keep waiting for Europe to solve its problems. The truth of the matter is, we have to solve our own problems.”
Banking law modernization lets state regulators intervene earlier
North Carolina's new state banking laws, signed into law last week, will give the state Office of the Commissioner of Banks new authority to step in earlier and work with struggling banks.
The law was the brainchild of former state banking commissioner Joseph Smith, who has recently left to serve as monitor of the $25 billion national mortgage servicing settlement. It marks the first major update to the system since the Great Depression.
The bill was uncontroversial and supported by consumer advocacy groups as well as industry groups. It passed with only one dissenting vote.
A good number of the changes to the law simply update definitions to things like "capital" to make them match federal standards. Others update recordkeeping requirements to take into account modern ways of storage (like computers).
But perhaps most significantly, the law gives the Office of the Commissioner of Banks authority to step in and take action before it gets to a point where federal regulators are coming in.
Specifically, it says the office can order a bank to "cease or desist from an act or course of conduct that
threatens or is reasonably probable of threatening the financial integrity of the bank." This tool is similar to one that federal regulators have and one that the state previously did not have.
This is helpful because "at the state level, there is oftentimes a pretty good recognition of where the economy is, where various markets may have issues," said Nathan Batts, an attorney at the N.C. Bankers Association. "State regulators often have a very good perspective and good read on the local markets in which a bank may be operating. They may be in a better position sometimes to identify issues of concern.
Investors joining call to break up biggest banks
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Investors joining call to break up banks. Some investors are now joining the call to break up the nation's largest banks after stock prices have fallen such that the pieces are worth more than the conglomerate, Bloomberg says. Many universal banks are now trading at a discount to tangible book value, and some analysts say breaking them apart could double shareholder value. Bank of America CEO Brian Moynihan and JPMorgan Chase chief Jamie Dimon have both defended their banks' size in recent weeks.
Barclays settles Libor charges. Barclays will pay $450 million to settle charges that it conspired with other banks to manipulate the key Libor interest rate, The New York Times reports. The settlement could pave the way for similar settlements with U.S. banks like Bank of America and JPMorgan Chase, which also give information to help set the rate.
Anti-foreclosure laws may be hurting. Experts say that laws passed after the financial crisis to make foreclosures more difficult may be prolonging the housing slump, Reuters reports. A large backlog of properties with delinquent borrowers continues to hang over the market.
Forced place suit. Bank of America has now been sued in Florida over its forced-place insurance practices, in which the bank buys a high-priced homeowners insurance policy for a borrower after his or her policy lapses, Bloomberg reports. Forced place has also drawn the attention of New York investigators.
Chinese banks expanding in Australia. China's largest banks are expanding their lending in Australia as European banks pull back amid the continents debt crisis, the Wall Street Journal says. The Industrial & Commercial Bank of China and the China Construction Bank are the biggest players.
Tuesday, June 26, 2012
Charlotte, region get mixed economic news Tuesday
Tuesday featured a raft of economic reports, including the much-anticipated Case-Shiller Home Price Index and the Richmond Fed manufacturing index.
The seasonally adjusted home price data showed that Charlotte's housing prices increased for the fifth straight month, and was up over the prior year period for the second straight month.
But of course, there's a long way to go:
The Richmond Fed's manufacturing index wasn't nearly as positive. It reported that employment growth is slowing and shipping and new orders are actually declining. The Richmond Fed's district encompasses the Carolinas, Virginia, West Virginia and Maryland.
While not local, the consumer confidence index was negative as well for the fourth straight month.
Top regulator: Bank 'living wills' aren't a cure-all
Welcome to the morning roundup. Here's a look at today's banking and finance headlines.
Bank living wills. Big banks are being asked to submit to regulators plans for how they can be quickly and cleanly liquidated, but FDIC Vice Chairman Thomas Hoenig said he doesn't support using the "living will" process to break them up, the Wall Street Journal reports. Nine of the biggest lenders must submit their initial living wills to the FDIC and Federal Reserve by July 1.
Euro banking. European Union leaders are set to discuss a plan for greater fiscal unity in the euro zone, including the creation of a finance ministry for the currency bloc, the New York Times reports. The talks will take place during a two-day summit of European leaders that begins Thursday.
Home prices. Residential real estate prices fell in April at the slowest pace in more than a year, according to the S&P/Case-Shiller index out this morning - an encouraging sign for the U.S. housing market, Bloomberg reports. The index of property values in 20 cities fell 1.9 percent that month from the same period in 2011, the smallest decline since November 2010. In Charlotte, home prices increased for the fifth straight month, the report found.
Job cuts. Credit Suisse is planning to cut more jobs
in its European investment banking unit, the New York Times reports,
citing a source familiar with the matter. The Swiss bank might reduce
the workforce in that division by as much as 30 percent, the person said, part of a
previously announced restructuring plan.
Stocks climb. Stocks rose modestly this morning after falling the day before, Reuters reports. Still, ongoing worries about the European debt crisis fueled only cautious buying.
Monday, June 25, 2012
Bank of America doing relatively well with credit card complaints
Though Bank of America's credit card business has been the subject of the fourth-most consumer complaints, they make up a smaller percentage of the total the Consumer Financial Protection Bureau has received than the bank's market share, according to an analysis of the bureau's complaint data performed by independent bank analyst Ken Thomas.
The bureau began releasing credit card complaint data last week. Data dating from June 1 is on its website, but the bureau has provided data going back to July 21, 2011 in response to public records requests.
Bank of America was the subject of 1,809 complaints, about 13 percent of the total, Thomas's analysis found. But the Charlotte bank has a 16 percent share of the credit card market.
By comparison, Capital One received the most complaints with 2,713, or 20 percent. It has an 8 percent market share.
Thomas created an index based on the ratio between market share and complaint share.
Of the 18 credit card companies that received at least 45 complaints, Bank of America ranked No. 13, where a low ranking is a better score. Capital One was No. 4.
Wells Fargo received 542 complaints, or 4 percent, and has a market share of 3 percent. It ranked ninth.
The industry has resisted publishing complaint data that identifies the companies since the claims do not have to be substantiated.
N.C. AG, assistant get awards after mortgage settlement
N.C. Attorney General Roy Cooper and Assistant Attorney General Phil Lehman were given awards last week by the National Association of Attorneys General for their work on the mortgage settlement with the country's largest mortgage servicers announced earlier this year.
Cooper was given a president's award, and Lehman received the Attorney General Staff Member of the Year Award, the state attorney general's office said Monday.
Wells Fargo buys loan portfolio from struggling German bank
Wells Fargo announced Monday that it will buy a $6 billion loan portfolio from struggling German commercial bank WestLB AG.
The terms of the deal for the subscription finance portfolio were not disclosed. Subscription finance involves lending to investment firms, primarily private equity and real estate investment groups, who are making deals that have commitments from institutional investors.
Eight employees and the head of WestLB's subscription finance group will move over to Wells Fargo. The deal is expected to close by the end of the quarter.
WestLB has been breaking apart since December, when the European Commission ordered it to close, according to the Financial Times.
U.S., European bank CEO pay on the rise
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Bank CEO pay rising. Pay for the top executive at the largest U.S. and European banks grew about 12 percent last year, though the rate of growth has slowed, the Financial Times reports. JPMorgan Chase CEO Jamie Dimon came in first with $23.1 million, about 11 percent higher than the year before. Barclays chief Bob Diamond was second, with $20.1 million, including a nearly 6 million euro personal tax bill picked up by the bank. Last year's growth in bank CEO pay tracks the growth in CEO pay among North Carolina's largest public companies last year.
BofA could poach Goldman exec. Diego de Giorgi, chief operating officer of Goldman Sach's investment banking unit, is expected to take a post with Bank of America Merrill Lynch's European investment banking arm in London, the Wall Street Journal says. The move comes as BofA is trying to beef up its European IB activity.
Central banks want help. An organization that represents central banks put out a report today calling on governments to do their part to help stem the European debt crisis, including insuring bank deposits, The New York Times reports. It says that monetary policy alone is not going to be enough.
Profit hits could harm stocks. Recent downward revisions to profit outlooks at large U.S. companies could cast a pallor on the stock market in the coming months, the Financial Times reports. It could be an indicator of a softening economic recovery.
Charities honor bankers. Over the past two months, the CEOs of nearly all the major banks have been lauded by charities in New York, Bloomberg reports. John Thain, the former Merrill Lynch chief who helped orchestrate the sale to Bank of America, was named Father of the Year. JPMorgan head Jamie Dimon was named executive of the year. BofA CEO Brian Moynihan also got an award from the American Ireland Fund.
Friday, June 22, 2012
Lacker says monetary policy won't spur faster growth without inflation
In a lone dissent from the Federal Open Market Committee's decision this week to extend its long-term Treasury buying program, Federal Reserve Bank of Richmond President Jeffrey Lacker said he doesn't think the program will help spur the economy to more growth and is concerned about higher inflation.
"I do not believe that further monetary stimulus would make a substantial difference for economic growth and employment without increasing inflation by more than would be desirable," he said in a statement released Friday.
The Richmond Fed covers the Carolinas, Virginia, West Virginia and Maryland.
Analysts: Moody's downgrades remove market headwind
Financial stocks are bouncing back today after Moody's downgraded 15 global banks in a widely anticipated move that wasn't as harsh as some analysts and investors expected. Charlotte-based Bank of America Corp., whose long-term debt rating was cut one notch, was trading around $7.88 by late morning, up slightly from Thursday's close.
Here's how some bank analysts are responding to the downgrades:
- Keefe, Bruyette & Woods analysts called Morgan Stanley the "clear winner" among U.S. banks after Moody's cut its debt rating by two notches instead of the three many expected. Bank of America and JPMorgan Chase & Co.'s downgrades were in line with analysts' expectations. But JPM "won second place" because investors were moderately concerned in recent weeks about a larger-than-expected downgrade after the bank announced its massive trading loss. The analysts don't expect the ratings changes to affect business at any of the U.S. banks mentioned. And they said the news Thursday removed a headwind that was weighing on bank stocks.
- Dick Bove of Rochdale Securities said the downgrades reflect the ratings agency's "obvious" view that the banking industry is cyclical and no bank deserves high ratings at the moment. "One cannot really quibble with this conclusion," he said. But he called it upsetting that Moody's downgraded big banks at a time when many have made dramatic improvements to their balance sheets. "This makes no sense," Bove said. "If Moody's understood the dynamics of the market, they could never have done what they did."
- Analysts from Robert W. Baird & Co. said the downgrades remove a hurdle facing the finance sector. Investors remain concerned about trouble in Europe and low interest rates, which are affecting banks' revenue, but overall, banks are looking more attractive, the analysts said. JPM remains the firm's top pick.
Stocks edge back up after downgrade news
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Stocks coming back. Moody's decision yesterday evening to downgrade 15 global banks grabbed a lot of attention, and investors anticipating the news sent the Dow to its second-biggest loss of the year. But banks like Morgan Stanley weren't hit as hard as expected, and stock futures were up Friday morning, the Wall Street Journal says. Bank of America was up more than 1.5 percent in pre-market trading.
Spain banks. Seeking to ease concerns that Spain's banks would need more than the 100 billion euro bailout pledged to them, a consulting team hired by the Spanish government put out a report saying that the banks only needed about 62 billion euros in capital, Bloomberg reports. Bank stocks gained and the country's economy minister said there is now a "road map" to a solution.
Twist too hard? The Fed's decision to continue Operation Twist, in which it sells short-term Treasuries and buys long-term ones, could have the negative effect of eliminating liquidity in the short-term market, traders fear, the Financial Times reports. It could put a crimp in the so-called "repo" market, where traders use Treasuries as collateral or short-sell them.
Thursday, June 21, 2012
NewDominion Bank expands board by two
Shareholders of Charlotte-based NewDominion Bank voted at Tuesday to add two new members to its board as part of a strategy to add more operating business executives to its leadership and transform from a focus on real estate to a broader community bank model.
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| David Longo |
Longo acquired Carolina Business Interiors in 1993 and has grown it into a $50 million in revenue company.
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| Casey Crawford |
“Both David and Casey possess deep roots and ties to the Charlotte area and are highly successful executives who run top notch operating companies," NewDominion CEO John Hipp said in a statement. "Their support and leadership will be instrumental as we build Charlotte’s favorite Community Bank.”
The bank has been rebuilding its management team since Hipp was brought in late in 2010. It continues to struggle with bad loans that have eroded its capital, and the bank lost $622,000 in the first quarter.
But Chief Operating Officer Marc Bogan told the Observer this week that the bank has had more loan production in the first four months of this year than in all 2011, and Hipp has predicted a return to profitability this year.
Merrill Lynch to pay $35 million over improper fees
Merrill Lynch was fined $2.8 million and paid $32 million in restitution after the Financial Industry Regulatory Authority found that the firm overcharged tens of thousands of customers between 2003 and 2011.
The improper fees mainly stemmed from computer coding errors, which led certain transactions to be billed at rates meant for other types of securities and trades, according to the action document from FINRA, a private company that policies brokerages and exchanges.
"Investors must be able to trust that the fees charged by their securities firm are, in fact, correct. When this is not the case, investor confidence is threatened," FINRA enforcement chief Brad Bennett said in a statement.
Merrill Lynch does not admit or deny the claims, but has accepted the penalties.
The firm also took a $1 million penalty from FINRA in January over its handling of employee disputes over bonuses.
Report: Moody's to cut top global banks Thursday
Welcome to the morning roundup. Here's a look at today's banking and finance news.
Bank downgrades. Ratings agency Moody's will announce downgrades of some top global banks later today, Reuters writes, citing a report from Sky News. Moody's has said it will release the ratings reviews -- which could result in higher funding costs for the affected banks -- by the end of June.
The Fed. The Federal Reserve has ordered another round of modest monetary stimulus, citing slow economic growth - but a Bloomberg editorial argues that a functional Congress wouldn't have to depend on such moves, saying the Fed "is stepping in largely because Congress won't."
Real estate recovery. Real estate markets around the country rose together during the boom and fell together during the bust, but now they're recovering at different speeds, the Wall Street Journal reports. Meanwhile, sales of previously owned homes probably fell in May, Bloomberg reports.
President's favorite banker? UBS executive Robert Wolf is one of President Obama's leading fund-raisers, golfs with the president and is known for e-mailing friends photos of himself and Obama. Now, that's making other executives at the bank uneasy, the New York Times reports.
Markets flat. Stocks opened flat today amid weak labor market data and an easing of Spanish bond yields, Reuters reports.
Merrill purchase settlement could wait until after October trial
Attorneys in a New York civil suit over Bank of America's 2008 acquisition of Merrill Lynch have reached a definitive agreement to settle some claims, but the federal judge overseeing the case indicated in documents filed Wednesday that he may wait to approve it until after an October trial on related claims.
Both cases deal with the fact that billions of dollars in losses at Merrill Lynch were not disclosed to shareholders in advance of its December vote to acquire the ailing investment bank. Filings in the case earlier this month included sworn testimony from then-Bank of America CEO Ken Lewis that he was aware of the ballooning losses before the shareholder vote.
In April, attorneys in the New York told the judge they had reached an agreement in principle to settle what are known as derivative claims for $20 million. Attorneys in a parallel case in Delaware sought to stop it, calling it inadequate, but were unsuccessful. Presumably, the April announcement is connected to the one this week.
But the judge said that he would likely wait until after a related securities class action case he also oversees goes to trial on Oct. 22 to give the settlement final approval.
Bank of America attorneys have said the Delaware litigants have rebuffed attempts to settle. The Delaware trial is also scheduled to begin Oct. 22.
Wednesday, June 20, 2012
Wells Fargo outsourcing some Charlotte jobs
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Wells Fargo outsourcing. Wells Fargo is outsourcing some jobs in Charlotte and other U.S. locations to India and the Philippines, according to an internal memo. The bank says its overall staffing in Charlotte -- about 20,000 -- will remain stable.
Helping Europe. Leaders of the European G20 nations have agreed to help drive down borrowing costs for eurozone countries by using the zone's 440 billion euro fund to buy bonds, the Financial Times reports. Spain in particular has seen borrowing costs spike, with yields exceeding 7 percent.
ATM gamble. A Bank of America ATM glitch let a man withdraw $1.5 million that wasn't his within 15 days, but the man proceeded to gamble with the money and lose it all, ABC News reports. He was caught, though, pleaded guilty and will be sentenced in federal court later this month.
Dimon speaks (again). JPMorgan CEO Jamie Dimon testified again Tuesday, this time to the House financial services committee. He told lawmakers that Dodd-Frank's provisions that limit U.S. bank subsidiaries overseas will make them less competitive with foreign banks, Bloomberg reports. He also said his bank properly disclosed losses when they knew about them.
Tuesday, June 19, 2012
Two N.C. reps question Dimon
Though neither of them made news, two of North Carolina's members of the U.S. House Committee on Financial Services questioned JPMorgan Chase & Co. CEO Jamie Dimon at the committee's hearing Tuesday on the bank's $2 billion-plus trading losses.
Republican Rep. Patrick McHenry and Democrat Brad Miller each took their allotted five minute questioning periods Tuesday during two-hour session was more pointed than the one before the Senate banking committee last week.
Democratic Rep. Mel Watt, who represents parts of Charlotte, did not appear to be in attendance. North Carolina's fourth member of the committee, Republican Walter Jones, did not ask a question and it was unclear whether he was there.
Here's what McHenry and Miller said:
Rep. Patrick McHenry
Taking a fairly combative tone, asked Dimon to identify the line between hedging and proprietary trading and made the point that they often look similar (though Dimon said in some cases there is a clear distinction).
"How long have you been in finance?" McHenry then asked.
"30 years," Dimon said.
"Let's just say a long time," McHenry continued. "You're supposed to know the difference between this. If you can't determine what that is, how can a regulator?"
Dimon didn't take the bait, instead saying that he didn't think regulators should take the approach of determining proprietary versus hedging, and instead should be focusing on capital levels in trading operations and other risk management areas.
McHenry also asked whether Dimon supports Dodd-Frank.
"That's a hard one to say," Dimon said, before saying there are parts he likes and parts he doesn't.
Finally, McHenry asked a question about the so-called "resolution authority" under Dodd-Frank, which gives regulators the ability to step in and wind down large institutions about to fail -- which Republicans call a codification of "too big to fail." McHenry asked whether it would be better for banks to go into bankruptcy.
"I don't care what you call it," Dimon said. "I'm not going to get involved in the debate."
Rep. Brad Miller
Miller then keyed in on the mandatory certifications executives have to make on regulatory filings, including one that proper risk management procedures are in effect.
