KeNo's Housing and Economic Portal: Wednesday September 28 20916 Housing and Economic stories

TOP STORIES:

Deutsche Bank Woes Sparks Concern Among German Lawmakers - (www.bloomberg.com) Deutsche Bank AG’s finances, weakened by low profitability and mounting legal costs, are raising concern among German politicians after the U.S. sought $14 billion to settle claims related to the sale of mortgage-backed securities. At a closed session of Social Democratic finance lawmakers this week, Deutsche Bank’s woes came up alongside a debate over Basel financial rules, according to two people familiar with the matter. Participants discussed the U.S. fine and the financial reservesat Deutsche Bank’s disposal if it had to cover the full amount, according to the people, who asked not to be identified because the meeting on Tuesday was private. While the participants -- members of the junior party in Chancellor Angela Merkel’s government -- didn’t reach any conclusions on the likely outcome, the discussion signals that the risks have the attention of Germany’s political establishment. The German Finance Ministry last week called on the U.S. to ensure a “fair outcome” for Deutsche Bank, citing cases against other banks where the government settled for reduced fines. A spokesman for Deutsche Bank declined to comment.

Exclusive: Regulators Expect Monte Dei Paschi to Ask Italy for Help-Sources - (www.reuters.com) European regulators expect Italian bank Monte dei Paschi di Siena will have to turn to the government for support, three euro zone officials with knowledge of the matter said, although Rome would strongly resist such a move if bondholders suffered losses. Less than two months after the Tuscan lender announced an emergency plan to raise 5 billion euros of fresh capital, having come last in a health check of 51 European banks, there is growing concern among European regulators that the cash bid will fall short. While the bank is determined to see through the capital raising, if it were to disappoint, it would be left with a capital hole. Now euro zone authorities are considering whether state support would have to be tapped after what bankers have described as slack interest in the bank's share offer. "There is clearly an execution risk to the capital raising," said one official with knowledge of the rescue attempt, adding that the bank's value, about one ninth the size of the planned 5 billion euro cash call, would be a turn-off for investors.

In Dramatic Twist, Wells Fargo Said To Retaliate, Fire Whistleblowers Who Exposed Bank's Illegal Practices – (www.zerohedge.com) Wells Fargo admitted to firing 5,300 employees for engaging in illegal, fraudulent tactics. Now, CNN is reporting that it spoke with numerous former Wells Fargo workers around the country who tried to put a stop to these illegal tactics. "Almost half a dozen workers who spoke with us say they paid dearly for trying to do the right thing: they were fired", CNN says, which if confirmed would promptly make this a criminal case, which implicate virtually every senior management member, as such retaliatory practices would suggest not only awareness of what was happening at the bank, but also an even more dramatic response by management seeking to keep these practices under wraps. Some of the named witnesses made it very clear that the narrative spun by Stumpf in Senate was a lie: "I endured harsh bullying ... defamation of character, and eventually being pinned for something I didn't do," said Heather Brock, who was fired earlier this month as a senior business banker at a Wells Fargo branch in Round Rock, Texas.

Suitcases of Cash: China Travel Data Hint at Capital Outflow - (www.bloomberg.com) Chinese tourists seem to be packing more than just sunscreen and cameras on vacation. The data discrepancy suggests they’re also shifting cash by buying homes while studying abroad, signing up for life insurance products in Hong Kong, or opening deposit accounts to squirrel money offshore, Setser said. That’s bad news for the global economy. "Right now, the world as a whole needs Chinese demand for its goods and services far more than it needs Chinese demand for bank deposits and bonds," said Setser, now a senior fellow at the Council on Foreign Relations in New York. "It helps us understand how the slowdown in China over the past few years is impacting world growth."

EU Banks May Need Rescue Funds Equaling Twice ECB Capital - (www.bloomberg.com) The euro area’s biggest banks will be asked to earmark funds equivalent to more than twice their minimum capital requirements to make sure a possible emergency doesn’t cost taxpayers, according to Elke Koenig, head of the Single Resolution Board. The Brussels-based SRB, the resolution authority for 142 banks including Deutsche Bank AG and BNP Paribas SA, will use the minimum capital requirement set by the European Central Bank as a proxy for funds that would be needed to absorb losses and allow recapitalization in a crisis, Koenig said in an interview this month. The ECB last year set an average requirement for the highest-quality capital of 9.9 percent of risk-weighted assets.

OTHER STORIES: