FHFA unveils refi program; can Deutsche Bank keep it rolling?

Receiving Wide Coverage ...

Steady as she goes

The Federal Reserve left interest rates unchanged at its monetary policy meeting Wednesday, and Fed chair Jerome H. Powell “made it clear that his central bank wants to see further healing in the American economy before officials will consider pulling back their support by slowing government-backed bond purchases and lifting interest rates,” The New York Times reported.

Powell “signaled that the Federal Reserve was still far away from withdrawing support for the U.S. economy, even after the central bank upgraded its view of the recovery,” the Financial Times said. “The Fed chair affirmed that the U.S. central bank was not yet ready to discuss tapering its massive program of asset purchases.”

“We’ve had one great jobs report, it’s not enough,” he said. "We’re a long way from our goals.”

Powell said the recovery has advanced “more quickly than generally expected,” but it “remains uneven and far from complete,” according to The Wall Street Journal.

Wall Street Journal

More refis for more people

The Federal Housing Finance Agency announced a new program Wednesday “to ease credit requirements, simplify documentation and waive certain fees for borrowers seeking to refinance their loans.” The plan is “targeting lower-income borrowers who have missed out on the refinancing boom of the past year. The program is expected to get off the ground by the summer.”

“To benefit from the changes, borrowers would need to make 80% or less of their area’s median income and not have missed more than one mortgage payment in the past 12 months. The program only applies to borrowers with existing loans backed by [Fannie Mae and Freddie Mac] and it will be up to lenders to participate in it."

In collusion

The European Union fined Bank of America, Credit Suisse and Crédit Agricole “for illegally colluding on trades in government bond markets at the expense of their clients. The three banks were together fined €28.5 million, equivalent to $34.4 million. Deutsche Bank also participated in the trades, but wasn’t fined because it alerted the EU about the existence of the alleged cartel. The EU’s executive arm said Wednesday that traders at the banks worked together on trading strategies, exchanged sensitive price information and coordinated prices for sovereign bonds denominated in dollars.”

What’s next?

Deutsche Bank “is recovering nicely. What comes next isn’t so obvious,” the Journal says. “On Wednesday, the German lender posted its best quarterly results in years. While management was careful not to take a victory lap, it does offer a nice proof point for the company’s turnaround. Shares jumped 9% in early trading.”

“While Deutsche Bank has made good progress toward its 2022 goals, it still needs to cut costs and boost revenue to deliver on the turnaround plan announced in 2019. Just turning into your average European bank would be progress for Deutsche Bank—and generate further healthy returns for shareholders. But it isn’t much of a long-term strategy. One potential solution is consolidation, a wild card for investors. A big acquisition could bring great benefits, but also the kind of complexity and duplication Deutsche Bank has been trying to put behind it.”

Financial Times

Back at it

Upgrade, the online marketplace lender founded by former Lending Club CEO Renaud Laplanche, has soared to the top of the FT’s ranking of fast-growth companies after it “doubled revenues last year.” Unlike Lending Club, however, which got a banking charter this year, Laplanche has “no intention of seeking a [banking] charter” for his new company. “We’re happy with a pure marketplace model,” he said.

Elsewhere

What pandemic?

“A surge in online shopping helped” Visa “beat Wall Street estimates for quarterly profit and counter sluggish travel spending,” Reuters reported. “Visa's total payment volumes rose 11% on a constant dollar basis from a year earlier, its biggest jump since the start of the pandemic. U.S. debit card volumes soared 31% to $806 billion.”

“If you leave out the travel part of the business, the rest of the business is beginning to look as if the pandemic never happened,” CFO Vasant Prabhu told Reuters.

Quotable

“Last year saw a spike in refinances, but more than two million low-income families did not take advantage of the record low mortgage rates by refinancing.” — Mark Calabria, director of the FHFA, which announced a program Wednesday designed to make it easier for more homeowners to refinance.