"Was that certification correct?" Miller asked.
Dimon dismissed the question.
"I believe it to be correct," he said. "...That's why we're having a review. The review's not done yet."
"Uh... alright," Miller said before moving on.
Swiss bank in talks to buy BofA unit
Welcome to the morning roundup. Here's a look at today's banking and finance headlines.
BofA close to deal. Swiss private bank Julius Baer is in talks with Bank of America Corp. about buying Merrill Lynch's non-U.S. wealth management unit, Reuters reports. A spokesman declined to say whether Baer was interested in buying the whole business, valued at up to $2 billion, or parts of it. Charlotte-based BofA put its non-U.S. wealth management unit up for sale this spring as part of an ongoing plan to shed non-core assets.
London whale. JPMorgan Chase & Co. trader Bruno Michel Iksil sometimes resisted sharing details of his positions with superiors, current and former colleagues told the Wall Street Journal. Those workers told the Journal how Iksil, known as the "London whale" for big trades that ultimately resulted in at least $2 billion of losses, gained credibility and power in the years leading up to the blunders.
European crisis. Markets had a tepid response Monday to the "supposedly momentous" election in Greece, showing investors are looking for a bigger fix to Europe's troubles, the New York Times reports. That raises questions about what exactly it will take to ease investors' concerns about the European debt crisis. Meanwhile, stocks climbed at the open today.
Help from regulators. The Federal Housing Finance Agency plans to help banks avoid being forced to buy back mortgages, citing concerns that lenders are tightening credit standards, Bloomberg reports. The regulator of Fannie Mae and Freddie Mac will detail flaws that would trigger a putback request and is standardizing the data Fannie and Freddie collect on loans so they have more information when buying mortgages from lenders, Bloomberg writes.
CFPB launches credit card complaint database
The data set contains only the 137 complaints the bureau has received since June 1, though it expects to expand it to previous complaints by the end of the summer. The database names the bank involved but does not give identifying information on the complainant beyond his or her zip code.
That's been unpopular with the banking industry, which sought to water down the proposal.
"While our industry stands ready to work with the CFPB to resolve customer concerns, the Bureau’s plan to release unverified data is disappointing and could mislead consumers," the American Bankers Association said in a statement. "Publishing allegations is often different than publishing facts."
Monday, June 18, 2012
Study: Online chatter about big banks mostly positive
Consumers who discuss their banks online have mostly positive things to say, despite widespread backlash against bank fees and continued economic uncertainty, a new report found.
Social media marketing agency Social Media Explorer's "Conversation Report: What Consumers Are Saying About Banking" found an overall favorable tone in online discussions. But the study revealed a mix of positive and negative chatter about the nation's 25 largest banks -- with some customers complaining about the same products or services others praised.
"In general, customers are either fickle or inconsistent," the report said. "Bank marketers will have to accept negative online reactions as a cost of doing business."
Charlotte-based Bank of America Corp. grabbed the biggest chunk of the conversations, at nearly 25 percent, according to the study, which aims to help banks better understand how to monitor and respond to what customers are saying online. That was well above rivals JPMorgan Chase & Co. and Wells Fargo & Co., which made up 17 percent and 10 percent of online conversations, respectively.
Unsurprisingly, most of the chatter about Bank of America involved its widely criticized $5 debit card fee, which was rolled out and then scrapped last fall, during the course of the study.
As a result, "we can say with a fair amount of confidence that most people mentioning BOA online are not doing so in a favorable light," the report said.
Customers who did speak positively about the bank mentioned its customer service, Twitter support, online banking and flexibility in debit card design, among other services. And despite the complaints, the bank still edged out most of its peers in its number of Facebook fans and Twitter followers.
Wells Fargo also saw some praise for its customer service -- with 8 percent of those conversations even calling out the bank's staff as "good-looking," the report found. Yet customers who complained about Wells also mentioned customer service and other gripes, from long lines to merger-related issues.
"When it comes to what customers think or say about brands and their products online, some will love them, some will hate them and many will remain neutral," Social Media Explorer found. "... One hundred percent of your audience will never completely agree on anything you do or say."
Americans to vote with wallets in presidential election
About 60 percent of Americans will decide who to vote for in November's presidential election primarily on how they expect the candidate to impact their personal finances, a new survey from Bankrate.com says -- but there is no agreement on whether that should be Barack Obama or Mitt Romney.
Twelve percent said their personal financial situation will be the primary issue guiding their vote, and 47 percent said it would be one of several.
But respondents were split on which candidate would help their finances more. Twenty-two percent said Republican nominee Mitt Romney, while 21 percent said incumbent President Barack Obama.
A full 50 percent said they'd probably fare about the same with either.
Stocks pointed down despite Greek election result
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Greek election fallout. Stock futures are pointed down this morning despite the results of the election in Greece, Bloomberg reports. A pro-austerity, pro-bailout party won the elections in Greece, meaning the country is likely to stay in the euro zone for the time being. But the party's leaders will struggle to form a governing coalition, and early bullishness from investors has been outweighed by a rising Spanish bond yield, the Financial Times says.
HARP boosts profits. Mortgage servicers will make an estimated $12 billion off the federal government's mortgage refinancing program called HARP, a total far greater than homeowners have saved, the Wall Street Journal reports. The banks have been charging above-market interest rates and fees to a mostly captive customer base.
Fed moves? The Federal Reserve may mark down its outlook on the country's economic growth this year, prompting it to take more action, Bloomberg reports. That could include an extension of Operation Twist, in which the Fed sells short-term bonds and buys long-term bonds, to drive down interest rates.
Bank sales. Small banks are increasingly looking for a buyer as weak loan demand and increased regulatory expenditures pressure their finances, the Wall Street Journal reports. With 90 deals so far this year, 2012 is on pace to have the most since 2007. In Charlotte, First Trust Bank recently sold itself to Bank of North Carolina.
Friday, June 15, 2012
Some lawmakers have been betting against market, disclosures how
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Lawmaker bets. A number of Congressional lawmakers have been using leveraged funds to bet against the market, financial disclosure forms show, according to the Wall Street Journal. House Speaker John Boehner invested in Fannie Mae and Freddie Mac, and an Alaskan senator invested in a Greek bank.
Wall Street allure. Wall Street banks have lost some of their appeal to top graduates of some prestigious schools, but not Dartmouth, The New York Times says. Three of the school's four valedictorians are headed that way.
Capital rules. International banking regulators are set to finalize rules for so-called systemically important financial institutions on how much extra capital they will be required to hold, Bloomberg reports. It could be as much as an extra 250 basis points.
Greek elections. The European Central Bank is bracing for this weekend's elections in Greece, which could lead the country closer toward leaving the euro, the Financial Times reports. ECB President Mario Draghi has pledged to make sure banks have adequate liquidity in the aftermath.
Thursday, June 14, 2012
Reactions mixed on Dimon's Senate appearance
Welcome to the morning roundup. Here's a look at today's banking and finance headlines.
Dimon on the Hill. A New York Times editorial argues senators did not press JPMorgan Chase & Co. CEO Jamie Dimon "nearly hard enough" during his appearance before the Senate Banking Committee. Meanwhile, a Wall Street Journal opinion piece says Dimon "delivered some lessons" to the Senate during his testimony, a month after the bank revealed a multibillion-dollar trading loss. And a corporate governance expert writes in Fortune that the JPM debacle raises more questions about executive pay.
BofA edges ahead. Charlotte's Bank of America Corp. overtook JPMorgan as the biggest lender to the commodities industry in the first five months as French lenders retreated amid the European debt crisis, Bloomberg reports. Commodity loans Bank of America arranged totaled $14.7 billion, ahead of JPMorgan's $14.4 billion.
JPM bets and corporate debt. JPMorgan's bets on corporate debt might have sent false signals about the financial health of blue-chip U.S. companies, Reuters reports. The struggle between JPMorgan and hedge funds on the other side of its gamble gave some investors unfavorable ideas about the credit quality of big companies, even when their underlying finances were largely unchanged, Reuters writes.
Household wealth. CNBC examines "why the rich recovered and the rest didn't" after the recession. For one, the wealthy have a greater proportion of their wealth in stocks and less of it in homes - and while financial investments have rebounded, real estate hasn't.
Wednesday, June 13, 2012
Law firm opens finance advisory firm in Charlotte
Schiff Hardin LLP, one of the oldest law firms in the U.S., has chosen Charlotte as headquarters of its new business advisory arm, the firm announced this week.
The nonlegal advisory affiliate, Schiff Hardin Strategic Advisers, is leasing space in the Carillon building uptown and will begin hiring senior professionals from the banking industry to support current clients and future growth plans. The company also has a Chicago branch office.
Longtime Charlotte resident Robert Piontek, a former executive at Bank of America Corp., Wachovia Corp. and KPMG consulting, will lead the company as chief executive and vice chairman. Stephen Antal, who held executive legal and leadership roles in the finance industry in Chicago, New Jersey and Charlotte, is president of Strategic Advisers.
Antal will also lead Schiff Hardin's new Charlotte law office.
Firm leaders said the move to Charlotte allows the company to expand its corporate finance, securities, financial services and mergers and acquisitions expertise. The advisory business will "bring a laser focus to the challenges facing our mid-sized and community banks," Piontek said in a news release
Strategic Advisers is building a core staff of experienced industry leaders but also plans to forge partnerships with leading accounting, investment banking, loan valuation, regulatory and joint venture firms, the company said.
Wells Fargo mortgage 'cowboys' target 40 percent share
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Wells Fargo cowboys. In January, a team of Wells Fargo mortgage unit managers dressed up as cowboys for a business meeting where the invitation said "40% or BUST!!" Bloomberg reports, referencing the market share of the mortgage business the San Francisco bank wanted to control. It currently leads the field with 34 percent share. The target is a bit out of character for Wells, which has generally not aimed to the be the biggest in its categories. But the mortgage unit has been very profitable for the bank as competitors like Bank of America have pulled back.
Moynihan and Countrywide. It appears that Bank of America CEO Brian Moynihan will be called on to testify again on the bank's disastrous acquisition of the subprime mortgage lender Countrywide after reportedly not being able to recall some details in his last deposition, TheStreet.com says. It's part of a suit brought by bond insurer MBIA after it guaranteed some bad Countrywide mortgage bonds.
PNC putbacks. Pittsburgh bank PNC, which recently entered the Charlotte market, will set aside $350 million to cover potential putbacks from Fannie Mae and Freddie Mac, more than 10 times what it reserved in the first quarter, the Wall Street Journal reports. The GSE putbacks have increased in the past year.
Mr. Dimon goes to Washington. JPMorgan CEO Jamie Dimon will be in D.C. today testifying in the Senate about his bank's $2 billion-plus chief investment office losses. He's expected to call them an "isolated incident" and say taxpayers and customers weren't at risk, The New York Times says.
Tuesday, June 12, 2012
Bank of America ready to 'get back and get after it'
Having significantly increased capital and liquidity over the past year, Bank of America is now pushing its employees to get back to making more money, Chief Financial Officer Bruce Thompson told investors at a conference Tuesday.
The bank has increased its Tier 1 capital by more than $17 billion, now hitting 10.8 percent, Thompson pointed out. Its liquidity has also hit a record high, the bank will be able to comfortably absorb $34 billion in debt maturity in the second quarter, and the bank's cost cutting initiative is bearing fruit, he said.
All that leaves the bank in a much better position to be more aggressive about making more money, he said.
"It's getting people out on the front to start pushing and find additional revenue generating opportunities," Thompson said. "There's clearly a push at this point for peopel to get back and get after it."
BofA connecting teens with summer jobs
Bank of America Corp. is committing $100,000 to help Charlotte-area teens land summer jobs.
As part of a three-year, $50 million effort to encourage self-sufficiency through employment, the Charlotte-based bank will provide jobs for 80 local students, N.C. and Charlotte Market President Charles Bowman said today. A dozen will intern in banking centers around the region, while the rest will work with nonprofit organizations.
"We believe in this country, and we believe in the youth of this country," Bowman told a crowd of teens and business leaders during a luncheon for the Mayor's Youth Employment Program.
Bank of America is partnering with other youth programs in coordination with the U.S. Conference of Mayors to help teens find summer jobs at nonprofits and businesses around the country. The Mayor's Youth Employment Program in Charlotte this year has connected 70 employers with more than 300 students.
During the kickoff luncheon today, Bowman praised the public-private effort. He also shared a story about his first summer job, hauling sofas from a truck to a railroad car in his hometown of Thomasville.
"You're going to have an opportunity a lot different than that," he told the students.
JPMorgan leaders warned of trading risks before loss
Welcome to the morning roundup. Here's a look at today's banking and finance headlines.
JPM trading. Some top JPMorgan Chase & Co. executives were alerted to risky trading practices well before the bank's $2 billion loss, the Wall Street Journal reports, citing sources familiar with the situation. Discussions about reining in traders started as early as 2010, the Journal writes. JPMorgan CEO Jamie Dimon is expected to testify before the Senate Banking Committee this week.
Financial rules. The U.S., Europe and Japan are behind schedule on implementing measures meant to help avoid future banking crises, according to a panel of regulators and central bankers, the New York Times reports. The U.S. ranked behind China, India and Italy, the Basel Committee on Banking Supervision said.
Stocks edge higher. Markets ticked up this morning as investors continued to scrutinize a bailout plan for Spanish banks, Reuters reports. That's after a brief rally - and, later, a stock market slide - Monday as concerns about European troubles continued.
Household wealth. A Federal Reserve study showed the financial crisis erased 18 years of gains for the median U.S. household net worth, Bloomberg reports. Net worth fell nearly 40 percent from 2007 to 2010, driven largely by the collapse in home prices.
Bank risk. U.S. banks said this year they had cut their exposure to Europe's most troubled economies - but many increased lending and bond buying in Italy, France and other countries, Fortune writes. That might now present a problem in the wake of a Spanish bank bailout.
Monday, June 11, 2012
N.C. Senate would divert $8 million in mortgage settlement money
Two weeks ago, the N.C. House indicated it was willing to divert money intended to help homeowners to plug budget gaps. Today, lawmakers in the state Senate showed they're on the same page.
In its version of the state budget unveiled today, the state Senate recommends using about $8 million given to state agencies from the blockbuster mortgage settlement negotiated with the country's largest mortgage servicers to shore up shortfalls.
The House had only recommended diverting about $7.5 million.
The vast majority of the Senate's total would come from the N.C. Housing Finance Agency. The agency was given about $30 million from the mortgage settlement for housing counselors and legal representation for struggling homeowners going through foreclosure. The state Senate recommends cutting $7.9 million from its budget, and suggests the agency use mortgage settlement money to plug the gap.
The state Senate also reduces $200,000 from the state Conference of District Attorneys, which received about $7 million for increased prosecution of financial crimes.
The $26 billion mortgage settlement with Bank of America Corp., Wells Fargo & Co., and three other servicers was approved in April.
North Carolina will receive about $338 million in total. About 80 percent will go directly to homeowners in the form of principal reduction for homeowners who owe more than their homes are worth, small payments to people who already have lost their homes to foreclosure, and other foreclosure prevention programs.
The state will receive the other 20 percent, about $64 million. About $10 million had already been scheduled to go to the state’s general fund and $6 million for the public school system.
Be sure to read this story for more background.
BofA study: Financial benefits increasingly important to workers
Financial benefits are becoming more important in attracting and retaining employees, according to a Bank of America Merrill Lynch study released today.
The latest Workplace Benefits Report, an annual look at employer and employee perspectives on benefits from 401(k) plans to financial advice, found nine of 10 employers believe financial benefits are equally or more important to potential hires today than five years ago. And nearly 80 percent of employees surveyed said they see those benefits as a key factor in accepting a new job.
"Benefits should be viewed as one of the most important investments a company makes to optimize employee performance, provide opportunities for them to succeed financially and gain sustainable competitive advantage," said Kevin Crain, head of Institutional Retirement and Benefits Services at the Charlotte-based bank. "A company culture known for making investments in their employees' financial wellness, in addition to their professional growth, will attract top talent and foster a more productive and loyal workforce."
The study also found most employers felt an increased sense of responsibility for their workers' financial future: 91 percent said concern for employees' financial wellness was the No. 1 reason they offer financial benefit plans.
Still, less than half of employees surveyed said they're on track, financially, to support their desired lifestyle in retirement, the survey found. And nearly three-quarters of those workers said they see themselves working into their 70s.
Markets pointed higher after Spain's bank bailout
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Markets pointed up. Markets across Europe were up this morning after the $125 billion bailout for Spain's ailing banks was announced over the weekend, the Wall Street Journal says. U.S. futures were up as well. But the gains may be fleeting, since Europe's markets seem to be settling down already.
Boring won't work. Or will it? Many politicians have called for a return to "boring" banking, or forcing banks to return to plain vanilla lending rather than investment banking. Bloomberg's editorial board, though, says that won't work. It points out that the majority of the losses banks suffered during the financial crisis came from lending, not trading losses, and says that's it's more capital, not a return to boring banking, that will protect banks. Of course, a University of Chicago professor argues the opposite in a column in the Financial Times, pushing for reinstatement of the Glass-Steagall Act by praising its simplicity and ability to reduce the political power of banks.
Defending Dimon. The chairman of the New York Fed is defending the membership of JPMorgan Chase CEO Jamie Dimon amid calls for the executive to step down after his bank's $2 billion-plus trading loss, the Wall Street Journal reports. Still, Dimon is likely to leave at the end of the year because he is in the final year of his second term, which is the customary length of service.
Housing fix faltering. President Obama's 2009 plan to stem the worst of the housing crisis has largely failed because it wasn't bold enough, Bloomberg says.
Friday, June 8, 2012
Bank of North Carolina assumes deposits of failed S.C. bank
Bank of North Carolina has assumed the deposits of a failed Charleston, S.C., bank, regulators announced today.
The Office of the Comptroller of the Currency closed Carolina Federal Savings Bank and appointed the Federal Deposit Insurance Corp. as receiver, according to an FDIC news release. The FDIC entered into a purchase and assumption agreement with Thomasville-based Bank of North Carolina, part of BNC Bancorp, which recently expanded into Charlotte.
The Charleston lender's two branches will reopen as Bank of North Carolina branches and will conduct business under the name BNC Bank. The FDIC estimated the cost to the Deposit Insurance Fund would be $15.2 million, saying the deal was the "least costly" resolution.
Carolina Federal Savings Bank had about $54.5 million in total assets as of March 31 and $53.1 million in total deposits. In addition to assuming the failed bank's deposits, Bank of North Carolina agreed to buy $41 million of its assets.
