President Barack Obama nominated Bank of America Corp. (BAC) executive Stefan Selig to oversee international trade as he seeks to jumpstart the economy by appointing a Wall Street veteran to the Commerce Department. The White House announced the nomination today, subject to confirmation by the U.S. Senate. Selig, Bank of America’s executive vice chairman of global corporate and investment banking, would report to Penny Pritzker, the Chicago businesswoman confirmed in June as Commerce secretary. Selig, 50, would replace Francisco Sanchez as undersecretary for international trade, a job that involves promoting American industry at home and abroad as head of Commerce’s International Trade Administration. Sanchez said in September he would resign from the post he has held since 2009. “Stefan Selig is a tremendous talent and we’ll be lucky to have him join the Commerce Department,” Pritzker said. “He has the global experience, management skills and understanding of how to put deals together to ensure that we will be able to continue our critical work to expand trade and exports, grow our economy and create jobs.”
Citigroup has come a long way since the financial crisis. It now has a much stronger capital position, and its balance sheet has continuously improved over the past four years. Just from the previous quarter, Citigroup's Basel III Tier 1 common ratio improved by 40 basis points to 10.4%, and the company's tangible book value improved by about 3% to $54.52. That means that Citigroup is trading at a discount to its TBV.
The credit quality of Citigroup's loan portfolio has also improved significantly, as is apparent in the bank's loan-loss allowance declining from $25.9 billion last quarter to $20.6 billion this quarter.
Bank of America is discussing a settlement with the Consumer Financial Protection Bureau to settle charges it deceived customers in the sales of credit-card add-on products, though a deal isn’t imminent as the two negotiate the terms, according to Bloomberg, citing two people briefed on the talks.
Investors in Bank of America Corp. (NYSE:BAC) were undoubtedly disappointed by a judge ruling this week, which disallowed them from continuing a lawsuit against the bank — claiming that it should have warned them that American International Group Inc. (NYSE:AIG) intended to sue. U.S. District Judge John G. Koeltl stated that Bank of America fulfilled its responsibilities to prepare investors, and “cautioned investors that it faced substantial and rising litigation risks,” according to Bloomberg.
While the legal issues may not allegedly be in public filings for the bank, AIG’s lawsuit was announced in the press, easily available information and publicly known. Koeltl said that the bank officers “argue correctly that the alleged omissions did not mislead investors because information about BoA’s exposure to MBS litigation generally, and AIG’s claim in particular, was in the public domain.”
After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan. But now banks like TD Bank, Bank of America (BAC, Fortune 500), and Wells Fargo (WFC, Fortune 500) are loosening the purse strings, offering loans with down payments that are as low #$%$.
TD Bank's "Right Step" mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows them to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.
Citi® is now the preferred credit card of American Airlines Center, as well as resident professional sports teams including the 2011 NBA Champion Dallas Mavericks and the NHL Dallas Stars. Citi credit cardmembers can enjoy benefits including exclusive presales for Mavericks and Stars games, discounted pre-game concessions, preferred pricing on select merchandise, as well as special game day experiences. As part of this sponsorship, the Citi® / AAdvantage® credit card will be featured prominently throughout the venue.
“We are always looking for new ways to deliver memorable experiences for our customers with the venues and talent that appeal to them most in sports and entertainment,” said Jennifer Breithaupt, SVP of Entertainment Marketing at Citi. “American Airlines Center is recognized as one of the premier venues in the country, and we believe this partnership will help further raise visibility and preference for Citi in this important market.”
It's a legal victory for Bank of America (BAC +0.1%) as a federal judge dismisses an investor lawsuit accusing it of concealing a $10B fraud case brought by AIG. The bank was not required to disclose the imminence of the suit because the news wasn't materially different than previously-disclosed information, says the judge, the bank made no inaccurate or incomplete statements, and there was no duty to disclose the information sought.
Of course, BofA's 20% dive on the day in 2011 when AIG sued it over $28B in MBS suggests something materially different occurred.
Whether the $8.5B settlement on that case goes through is at this moment before a judge (the Article 77 hearing is expected to restart next week).
St. Louis Fed President James Bullard appeared on CNBC's "Squawk Box" on Monday. The centrist Bullard is a voting member at the Federal Reserve this year. The more hawkish Philadelphia Fed President Charles Plosser, appearing on the show Friday, argued that specific dollar limits should be put on the size of the central bank balance sheet, which is approaching $4 trillion. Plosser will be a voting member at the Fed in 2014.
Meanwhile, Dallas Fed President Richard Fisher told an Australian economic forum Monday that an ineffective, fractious, and fiscally irresponsible government has slowed the U.S. economic recovery and counteracted the stimulative effects of Fed's super-accommodative monetary policy. Fisher will be a voting member at the Fed next year. The Fed took no action at its October meeting, after surprising Wall Street in September by not tapering its $85-billion-a-month bond-buying program known as quantitative easing.
Monetary policymakers are set to hold their final meeting of the year on Dec. 17 and 18—followed by the release of a summary of their economic projections and what will presumably be the last scheduled news conference from outgoing Fed Chairman Ben Bernanke.
Citigroup and Deutsche Bank appointed joint bookrunners
Dubai developer DAMAC Properties said on Monday it plans to raise around $500 million from a sale of global depositary receipts on the London Stock Exchange as it seeks to take advantage of a recovery in the emirate's property market. No details on timing or the percentage of the company being sold to investors was given in the statement.
Citigroup and Deutsche Bank are joint bookrunners for the offering, with the investment banking arm of Saudi Arabia's Samba Financial Group and VTB Capital acting as co-lead managers. It recently announced plans for a $1 billion Hollywood-themed development in Dubai with Viacom Inc's Paramount Group and said in May it was working with American real estate mogul Donald Trump to build a new golf course in Dubai.
The federal government's latest annual deficit is the smallest it's been since 2008, according to Treasury Department data released Wednesday.
At $680 billion, the fiscal 2013 deficit is 51% less than it was in 2009, when it hit a record high nominally of $1.4 trillion. As a percent of the economy, it's also considerably smaller than it's been in the past five years, coming in at 4.1% of gross domestic product. By contrast, the annual deficit in 2009 topped 10% of GDP. And last year it was 6.8%. Overall, Treasury said higher receipts accounted for 79% of the decline in the deficit from last year.
Representative Jeb Hensarling leads the House Financial Services Committee.
Updated, 9:27 p.m. | The House of Representatives, with bipartisan support, passed legislation on Wednesday that would roll back a major element of the 2010 law intended to strengthen the nation’s financial regulations by allowing big banks like Citigroup and JPMorgan Chase to continue to handle most types of derivatives trades in house. The bill, which passed by a 292-122 vote, would repeal a requirement in the Dodd-Frank law that big banks “push out” some derivatives trading into separate units that are not backed by the government’s insurance fund.
Lobbyists and Financial Regulation
But the debate Wednesday regarding this decidedly technical matter quickly turned into an impassioned dispute over the role the federal government has played since the recession in regulating financial markets. Advocates of the legislation argued on the House floor that the federal government is partly responsible for the slow rate of economic growth because it imposed excessive new regulations. “America’s economy remains stuck in the slowest, weakest nonrecovery recovery of all times,” said Representative Jeb Hensarling, Republican of Texas, the chairman of the House Financial Services Committee. “Those who create jobs for America are drowning in a sea of red tape preventing them.”
Qatar's sovereign wealth fund, one of the world's most prolific investors, is building a $1 billion holding in Bank of America (BAC), seeking to benefit from the U.S. economic recovery, the Financial Times reported, citing sources close to the plans. Qatar Holding, the investment arm of Qatar Investment Authority (QIA), began buying BofA shares about two years ago, the newspaper said on its website, citing a person close to the fund. The FT added that Qatar had bought more of the bank's shares when their price fell to $7-$8 last year. BofA's stock closed at $14.17, up 2 cents, on the New York Stock Exchange. A $1 billion stake at this price represents less than 1 percent of BofA, which has a market capitalization of about $151.2 billion, according to Thomson Reuters data. Under newly appointed Chief Executive Ahmed Al-Sayed, QIA has been on an aggressive expansion spree, hiring bankers and senior executives with experience ranging from mergers and acquisitions in Asia to retail and luxury investments in Europe. The FT said QIA had hired Michael Cho, a former co-head of Asia mergers and acquisitions at BofA, for a senior role in its mergers and acquisitions department.
Three sources had told Reuters in September that Qatar Holding had hired Ugo Arzani, most recently a BofA managing director in London, as its new head of consumer and retail investments.
The sources had also said that QIA, worth more than $100 billion, was scouting for opportunities
Full Coverage of 3,000 U.S. equities. Reports include Financials, Ratios, Competitor Comparison, and our proprietary ASR Ranking indicating Buy/Sell/Hold. Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves cutomers globally.
The federal government began its first partial shutdown in 17 years on October 1, after Congress failed to overcome a partisan disagreement over the temporary spending bill that would have funded operations for the beginning of the new fiscal year. The 16-day long closure gave America a front-row seat to a demonstration of how political dysfunction can damage business confidence, consumer confidence, and the economy as a whole. The manufactured crisis created climate in which businesses are hesitant to invest and hire new employees.
