Morning Consult Finance: Citigroup’s Fraser Slated to Become First Woman to Lead a Major U.S. Bank



Top Stories

  • Citigroup Inc. has selected Jane Fraser as its new chief executive to replace Michael Corbat when he retires in February. Fraser, who currently runs the bank’s consumer division, will be the first woman to lead a major financial institution in the United States. (The New York Times)
  • In a 52-47 vote, the $300 billion coronavirus economic relief package stalled in the Senate after being blocked by Democratic lawmakers, who have said they would accept a bill with a $2.2 trillion price tag. Democrats had argued that the Senate GOP bill doesn’t provide enough aid, and after the vote, Senate Minority Leader Chuck Schumer (D-N.Y.) called the bill “emaciated, inadequate and designed to fail.” (The Wall Street Journal
  • The Justice Department said that nearly 500 individuals are suspected of coronavirus-related loan fraud and that federal law enforcement has opened “several hundred” investigations, with charges already filed against more than 50 people. Later, the DOJ announced new charges in a case that is focusing on applications for about $24 million in loans and involves 11 people including Joshua Bellamy, a former wide receiver for the New York Jets football team. (Politico)

Chart Review

Events Calendar (All Times Local)

09/14/2020
NAFCU Virtual Congressional Caucus
Digital Mortgage 2020
09/15/2020
NAFCU Virtual Congressional Caucus
Women in Housing & Finance event: “Access to Credit: How Inclusive Is the U.S. Financial System” 12:00 pm
CFPB Listening Session with Members of the Bureau’s Taskforce on Federal Consumer Financial Law 2:30 pm
09/16/2020
House Financial Services Committee hearing: “Prioritizing Fannie’s and Freddie’s Capital over America’s Homeowners and Renters? A Review of the Federal Housing Finance Agency’s Response to the COVID-19 Pandemic” 12:00 pm
Women in Housing & Finance event: “FRB Control Framework” 12:00 pm
SIMFA webinar: LIBOR – Preparing for Alternative Reference Rates 1:00 pm
View full calendar


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General

White House moves to curb policing of corporate misbehavior
Victoria Guida, Politico 

The White House is taking action to rein in enforcement activity by government agencies, calling for more input by political appointees and advising against opening more than one probe into the same company. When it comes to investigations and actions against companies for regulatory violations, any ambiguity in the law should be read “in favor of the targeted party,” according to a memo issued last week by Paul Ray, who heads the White House’s regulatory review office.

Fed Seen Balking Again at Providing Fresh Interest-Rate Guidance
Christopher Condon and Kyungjin Yoo, Bloomberg

Federal Reserve officials will link interest-rate increases to inflation outcomes when they provide more guidance on the future path of monetary policy, economists said in a Bloomberg survey. They’re just not sure when that guidance is coming.

Global Economy on Track for Rebound, but Slower Grind Looms
Paul Hannon and Jason Douglas, The Wall Street Journal

The global economy is set to regain lost ground in the three months through September, but there are indications that its recovery is likely to slow from there, with the novel coronavirus still weighing heavily on consumer services and other businesses. The global economy contracted for a second straight quarter in the three months through June, with widespread lockdowns and individual efforts to avoid infection dealing a severe blow to activity.

What’s really going on with the economy
Matthew Yglesias, Vox

The economy is growing again, with employers adding millions of workers to payrolls per month. The unemployment rate — which briefly hit levels far higher than the worst of the Great Recession — is now falling rapidly.

A Surprisingly Durable Recovery Faces Tougher Tests
Greg Ip, The Wall Street Journal

When the stock market began to rally back in March, it seemed oblivious to an economy sliding into its worst contraction since the Great Depression. Nearly six months later, some of that optimism has proved justified. 

U.S. Futures Climb as Stocks Fluctuate; Euro Gains: Markets Wrap
Robert Brand, Bloomberg

U.S. futures climbed at the end of a week in which concerns over valuations in some pockets of the market whipsawed global equities. The British pound headed for its biggest weekly drop since March as Brexit talks frayed.

Banking

JPMorgan Top Brass Tell Trading-Floor Staff to Come Back to the Office
Julia-Ambra Verlaine, The Wall Street Journal

One of Wall Street’s biggest employers is calling its trading staff back to the office. JPMorgan Chase JPM -1.03% & Co. executives told senior employees of the bank’s giant sales and trading operation that they and their teams must return to the office by Sept. 21, according to people familiar with the matter.

Financial Products and Investments

Companies urged to issue debt in calm before US election
Joe Rennison, Financial Times

Turbulent contest in early November could push up financing costs, advisers warn.

CFTC Issues Guidance on Corporate Compliance Programs
Dylan Tokar, The Wall Street Journal

The U.S. Commodity Futures Trading Commission issued guidance detailing how it will evaluate corporate compliance programs—the latest effort by a U.S. enforcement agency to get companies to invest in programs that prevent regulatory infractions. The guidance, which will be published in the agency’s enforcement manual, was released in a memo Thursday that instructs staff in the CFTC’s enforcement division to consider a number of matters when evaluating whether a company had an adequate compliance program before a possible infraction, and whether it took steps to fix a problem after it occurred.