Carolina Federal Savings Bank is the 26th FDIC-insured institution to
fail this year, and the second in South Carolina. Customers with questions about the deal should call the FDIC at 1-800-760-3639.
Banking IT firm expands in Charlotte
Digital Intelligence Systems Corp., an IT staffing and consulting firm primarily serving the finance sector, is expanding in Charlotte.
The McLean, Va.-based company has grown into a new office on South Tryon Street uptown and plans to double its current 2,500 square feet in the next six months, it said this week. DISYS also hired a new managing director, Eric Felice, for its Charlotte office.
Among his goals: Combining his experience in banking and finance IT with a focus on the latest innovations, such as mobility and security, DISYS said.
The firm, which supports Fortune 500 companies and other large businesses around the world, has 10 employees in Charlotte and is in the process of hiring four more, it said.
Mainstream investors joining activists in pushing for change
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Investor revolt. Mainstream investors are increasingly joining shareholder activists this year to lobby corporate boards for change, The New York Times says. Not only labor unions are individuals, but mutual funds and other institutional investors, have pressed for change at companies like Citigroup, Goldman Sachs and Chesapeake Energy.
Abandoned homes. Abandoned bank-owned homes continue to be a problem, contributing to blight in cities around the country, Reuters says. And right now, most cities don't have the wherewithal to deal with them.
More capital. The Federal Reserve unanimously voted to support a draft proposal that would raise most banks' required common equity capital levels to 7 percent of risk weighted assets, from a previous standard of 2 percent, shocking bankers, the Wall Street Journal reports. Moreover, the largest banks will have to maintain a capital cushion above and beyond that, but the specific levels haven't been proposed.
Europe. Spain's banks appear headed toward an urgent and major bailout, industry groups warn, according to Bloomberg. The country's and continent's leaders are still divided on how to address the hundreds of billions in problem mortgage loans.
Overdraft fees inching up at big banks
Overdraft fees are creeping up once again after two years of stability, according to a survey from the Consumer Federation of America.
While $35 remains the going rate, two banks -- Fifth Third Bank and U.S. Bank -- are tweaking their tiered overdraft charge system, raising some fees.
Starting later this month, Fifth Third will charge $37 on the second overdraft of the year and all subsequent ones, after charging $25 for the first. The bank currently charges $33 on the second, third, and fourth overdrafts of the year. Customers will no longer be charged an $8 fee for each day an account is overdrawn.
Another change this year is the variation in ways banks process debit transactions, which can lead to more overdraft fees.
Two years ago, most banks processed transactions from largest to smallest. Now a number process time-stamped transactions in the order received, then processing checks and the rest from largest to smallest. BB&T posts in chronological order and then from smallest to largest.
Overdraft rules changed after the Dodd-Frank financial reform law in 2010, which requires banks to have customers "opt-in" to overdraft protection.
Soon after, Bank of America stopped charging overdraft fees for most purchases, instead declining the transaction.
The Consumer Federation states that it wants banks to take a similar course, by simply denying transactions that would put customers in the red.
“Banks should not be in the business of charging steep fees for small loans triggered by debit card sales and ATM transactions that can be denied at no cost to consumers,” director of financial services Jean Ann Fox said in a statement.
“The extreme fee in relation to very small loans that must be repaid in just days to avoid more fees means that bank payday lending is particularly burdensome to consumers who are struggling to make ends meet."
Thursday, June 7, 2012
Survey: Mortgage troubles, regulatory pressure still weighing on bank profits
Bank executives are working to streamline operations and cut costs as regulatory pressure and other troubles hamper profits, according to a recent study from KPMG.
The audit, tax and advisory firm's Banking Outlook Survey this week found nearly 70 percent of respondents called regulatory and legislative pressure the most significant barrier to growth over the next year. More than 40 percent said bank management will spend most of its time and energy in the next two years on initiatives related to boosting efficiency and reducing costs.
"Banks are still in recovery mode after the financial crisis and coming to grips with the new regulatory environment," said Brian Stephens, who leads KPMG's banking and capital markets practice. "... The new normal for the industry seems to be slow and steady growth as banking leaders streamline costs and evaluate strategies to drive future revenue."
Executives' outlook for revenue and lending was mildly optimistic, according to the study, which reflects the responses of 100 senior banking executives. Almost 70 percent said they expect moderate revenue growth in the year ahead, driven in part by core banking services, cross-selling and asset and wealth management.
Troubled mortgages, new regulations and capital requirements are among the hurdles that remain, executives said.
Meanwhile, 80 percent of survey respondents plan to increase commercial lending in the coming year, while 84 percent said they will increase consumer lending, KPMG found.
Banks anticipate modest hiring, too, with gains largely dependent on the mix of businesses within each bank. And overall, bank executives expect the economic picture to brighten in the coming year, the study found.
Concerns about European banks persist
Welcome to the morning roundup. Here's a look at today's banking and finance news.
Europe troubles. Two top U.S. officials are concerned about the European banking industry, Finnish Prime Minister Jyrki Katainen told Bloomberg after meeting them. Katainen said U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke were "very worried" as they discussed the options for recapitalizing troubled banks, Bloomberg reports.
JPM. Federal Reserve governor Daniel Tarullo said the proposed Volcker rule, which would bar banks from trading with their own money, would have forced JPMorgan Chase & Co. to look more carefully at the trading activities that led to its $2 billion loss, the Wall Street Journal reports. The Fed official's comments suggest the bank's loss is helping shape the debate on banking regulation, the Journal writes.
Goldman shrinking. Wall Street giant Goldman Sachs is expected to name fewer than 100 new partners this fall, one of the smallest classes in recent years, the New York Times reports. The firm is being more selective about its elite ranks, mirroring a decline in overall head count, the Times writes.
Stocks climbing. Stocks rose at the open today on hopes of new action to help the global economy, Reuters report. The move higher came after the Chinese central bank cut bank lending and deposit rates.
Tree.com sells home loans unit, will repurchase shares
Charlotte-based Tree.com has now returned to its original business model, announcing Thursday that the months-delayed sale of its home loan origination unit to Discover Financial has closed.
The parent company of lead generation sites like LendingTree will now use its improved cash position to repurchase up to $4.3 million in shares, the company said.