In order to quantify the effect the polarization of United States politics on business investment and job creation, economist Marina Azzimonti of the Federal Reserve Bank of Philadelphia created an index to measure the tone of the political debate and its impact on hiring, investment, and economic growth. “American politics have become increasingly polarized in recent decades. To the extent that political polarization introduces uncertainty about economic policy, this pattern may have adversely affected the economy,” she wrote in a September working paper released by the regional Fed branch. “Polarization significantly discourages investment, output and employment.”
Citigroup Inc. C has plans to sell its mortgage servicing rights on loans valued at $63 billion or 21 percent of its total contracts, according to a report in Bloomberg, who cited two people briefed on the matter on Friday. The third-biggest bank in the nation is scaling back as regulations increase and the refinancing business has taken a hit. The bank owned servicing rights on $301 billion of mortgage balances as of the end of June, according to quarterly securities filings.
Mexican lender Banco del Bajio SA hired Citigroup Inc., Bank of America Corp. (BAC), Morgan Stanley and Banco Bilbao Vizcaya Argentaria SA for an initial public offering, two people with direct knowledge of the plans said. The offering will probably take place next year, according to the people, who asked not to be identified because the deal is in the preliminary stages and the timing and size haven’t been set. Citigroup will serve as global coordinator on the transaction, one of the people said. Banco del Bajio, based in the central Mexican city of Leon, asked investment banks earlier this year to assemble proposals for the sale, people familiar with the matter said at the time. A press official at BanBajio declined to comment on the hiring of investment bankers for an IPO. Angeles Meraz, a press official with Citigroup’s Banamex unit, declined to comment, as did Rodolfo Benitez, a press official for BBVA’s Bancomer unit, Kerrie McHugh, a spokeswoman for Bank of America, and Mary Claire Delaney, a spokeswoman for Morgan Stanley. (MS)
In March 2012, Banco Sabadell SA (SAB), Spain’s fifth-biggest bank, said it sold its 20 percent stake in BanBajio for 156.6 million euros ($216 million), valuing the company at about $1.1 billion.
There's more manna for the specialty servicers as Citigroup (C) has reportedly put up for sale MSRs on $63B of mortgages (about 21% of the bank's total).
Banks have been busy unloading MSRs thanks to new regulatory measures forcing lenders to hold more capital against those assets. Not bound by Basel, specialty servicers like Nationstar (NSM), Walter Investment (WAC), and Ocwen (OCN, HLSS, ASPS, AAMC) are picking up these rights and making fortunes for their shareholders.
FORTUNE -- Bank of America's great mortgage "Hustle" opens a legal can of worms, which could have dangerous consequences for the rest of Wall Street.
A jury late Tuesday found Bank of America's Countrywide mortgage lending unit liable for fraud in selling the government bad mortgages under a scheme known internally as "The Hustle." This marks the first time the courts have found a bank liable for wrongdoing in connection with a deal done in the lead-up to the financial crisis.
But the significant development here is not the fact that the government won, but how it won. Government attorneys successfully used a controversial interpretation of an obscure law to gain a victory against Bank of America (BAC). Armed with this new piece of legal weaponry, there is concern on the Street that the government could lay waste to basically any financial institution that had anything to do with trading mortgage securities going back as far as a decade.
The government has launched dozens of lawsuits against Wall Street in the last two years due to shenanigans involving residential mortgage backed securities (RMBS), but few have actually made it to court. They were either dismissed on some legal technicality, or the banks settled before trial. Citigroup (C) and Deutsche Bank (DB) were amongst those accused of wrongdoing that decided to settle right away, costing them $158 million and $202 million, respectively.
Citigroup Inc., the third-biggest U.S. bank, is selling mortgage-servicing rights on $63 billion of loans, its largest potential sale of this type since the 2008 financial crisis, according to two people briefed on the offer. The servicing rights, or MSRs, represent about 21 percent of Citigroup’s total contracts as of midyear, and could be sold in pieces, said the people, who asked not to be identified because the sale is private.
Citigroup’s offering comes as the nation’s banks, including Bank of America Corp. (BAC) and Ally Financial Inc., retreat from the almost $10 trillion mortgage-servicing market amid looming Basel III regulations. That’s attracting private-equity firms and hedge funds including Fortress Investment Group LLC (FIG) and GSO Capital Partners LP to assets that can increase in value when borrowing costs rise and giving them more control over the rights to collect Americans’ monthly mortgage payments. “It’s a step toward cleaning up their capital,” said David Stephens, the chief financial officer at Denver-based United Capital Markets Inc., who added he didn’t have specific knowledge of the Citigroup offering. Demand is currently high enough that banks can sell the rights without recording a loss, he said. Citigroup owned the servicing rights on $301 billion of mortgage balances at the end of June, according to the lender’s quarterly securities filing. The bank valued those contracts at $2.52 billion at midyear.