Mortgage market under pressure; battle lines forming in cryptocurrencies

Receiving Wide Coverage …

At the brink

The Consumer Financial Protection Bureau “is ringing an alarm bell it hopes homeowners and mortgage loan servicers hear,” The Washington Post reports. “The nation’s consumer watchdog agency says more borrowers are behind on their mortgages than at any time since the Great Recession. And the situation is even worse for Black and Hispanic borrowers, who are twice as likely to be delinquent or in a forbearance program as White borrowers.”

“It’s not quite a true repeat of the housing crisis, which forced millions to fall behind on their mortgages and many to eventually lose their homes to foreclosure, but there’s no question that the pandemic has pushed many homeowners to the financial brink.”

While that may be true, “the housing market is as hot as ever. The mortgage market, though, is losing steam,” The Wall Street Journal reports. “Lenders are preparing for mortgage demand to cool in the coming months, the result of rising interest rates that make refinancing less attractive for a huge chunk of borrowers.”

“The anticipated decline in mortgage volume is setting off price wars across the industry. That is driving down profit margins and spooking the shareholders of mortgage firms that went public closer to the height of the lending boom. This year, total originations are expected to fall to $3.3 trillion, a 14.2% decline. Still, at that level, 2021 would rank among the best years on record.”

Battle stations

Regulators in the U.S. and Germany “are bristling at cryptocurrency operators’ incursions into tightly-controlled public markets,” the Financial Times reported. “Crypto industry executives and securities law experts around the world are closely scrutinizing the tussle between German regulator BaFin and crypto exchange Binance, which deepened this week. Binance, one of the world’s biggest crypto firms, has asked BaFin to retract an allegation that it may be breaking securities laws with its new offering of ‘tokens’ meant to mimic a clutch of U.S. stocks — a request the regulator has rebuffed.”

“In the same week, the new chair of the Securities and Exchange Commission, Gary Gensler, told a hearing on Capitol Hill that the ‘close to $2 trillion [cryptoasset] market is one that could benefit from greater investor protection.’ Right now, the exchanges trading in these crypto assets do not have a regulatory framework either at the SEC or our sister agency, the Commodity Futures Trading Commission,” he said. “There’s not a market regulator around these crypto exchanges, and thus there’s not protection against fraud or manipulation.”

Perhaps in response, “Ripple has hired two lobbying firms in the past three months to help it develop strategy in Washington,” The New York Times reported. “And to defend itself against the SEC, it hired Mary Jo White, a former chairwoman of the commission during the Obama administration.”

“Ripple is just one of a long list of cryptocurrency companies scrambling for influence in Washington as the Biden administration begins setting policy that could shape the course of a potentially revolutionary industry that is rapidly moving into the mainstream and drawing intensifying attention from financial regulators, law enforcement officials and lawmakers.”

Separately, Goldman Sachs “executed its first cryptocurrency trades and formalized the set-up of its bitcoin desk on Friday, two months after the U.S. bank announced that it would re-enter the fledgling market,” the FT reported. “The bank said on March 1 that it would relaunch its mothballed cryptocurrency trading desk due to growing demand from institutional clients.”

Wall Street Journal

Pot lobby

“Banks, cannabis companies, and new marijuana trade organizations are deploying platoons of lobbyists to state capitals and Washington, D.C., to help shape the ground rules for the industry as more states legalize use, and as Congress weighs measures that could further legitimize the market. Banks including Morgan Stanley, as well as tobacco and alcohol companies, are beginning to weigh in on federal cannabis policy. The lobbying uptick comes as states are developing their own rules for recreational use and Democrats in Washington say they will soon push to decriminalize marijuana federally.”

New CIOs

JPMorgan Chase named two chief information officers. James Reid, “the first Black CIO at the bank and the first Black member of the technology leadership team, was named CIO of the bank’s new employee experience and corporate technology organization, a new position that is focused on building and improving technology used by its internal workforce. In his new role, he is tasked with building and maintaining technology systems related to human resources, diversity and inclusion, legal, and corporate responsibility.” He will report to Lori Beer, the bank’s global CIO.

The bank also named Melissa Goldman “CIO for the recently reorganized finance, risk, data and controls technology unit. Ms. Goldman was previously CIO of corporate technology, in which her duties included leading the capabilities that would become the new employee experience unit under Mr. Reid.”

School daze

School banking programs “are facing a growing backlash in Australia,” where a “recent critical report from the Australian Securities and Investments Commission faulted the programs for exposing children to sophisticated marketing tactics and said banks didn’t state clearly a key objective was to attract customers. The corporate regulator also objected to schools being paid to set up the programs.”

“Concerns have been ‘repeatedly raised about banks using inappropriate tactics such as luring children with prizes and incentives to develop trust and loyalty in banks at an inappropriate age.’ The securities and investments regulator found several banking programs offered rewards like toys or stationery to students.”

Financial Times

Difference of opinion

“A transatlantic rift has opened up in banking over the merits of bringing employees back to the office quickly, with some U.S. executives calling for a swift return to pre-pandemic normality while many of their European counterparts take a more cautious approach. JPMorgan Chase and Goldman Sachs have summoned all U.S. staff back to their offices as soon as next month. By contrast, European banks from London-based HSBC to France’s Société Générale are returning to the office more cautiously and with a more relaxed attitude to flexible working.”

New York Times

PPP spree

“A man in California who received more than $5 million in Payment Protection Program loans was arrested on Friday on federal bank fraud and other charges after he used the money to buy a Lamborghini and other luxury cars, federal prosecutors said.” The man “submitted applications to three different banks for Covid-19 relief funds in order to help four companies based in California that, in fact, were not in operation, prosecutors said. Some of [his] assets have already been seized.”


“This year is still expected to be a great year, probably the second-best year in history. But it’s just that directionally, [mortgage volume] is going down.” — KBW analyst Bose George on the mortgage originations market, which appears to have peaked.

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