Receiving Wide Coverage ...
Extension asked
The Consumer Financial Protection Bureau proposed Monday to extend a moratorium on mortgage foreclosures until next year, from June 30 currently. “ The aim is to ensure companies thoroughly process a large volume of borrowers expected to exit temporary pandemic-relief programs that have allowed homeowners to postpone monthly payments until the fall,” The Wall Street Journal reported. “The CFPB also on Monday proposed a series of related consumer-friendly proposals such as streamlined loan-modification options to borrowers who have suffered a pandemic-related hardship.”
The intent of the moratorium extension “is to give borrowers coming off forbearance time to consider their options, such as whether they need a mortgage modification to reduce their monthly payments,” The New York Times said. The aim of the modification proposal “is to let lenders quickly offer borrowers more affordable terms, so long as the change does not increase the borrower’s monthly payment or extend the loan’s term by more than 40 years.”
“The proposed changes would apply to the entire mortgage market, and not just federally backed loans that have been subject to a foreclosure moratorium since last year,” American Banker reported.
Opportunity knocks
"The collapse of Archegos Capital Management last week “could end up playing to the biggest banks’ advantage,” the Journal says. "There may be changes that could crimp the prime business, but that might not be to the disadvantage of the biggest U.S. firms, which so far have reportedly steered clear of the losses potentially suffered by Credit Suisse and Nomura Holdings. There could be a push for total-return swaps to be standardized and centralized in a clearinghouse or on exchanges. If this makes the swaps less profitable, it could reduce the availability of financing. But it also could make it relatively more efficient for America’s giant money-center banks to provide swaps because they already have so much activity with clearing firms. The Archegos episode may ultimately serve as a reminder that, on Wall Street, tragedy for some can sometimes be followed by opportunity for others.”
Meanwhile, two senior Credit Suisse executives—its chief risk and compliance officer and the head of its investment bank—are expected to leave the bank “as it deals with the fallout from billions of dollars of losses in the blow-ups of Archegos Capital and Greensill Capital,” the Financial Times reported. “Both the Archegos and Greensill crises have raised questions over the risk management processes within the bank.”
Credit Suisse said it will “take a $4.7 billion hit from the meltdown of Archegos Capital Management and slashed its dividend,” the Journal said. Christian Meissner, “a Bank of America and Goldman Sachs veteran, will become head of the investment bank,” and “put its former chief risk officer temporarily back in that job and named a temporary head of compliance.” New York Times
Wall Street Journal
Digital first
China has “created its own digital currency, a first for a major economy. China’s version of a digital currency is controlled by its central bank, which will issue the new electronic money. It is expected to give China’s government vast new tools to monitor both its economy and its people. By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user.”
“Beijing is also positioning the digital yuan for international use and designing it to be untethered to the global financial system, where the U.S. dollar has been king since World War II. China is embracing digitization in many forms, including money, in a bid to gain more centralized control while getting a head start on technologies of the future that it regards as up for grabs. Digitized money could reorder the fundamentals of finance the way Amazon.com disrupted retailing and Uber Technologies rattled taxi systems.”
Financial Times
Sustainable central banking
“By now it is obvious, and fortunately recognized as such, that climate change affects economies in profound ways that central banks cannot ignore,” an FT editorial says. “Central banks must understand what economic and financial risks climate change brings. In their roles as guardians of financial stability, they should act to protect against these like they would any other risk.”
But “central bankers are rightly cautious about venturing into political territory. Stabilizing the overall economy is one thing; directing capital flows within it, with sectoral and distributive consequences, quite another. Ultimately it is for democratic governments to decide central banks’ mandates. Broader mandates need broad political backing to be sustainable.”
Quotable
“We will do everything in our power to ensure servicers work with struggling families to find solutions that prevent avoidable foreclosures.” — Acting CFPB Director Dave Uejio, announcing a proposal to extend the moratorium on mortgage foreclosures into next year.