Second Top Female Executive at Bridgewater Says Firm Paid Her Less Than Men
Rob Copeland, The Wall Street Journal

Karen Karniol-Tambour, the top-ranked woman at hedge fund Bridgewater Associates, is sparring with the firm over her pay after learning that she has earned less than some male counterparts, according to people familiar with the matter. Ms. Karniol-Tambour, 35 years old, is director of investment research, a role that makes her essentially the fourth-most-senior investor at the firm. 

U.S. Drops Bid for 48-Hour Delay in Big Swap Trade Reporting
Benjamin Bain, Bloomberg

U.S. regulators are backing away from a controversial plan to let banks and fund managers keep secret for two full days their biggest trades in the $559 trillion global swaps market after some financial firms complained it would hurt transparency. The 48-hour delay — proposed by the Commodity Futures Trading Commission in February as part of a sweeping revamp of disclosure regulations — will likely be stripped out amid opposition from major market players, said three people familiar with the matter.

A Biden Victory And Split Congress Is Best For Stocks, But Here’s What Would Kill Markets After Election Night
Sergei Klebinkov, Forbes

With the 2020 election less than two months away, Wall Street investors are weighing the pros and cons of a Trump versus Biden presidency. Polls show former Vice President Joe Biden holding a lead of 7.3% over President Trump, according to RealClearPolitics, though betting markets suggest a narrower spread.

Housing and GSEs

Fixed mortgage rates tumble to lowest levels in history
Kathy Orton, The Washington Post

After rising three out of the past four weeks, fixed mortgage rates plunged to a new low. The 30-year fixed-rate average, the most popular mortgage product, sank to its lowest level on record this week.

Fannie Mae: Almost half of lenders expect profit margins to increase in next 3 months
Alex Roha, HousingWire

Mortgage lenders continued to be optimistic in the third quarter, with 48% of lenders saying they think profit margins will increase compared to the prior quarter, according to Fannie Mae‘s Mortgage Lender Sentiment Survey. Thirty-seven percent think profits will remain the same, while only 15% see profits decreasing in the next three months.

Taxes

Trump’s Payroll Tax Pause Fizzles as Employers Spurn the Move
Laura Davison and Steven Matthews, Bloomberg

A month after President Donald Trump moved to shore up workers’ incomes by giving employers the option of deferring payroll taxes, the effort has failed to energize a U.S. economy still reeling from the coronavirus pandemic. No major private employer has stepped forward with plans to forgo withholding the levy from workers’ paychecks — as Trump’s action allowed from Sept. 1 through year-end.

Top Democrat urges IRS to expedite letters to non-filers about stimulus payments
Naomi Jagoda, The Hill

House Ways and Means Committee Chairman Richard Neal (D-Mass.) on Thursday urged the IRS to expedite sending letters that urge non-filers to claim their coronavirus relief payments. The IRS announced earlier this week that it would start sending letters around Sept. 24 to about 9 million people who did not file tax returns for 2019 or 2018, typically because they have very low incomes.

Financial Technology

‘Pay later’ products take off this year as PayPal, Microsoft allow customers to delay the bill
Kate Rooney, CNBC

A wave of major companies are suddenly letting people finance everything from video game consoles to hair products in smaller, monthly payments. These so-called installment loans have been around for decades, and historically used for big-ticket purchases such as furniture.

Citi, JPMorgan and State Street back fintech startup Capitolis
Anna Irrera, Reuters

 JPMorgan Chase & Co JPM.N, Citigroup Inc C.N and State Street Corp STT.N have invested $11 million in Capitolis, a New York-based technology startup that seeks to help banks use capital more efficiently, the companies said. Capitolis, which was founded by Gil Mandelzis, a former senior executive at ICAP and former Thomson Reuters Chief Executive Tom Glocer, will use the funding to grow its team and operations, the startup said.

Opinions, Editorials and Perspectives

Congress needs to address the pandemic economic crisis. This is not the time to worry about deficit spending.
Robin E. Rubin and Jacob J. Lew, The Washington Post

Our nation faces the worst pandemic in a century, the deepest economic crisis in 90 years and stunning rates of hardship. Congress has returned with only a few weeks before a long recess, yet lawmakers appear to feel little urgency to address the crises.

Democrats Filibuster Covid Relief
The Editorial Board, The Wall Street Journal

Congratulations to Mitch McConnell, who kept all but one of his GOP Senate majority together on Thursday to vote for a $500 billion virus relief bill. Senate Democrats filibustered the bill, though these are the same Democrats who say they’ll kill the filibuster if they run the Senate next year.

Research Reports

Can Regulators Foster Financial Innovation and Preserve Consumer Protections?
Nick Bourke, Pew Trusts

Between 2010 and 2018, U.S. investments in financial technology, or “fintech,” grew from almost $2 billion to more than $100 billion, with over half of the increase occurring in 2018 alone. Among the ripest spaces in the financial sector for a technology upgrade is payments—the systems that move money between people and institutions—which currently rely on aging infrastructure and often make consumers wait for access to their funds.

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