Under the terms of the deal renegotiated in February, Discover paid $42.9 million at closing and will pay $10 million on the first anniversary. Discover paid $3 million on March 7.
"We're very excited to complete this transaction and our transition to a focused performance marketing company," CEO Doug Lebda said in a statement. "Tree.com will now be able to focus solely on our core lead generation business powered by our world-class marketing team."
Wednesday, June 6, 2012
Bank of America's sale of Hearst Tower closes
Bank of America's $250 million sale of the uptown Hearst Tower to an Orlando-based real estate investment firm has closed, the firm said Tuesday.
Parkway Properties Inc. announced it was buying the 972,000-square-foot office building in early May. The Charlotte bank is leasing back about one-third of the building through 2022.
Parkway expects to make $17.5 million net operating cash from the Hearst building in its first year owning it.
Another real estate firm bought Bank of America's Fifth Third Center last month. One Wells Fargo is also under contract.
U.S. investor optimism waning, Wells Fargo finds
Wells Fargo's index of investor optimism fell 40 percent between February and May, according to results released Tuesday from the bank's quarterly survey.
The index fell to 24 in May, from 40 in February.
To put that in perspective, the index peaked at 178 in January 2000, the peak of the dot-com boom. It hit bottom during the financial crisis in February 2009 at -64.
A few other results from the survey:
- 1/3 of investors say low interest rates will cause them to delay retirement.
- 80 percent say healthcare is in crisis, but 90 percent say they're pleased with the quality of their healthcare.
- 87 percent say they share major financial decision-making. 48 percent of men but only 21 percent of women say they "take the lead" in financial decision-making.
The polls are conducted in conjunction with Gallup and survey more than 1,000 randomly selected investors.
FINRA, SEC to host investment fraud workshop in Concord
The Financial Industry Regulatory Authority, Securities and Exchange Commission and other agencies will be in Concord from 5:30 p.m. to 8:30 p.m. on Thursday hosting a workshop on how to spot investment fraud when con artists call.
Geithner challenges banks for specific Dodd-Frank gripes
Welcome to the morning roundup. Here's a look at what's news in banking and finance.
Dodd-Frank. U.S. Treasury Secretary Tim Geithner is reportedly challenging bankers to provide him specific examples of where the Dodd-Frank financial reform law is costing them an inordinate amount of money or placing burdens on them, Bloomberg reports. Bankers have long decried the law as doing both.
Europe. The European Central Bank kept its one-week refinancing rate at a historic low of 1 percent despite pressure to reduce it even further, the Wall Street Journal reports.
Wells in Tampa. Wells Fargo is offering Tampa residents down payment assistance and $15,000 home renovation grants as part of a $7 million program in the Florida city, the Tampa Bay Times reports. It's not simple to qualify, however. People must be Tampa residents, have income no greater than 120 percent of the median, qualify for a mortgage, take an 8-hour course and commit to staying in the home for five years.
JPMorgan losses. The Office of the Comptroller of the Currency will be looking into whether JPMorgan Chase provided clear and accurate information to regulators about its activities in the chief investment office, which racked up $2 billion-plus in losses, the Wall Street Journal says. Regulators are set to testify at a Senate hearing today.
Tuesday, June 5, 2012
Former Bank of America general counsel named CEO of Fannie Mae
Timothy Mayopoulos, the former Bank of America general counsel who was abruptly fired in 2008, was appointed Tuesday as the new CEO of mortgage giant Fannie Mae.
BofA sells mortgage servicing rights
Bank of America has sold more mortgage servicing rights, the latest step in a long-running push to shed noncore assets.
Texas-based Nationstar Mortgage said today it was acquiring a $10.4 billion residential portfolio, measured by the unpaid principal of the loans, from the Charlotte bank in a co-investment with Newcastle Investment Corp. The portfolio consists entirely of loans in government-sponsored enterprise pools, Nationstar said.
Bank of America has been selling off nonessential operations in recent months as part of chief executive Brian Moynihan's wide-ranging efficiency initiative Project New BAC. Mortgage servicing rights have been part of the cuts.
Nationstar currently services more than 635,000 residential mortgages, totaling nearly $103 billion in unpaid principal. The company expects the loans from Bank of America to transfer in July.
BB&T launches prepaid card for teenagers
BB&T has introduced a new prepaid debit card aimed at teenagers, the Winston-Salem bank's second offering in a part of the market growing increasingly popular.
The card carries a $3 monthly maintenance fee, less than the $10 or $5 charge the traditional prepaid debit card carries.
Prepaid cards have become increasingly popular as fees rise on traditional checking accounts. A study from Javelin Strategy and Research showed that prepaid card use rose 18 percent in 2011. The Consumer Financial Protection Bureau has recently turned its attention to the product and is seeking to write new regulations governing their fees.
Wells Fargo and Regions Bank also offer consumer prepaid debit cards.
Buffett's firm seeks independent examiner in ResCap bankruptcy
Welcome to the morning roundup. Here's a look at today's banking and finance headlines.
ResCap bankruptcy. Warren Buffett's firm has asked a court to appoint an independent examiner in the Residential Capital LLC bankruptcy case to investigate transactions between the mortgage unit and its parent, Ally Financial Inc., Reuters reports. Berkshire Hathaway, a major creditor, said the transactions with Ally were "potentially improper."
OCC ethics. The Office of the Comptroller of the Currency worked around strict ethics rules when it appointed David Wilson to oversee supervision policy for all national banks, because he's married to a high-level executive at Bank of America, American Banker reports. Wilson was later reassigned, but industry experts said placing him in the role made the regulator appear too close to big banks.
New banking business. Citigroup Inc. is expanding into the little-known field of identity proofing, or proving people are who they say they are, in search of bigger profits, the Wall Street Journal reports. The lender will begin by issuing digital ID badges to government contractor employees later this month.
European crisis. As Europe's debt crisis deepens, U.S. companies are warning investors that sales there are slowing and could get worse -- a sign of the trouble's impact on the global economy, the New York Times reports.
JPM loss. Top U.S. bank JPMorgan Chase & Co. might report a $4.2 billion second-quarter trading loss in its chief investment office, according to one investment firm's estimate, Bloomberg reports. International Strategy & Investment Group Inc. said the pretax loss could drive earnings to 65 cents per share, down 30 percent from an earlier estimate.
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